House of Commons

Tuesday 13th December 2011 Commons Chamber

Tuesday 13 December 2011

The House met at half-past Two o’clock

Prayers

Tuesday 13th December 2011 Commons Chamber

[Mr Speaker in the Chair]

business before questions

London Local Authorities Bill [Lords] (By Order)

Further consideration of Bill, as amended, opposed and deferred until Tuesday 20 December (Standing Order No.20).

London Local Authorities and Transport for London (No.2) Bill [Lords] (By Order)

Transport for London (Supplemental Toll Provisions) Bill [Lords] (By Order)

Second Readings opposed and deferred until Tuesday 20 December (Standing Order No.20).

Oral Answers to Questions

Tuesday 13th December 2011 Commons Chamber

The Secretary of State was asked—

[Ian Swales (Redcar) (LD)]

1. What assessment he has made of whether there should be a compulsory retirement age for coroners.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The Coroners and Justice Act 2009 requires a senior coroner, area coroner or assistant coroner to vacate office on reaching the age of 70. The Government intend to implement this provision as soon as is practicable, although the retirement age will not apply to those in post immediately before the change comes into effect.

[Ian Swales]

I thank the Minister for that answer. The Teesside coroner is used as a bad example nationally by charities such as Cardiac Risk in the Young and the Royal British Legion. It is led by 81-year-old Michael Sheffield. Will the Minister meet a delegation of local MPs to discuss how the performance of the Teesside service could be improved?

[Mr Djanogly]

I am happy to meet to discuss the Teesside service, but not the coroner per se. The Lord Chief Justice and the Lord Chancellor are aware of the concerns that have been expressed about the Teesside coroner and have asked the Office for Judicial Complaints to investigate. I cannot comment any further while that investigation is ongoing.

[Robert Flello (Stoke-on-Trent South) (Lab)]

The Secretary of State’s change of heart, perhaps encouraged by the other place, about the creation of a chief coroner is most welcome, and I look forward to hearing that a chief coroner has been appointed. However, there are still major concerns about the repeal of section 40 and other sections in the Coroners and Justice Act 2009 that provide for the new appeal process. I understand the Secretary of State’s concerns about costs, but all that bereaved families are looking for is a commitment to bring forward a proper appeal process. The Teesside coroner is a very good example of the fact that the current system of judicial appeal is time consuming, costly and damaging. Will the Minister reconsider the decision about the appeal process?

[Mr Djanogly]

We take the view that it is better to focus on raising the standards of coroners’ inquiries and inquests to ensure that bereaved families are satisfied with the process without the need for new appeal rights and the resulting expensive litigation.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

2. What steps his Department is taking to ensure access to justice for vulnerable people.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

Access to justice is a wide concept, encompassing general advice provision, access to courts, as well as privately and publicly funded advice and representation. In respect of legal aid, the provisions of the Legal Aid, Sentencing and Punishment of Offenders Bill are designed to ensure that resources are targeted at the most serious cases, in which public funding is justified, protecting fundamental rights to access to justice.

[Mr Virendra Sharma]

I thank the Minister for that answer.

“The Legal Aid, Sentencing and Punishment of Offenders Bill will have a damaging effect on access unless substantial amendments are made in the House of Lords.”

Those are not my words, but those of the esteemed Cross Bencher, Lord Pannick. Is the Secretary of State concerned by the opposition shown by Lord Pannick and others—especially given the enormous time pressure on business in the other place—and will he therefore save considerable time and effort by announcing now to the House his intention to reverse his damaging proposals on legal aid, which risk undermining access to justice for the most vulnerable?

[Mr Djanogly]

We do recognise that there is a need to provide a suitable level of protection for the most vulnerable. Reforms will ensure that legal aid is targeted at those who need it most, for the most serious cases in which legal advice or representation is justified. Areas that remain in scope, such as domestic violence, asylum, property repossession and protecting children, demonstrate our commitment to that.

[Mr Gary Streeter (South West Devon) (Con)]

Thank you, Mr Speaker—I shall be brief. Is not one of the most important aspects of access to justice the time it takes to get a decision? Are there not still too many unnecessary adjournments in our court process, and what is the Minister doing about that?

[Mr Djanogly]

With my honourable colleagues on the criminal side of the Department, I am looking at many areas in which to speed up court processes. Indeed, the speed of the magistrates court process has increased dramatically since we came into power.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

That is all well and good but what the Minister does not say is that people who need debt, welfare benefit or housing advice will now be out of scope, as he well knows, and that that will have a knock-on cost. This is simply short-termism. On the definition of domestic violence, he also knows that far more people will be litigating in person, which will also be a waste of money.

[Mr Djanogly]

I must put the right hon. Gentleman right: we are not ending debt advice or advice in some of the other areas he mentioned. In fact, we will still be spending some £50 million on social welfare advice.

[Sadiq Khan (Tooting) (Lab)]

Fifty-three peers of the 54 who spoke in the House of Lords on Second Reading of the Government’s flagship Legal Aid, Sentencing and Punishment of Offenders Bill expressed their worries about the Bill. They came from both sides of the political spectrum and many were among the country’s leading experts. Unlike their Liberal Democrat and Conservative counterparts in the House of Commons, they are not Whips’ fodder and will not be bought off by platitudes or the offer of jobs in government. What plans does the Minister have to address the concerns that they raised, or will there be no change from the Bill that left this House?

[Mr Djanogly]

The right hon. Gentleman mentions the fact that the Bill is currently going through the other place and will shortly head to Committee. Of course, the Government, being a listening Government, and the Ministry of Justice, being a listening Ministry, will take onboard the concerns of noble Members in the other place and act accordingly.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

3. When he expects to appoint a new Victims’ Commissioner.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

I am extremely grateful to Louise Casey for the work she did as Victims’ Commissioner and the advice that I received from her while she was in office. We are considering the future of the role and intend to make an announcement in due course.

[Chi Onwurah]

In 2005, teenager Jenny Nicholl was murdered. Her murderer was convicted in 2008 but her body has never been found. Her mother, a constituent of mine, tells me that she received little support while suffering aggressive media intrusion and insinuations. Murder victims’ families have no formal status in court, are offered no protection from the media and, on average, incur costs of £113,000. Mrs Nicholl found the Victims’ Commissioner a strong supporter and champion. To whom should she turn now?

[Mr Clarke]

When Louise Casey was Victims’ Commissioner, she advised me strongly on giving more resources to the support of bereaved families, and I thought that her advice that we should target our support to victims and their families was very sensible. We are working on that and will continue to do so. I propose to publish a consultation document on a general victims package covering a wide range of areas, and I can assure the hon. Lady that in all our work we intend to give even greater emphasis to the importance of looking after victims, as well as getting justice in their cases.

[Tony Lloyd (Manchester Central) (Lab)]

The outgoing Victims’ Commissioner, Louise Casey, referred specifically to the needs of children as witnesses and victims in the criminal justice system. How will the Justice Secretary work with the new Victims’ Commissioner to ensure that proper protections are given to vulnerable children in that situation?

[Mr Clarke]

I can assure the hon. Gentleman that I will do that. We have made great progress in this country in recent years, including under the previous Government, on giving proper support to witnesses who have to appear in court. Obviously, it is most important to look after the most vulnerable witnesses, including children, who can be intimidated by the experience. We are looking at what we have in place now, and we hope to strengthen the arrangements.

[Jo Swinson (East Dunbartonshire) (LD)]

4. What steps he is taking to tackle first-time drug users in prisons; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

Drug misuse in prisons has declined by 71% since the introduction of mandatory drug testing in 1996. The latest results from the surveying prisoner crime reduction study suggest that 7% to 8% of prisoners had their fist use of heroin in custody, while 81% had used drugs in the year before custody. The steps to tackle drug use include drug-free wings and drug-recovery wings; procuring a networked intelligence system; a comprehensive corruption-prevention strategy; new technology to tackle the availability of drugs and phones in prisons; and building on existing prison security measures.

[Jo Swinson]

I thank the Minister for that answer, but the fact that any prisoners first try heroin while in prison is shocking. The very concept of “drug-free wings” shows just how bad the situation has become. Will he undertake a thorough review of the supply routes by which drugs are getting into prisons—via visitors, staff or the mail system—and act to cut them off, so that all our prisons can be drug-free?

[Mr Blunt]

The hon. Lady is right, although the position has been historically improving over the past 16 years or so, and one should remember that prisons are mini-communities, with a high volume of legitimate communication with, and access to, the outside world. Prisons cannot be hermetically sealed, and she drew attention to the many different routes through which drugs are smuggled. However, we of course examine all the routes into prison, and act to interdict and address them with the resources available to us, including new technology.

[Mr David Hanson (Delyn) (Lab)]

The Minister will know that funding for drug treatment in prisons under the Labour Government rose by 15 times, to £112 million in the year they left office. Will he guarantee that that resource will be maintained throughout the spending review? Will he also tell us how many body orifice scanners are now in place, following the Labour Government’s commitment to put one in every prison?

[Mr Blunt]

I hope that it will be of some comfort to the right hon. Gentleman to know that that budget is now the responsibility of the Department of Health. As it is not under the same financial constraints as the Ministry of Justice—we are having to play our part in addressing the economic mess that we inherited from the last Administration—that budget will be sustained.

[Nick de Bois (Enfield North) (Con)]

5. What recent discussions he has had with representatives of employers and training organisations to develop his policy on rehabilitation.

[Margot James (Stourbridge) (Con)]

9. What recent representations he has received on promoting links between employers and prisons for the purposes of improving skills among prisoners and increasing employment opportunities on release.

[The Minister for Policing and Criminal Justice (Nick Herbert)]

Promoting links with employers and business is central to our plans to make prisoners work and improve rehabilitation. We have established a business advisory group, which meets regularly to advise Ministers and officials on how to increase both work in prisons and private sector involvement.

[Nick de Bois]

Will the Minister extend the good practice shown by the National Grid young offender programme? About 1,000 graduates from the scheme have been released from prison into real jobs, which has led to single-figure reoffending rates.

[Nick Herbert]

I share my hon. Friend’s enthusiasm for that programme. The National Grid young offender programme is a really good model of effective engagement with the private sector. I would particularly commend Dr Mary Harris, its director, who has driven it energetically. The programme has recently been extended to two prisons in Wales and one in the west midlands, and we would like to do more with it.

[Margot James]

It is well known that employment is the most significant determinant of effective rehabilitation. Will my right hon. Friend update the House on his plans to incentivise Jobcentre Plus, Work programme providers, further education colleges and local employers to get involved and maximise the number of job opportunities available to ex-offenders?

[Nick Herbert]

My hon. Friend is absolutely right. Finding a job on release plays a significant part in reducing the reoffending of prisoners. That is why we have worked with the Department for Work and Pensions to ensure that prisoners being released who are eligible for jobseeker’s allowance will be mandated immediately on to the Work programme. We are also re-commissioning learning and skills in prisons. One of the main objectives is to ensure that learning focuses far more on employability, and our employers forum will encourage employers of all sizes.

[Ann Clwyd (Cynon Valley) (Lab)]

A constituent of mine aged 60 was offered a job recently as a handyman in a care home and his Criminal Records Bureau check was called for. It showed that he stole a bag of coal in 1983, 28 years ago, and the job offer was withdrawn. I would allege that this had no relevance at all to the job that he was offered, so will the Government look again at the use of CRB checks?

[Nick Herbert]

We are reviewing the Rehabilitation of Offenders Act 1974. We have to strike the right balance between protecting the public and ensuring that those whom we want to resettle in society and get the right kind of work are able to do so.

[Heidi Alexander (Lewisham East) (Lab)]

Earlier today I visited Bronzefield women’s prison in Surrey with my hon. Friend the Member for Darlington (Mrs Chapman). We observed a financial literacy course run by Principles in Finance. What plans does the Minister have to increase the amount of financial training available in prisons, given the link between debt and reoffending?

[Nick Herbert]

I mentioned that we have re-commissioned the provision for skills with a focus on employability. That must be the right approach. It is important to address the causes of offending to establish whether this is one of them and to ensure that we have proper programmes of rehabilitation in prison that will support people on their release to enter the world of work and responsibility.

[Mike Crockart (Edinburgh West) (LD)]

Does the Minister agree that literacy is a key part of any rehabilitation strategy? Will he update us on what the Government are doing to tackle poor literacy, not only to help the future employment opportunities of those convicted, but to increase the prospects for work within prisons to be meaningful and transformative?

[Nick Herbert]

Again, this is an area where we seek to improve provision. There is, of course, a role here for the state, but, as I mentioned last time, there is a role for voluntary groups as well. I mentioned the excellent Toe By Toe scheme, which uses former offenders or prisoners to encourage literacy and to teach skills to others. There is a very high correlation between illiteracy and the learning difficulties of prisoners in our jails. We need to address those issues if prisoners are to have a chance of not reoffending on release.

[Kelvin Hopkins (Luton North) (Lab)]

6. When he expects to announce his proposals on the reform of probation services.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

The first stage of our work to look at the future of probation services in England and Wales is nearing completion. This work requires careful consideration and has been taken forward with valuable input from trusts and other key probation stakeholders. For example, I met Probation Association chiefs last week and this morning I had meetings with the probation trade unions. We expect to announce our probation reform proposals alongside those for community sentences early in the new year, and we will then consult widely.

[Kelvin Hopkins]

Given that probation staff are experiencing major cuts in their budgets, will the Minister explain how he expects them to do more with less? Are not Government policies going to cause serious damage to the probation service?

[Mr Blunt]

No, Government policies are going to improve the probation service. If the hon. Gentleman looked at the probation budget, he would see that the position of probation has been substantially protected relative to the demands being placed on the overall budget of the Ministry of Justice.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

What is the Minister doing to make sure that probation officers’ work with prisoners is not undermined by prisoners being moved from prison to prison for no very good reason or for entirely administrative reasons?

[Mr Blunt]

We are trying to give the notion of prison clusters much greater prominence. The right hon. Gentleman will have seen that the OLASS—Offender Learning and Skills Service—review presages a situation in which prison clusters would procure education and skills training, and that should reflect the prisoner journey. We want to have a prison estate that is not under the enormous pressure it is under now—due to the terrible situation we inherited—so that we can get prisoner journeys from local prisons through to resettlement prisons, while both getting support from offender management and delivering programmes.

[Mrs Jenny Chapman (Darlington) (Lab)]

Justice Ministers give every impression of treating their Department as a policy adventure playground in which constant experiments in rhetoric lead to predictable U-turns and confusion. The probation service supervises some of the most dangerous individuals in our community and uncertainty now grows in this service, too, as the Minister decides whether to privatise all probation functions or just some of them. Does he consider any probation service functions, such as court reports, to be unsuitable for privatisation?

[Mr Blunt]

I am afraid that the hon. Lady will have to contain her impatience until we make a comprehensive statement—[Interruption.] The right hon. Member for Tooting (Sadiq Khan) intervenes from a sedentary position, but a proper statement will be made to this House early in the new year.

[Jessica Morden (Newport East) (Lab)]

7. What steps his Department is taking to support victims.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

In the current financial year, the Ministry of Justice is providing funding of approximately £50 million to voluntary sector organisations that support victims of crime. We intend to launch a consultation soon on proposals that will ensure that victims of crime are supported in the best way possible.

[Jessica Morden]

The anniversary of the terrorist attacks in Mumbai was on 26 November. In 2010 the innocent victims of overseas terrorism were led to believe that they would receive compensation, but they are still waiting. What is the Secretary of State doing to resolve the matter?

[Mr Clarke]

I will make announcements on what we propose to do for the victims of terrorism when we produce our package on victim support generally. We will certainly produce a package, and we will respect the previous Government’s proposal of an interim award for those injured in incidents such as that in Mumbai.

[Esther McVey (Wirral West) (Con)]

Delays to cases caused by defendants not appearing in court can be very distressing for victims. What guidance is given to the court to continue with the trial in the absence of the defendant?

[Mr Clarke]

This is the second reference in questions to delays in court, which cause immense inconvenience and sometimes considerable distress to witnesses and others, as well as to the victims of crime. We are looking urgently at how to improve the efficiency of the system and how best to proceed if people fail to co-operate. It is always possible to proceed with a trial in the absence of the defendant, but only once the judge is satisfied that the interests of justice will not be prejudiced. There is no point in starting a trial only for it to have to be started a week or two later when it is challenged.

[Mike Freer (Finchley and Golders Green) (Con)]

8. What steps he is taking to reform the role of bailiffs in commercial rent collections and repossessions; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The Government have given a commitment to provide more protection against aggressive bailiffs. Although there are no plans to reform the role of bailiffs in repossessions, the Government are considering replacing the existing common law right for a landlord to distrain for arrears of rent with a modified out-of- court regime for recovering rent of commercial premises. We will announce details of a full public consultation in due course.

[Mike Freer]

I thank the Minister for that answer. Will he confirm that the consultation will include representatives of landlords and not just those of tenants?

[Mr Djanogly]

Of course. It is vital that we ensure that our proposals for transforming bailiff action do not impose unreasonable burdens on business. To that end, we are undertaking further work to explore all the regulatory and non-regulatory options available.

[John Pugh (Southport) (LD)]

10. How many trials in magistrates courts in Merseyside were abandoned or deferred due to the non-appearance of either defendants or witnesses in the last year for which figures are available; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

In the last 12 months—from July 2010 to June 2011—for which data are available, there were a total of 5,239 trials in magistrates courts in Merseyside. Of those, 615, or 12%, did not go ahead on the day due to the absence of a witness, while 151—3%—did not go ahead due to the absence of a defendant.

[John Pugh]

In recognising the problem, does the Minister think that it will be made worse by the closure of magistrates courts in places such as Southport, and will he monitor the situation?

[Mr Djanogly]

We are certainly monitoring the situation, and I do so virtually on a weekly basis. Since 2009, until closure, Southport courts sat on three days per week. The court utilisation figure prior to consultation on closure was 33%. Since the work was transferred to Bootle courts, the utilisation level of Bootle has increased from 49% to 68% for the month of October 2011.

[Dr William McCrea (South Antrim) (DUP)]

rose—

[Mr Speaker]

Ulster is a little way away, but I am sure that it is not beyond the ingenuity of the hon. Gentleman to relate his supplementary to Merseyside.

[Dr McCrea]

Absolutely, Mr Speaker. Will the Minister tell us whether any figures are available on the cost to industry and individuals in Merseyside, when witnesses attend court proceedings only to be told later in the day that they can go home because the proceedings cannot go ahead?

[Mr Djanogly]

I cannot do so off the top of my head, but I will write to the hon. Gentleman. There might be good reasons for such occurrences, such as someone entering a guilty plea, as well as bad reasons. The situation is complicated.

[Karl Turner (Kingston upon Hull East) (Lab)]

11. What assessment his Department has made of the potential effects on women of planned changes to legal aid.

[Kate Green (Stretford and Urmston) (Lab)]

18. What assessment his Department has made of the potential effects on women of planned changes to legal aid.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The Government published an equality impact assessment alongside our response to consultation, which laid out the best assessment of the effects on women of planned changes to legal aid. That recognised the potential for the reforms to impact on a greater proportion of women, alongside others featuring protected characteristics.

[Karl Turner]

There have been reports in the media that the Deputy Prime Minister is to announce a consultation on the definition of domestic violence. Will the Minister explain how it accords with the narrow definition in the Legal Aid, Sentencing and Punishment of Offenders Bill, which will exclude many women from the legal support that they need and will, I believe, put a number of them at serious risk?

[Mr Djanogly]

As the hon. Gentleman says, there is to be a consultation on domestic violence, although I believe that it will be undertaken by the Home Office rather than the Deputy Prime Minister. We will look carefully at the results of the consultation, but the definition of abuse in the Bill is broad and comprehensive, and includes mental as well as physical abuse.

[Kate Green]

What steps is the Minister taking to protect women who are victims of domestic violence from the risk of aggressive and unfair questioning in the courts by abusive partners, given the likelihood of an increase in the number of litigants appearing in person as a result of the legal aid cuts?

[Mr Djanogly]

I believe that some 50% of respondents are currently not represented through legal aid. As a consequence, the circumstances that the hon. Lady describes are common in our courts, and our judiciary are expert and accustomed to dealing with them when they arise.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Most women, in particular, depend on legal aid cases when starting out in practice. As a non-practising advocate, may I ask my hon. Friend whether the changes will affect the number of women entering the profession, and whether it is likely that the early stages of legal aid cases will be replaced by mediation?

[Mr Djanogly]

We are certainly promoting mediation as an alternative to court. That is always to be recommended when it is appropriate, which I admit is not always the case. The impact on providers in terms of their sex varies according to the nature of the organisations involved and the nature of the work being undertaken, but there is no real difference between the impacts on male and female solicitor providers of either civil or criminal legal aid services.

[Mr David Nuttall (Bury North) (Con)]

Did the impact assessment also cover the potential effect of the legal aid changes on men?

[Mr Djanogly]

By implication, yes.

[Mr Andy Slaughter (Hammersmith) (Lab)]

The press were, of course, briefed on the domestic violence review before the House was. It was clearly stated at the weekend that the Deputy Prime Minister would undertake it, but perhaps he cannot be found now, which is why the Home Office will be in charge.

If the purpose of the review is to broaden the ambit of what constitutes domestic violence, why are the Department and the Secretary of State narrowing not just the definition but the evidential criteria, so that whether a woman is supported by a GP or hospital doctor or by a refuge, she will no longer be able to obtain legal aid?

[Mr Djanogly]

We have no intention of narrowing the definition, and we do not believe that the definition in the Bill does that. I can say, however, that our policy is to end legal aid for most private family law applications relating to, for instance, divorce, ancillary relief and child contact. The main exception is legal aid in domestic violence cases, which we are anxious to retain.

[John Mann (Bassetlaw) (Lab)]

12. What assessment he has made of the level of compliance by local authorities with the requirements of his Department on health and safety in cemeteries.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

Responsibility for health and safety in local authority cemeteries lies with the relevant council. The Department published guidance on the safety of burial ground memorials in 2009 and burial authorities have been encouraged to take account of it, but there are no plans to initiate individual assessments of compliance.

[John Mann]

The Minister says that there are “no plans”. Luckily, the new administration in Bassetlaw council has dug up the stakes that were put in by the last Conservative administration, at huge cost to the taxpayer. Why are the Government not sorting out the abuse of a change in the regulations that was made in 2009? Local authorities across the country are still doing nothing about it, much to the disgust of those who visit cemeteries.

[Mr Djanogly]

The hon. Gentleman’s expertise in this area is renowned, so perhaps I can write to him on the specifics of the cemetery in his constituency. I just point out to him that the Ministry of Justice has no responsibility for health and safety in local authority cemeteries.

[Mr Robert Buckland (South Swindon) (Con)]

13. If he will bring forward proposals to extend the power of the Attorney-General to refer unduly lenient sentences to the Court of Appeal for crimes aggravated by hostility towards disabled people.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

We have no plans to extend the Attorney-General’s powers in this field at present. However, as my hon. Friend will be aware, we are considering this issue carefully in formulating our response to the recommendations of the Equality and Human Rights Commission’s inquiry into disability-related harassment.

[Mr Buckland]

More work needs to be done to ensure that existing provisions allowing for longer sentences where offences are aggravated by disability hate are applied consistently. Would extending the Attorney-General’s powers of reference not help to establish greater consistency in sentencing?

[Mr Clarke]

I agree with my hon. Friend that this is an important area, because it is a particularly nasty element of crime when violence or something of that kind is provoked by hostility to a disabled person because of their disability. Sentencing guidelines already provide that this is an aggravating feature when someone is sentenced. Of course, if the Attorney-General uses his existing powers to appeal a lenient sentence, he can include cases where disability is a feature, for example, in an assault occasioning grievous bodily harm or something of that kind. But we are looking at the point again at the moment and I will bear my hon. Friend’s comments in mind.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Will the Justice Secretary consider introducing offences on disability hate crime and other hate crime, including incitement, along the lines of the legislation that rightly exists on racially aggravated crime?

[Mr Clarke]

That is an option. Of course, as I say, offences provoked by prejudice against disabled people are regarded as hate crimes and this is an aggravating feature in sentences, but we are examining the whole area. We have to make sure that we do not overcomplicate sentencing, because if we keep thinking of things that make the most serious offences even more serious, we threaten the consistency that has been described. However, the right hon. Gentleman makes an important point and we are reviewing this field in the light of the report we have received.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

Will the Secretary of State examine the possibility of extending the concept of disability hate crime to include disability by association, thereby bringing the concept into line with the other measures in the Equality Act 2010? If he does not do that, cases such as that of Fiona Pilkington will not count as disability hate crime as she herself was not disabled.

[Mr Clarke]

I shall consider that point in the course of the work we are doing at the moment, but I do not want to encourage my hon. Friend too far because overcomplicating this does not necessarily help. What is important is that sentences should be allowed to reflect, in the most appropriate and consistent way, the disgust that the ordinary public feel when a crime is motivated by prejudice against a disabled person. It does make a crime even more serious than it would otherwise be.

[John Cryer (Leyton and Wanstead) (Lab)]

I agree with a lot of what the Secretary of State says, but not with his claim that this move would overcomplicate things. One single principle underpins all hate crime: the principle of intent. If that principle applies in respect of one group, does it not apply in respect of other groups, for example, racial groups or the victims of homophobic crime?

[Mr Clarke]

The hon. Gentleman is quite right to say that the intent of the offender makes for a particularly unpleasant version of whatever crime it is we are talking about. I will certainly consider the hon. Gentleman’s points, just as I have said I will those made by other hon. Members, in the course of seeing whether the law needs any further improvement, but I think that sentences do already reflect the fact that it is a serious aggravating feature of crime if prejudice against disabled people is involved.

[Christopher Pincher (Tamworth) (Con)]

14. What plans he has to permit the broadcasting of court proceedings.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

I am very clear that we must not allow our courts to become theatre; filming will be of judges’ remarks only. Victims, witnesses—wait a minute, wrong answer!

We are planning to legislate, as soon as parliamentary time allows, to remove the ban on cameras in courts, subject to certain safeguards, and we are working closely with the Lord Chief Justice on achieving this. Initially, we will allow judgments in the Court of Appeal to be broadcast for the first time, and will expand this to the Crown court in due course. We will not allow filming of juries, victims and witnesses under any circumstances.

If any supplementary question should resemble the point I have just replied to, I assure you, Mr Speaker, that I will use my own words in replying to it.

[Christopher Pincher]

I am grateful to my right hon. and learned Friend for both answers. I quite agree with him that justice, if it is to be seen to be done, must not be seen to be fun. Will he say how he intends to safeguard court officials and lawyers from unwanted attention?

[Mr Clarke]

I share all my hon. Friend’s reservations about going too far. The judge, when he gives a sentence or a judgment, is a public official performing a public function; his words can be quoted, he will be reported and there is no real reason why he should not be filmed. The other people involved, I think, need to be protected because, otherwise the whole nature of the proceedings will be changed, some people will be intimidated and some people’s behaviour will be affected.

[Chris Bryant (Rhondda) (Lab)]

I note that the Justice Secretary said that the words he used earlier were not his own, whereas these now are.

One thing that really upsets victims is when the defence lawyer, having already admitted guilt on behalf of his client and going to mitigating circumstances, suddenly launches into a major attack on the victim of the crime, thereby, I believe, abusing privilege. Will the Justice Secretary ensure that that is not available for public consumption?

[Mr Clarke]

If taken too far, that can be stopped. Of course the lawyer is entitled to put forward mitigation for his client after the plea, but I strongly disapprove, and I am glad the hon. Gentleman would too, of any attempt for this to be used for people to make allegations against the victims, for the defendant to make a theatrical display in the witness box, for the jurors’ reactions to evidence to be filmed or anything of that kind. We are talking about the judgments and what is said as part of his official duties by the judge and, at this stage, I am not contemplating going any further.

[David Wright (Telford) (Lab)]

15. What arrangements his Department has in place to manage any shortfall of prison places.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

On Friday 9 December, the prison population was 88,070 against a capacity of 89,413 places, providing headroom of 1,343 places. There are sufficient places for those being remanded and sentenced to custody. We keep the prison population under careful review to ensure that there is always sufficient capacity to accommodate all those committed to custody by the courts.

[David Wright]

Under Labour, we saw 27,000 more places provided in prisons and a modernisation of the prison estate. According to the Department’s own figures, it looks as though the prison population will rise to somewhere around 95,000 over the next six years. Is it not a simple fact that the Government are not building enough prisons?

[Mr Blunt]

I recognise the figure of 96,000 as the projected prison population that we inherited on coming into office. As the hon. Gentleman will be aware, changes that this House has endorsed through the Legal Aid, Sentencing and Punishment of Offenders Bill, which is now in another place, will have an effect on that. In the end, all these numbers are estimates because it is our job to incarcerate those sent into custody by the courts. We will continue to do that, despite the evident frustration of the Opposition that we appear to be managing it rather more satisfactorily than they did.

[Philip Davies (Shipley) (Con)]

May I tell the Minister not to be ashamed of sending more criminals to prison? In fact, my constituents will judge him on the basis that more criminals are sent to prison, not on more criminals being released from prison.

[Mr Blunt]

I hope that my hon. Friend will ultimately judge us on the effect we have both on crime and reoffending figures. When people are in the justice system, the effect on them should be when they leave it they are less likely to offend than when they came in.

[Caroline Lucas (Brighton, Pavilion) (Green)]

16. What plans he has to use restorative justice to divert more children and young people away from the criminal justice system.

[The Minister for Policing and Criminal Justice (Nick Herbert)]

The proper goal should be to divert people from crime. When offending takes place, the criminal justice system should respond effectively, and we are keen to promote restorative justice to deliver better outcomes.

[Caroline Lucas]

I thank the Minister, but the issue is that the Government’s approaches to restorative justice for children are embedded in the youth justice system so they deal with children only once they are inside that system. Why are the Government not investing in diverting young people from the criminal justice system, for example by rolling out the very successful youth restorative disposal pilots?

[Nick Herbert]

We certainly want to make more use of restorative disposals, which can be valuable. They give greater victim satisfaction when the victim consents, and they can reduce reoffending. We have plans to announce more in relation to our neighbourhood justice proposals, which we will say more about at the beginning of next year. There have been many expressions of interest in that. The goal of the criminal justice system should be to deal with offending when it has taken place. I disagree with the contention that we should be diverting offenders from the criminal justice system. We should be diverting people from crime.

[Mr Philip Hollobone (Kettering) (Con)]

The police in Kettering spend a great deal of time checking compliance with overnight curfews issued to repeat juvenile offenders. This could be solved by tagging those people, but local magistrates tell the police that they are prevented from doing that by sentencing guidelines. Will the Minister go away and have a look at those guidelines?

[Nick Herbert]

Yes, I am happy to go away and look at them.

[Jeremy Corbyn (Islington North) (Lab)]

Does the Minister think that restorative justice and guiding people away from the criminal justice system would be a more appropriate way of dealing with the minority of young people who were peripherally involved in disturbances last August, rather than the large number of long sentences that have been handed out to them, with all the obvious consequences for them?

[Nick Herbert]

We do not see restorative justice as an alternative to the criminal justice system; we want to see it embedded in that system. The idea of offenders making amends to victims is a good one, but we have to remember that the figures show that three quarters of those brought before the courts in relation to the riots had previous convictions and that a quarter of them had been in prison before. Perhaps people were caught up in those riots, but a great number of those involved had been in trouble with the law before and we should remember that.

[Simon Wright (Norwich South) (LD)]

17. What recent representations he has received on securing justice for victims of road accidents.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

Following calls from road safety groups, victims and their families and from right hon. and hon. Members, we have added a new offence of causing serious injury by dangerous driving, which is subject to a five-year maximum prison sentence, to the Legal Aid, Sentencing and Punishment of Offenders Bill, which is currently being considered in another place. Since then, we have not received any further representations.

[Simon Wright]

I thank the Minister for his response and welcome the measures he is taking. Does he agree that in order effectively to deliver justice to victims of road accidents, we need sentencing powers that reasonably and consistently reflect the too often appalling consequences of driving offences?

[Mr Blunt]

I agree with my hon. Friend and no doubt that is why the House agreed to add that measure to the Bill.

[Roberta Blackman-Woods (City of Durham) (Lab)]

19. When he expects to announce his proposals on the reform of probation services.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

I refer the hon. Lady to the answer I gave earlier to the hon. Member for Luton North (Kelvin Hopkins).

[Roberta Blackman-Woods]

I am sure the Minister is aware that Durham Tees Valley probation trust has been assessed as the top-performing trust by the probation trust rating scheme. Indeed, it was considered to be exceptional. What guarantee will he give that the reform of probation services will enable the good practice from Durham Tees Valley to be rolled out across the country and enable its front-line services to be protected?

[Mr Blunt]

Perhaps it is not a complete coincidence that Mr Sebert Cox, the chairman of the Probation Association, is also the chairman of the Durham Tees Valley probation trust. I had the pleasure of discussing these issues with him last week. Like the hon. Member for Luton North, the hon. Lady will have to contain herself until we come forward with our proposals early in the new year.

[Kelvin Hopkins (Luton North) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

I recently launched a consultation on improving judicial diversity and appointments. The proposals include the following measures: first, looking to prefer the candidate from an under-represented background where candidates are essentially indistinguishable on merit; secondly, limiting fee-paid judges to three five-year terms; and, thirdly, introducing flexible working for the senior judiciary. Our aim is to deliver a judiciary that is reflective of our society, in which public confidence is enhanced and which retains its world-class quality.

[Kelvin Hopkins]

Given the recent mess that the Mayor of London made by using incorrect reoffending statistics, how can we be sure of the impact of payment-by-results models for probation if reoffending statistics are so unreliable?

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

The hon. Gentleman is being a little harsh on the Mayor of London, who is a keen supporter, as am I, of the Heron unit in Feltham, to which he was referring, which does extremely good work. The hon. Gentleman is right to underline the importance of getting proper research and analysis to inform payment by results so that we in the Ministry of Justice and the taxpayer end up paying for outputs that deliver and not simply for inputs, which is how the position has been characterised in the past.

[Margot James (Stourbridge) (Con)]

T2. Last month my right hon. and learned Friend prioritised the reform of the European Court of Human Rights during our chairmanship of the Council of Europe. Will he update the House on the steps that the Government are taking to restrain the Court’s influence over laws and customs that are properly the affair of member states?

[Mr Kenneth Clarke]

We have had the chairmanship of the Council of Europe since 7 November, and my right hon. Friend the Foreign Secretary and I have been seeking to move forward our agenda of reforming the Court in due course. Indeed, I will be lobbying two more Ministers tomorrow at a meeting of the Justice and Home Affairs Council. We are seeking to get the Court to concentrate on the most important cases which require some international jurisdiction to get rid of the huge arrears of cases clogging it up at the moment, most of which are inadmissible, and to make sure that the national courts and national Parliaments discharge their primary duty of delivering the convention.

[Sadiq Khan (Tooting) (Lab)]

Perhaps the Justice Secretary will advise his right hon. Friend the Foreign Secretary not to walk out of those talks while he is chairing them, if he does not get what he wants in the first few weeks. The Justice Secretary will be aware that the number of prison places is now just below 90,000. It has gone up over the past 18 months as a consequence of doubling up prisoners in prison cells and as the previous Government’s investment in capital programmes comes on stream. At the last Justice questions, the right hon. and learned Gentleman refused to answer my simple question about whether he thought prisoner numbers would go up, go down or stay the same, which is crucial for planning. He said that anybody who tried to predict prisoner numbers was “an idiot”. May I ask him another simple question? Perhaps he will rest the bluster and answer the question. Is he making plans for the usable operational capacity to go up, go down or stay the same during this Parliament?

[Mr Clarke]

The right hon. Gentleman’s remarks might best be addressed to Ministers in the previous Government, who obviously made some errors somewhere when they found that they had to release 80,000 prisoners before they had completed their sentence because they had no room for them on the prison estate. We are maintaining capacity to meet whatever demand we face from the courts. What I said last time, from which the right hon. Gentleman took the slightest extract, was that we respond to the decisions of the courts, we respond to the level of crime, and at present we have managed—[Hon. Members: “Have the numbers gone up or down?”] They have gone up. It is possible that with the prolonged recession and the long period of youth unemployment, there will be an increase in acquisitive crime. If that is the experience that we have in this country, we are responding to that. The Prison Service is responding very well to it at the moment, though of course we have to adjust the capacity of the estate.

[Sadiq Khan]

One way of reducing cost to the British taxpayer and at the same time increasing prison places is by removing the thousands of foreign prisoners in British prisons. May I refer to the European Union and events last week? Last week the European Union framework directive on prisoner transfers, negotiated and signed by the Labour Government, who stayed in the room and argued for our national interest and got a good agreement, came into force. Fifty prisoner transfer agreements with other nations were also negotiated by the last Government. When will the Justice Secretary be able to negotiate successfully this Government’s first prisoner transfer agreement, and how many nations does he expect the Government to sign agreements with during this Parliament, or is it the case that in addition to failing to repatriate any powers from Europe, this Government will fail to repatriate any foreign prisoners from this country?

[Mr Clarke]

Again, under the last Government the number of foreign prisoners in our jails soared until the Government eventually managed to stabilise it. We are maintaining roughly the same level of deportation of foreign prisoners who complete their sentence as was maintained under the previous Government. The new European arrangements have come into force, but not many states are yet ready to implement them. We are ready to implement them and they will provide some help. We are of course seeking to negotiate agreements with other Governments, but it requires the other Governments to be willing to undertake an obligation to take prisoners repatriated from this country.

[Mr David Ward (Bradford East) (LD)]

T3. I am sure that we all welcome efforts to help reformed offenders back into work so that they can make a positive contribution to society, but one major barrier will always be the perception that employers hold of offenders. What changes does the Minister plan to make to the Rehabilitation of Offenders Act 2010 to overcome that barrier? As part of the process, will he also look at reducing the number of professions that are exempt from the disclosure limits on sentences?

[Mr Clarke]

We propose to make changes to the Rehabilitation of Offenders Act in order to make some offences spent earlier and to ensure that those who really have put their convictions behind them are not inhibited in getting fresh employment by having to disclose them. That is, I know, a Liberal Democrat enthusiasm, and my noble Friend Lord McNally will introduce amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill, currently in the House of Lords, very shortly, setting out the details of what we propose.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

T6. The Justice Secretary will be aware that last Saturday was international human rights day. What is he doing to dispel the myths and misconceptions about the functioning of our Human Rights Act 1998?

[Mr Clarke]

I think there have been one or two colourful occasions when I have helped to dispel some of the misconceptions about the Human Rights Act, but I of course await the advice of the commission, which the Government have set up to advise us on those matters, so that we can decide whether a better way of complying with our obligations under the convention might be a Bill of Rights rather than the Human Rights Act. But there is no doubt: this Government will seek to abide by their full obligations under the convention on human rights.

[Nigel Mills (Amber Valley) (Con)]

T4. I am sure the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly), will join me in paying tribute to the work of the citizens advice bureau in Amber Valley. What progress has he made in his discussions with the Cabinet Office to secure future funding for such centres?

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The Cabinet Office is working on two fronts: first, in relation to an immediate payment to not-for-profit organisations; and, secondly, in relation to a longer-term proposal to look at transitional arrangements for those bodies. The MOJ supports both.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

T8. How many EU foreign nationals currently in English and Welsh prisons does the Secretary of State expect to be repatriated to their country of origin in the next 12 months?

[Mr Blunt]

rose—

[Sadiq Khan]

Give us a figure.

[Mr Blunt]

The hon. Gentleman’s right hon. Friend may intervene from the Front Bench, but of course it is not possible to give a precise figure. The answer is that it will be as many as we can administratively deliver, and that it has to be done in co-operation with the receiving countries.

[Mr Laurence Robertson (Tewkesbury) (Con)]

T5. Given that murder is a crime different from any other, does the Secretary of State agree that the only appropriate punishment for the crime of murder is, indeed, a life sentence?

[Mr Kenneth Clarke]

The Government have no intention of reopening that question at the moment, and the vast majority of Members would not contemplate changing the current arrangements, as my hon. Friend has described.

[Mr Speaker]

Order. May I ask the Secretary of State to face the House? We all want to be the beneficiaries of his eloquence.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

What action does the Justice Secretary intend to take against offenders who receive a community sentence instead of a prison sentence and then use social media to boast that they have “got away with it”? I am thinking in particular of comments posted on Facebook yesterday by Ryan Girdlestone, who mocked the court within minutes of receiving a restraining order for his part in a vicious attack on my constituent, Bernard O’Donnell, a man in his 80th year. Is that not sheer contempt for the court, and should he not be held to account?

[Mr Clarke]

I think that we had both better take legal advice on whether such behaviour amounts to contempt of court, but one of the things we are addressing is how we can make community sentences more effective. They have to contain an element of genuine punishment in most cases, and also of course be rehabilitative, but such an example is very offensive to victims and to the general public. Community sentences as a whole, however, have a very good record of improving the reoffending rate and deterring some people from wanting to commit crime again.

[Andrew Rosindell (Romford) (Con)]

T7. The Lord Chancellor will know that one of his responsibilities is to take care of the British Crown dependencies, so perhaps he will explain why, even today, they are not represented in the Commonwealth, have no seats at the Commonwealth Heads of Government meeting and have no status at all. Will he take the matter forward to ensure that all our Crown dependencies are given the status and the recognition that they rightly deserve?

[Mr Clarke]

I shall take my hon. Friend’s comments on board and consult my right hon. Friends the Prime Minister and Foreign Secretary on whether the composition of the Commonwealth might be readdressed in that way. I assure my hon. Friend that my Department and my noble Friend Lord McNally take very seriously our responsibilities towards the Crown dependencies.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Earlier this year, I put down a parliamentary question about employment tribunals. I was told that information on the length of time was not held centrally. Subsequently, I have discovered that there is such information, but that it does not show what the Government intend to do, which is to extend the period in which a person has the right to apply to an employment tribunal. Why do the Government continue to drive such a policy when they do not have that information and there is no right to it?

[Mr Djanogly]

I should say that that is a Department for Business, Innovation and Skills policy. However, I can tell the hon. Gentleman that the Government’s policy is that fewer people should go to tribunals in the first place. That is why we are encouraging people to go to ACAS in all circumstances before they go to the tribunal. That is what we have been consulting on.

[Robert Halfon (Harlow) (Con)]

Is my hon. Friend aware that 40% of prisoners were excluded from school? Will he work with the Department for Education and charities such as Catch22, based in my constituency, which do so much to get young people off the conveyor belt to crime?

[Mr Blunt]

My hon. Friend has alighted on a particular problem. We need a policy of social justice and early intervention that begins to address such problems before people in that situation turn to crime and end up in the criminal justice system.

[Paul Blomfield (Sheffield Central) (Lab)]

Last Friday, the Government equality unit announced that the Equality and Human Rights Commission funding for discrimination casework in law centres would end in March 2012 and that discussions would begin for replacement arrangements from April 2013. How do the Government plan to support victims of discrimination in the intervening 16 months and thereafter?

[Mr Djanogly]

I assure the hon. Gentleman that there are no proposals to end legal aid for discrimination cases. I think he is confusing that with the Government’s wider decision to delay the legal aid changes by six months.

[Tessa Munt (Wells) (LD)]

Sadly, James Herbert, a 25-year-old resident of Wells, died in police custody on 10 June 2010. The Independent Police Complaints Commission investigated and made six recommendations to the police. The coroner is holding an inquest and will consider a verdict of unlawful killing. Avon and Somerset police will have full access to taxpayer-funded legal representation, but James’s family have been refused such funding on the basis that they should use a local solicitor, should not need much preparation and can use their small savings to fund the case. Will the Secretary of State meet me to discuss the Legal Services Commission’s rejection of James’s parents’ application for help?

[Mr Speaker]

I am extraordinarily, almost inordinately, grateful to the hon. Lady, but before the Minister replies I am wondering whether proceedings are still active. The hon. Gentleman answering from the Treasury Bench might want to take account of that in framing any reply, with the due caution that we have come to expect of Ministers in general and lawyers in particular.

[Mr Djanogly]

Thank you, Mr Speaker. I will not comment on the case itself, but if my hon. Friend wants a general discussion on the legal aid attaching to the case, I will be happy to have it.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am sorry, but demand has exceeded supply. We now come to points of order.

Petition

Tuesday 13th December 2011 Commons Chamber

Joan Walley (Stoke-on-Trent North) (Lab)

- Hansard - - Excerpts

I should like to present a petition—[Interruption.]

Mr Speaker

- Hansard - - Excerpts

Order. May I appeal to Members who are leaving the Chamber to do so quickly and quietly so that the hon. Lady is afforded the courtesy that they would want to be extended to them?

Joan Walley

- Hansard - - Excerpts

I am most grateful, Mr Speaker, because this issue matters to me.

I should like to present a petition of more than 1,000 signatures from the residents of Kidsgrove, Staffordshire and others. In the run-up to Christmas, all Members will be aware of the important role of Royal Mail delivery offices, and that they are busier than ever at this time of year.

We are all aware of the value of the work of the postmen and women who deliver our mail, and of the importance of local delivery offices being close at hand. We want to ensure that Royal Mail liaises with local business and with Kidsgrove town council about any changes.

My petition therefore declares:

The Petition of residents of Kidsgrove, Staffordshire and others,

Declares that the Petitioners believe that the proposed relocation of the Royal Mail Delivery Office from Kidsgrove to Newcastle-under-Lyme, without consultation with local people and businesses, will result in a deterioration of local services, will be detrimental to local businesses, and cause an increased carbon footprint.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to ensure that Royal Mail consults with local partners to improve delivery services in line with the commercial and domestic needs of the Kidsgrove, ST7 area and reviews the proposed relocation accordingly.

And the Petitioners remain, etc.

[P000988]

Points of Order

Tuesday 13th December 2011 Commons Chamber

15:33

[Jim Shannon (Strangford) (DUP)]

On 6 December, during questions to the Chancellor of the Exchequer, an hon. Member used language—confirmed by Hansard—that was unsavoury, blasphemous and, many feel, unparliamentary. I have spoken to you about that, Mr Speaker, and out of courtesy and good manners I have made the hon. Member aware of my intention to bring this matter to your attention. Can you, Mr Speaker, look at this matter, check Hansard and request that the hon. Gentleman withdraw the remarks and terminology used on that day?

[Mr Speaker]

I thank the hon. Gentleman for his courtesy in giving me notice of his intention to raise his point of order. Moderation and courtesy are, as we all know, required of the language used in the Chamber. I think that that courtesy should extend to sensitivity to and respect for the religious convictions and sensibilities of other Members and of all those listening to and reading our proceedings. It would be desirable for all hon. Members to bear that in mind, even—perhaps especially—in the heat of the moment. I intend to leave the matter there, but I hope that I have been helpful to both the hon. Gentleman and the House.

[Ian Austin (Dudley North) (Lab)]

On a point of order, Mr Speaker. I have let the hon. Member for Cannock Chase (Mr Burley) know that I would be raising in the House his participation in a dinner in France over the weekend before last at which guests toasted the Third Reich and chanted “Hitler, Hitler, Hitler.” These disgraceful events are now being investigated by the French judiciary. May I ask whether it is in order for the hon. Gentleman to retain his position as a member of the Government and for the Prime Minister to have taken no action?

[Mr Speaker]

I am grateful to the hon. Gentleman. I was not sure how the matter related to the authority of the Chair, but he has raised his concern about conduct outside the Chamber and placed his concern on the record. He will know that membership of the Government, at whatever level, is—perhaps I should say thankfully—not a matter for me.

[Huw Irranca-Davies (Ogmore) (Lab)]

On a point of order, Mr Speaker. I apologise for not giving you notice of my point of order, but in the past few minutes I have given a transcript to the Clerks so that they can give you suitable advice.

A very welcome improvement in the transparency of Government and Parliament has been the publication on departmental websites of the officially recorded meetings that Ministers have with organisations and individuals from the business, public and third sectors. That helps to give the public a feel for who has the ear of Ministers, for good or bad. While it is not a substitute for a proper overhaul of access through lobbyists, and neither does it preclude less official access, as we have seen in recent months, it has helped to some extent with transparency for the public and also for parliamentarians in this House.

Having turned my attention to the recent meetings of such groups and individuals over the past year or so, I am surprised to see a very wide divergence in approach between Departments. Some produce a rolling, live, updated register of meetings with Ministers; some produce a list retrospectively every three or six months; and some run for up to a year before being updated. Indeed, the No. 10 Downing street website has only this week updated its list of meetings, which had not been updated since March 2011. That is surely unconnected with the written parliamentary question that I tabled on 12 December.

Could you give any guidance, Mr Speaker, for Members about the frequency and timeliness of information on meetings with Ministers, as we need to know not only who has been meeting Ministers but to know that information in a timely manner, so that it is of use to us and to our constituents?

[Mr Speaker]

The short answer is no. I am an enthusiast for timeliness where Government replies to parliamentary questions are concerned; that is a legitimate preoccupation of the Chair. Timeliness in this context is not a matter for the Chair at all. However, Ministers will have heard the hon. Gentleman’s point. I am sure that he will be gratified that both the Leader of the House and the Deputy Leader of the House are on the Front Bench. I hope that that is helpful to him.

Bill Presented

Passive Flue Gas Systems (Strategy)

Presentation and First Reading (Standing Order No. 57)

Martin Caton, supported by Mr Don Foster, Heidi Alexander, Caroline Lucas, Lorely Burt, Kelvin Hopkins, Bob Russell and Joan Ruddock presented a Bill to require the Secretary of State to prepare and publish a strategy for the promotion of passive flue gas heat recovery systems; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 20 January, and to be printed (Bill 261).

Public Festivals, Holidays and Commemorations

Tuesday 13th December 2011 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

15:38

[Andrew Rosindell (Romford) (Con)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State annually to prepare and publish a list of the festivals and commemorations which will take place in the year 10 years after publication; to indicate which days will be designated as Bank or Public Holidays; to make provision to enable local communities to observe significant occasions; and for connected purposes.

The United Kingdom has a rich tradition of commemorations and festivals, all of which are rooted in the history of these islands, with origins that date back centuries. Indeed, the British Isles are steeped in tradition, and in every part of the kingdom special days in the calendar are celebrated with pride by people up and down the land, as they are in each and every one of Her Majesty’s realms, dependencies and territories.

British festivals, celebratory days and commemorations are often founded on the Christian heritage of these islands, such as Christmas day, Easter Sunday, Good Friday, Palm Sunday, Ascension day and Epiphany. Others are royal anniversaries such as the Queen’s birthday, accession day, coronation day, the Queen’s wedding anniversary and special events such as the diamond jubilee, a truly historic occasion that we will all celebrate with great pageantry in 2012. There are also state occasions such as the state opening of Parliament and trooping the colour.

Then, of course, there are those occasions dedicated to our proud military history, such as Trafalgar day, Waterloo day, D-day, VE-day, VJ-day, Battle of Britain day, Armistice day and of course Remembrance Sunday and Armed Forces day. I believe that Anzac day and Falkland Islands liberation day should also be commemorated with pride.

Our patron saint days of St George, St Andrew, St Patrick and St David have also become increasingly important to the peoples of all four countries in the United Kingdom. One has only to visit Romford market on 23 April to see just how significant that day has become as a celebration for the people of my constituency.

There are also days that have become established over the centuries to mark festivals, historic events or traditions, such as Guy Fawkes night, Burns night in Scotland, 12 July in Ulster, May day, St Valentine’s day, mothering Sunday, fathers’ day, Shrove Tuesday—otherwise known as pancake day—Hallowe’en, harvest festival, apple day, new year or Hogmanay and, of course, twelfth night.

Other religious festivals are also of great significance to millions of British people, such as Eid, Diwali and Hanukkah. There are also days to mark our nation’s international links, such as Commonwealth day, United Nations day and even, dare I say it, Europe day. All such days commemorate something significant in the life and history of our nation and island peoples and should be recognised—not all as public holidays, of course, but as days to mark something important to remember and learn about, especially in our schools.

My Bill would give Her Majesty’s Government the statutory authority to publish an official list of British public festivals, holidays and commemorations that would contain all those days and many more. Because only a small number of them would be designated official bank or public holidays, the list could be extensive and additional dates could be added from time to time.

The most important reason for maintaining such a comprehensive list would be to ensure that schools, churches, voluntary organisations, businesses, local authorities, community groups, charities and scout groups and other youth organisations could, if they chose, celebrate or commemorate those events with their own special activities. It would be a source of education, as school assemblies and classes throughout the country would learn about the history and traditions of our island nation.

We must never forget Her Majesty’s realms, dependencies and territories. They should also be recognised, so that we can mark the national days of the wider British family —Australia day, New Zealand’s Waitangi day, Canada day, Jamaica’s independence day, Channel Islands liberation day, the Isle of Man’s Tynwald day, Gibraltar’s national day, Bermuda day and Norfolk Island’s Bounty day, to name but a few. Indeed, I am sure the whole House would wish to send its warmest greetings to the people of St Lucia, who today celebrate their very own national day. That proud Caribbean nation, which remains one of Her Majesty’s realms, will celebrate with cultural events, dancing and a colourful festival of lights, with lanterns made by children in villages throughout the island.

New days could also be included on the official list, such as a flag day to honour our national flag—the Union Jack, as it is commonly known—or perhaps a Britannia day for all British people and for those descended from the people of these islands who wish to take pride in their British heritage.

Why not set aside one day of the year to celebrate the animal kingdom—a national animal day? It could be a Sunday, when the nation could celebrate the animal kingdom with pet services at churches and events to support animal and wildlife charities. In my constituency, I attend the annual horseman’s Sunday in the historic village of Havering-atte-Bower, where local horses and their owners attend an open air service on the village green and the local MP presents a rosette to every horse.

It is also important that communities have a chance to organise their own local festivals, so why should not each county, town or village designate a particular day of the year as their day to celebrate in whatever way they see fit, bringing everyone together in celebration of their local identity? Fine examples are St Piran’s day in Cornwall and Yorkshire day.

My Bill would also require the Government to prepare and publish a list of festivals and commemorations up to 10 years in advance, to give local communities the chance to plan and prepare fully for all our historic occasions, allowing everyone the opportunity to celebrate those events that are important to them, and to ensure that all anniversaries and traditions are recognised and kept alive rather than relegated to the pages of history books.

My Bill would also address the nature of our bank and public holidays. Under our current system, those that fall on a weekend are transferred to a day following the weekend. For example, this year, Monday 3 January was made a public holiday in lieu of new year’s day, which fell on Saturday 1 January. When that happens, rather than having a meaningless day off next to a weekend, we should use it for a day of greater significance. If we followed that rule for all existing bank holidays, I believe it would be possible to make St George’s day, St Andrew’s day and St David’s day annual public holidays without creating more days off overall, thus not harming businesses or the economy.

Next year is the diamond jubilee of Her Majesty the Queen. Across our nation, people will celebrate this great milestone in British history, and, God willing, in 2015 we will see Her Majesty reach the next landmark of her reign, when at 63 years and seven months on the throne, the Queen will become the longest ruling monarch in British history. Then, in 2022, I hope and pray that we will celebrate Her Majesty’s platinum jubilee, an anniversary that has never been reached by any British monarch.

We can all look forward to those celebrations, and my Bill will guarantee that all great British festivals, celebratory days and commemorations will always be recognised, celebrated, cherished and passed down to future generations.

I commend my Bill to the House.

15:48

[Paul Flynn (Newport West) (Lab)]

It is a pleasure to speak on St Lucia’s day, about which we did not know previously. The hon. Member for Romford (Andrew Rosindell) seems to suggest an incontinence of celebration—there is hardly a day of the year when we would not be obliged to celebrate something. However, absent from his speech was any suggestion of celebrating the reason for our existence in the Chamber. Why not have a democracy day? What about 4 November to celebrate the Chartists who died in my constituency, and others who died in many other places, for example, the Tolpuddle martyrs—all those who fought in the struggle to ensure that we have our free Parliament? They should be celebrated; they are far more significant than many of those the hon. Gentleman suggested.

Question put and agreed to.

Ordered,

That Andrew Rosindell, Henry Smith, Jacob Rees-Mogg, Nadhim Zahawi, Bob Russell, Simon Hart, Priti Patel, Thomas Docherty, Paul Uppal, Mr Angus Brendan MacNeil, Heather Wheeler and Ian Paisley present the Bill.

Andrew Rosindell accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 20 January 2012 and to be printed (Bill 262).

United Kingdom Statistics Authority

Tuesday 13th December 2011 Commons Chamber

[Relevant documents: The Sixteenth Report from the Public Administration Select Committee, on the Appointment of the Chair of the UK Statistics Authority, HC 910-I, the evidence taken before the Committee on 10 May, HC 910-i, the uncorrected evidence taken before the Committee on 6 December, HC 1634-i, and the written evidence reported by the Committee and ordered to be published on 10 May.]

15:50

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

I beg to move,

That this House endorses the nomination of Andrew Dilnot CBE for appointment as Chair of the United Kingdom Statistics Authority.

The motion is in my name and that of other Ministers. All Members will know that this appointment is a very important one. Without reliable and independent statistics it is impossible for the Government to make good policy, or for Parliament, the public and the media to hold us to account. The quality of statistics in the UK is recognised to be very high, and all Members will agree that it is essential that we maintain that position.

The UK Statistics Authority is at the heart of the system for maintaining the quality and credibility of official statistics. The Statistics and Registration Service Act 2007 established the authority to provide independent oversight of the statistical system. Therefore, the credibility of the chair is central to the whole operation of statistics in the UK.

Before moving to the specific candidate whom the Government have proposed for the post, I should like to acknowledge two very important contributions. First, the current chair, Sir Michael Scholar, has done outstanding work in establishing the authority as a credible and effective body, and I should like the House to record our thanks to him, not just for the work he has done since 2008, but for staying in post until the Government secured his replacement. I am sure other Members would like to place on record their thanks for and appreciation of his good work.

Secondly, I thank my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) and the Select Committee on Public Administration under his chairmanship for their constructive engagement in the whole appointment process. In particular, I welcome the contribution that the hon. Member for Luton North (Kelvin Hopkins) was able to make as part of the panel that selected Andrew Dilnot.

Two particular qualities are essential for the chair of the UK Statistics Authority: independence and a passion for statistics. The Government believe that Andrew Dilnot is superbly qualified in both respects. First, on independence, Mr Dilnot has repeatedly demonstrated his commitment to independent analysis and a willingness to stand up for his views. Members on both sides of the House—to varying degrees, I suspect—will have appreciated, and been challenged by, the sharp but fair analysis that the Institute for Fiscal Studies published under his leadership of Budgets produced by Governments of all parties.

More recently, Mr Dilnot chaired the independent commission on long-term care, which tackled, as I am sure all hon. Members agree, one of the most important and intractable policy problems that we face with great rigour. I am sure he will display the same qualities if appointed to this new role. Although that might on occasion lead to discomfort among my ministerial colleagues, I hope that Members agree that Parliament and Government are best served by a credible, senior and independent advocate of the proper use of statistics.

Secondly, on Mr Dilnot’s passion for statistics, he is an acknowledged leader in the field of statistics and, frankly, is second to none in that regard. He is the author of what his biography assures me is a best-selling book about statistics, and was the founding presenter of BBC Radio 4’s series on statistics, “More or Less”. He is currently chair of the statistics users forum of the Royal Statistical Society, and has held a range of academic and advisory positions that require a detailed understanding of statistics and their use and misuse. In short, it is hard to imagine a better qualified candidate.

To sum up, it is essential that we appoint a new chair for the UK Statistics Authority who can continue to develop it as an effective guardian of good statistics. We believe that Andrew Dilnot is an excellent candidate. I welcome the report from the Public Administration Committee on his pre-appointment hearing, and its conclusion that he should be appointed. I therefore commend the appointment to the House.

15:55

[Michael Dugher (Barnsley East) (Lab)]

Before I turn to the nomination of Andrew Dilnot as chair of the UK Statistics Authority, I would like to echo the Minister’s tribute to the outgoing chair, Sir Michael Scholar. As the Public Administration Committee said in its report, published last week, his work over the last four years in establishing the UK Statistics Authority has been first class. He has performed his important public duties robustly and with complete impartiality.

The Statistics and Registration Service Act 2007 was designed to ensure that we had an independent statistics authority—one that can challenge the use of statistics where necessary. This was exemplified only recently when Sir Michael publicly rebuked the Mayor of London, Boris Johnson, for giving misleading figures to the Home Affairs Committee. I am sure that the whole House is also grateful to Sir Michael for agreeing to continue in the post for longer than was originally expected.

As the House is aware, the recruitment process for the post was significantly delayed when the Government’s initial preferred candidate withdrew. That followed serious, and in our view proper, scrutiny by the Public Administration Committee of whether individuals had the necessary personal independence to carry out the role. I would like to take this opportunity to praise members of the Committee from both sides of the House—in particular, the Chair of the Committee, the hon. Member for Harwich and North Essex (Mr Jenkin), and my hon. Friend the Member for Luton North (Kelvin Hopkins). The Committee has understood—and repeatedly stressed—the importance of independence in this post, and I believe its actions were consistent with the principle of parliamentary pre-appointment scrutiny.

I also welcome the greater role that the Committee played in deciding the make-up of the selection panel when the recruitment process was rerun, as well as in persuading the Government to recognise explicitly in the re-advertised job description that a key responsibility of the role is to ensure the independence of the authority. I hope the Government have learned from this process and will take the changes forward for all future appointments.

In respect of Andrew Dilnot’s professional competence, I agree with the Committee’s report that his extensive experience makes him eminently suitable for the role of chair of the UK Statistics Authority. As the Minister has said, Andrew Dilnot has had a distinguished career, most recently at Oxford university and in chairing the commission on the funding of care and support. He also headed up the Institute for Fiscal Studies for more than a decade. Indeed, this experience should stand him in particularly good stead. As we saw after the Chancellor’s autumn statement, the IFS is famously an organisation that is not afraid of criticising Ministers’ use of figures. I am therefore both satisfied—and indeed rather hopeful—that Mr Dilnot will bring the same kind of robustness when challenging the present Government’s continued use of statistics.

Throughout the pre-appointment hearing, Mr Dilnot expressed differing views from the Government on a wide range of issues, which is always encouraging. Those issues include the reduction of the pre-release period. It is also worth noting that when he was questioned about the Government’s happiness index, which costs the taxpayer £2 million a year, he said that it was “really rather silly” and “a pile of nonsense”. It appears that the candidate has fine commonsense in addition to independence of mind.

The post involves the significant responsibility of promoting and safeguarding the production and publication of official figures that serve the public good. Mr Dilnot has already made it clear how “absolutely vital” it is to have consistency in how the Government produce their figures. Labour Members agree that to make the most of our data we must be able to compare information over significant periods of time. This is why, of late, we have been concerned about some public statements from members of the Government about possibly changing the methodology used in producing certain statistics—for example, how child poverty is measured. The fact that child poverty is increasing in a way that undoubtedly shames the Government is no reason to alter how it is measured.

The appointment of a new chair of the board of the UK Statistics Authority is an extremely important one. We need a candidate who can maintain the code of practice for official statistics and ensure that Government figures are produced and presented to the highest standards of independence and integrity. We share the view of the Government and the Public Administration Select Committee that in Mr Dilnot we have a candidate who can rise to meet that challenge.

16:00

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I am grateful for the support of the official Opposition for this appointment, although I wondered whether the hon. Member for Barnsley East (Michael Dugher) was going to declare an interest during his remarks. He might have forgotten—it is a failing of us all, I suppose—but if he looks at the inside cover of the report from which he quoted, he will see that he is still a member of the Public Administration Committee. He has very honourably absented himself ever since he joined Labour’s Front-Bench team, but I hope that he will involve his party in putting forward a new nominee for the Committee, because it would be of great service to the Committee and the House. I make no personal criticism of him whatsoever.

When he appeared before my Committee last week for his pre-appointment hearing, Andrew Dilnot was invited by the hon. Member for Newport West (Paul Flynn) to reflect on a statement that he made in 2007 during the passage of the Statistics and Registration Service Act 2007. Andrew Dilnot confirmed that he still held the view that he held then: that the passage of the 2007 Act, which set up the UK Statistics Authority, was

“a turning point. It has made possible something that otherwise was not possible, which is the recovery of a sense of independence and integrity for statistics…This Act gives the control and management of statistics back to Parliament…I think that was a very, very important step.”

I shall briefly remind the House of what the 2007 Act did. It established a new authority, now known as the UK Statistics Authority, with the statutory objective

“of promoting and safeguarding the production and publication of official statistics that serve the public good.”

To many of my right hon. and hon. Friends, that might seem rather a dry subject, but the public good in this instance is defined as

“informing the public about social and economic matters”

and

“assisting in the development and evaluation of public policy.”

This is serious stuff. The authority has the statutory duty

“to promote and safeguard the quality of official statistics, good practice in relation to official statistics and the comprehensiveness of official statistics”.

In this respect, “quality” means the “impartiality, accuracy and relevance” of official statistics and their coherence with other official statistics.

[Robert Halfon (Harlow) (Con)]

I am grateful to my hon. Friend for giving way, and for the chance to serve under his chairmanship when approving the appointment as head of the UK Statistics Authority of this excellent candidate. He mentioned the importance of informing the public about statistics. Does he agree that one of the main priorities for Mr Dilnot will be to improve the website to make it accessible to the public, to make it easy for them to use and to allow them to give some feedback on how statistics are presented?

[Mr Jenkin]

I am most grateful to my hon. Friend for raising that point, which he raised in the pre-appointment hearing and to which Andrew Dilnot responded favourably. I think he sees the potential of improving public access to statistics and the public’s ability to understand why they appear as they do, what value they offer and, therefore, how they can influence the democratic process. This goes to the heart of so much of what we do in this place, and the way in which we try to engage our public. Technology, particularly the internet, enables us to do that in an unprecedented way. There is no reason why every citizen cannot have access to the same information that we have—the information that informs the decisions that we make in this Parliament. We should therefore involve the public much more in that. Indeed, we have an obligation to ensure that what the Government and the Opposition say is objective, truthful and properly informative, rather than otherwise; we all know what Disraeli said about damned lies and statistics. We need to ensure that the quality of the numbers and the data that the Government produce genuinely informs the debate, rather than just advancing the partisan interests of those producing them.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Does my hon. Friend share the view that it is a proper function of the UK Statistics Authority to be fully separate, over and above the Office for National Statistics, or does he see some scope for reducing the number of quangos in this area?

[Mr Jenkin]

We are talking about a quango that survived the cull. Given that it was so recently established by an Act of Parliament, it would have been an absolute travesty if it had fallen to the cull. The reason is that for many years those who understand the rather arcane world of statistics have been campaigning for much more independent oversight of statistics. Indeed, independence is one of the key tests that the Government applied in the Public Bodies Bill and the review of arm’s length bodies. If a body’s independence is fundamental to the function it performs, that justifies its existence. Therefore, the United Kingdom Statistics Authority was never on the list.

[John Healey (Wentworth and Dearne) (Lab)]

Perhaps the hon. Gentleman would like to remind his hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) that the Office for National Statistics and the UK Statistics Authority are not two separate bodies, but are one and the same. Indeed, the Statistics and Registration Service Act 2007 sets out the delicate balance between the regulator and producer of statistics, which is one of the big challenges that any chair of UKSA must be able to manage.

[Mr Jenkin]

I am grateful for that intervention, because one of the things that we discussed in our pre-appointment hearing was the balance between oversight and production. The ONS is basically the producer of statistics, while UKSA should provide the oversight. However, the two are not directly separated in the way that one would expect, which is why the independence of UKSA’s chair is such an important feature of the arrangement. Therefore, the authority has a particular duty to ensure the accessibility of statistics.

Since its establishment in 2008 the authority has had the duty to monitor and report publicly on areas of concern in relation to good practice and the quality and comprehensiveness of all official statistics across Government and arm’s length bodies. The authority consulted on and established a code of practice for official statistics in 2009. Indeed, it seems astonishing that there was no such code of practice until UKSA established it. UKSA set independent professional standards for statistics in government, and is assessing against those standards all government statistical products that are classified as national statistics. There are some 1,300 series of statistics produced by government. One third of those statistical products are issued by the ONS, for which the authority performs the governance function.

The other key function of the new authority has been to challenge Departments and Ministers on the quality and integrity of the statistics for which they are responsible. As hon. Members, including several Ministers past and present, will know—I see in his place the right hon. Member for Blackburn (Mr Straw), the former Home Secretary—the authority’s first chair, Sir Michael Scholar, has been ready to challenge Government practices in the preparation and release of statistics where he and the authority have considered these practices to be corrosive of trust in official statistics. I must say that UKSA should have a sense of mission about its purpose; the Public Administration Committee certainly shares this sense of mission.

Sir Michael’s interventions, made in public and invariably copied to my Committee and to the relevant departmental Select Committee, have, I can reliably attest, been regarded with a mixture of fear and outrage in Whitehall. I think the House would be worried if the pronouncements of the authority—a non-ministerial department accountable to the House through my Committee—were not feared and respected in Departments and ministerial private offices, or, indeed, by Her Majesty’s official Opposition. My right hon. Friend the Prime Minister would attest that when we were in opposition, we suffered from the whiplash of Sir Michael’s interventions.

One such early intervention, in December 2008, was to raise in public with the permanent secretary at 10 Downing street an allegation that No. 10 Downing street special advisers had

“caused the Home Office to issue a Press Release which prematurely published provisional statistics for hospital admissions for knife or sharp instrument wounding…These statistics were not due for publication for some time, and had not therefore been through the regular process of checking and quality assurance. The statisticians who produced them, together with the National Statistician, tried unsuccessfully to prevent their premature, irregular and selective release. I hope you will agree that the publication of prematurely released and unchecked statistics is corrosive of public trust in official statistics, and incompatible with the high standards which we are all seeking to establish.”

This intervention resulted in an apology from the then Home Secretary on the next sitting day and a swift investigation by the Cabinet Secretary, which led to substantial changes to guidance to officials on how statistics should be handled, particularly on selective publication from unpublished data sets. An explicit reference was also inserted into the ministerial code, requiring Ministers to abide by the code of practice for official statistics. I regard it as part of the mission of UKSA and my Committee to empower the professional statisticians in government to stand up for the integrity of statistics when under the political pressure that inevitably arises in modern politics.

More recently, Sir Michael has raised with the Chancellor the issue of pre-release access by Ministers, advisers and officials to sensitive economic statistics such as the consumer prices index and retail prices index inflation figures. Sir Michael has asked—I tend to agree with him—what reason there can be for allowing prior access to these figures to a group of up to 50 individuals some 24 hours before publication. I would add that that can be to the advantage only of the Government. For the sake of trust in the use of official statistics, Sir Michael has requested that the number of recipients of these figures be cut to an absolute minimum and the time reduced to the shortest period necessary. I would add: why not?

My Committee is very concerned by the Government’s adherence to pre-release practices. It greatly concerned our predecessor Committee under Tony Wright, and we thought that those practices would be abolished by this Administration when they took office. When the Statistics and Registration Service Bill was going through Parliament, the Minister for the Cabinet Office and Paymaster General gave explicit assurances when we were in opposition that we would abolish pre-release when we were elected. I have to say that we expect the Public Administration Committee to return to the issue in the new year.

Sir Michael Scholar has exemplified an independence of mind and a desire to be independent of Government, which we have thoroughly supported; it could be considered all the more galling as he also served as a most distinguished senior civil servant in Whitehall before he took up this appointment. When he gave evidence to us on the challenges facing his successor he was clear that the single most important feature of his office was its independence. We have been concerned that his successor should be similarly independent, with the judgment to know when to stand up to Ministers to make crucial points about the proper use of official statistics.

In March 2011 Sir Michael indicated his desire to step down, and a competition was initiated to find a successor. A panel—which I understand was chaired by the permanent secretary to the Treasury, and included the Cabinet Secretary—recommended a candidate who was presented to us for approval as the Government’s preferred candidate. I commend my right hon. Friend the Minister for the Cabinet Office on the fact that this debate is taking place, because he conceded, in answer to a question in the Committee, that it would be appropriate for the appointment to be confirmed by a resolution of the House, and for the appointment to be made only after having been so confirmed. If I am correct, that procedure did not apply to Sir Michael Scholar’s appointment and is not required by Act of Parliament.

That is a testament to the Government’s determination to ensure the independence of the appointment, although, perhaps ironically, my right hon. Friend will have rued the day that he made that undertaking. Earlier this year we held a pre-appointment hearing with Dame Janet Finch, an academic of great distinction and experience, to examine her professional competences and personal independence with regard to the appointment. It is a matter of record that the hearing was a somewhat difficult occasion. Subsequently Dame Janet wrote to the Cabinet Secretary, on her own initiative, to say that it had become clear during the course of the hearing that she and the Committee

“had differing views over how the job should be undertaken, and in particular how the independence of the Chair should be exercised.”

I commend her for applying for the post, for gamely putting herself up for the post, and for behaving in such a dignified way. She withdrew from the selection process entirely voluntarily. May I place on record the Committee’s appreciation for the dignified way in which she handled a difficult personal situation? Her conduct in the matter was exemplary, and the Committee continues to hold her in the highest esteem.

[David Heyes (Ashton-under-Lyne) (Lab)]

I have served on the Public Administration Committee both under the hon. Gentleman’s chairmanship and for many years before that, and only recently have we taken on the responsibility for pre-appointment hearings. Does he agree that this is a fine example of how a pre-appointment hearing can work to produce an excellent candidate, whom we talked about earlier, in a sensitive and intelligent manner?

[Mr Jenkin]

I am grateful for that comment. I also want to place on record my appreciation for the action subsequently taken by my right hon. Friend the Minister for the Cabinet Office, who readily agreed that the competition should be rerun and generously consulted my Committee on the arrangements for rerunning it, as it was clear that the previous arrangements had led to the situation. He decided that the nomination panel should be chosen afresh, and the new panel did not include the Cabinet Secretary or anyone else of permanent secretary rank. He agreed that a parliamentarian should serve on the panel, to assess the independence of the panel from the Executive, and we are pleased that he accepted our suggestion that the hon. Member for Luton North (Kelvin Hopkins), a member of the Public Administration Committee and academic statistician of some distinction himself, should serve on that panel, which he duly did.

Having been consulted and had our views taken into account, the Committee was confident that the fresh panel was well placed to select an independent and capable candidate. The House has before it the transcript of the pre-appointment hearing held with the Government’s preferred candidate, Andrew Dilnot, who gave a stellar performance. He is no stranger to any of us—his work with the Institute for Fiscal Studies was for many years required reading at Budget time—and I am sure that many right hon. and hon. Members on both sides of the House have been briefed by him on occasion. As he pointed out to us, he was always able to conduct his analysis of Budget documents without the benefit of pre-release access. He is an accomplished communicator of statistical issues, and communicates in a way that can make him truly engaging and relevant to the wider public. He was the first presenter of BBC Radio 4’s “More or Less” programme, which, whenever I turn it on, I find myself unable to turn off, because it is so revealing about what we need to know in public life.

In the arena of fiscal statistics, Andrew Dilnot has long demonstrated an independence of mind and confidence that have attracted criticism only from those who have found his truths inconvenient. He has made it clear that, if appointed, he will want to work constructively with the Public Administration Committee, and to improve the standing and presentation of official statistics. Certainly my colleagues and I did not hesitate to conclude that he had the professional competences and personal independence necessary to fulfil the role of chair of the United Kingdom Statistics Authority. In fact, the two—he and the job—seem to have been made for each other.

I also look forward to Mr Dilnot’s introduction of a number of innovations that will benefit the public. The authority faces considerable challenges in the years ahead. For instance, it must steer a course towards a more efficient and cost-effective way of collecting population data to replace the census in 2021. Its governing legislation gives it the dual role—mentioned earlier by the hon. Member for Barnsley East (Michael Dugher)—of producer and regulator of official statistics, which is sometimes uncomfortable to negotiate, and which Mr Dilnot will wish to clarify. It must represent the statistical profession in Government effectively at a time when budget reductions mean the loss of statistical resources and the axing of whole statistical series. It must also act as cheerleader for official statistics when public trust in them is generally accepted to be low, and remains low despite the progress that has been made in recent years.

The Public Administration Committee is very confident that Andrew Dilnot is the right candidate to address those challenges, and to build on the considerable legacy left by Sir Michael Scholar, to whom I pay tribute. I particularly wish to mention that Sir Michael stayed on willingly for the extra months during what would otherwise have been an interregnum between his retirement and the delayed appointment of his successor. I wholeheartedly support the motion.

16:22

[Mr Jack Straw (Blackburn) (Lab)]

Let me begin by declaring an interest: I am an honorary fellow of the Royal Statistical Society. The society graciously bestowed that honour on me for my work in the 1990s in advancing the case for an independent national statistical service and proper parliamentary scrutiny of statistics.

I am delighted to observe that my right hon. Friend the Member for Wentworth and Dearne (John Healey) is present. It was he who introduced the Statistics and Registration Service Act 2007, which completed the journey from a statistical service that was half independent and half controlled by Government to a service in which the producers of the statistics, the Office for National Statistics and its agents, and the supervisor of that production, the United Kingdom Statistics Authority, became entirely independent of Government.

I also commend the Public Administration Committee for its work both in monitoring the work of the authority and in conducting the process of this appointment. It is interesting to recall, as I do, the nervousness that was abroad at one time about Select Committees having any role in public appointments, given that this appointment has effectively been made entirely by Parliament, and has been endorsed by a Select Committee with the approval—hopefully—of the House.

I know Sir Michael Scholar well and I think that he did an outstanding job as the first chairman of the UK Statistics Authority, in difficult circumstances. Nobody should underestimate the pressure that was put on him when he dared to criticise the Government of whom I was a member. He criticised the frankly preposterous behaviour of part of the Government—special advisers in No. 10 and in the Home Office—in allowing not just the pre-release of statistics, but the traducing of statistics that should have been properly released by the Office for National Statistics.

That was part of a culture that went back to previous Administrations, and we have seen one example of it during this Administration, whereby special advisers in No. 10, all jockeying among themselves to show that they are more adept than their colleagues in getting material into the newspapers and anxious for attention from the master, cajole the people they believe are their subordinates—the special advisers in the individual Departments. They say, “We can see this on the grid”—the wretched grid—“and we must know about this. We want early information. There is something else coming up. We have heard a rumour that those nasty people in the Opposition are about to do X or Y, or there is a terribly bad news story, Z, and if only we can get this good news out, all will be fine.” That is all without purpose, it never works, it always ends in tears and it carries on. The problem is that previously, unless a strong and confident Minister was looking after those statistics, it was all too easy for this abuse to run away with itself. I had only one occasion when those at No. 10 tried this on me and I told them to get lost, saying that if they wanted I would come to the House to make a statement about what they were trying to suborn my officials and special advisers, who are of the highest integrity, into doing. I was secure in my position but a very large number of Ministers, sadly, are not in that happy position.

I know what the chuntering was when Sir Michael Scholar criticised the practice of the Home Office and No. 10 in December 2008—I believe it was then. It is no coincidence that much of the attempt to bypass official release mechanisms has taken place in respect of Home Office statistics. That is not because the Home Office statisticians—or now the Ministry of Justice statisticians—are any less worthy or any less replete with integrity; it is because of the highly political nature of the information they convey. Sir Michael set out, in handling that abuse, to continue in a similar manner, and he put his foot down on a number of further occasions—two when the Labour Government were in power and once under this Government. I hope that, bit by bit, Ministers, officials and special advisers will get the message that in the 21st century it is no more appropriate to try to interfere with the generation, organisation, analysis and publication of official statistics than it is to interfere in the generation, analysis and publication of the accounts of a Department.

No Minister or senior official at any level would dream of saying, “We’ve got to alter the accounts. It is a bit inconvenient but this has come up and we seem to have lost some money.” Such alteration is a criminal offence for directors of companies. It is worth remembering that in the early part of the 19th century it was perfectly commonplace for Ministers to ensure that there was a bit of fiddling of the statistics. A lot of Ministers lined their own pockets, a few got charged with corruption but generally got away with it, and one or two were impeached. That was the culture of the times. We have moved away from that in respect of financial probity, but we now have to see a similar cultural shift in respect of statistical probity because otherwise the whole political debate and discourse in this country will be the loser.

We can have serious discussions when it comes to arguments about finance. We know what the deficit is and we can argue about what its components are, but no one suggests that it has somehow been made up. It is there. With other statistics—particularly social statistics, and particularly those on crime and immigration—there has been a ridiculous argument about whether crime has gone up or down. The same applies to unemployment and so on. We must move away from that, because it is a real turn-off for the public and it is very undermining for the quality of debate in this country.

Let me make two points, the first of which is on pre-release statistics. The hon. Member for Harwich and North Essex (Mr Jenkin) was quite right to draw attention to the fact that before the election the Minister for the Cabinet Office and Paymaster General made a lot of play of the fact that he was going to abandon pre-release notice, or move at best to one hour. We should have abandoned it when we were in government, but we did not do so. He said that he would and then, when he came into government, hey presto, he supped at the royal jelly—or something like that—or had a nod from somebody at No. 10 and suddenly decided that he was wrong.

[Mr Jenkin]

Will the right hon. Gentleman reflect on what interests prevented him from persuading his colleagues to abolish it and does he therefore have some sympathy with my right hon. Friend the Minister for the Cabinet Office and Paymaster General as regards the opposition he might be facing?

[Mr Straw]

I have sympathy with the Minister, of course. He happens to be my pair, anyway, so I declare that interest too. I have every sympathy with him, but the forces of darkness get tiring after a while. People always think that the Government will do better if only they can get early information and slip this or that past, but that is all nonsense.

My officials and others used to regard it as slightly tedious that I was not terribly bothered about when the figures were coming out—although I was early on, when I was neurotic about when the crime figures were being released. My view was that one had to ask what the point was of knowing in advance. It just led to a suspicion that we had somehow fiddled the figures because we had had them early and all the rest of it. There was absolutely no point at all. Why not find out at exactly the same time as anybody else? It is impertinent to think that Ministers should have any right to find out in advance. Why should they? They are not Ministers of figures—the figures belong to the public and Parliament. It is also self-defeating, in my opinion.

My advice to the Minister for the Cabinet Office and Paymaster General and his colleagues is: chill and defeat the forces of darkness. I am sorry I did not complete that task, notwithstanding being joined by my right hon. Friend the Member for Wentworth and Dearne. Ministers will do themselves an enormous favour if they abandon pre-release notice.

[Robert Halfon]

I agree with much of what the right hon. Gentleman says. Does he not agree, however, that there is a very small case for certain statistics—particularly market-sensitive information—to be released to the Government early, given the effect they might have?

[Mr Straw]

There might be, and there could have been in the days when the Treasury was responsible for setting interest rates. At a time when by all-party agreement the Treasury is no longer responsible for setting interest rates, what can the Government do about it anyway? If they have advance information that there will be a sudden huge—mega—balance of trade deficit then, with a bit of luck, it will gradually emerge through the tax data anyway. What can they do about it? If the markets react adversely, the Bank of England will come in and buy sterling, or not. I accept that there might be a narrow case for examining that, however.

My second point is about the responsibility for defining the components of series. Let us recall the great debate about the components of youth unemployment figures. There was irritation among those in the Government of whom I was a member that that series included people in full-time education, and I gather there is also irritation about that in this Government. Of course, support for the current definition has stayed on the Opposition side of the Chamber. My view is that there is a case for saying that people in full-time education should not be included in the definition of the unemployed because they are not available for work, although they might want a part-time job. There might not be a case for that but, whether or not it is to the advantage of Government, that issue ought to be examined independently and decided independently, without regard to which party might, for the time being, gain partisan advantage.

Lastly, I commend the recommendation of the Public Administration Committee that Mr Andrew Dilnot be appointed as the successor to Sir Michael Scholar. He is brilliant, he has a very fine mind and he has a great understanding of public affairs. I can think of no better successor to Sir Michael Scholar.

16:36

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I, too, am extremely pleased to support the motion. I speak not only as a Member of the House but as a member of the Treasury Committee. The House will be aware that we are extremely reliant on the quality of our national statistics as we supervise, regulate and seek to hold to account, at least at arm’s length, entities and agencies that are themselves extremely reliant on our national statistics. This appointment reflects very creditably on the Government for their willingness to choose, and to allow pre-selection hearings on, the highest quality candidates who can genuinely hold them to account rather than simply choosing placemen. This appointment fits into that good tradition, and the appointment of Robert Chote was another example of that.

I pay tribute to Sir Michael Scholar and also to the Public Administration Committee’s role in vetting not one but two candidates.

[Paul Flynn (Newport West) (Lab)]

Would the hon. Gentleman extend those sentiments to the Mayor of London, who, when he was criticised for abusing statistics before a Select Committee of the House, reacted to the criticism of Michael Scholar by describing him as a “Labour stooge”?

[Jesse Norman]

I certainly do not share that view and I am not sure that the Mayor would share that view if he had further time to reflect on it.

Sir Andrew Dilnot is a person of impeccable personal reputation and great intellect. He has been garlanded with honours from our finest academic institutions and the Institute for Fiscal Studies. Anyone who has heard him present “More or Less” or heard his outstanding podcasts will know that he is an extraordinarily apt and adept presenter of information, and therefore perfectly fits an agency with the job not merely of presenting information and ensuring its integrity but of recruiting and engaging its users.

The truth is that we in Parliament and those in government cannot survive without good information and good numbers, and the Opposition, whoever they may be, cannot survive without the numbers that allow them to hold the Government to account. I hope that an early priority for the new chair will be to look at the private finance initiative, which hon. Members will know is one of my pet bugbears. I can think of no better example than that because there has been extraordinary abuse of those statistics, with things being pushed off-balance sheet, with standards that are not of the highest quality being adopted and—I am pleased that this is being addressed by the Government—with the creation of a situation in which it is possible to have an asset that is off-balance sheet not only to the country but to PFI contractors.

Sir Andrew Dilnot is also to be commended for his outstanding report on different ways of funding the provision of care for the elderly. It would be a very poor debate that did not recognise that and congratulate him on that report. His appointment fits into a pattern of improving the governance of our public agencies, and it is a principle that could properly be extended to other public agencies whose governance has been somewhat lacking of late. I think in particular of the Bank of England, whose court needs comprehensive restoration; the Treasury Board, which could do with refreshment; and the governance of HM Revenue and Customs, which needs higher quality senior officials and non-executives.

I conclude by congratulating the Government on this appointment, and Sir Andrew Dilnot on his acceptance, on his passion for statistics and on his independence of mind. I welcome the energy, the integrity and the intelligence which he will bring to the evaluation of policy, I hope, as well as to the assessment of statistics and their presentation to the public.

16:40

[Paul Flynn (Newport West) (Lab)]

This appointment is a major development in our parliamentary procedures. This is the first time that the pre-appointment hearings made a significant difference and had an influence in changing the candidate. The pre-appointment hearings came out of an investigation in the previous Parliament by the Public Administration Committee, which went to America and recommended that certain senior appointments should be subject to the procedure. We have heard the explanation given by the Chair of how the decision arising from the interview with the first candidate resulted in a second candidate coming along and how a member of the Committee was appointed to the panel that took part in the process. These are important changes that reinforce the view that this is a useful way of proceeding. The House has behaved in a responsible manner in this process.

My right hon. Friend the Member for Blackburn (Mr Straw) referred to the forces of darkness and the queen bee jelly that takes over Governments. Some of us can rejoice in being the forces of light who were against the previous scheme and against our own Government, and are still against it and against the new Government. So often when Governments change, it is not a change of philosophy, but an exchange of scripts. Of course Governments neurotically want to hoard their secrets for as long as possible. It seems extraordinary that it was only in 2007 that the arguments were exactly reversed—when I was sitting on the Government Benches arguing with my own Government, the Tory Opposition were saying that this was the big weakness in the Bill that went through. Now they flip over without a blush.

There was a time when I recall accusing Mr Alan Clark of supervising the largest and most shameless massage parlour in London, which was the Department of Employment, in his use of employment statistics. There was some truth in that. I had an exchange of letters with Margaret Thatcher in 1989, when a group of statisticians came to see me. They were distressed because the responsibility for statistics was being moved from the Cabinet Office to the Treasury, and they rightly said, “This is our life’s work. That will reduce these pristine, glorious statistics, wonderful graphs and histograms to garbage by politicians on the make.” They suggested that the Treasury was the Department with the greatest vested interest in fiddling the statistics and damaging the result of their work. Their whole professional raison d’être was diminished by that.

Mrs Thatcher sent me a letter in which she expressed her deep shock that anyone should express the unworthy idea that her Department would want to fiddle statistics in any way. We do not feel quite that way now. There has been a move forward. I mentioned the distressing episode involving the Mayor of London. It goes to show that the advance has not been complete—not all Departments have changed their mind.

The Mayor of London was rightly criticised by Sir Michael Scholar, and we have all praised him for the way in which he did that. Sir Michael has done very well. He challenged the Home Department with great courage. He challenged the previous Government and he has challenged Departments now. He did the job that he was set to do, but when he attacked the Mayor of London, the Mayor’s reaction was not to say, “All right, I got it wrong. I’ll change the statistics”.—no humility from Boris, of course. Instead, he called him a Labour stooge. It was an outrageous thing to say, given his lifetime of independence. Michael Scholar, as all today’s contributors have said, has done a splendid job of establishing that independence, and it is what we see in Dilnot.

There are still a few old lags in the House from the passage in 2007 of the Statistics and Registration Service Bill, which went through with hardly a flicker of interest; this is a crowded House compared with the number of people who attended back then. There was only one tiny piece of interest in the press, too, but it was an article that I repeated ad nauseum to the House at the time, because it stated that it was the most important Bill of the Labour Government—we had been in power for 10 years—and would have a bigger effect than anything we had done, including handing over power and independence to the Bank of England. The article was written by a certain Andrew Dilnot, and his entire career has rightly been in that area—suggesting that statistics need to be independent.

In the Public Administration Committee, we all saw Dilnot’s boyish enthusiasm for statistics. He talks about them as “Statistics”—these wonderful things, which are the key to all happiness and the path to knowledge and wisdom—

[Mr Straw]

And employment in your constituency!

[Paul Flynn]

Indeed. I will turn to that point now.

I do have a slight vested interest in the matter, because the largest employer in my constituency happens to be the Office for National Statistics, and that is why I like to deal with the cynicism that occasionally crops up about the well-being statistics. They might have cost £2 million, but they have certainly added to my sense of well-being, because they provide work in my constituency, and we should not be cynical about them. In the past we measured happiness, success and politics on the basis of gross domestic product, but that is not a sensible thing to do, because, when the nation’s prosperity increased, unhappiness increased as well.

There was a splendid T-shirt in Hungary in 2000. On the front it said, “What has 10 years of right-wing government done that 50 years of communism could never do?” and the answer on the back was, “Made the people love socialism”. They had put up with the equality of misery, because everyone was treated badly, but when they moved to the inequality of choice they were unhappy, because young men were becoming millionaires on the stock exchange while pensions were increasing slower than inflation.

There is a crucial difference between the two, and one of the myths of politics is that choice is an example to be pursued, and that everyone will be happy if they have choice. No, they will not. I am a child of the war, when there was no choice and we wore utility clothes, but everyone was on the same level, and that was much better than what we have now, with our children wanting to wear quality, fashion clothes. All the great myths of politics are there, so it is crucial that we measure scientifically our sense of well-being.

Many points that I wished to make have been made, but it was telling of Andrew Dilnot to give us one striking example of the need for truth and honesty in statistics. He did not mention the newspaper, but most people will recognise that he was citing The Daily Telegraph, which put out a big, 36-point, front-page headline, stating, “Public pensions to cost you £4,000 a year”. It had divided £9.4 billion by 26 million and got an answer of almost £4,000. The answer is actually £400, but that particular piece of fiction was repeated on the “Today” programme and in the day’s headlines, and it became part of common knowledge which is actually common ignorance, so it is right that someone such as Andrew Dilnot should be there to take on the powerful forces that put fiction into the public domain because they are innumerate.

Mr Dilnot made a number of other points, which were entertaining, about how we should move forward. He talked about an idea called “Tell me a story”. He would suggest to schoolchildren that they go to the website of the Office for National Statistics or the Government statistical service and tell him a story about aspects of the country, but expressed in statistics.

It is a matter of great satisfaction and pleasure for my constituents that this Swansea boy should have been upgraded to Newport—a matter of some congratulations. He can work in Newport under the benign observance of a quality MP, and I am sure that he will be extremely content. The hugely successful relocation of the ONS to Newport can continue and prosper. Gales of applause will be coming up the M4 today as a result of the House’s decision, which I am sure will be to reinforce the decision of the Public Administration Committee to appoint Andrew Dilnot as the best possible candidate.

16:50

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Newport West (Paul Flynn), although I am not sure how I am going to follow some of the details that he mentioned. It will be a challenge for Mr Dilnot to find a statistical measure for happiness; I am not sure that he will find reliable data for that.

I start by welcoming Mr Dilnot’s appointment. I pay tribute to the Chair of the Public Administration Committee, my hon. Friend the Member for Harwich and North Essex (Mr Jenkin). The process has shown that pre-appointment hearings should not always be simply to ratify the Government’s appointment. There should be a possibility that the proposal will be rejected and that the process will have to restart, and the occasional rejection should be seen in the context of the advantages that the process offers us.

Any politician will know how important statistics are. Soon after I was selected as a candidate, around the time of the change in the law, in early 2008, we used some crime figures in a leaflet. A couple of months later, I was phoned up by someone from the local newspaper, who said that the police authority was challenging the data that we were using. It cited some very different figures and had no idea where the figures that I had used came from. It turned out that my figures were from the most recent British crime survey and the authority was using police data. What was slightly unfortunate was that it used crime data for the year that ended two days previously—I could not possibly have used that in my leaflet, which had been printed two months before, and not even in the same year.

In retrospect, I was grateful as I got a front-page headline and a decent amount of publicity. The vast majority of correspondence said, “You’re right—we don’t believe a single figure that they tell us anyway, so we’ll happily go with the ones that you cited.” That sums up the public mood about official statistics—they just do not believe them, probably because all politicians tend to manipulate them, get them wrong or selectively use some that suit the argument and omit those that might go the other way.

It is a real job to make public the data used and make it clear when they are abused by politicians. We should all base government and policies on actual evidence, rather than on what we would like the evidence to be; we should make the policy fit the data, not the data the policy. It is ironic that, in a debate about the probity of the data we use, we have had comments about child poverty data. That is one of those footballs that we can kick back and forward. What data do we want to use? Do we compare 2005 to 2010? Some of the numbers show child poverty going up by 300,000 and some by 100,000, or we can say that it has gone up since the election. The hon. Member for Barnsley East (Michael Dugher) wandered into that argument. The right hon. Member for Blackburn (Mr Straw) gave a far more balanced view: we have to be careful that we use realistic, accurate data that present a meaningful picture, rather than the one that we want.

I agree with the Minister that the person who heads this authority needs to be credible, senior, and, most of all, independent. If we are to have a Parliament that can effectively hold Government to account, we need reliable, honest, accurate data to be available to all of us so that we can do that job properly. I truly hope that Mr Dilnot can take that process forward. I, too, cannot see much justification for the Government’s having 24-hour advance access. I hope that the Public Administration Committee can make some further recommendations when it looks at that, because probably one of the last great abuses is our being able to see stories appearing in the press that rely on statistics that we have not seen.

16:55

[Kelvin Hopkins (Luton North) (Lab)]

It is a great pleasure to endorse the recommendation that Andrew Dilnot be made chairman of the UK Statistics Authority. I had the pleasure—indeed, the honour and responsibility —of serving on the selection committee. I cannot say too much about what went on in the selection process, but his performance was, as the chairman said at the pre-appointment hearing, stellar—and in a very strong field. We have got exactly the right person in Andrew.

Before saying more about Andrew Dilnot, I want to say something about Sir Michael Scholar. I agree with all the compliments paid to him this afternoon. Indeed, I praised him publicly at the Public Administration Committee when he came before us in the previous Parliament. The fact that he has been criticised by—or perhaps I should say that he has slightly disturbed—politicians on both sides of the House shows that he is even-handed. However, I think that he was just being truthful when he criticised special advisers in the previous Government for misusing statistics about knife crime. I am sure that they were not pleased, and they may have privately said that he was a Tory stooge—who knows? The fact that he has now upset the Mayor of London and has been accused of being a Labour stooge suggests that perhaps he is nobody’s stooge. Perhaps he is just his own man, telling the truth as he sees it, and that is what we want in a chair. He has done a splendid job.

Sir Michael has drawn attention to the fact that official statistics are not held in high regard by our voters. In a recent public lecture at Oxford university, he said that we came bottom of the league table in our attitude to official statistics and that our electors do not trust them. That is a very serious matter. In my view, our official statistics are of very high quality, and they should be trusted, but it is their misuse by Governments and by the media that leads to their being mistrusted. I think that I was appointed to the Committee because I have some modest experience of statistics; I studied the subject and used to teach it at a modest level. I used to show my students how one can use statistics to tell fibs, in a sense, by distorting things; one can exaggerate the vertical scale to make it look steeper than it should be, and so on. People can try all sorts of tricks to make statistics tell the story that they want to tell.

The great thing about the UK Statistics Authority is that it will present the statistics raw, and truthfully. If they are misused, it is up to the authority to point that out from time to time. I entirely agree with what my right hon. Friend the Member for Blackburn (Mr Straw), the former Justice Secretary and Home Secretary, said about pre-release. Let us get rid of pre-release and we will solve some of these problems. We can then all see the statistics as they come out and make of them what we think, not get it all pre-digested by politically interested, politically motivated Governments of both sides.

Sir Michael has pointed out that we have to raise the status and the opinion of official statistics with our electors so that they are trusted. I personally trust official statistics, and I trust the splendid people who work in Newport in the constituency of my hon. Friend the Member for Newport West (Paul Flynn). I have visited their headquarters and spoken to them many times, and they are clearly public servants who can and should be trusted. We want to ensure that the population at large regards them equally well.

I have had a long association with Andrew Dilnot, because long before I was a Member of the House I used to attend the pre-Budget presentation by the Institute for Fiscal Studies, which he led. It was always a splendid occasion, and the statistics and analysis that the IFS produced were always first class. I still receive its green budget reports—in hard copy, I am afraid, because I am old-fashioned—and always pore over them with great interest.

I am one of those people who are fascinated by numbers and statistics. I like nothing better for Christmas than a book full of statistics that I can spend Christmas day entertaining myself with. People might call me an anorak, but I believe that numbers are important. The great thing about Andrew Dilnot is that he has a passion even greater than my own for statistics. The passion that he showed in the interview was almost as though he were talking about great works of art. Statistics tell truths if they are accurate and presented truthfully, and his enthusiasm and passion for statistics as almost works of art inspired us all. I believe that we have the right person for the job.

I agree entirely with what the Chair of the Public Administration Committee, the hon. Member for Harwich and North Essex (Mr Jenkin), and a number of other Members have said about Andrew Dilnot. I could not attend the hearing, because I was a member of the selection committee, but I am sure his performance was as exciting and stimulating as it was at the interview. It was a great pleasure to be involved in the process, and I think we have got exactly the right person for the job.

17:01

[Priti Patel (Witham) (Con)]

It is a great pleasure to follow the hon. Member for Luton North (Kelvin Hopkins), a fellow member of the Public Administration Committee. I was at the hearing at which we interviewed Mr Dilnot—in fact, it was my first day on the Committee—and I was overwhelmed by his enthusiasm and passion and the degree of animation with which he spoke about statistics. On that basis, it gives me great pleasure to endorse his recommendation.

I wish to add to the points that have already been made one that has been spoken about only briefly, which is Mr Dilnot’s capacity to become a cheerleader for statistics. We have heard a great deal about the cynicism and negativity associated with statistics, but one of the strongest points that came out of our hearing with him was that he wanted to do significant work to change the perception of statistics. He wants not just to do that for the cynical oldies among us but to engage young people in statistics and increase their understanding of them.

As the hon. Member for Luton North pointed out, Mr Dilnot is passionate about statistics. Those of us who have had the privilege of studying statistics, maths or economics in the past will understand the significance of stats to our daily lives and well-being and what they mean to society as a whole. Mr Dilnot spoke about that with great enthusiasm and commitment, and he went as far as to state that it would be a priority for him.

Members have made points about the integrity of statistics. Mr Dilnot’s appointment provides a tremendous opportunity to redefine the relationship with statistics of all of us—the Government, the public and future generations. I wholeheartedly support the recommendation in the Committee’s report, and I hope that the appointment goes through with no flaws or problems at all.

17:03

[John Healey (Wentworth and Dearne) (Lab)]

It is good to follow the hon. Member for Witham (Priti Patel), and I welcome the fact that so many Members on both sides of the Chamber have wanted to contribute to the debate.

I pay tribute to the members of the Public Administration Committee and its Chairman, the hon. Member for Harwich and North Essex (Mr Jenkin), for the report and their work. I speak having been the Minister responsible for developing the Statistics and Registration Service Act 2007 and leading it through the House. May I say that I had no greater supporter in government or more critical friend in that work than my right hon. Friend the Member for Blackburn (Mr Straw)? I am grateful to him for that.

The fact that our debate this afternoon is in such terms causes us to reflect on and pay tribute to the work of several people in setting up the UK Statistics Authority after the House passed the legislation, especially the former national statistician, Karen Dunnell, and the current national statistician, Jil Matheson. However, I want to pay particular tribute to the outgoing chair, Sir Michael Scholar. He helped lead and set up the authority with great distinction. He helped provide important guidance and governance to the Office for National Statistics, and ensure that a good, strong code of practice for official statistics was introduced in January 2009 and is, properly, now also enforced. As hon. Members from both sides of the Chamber have observed, he has been ready, when necessary, to tackle Ministers from the previous Government and the current Government about the misuse of statistics. Indeed, he most recently tackled the Mayor of London for his misuse of official statistics.

The UK Statistics Authority has two most important features, which have a bearing on the appointment of its chair. The first is its statutory independence from Government and the second is its answerability to Parliament—to this elected House. The report of the Public Administration Committee demonstrates and reinforces the role that Parliament must play. My hon. Friend the Member for Ashton-under-Lyne (David Heyes) called it a fine example and my hon. Friend the Member for Newport West (Paul Flynn) said that we mark a historic day in the extension of the proper role of Parliament in holding the Executive to account and in the conduct of public life. That is true, and the report reinforces the value and importance of the House’s role in the process in three ways.

First—and perhaps for the first time—the Select Committee played an important role in ending the appointment process for the Government’s previous preferred candidate for the job. Secondly—I pay tribute to the Parliamentary Secretary, Cabinet Office, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd)—the Government conceded a greater role for the Committee in the selection process for the chair, allowing it to comment on the person specification, the job specification and the recruitment process. Thirdly, they crucially conceded the point that a member of the Committee had a valuable role to play on the selection panel, and I pay tribute to my hon. Friend the Member for Luton North (Kelvin Hopkins). I note that the report stated that his role was to assess independence from the Executive. He proved his ability to do that over 13 years of the previous Government and continues to do that from the Opposition Benches.

It strikes me from the Committee’s hearings that Andrew Dilnot demonstrated an extraordinary passion for and commitment to what he called the science of statistics in his evidence session. One of the special qualities that he brings to the post is that of being a long-term user, not simply a producer, of statistics—a man who can be not just a guardian, but a champion of statistics in future. The Select Committee report’s conclusion states:

“We welcome his independence of mind and his enthusiasm better to communicate statistics and their importance.”

The contributions to the debate from both sides of the Chamber, particularly from Members who served on the Committee and heard his evidence, reinforced the point about passion and enthusiasm.

The Chairman of the Committee said that in the appointment process the Committee was concerned to establish personal independence and professional competences. Any hon. Member who has ever worked with Andrew Dilnot, or who has worked in areas of his expertise and activity, has absolutely no cause to doubt his personal independence or his professional competence. Treasury Ministers—I am a former Treasury Minister—waited immediately after the Budget for the Institute for Fiscal Studies assessment and analysis, which was the most significant one. Invariably and reliably, that was delivered with great independence and competence, and it was often delivered personally by Andrew Dilnot.

In conclusion, like the hon. Member for Hereford and South Herefordshire (Jesse Norman), who is not in the Chamber, I too can think of no more fitting and suitable a person for this post in public life in our country than Andrew Dilnot. I welcome him as the Government’s preferred candidate and the work of the Committee in the process of his appointment, and I welcome and endorse the report, which concludes:

“His experience makes him eminently fitted for the role.”

17:10

[Sir Peter Bottomley (Worthing West) (Con)]

I apologise for not being here at the beginning of the debate, Mr Deputy Speaker, and declare an interest: I am not the statistician in my family.

I believe that those who follow such debates would be well advised to get hold of the Public Administration Committee’s sixteenth report of Session 2010 to 2012, HC 910-I, “Appointment of the Chair of the UK Statistics Authority”; the corrected transcript of oral evidence of 10 May 2011 of Sir Michael Scholar, Jil Matheson and Richard Alldritt on the appointment of the chair of the UK Statistics Authority; and the written evidence on the appointment of the chair of the UK Statistics Authority, which contains all but one of eight papers submitted to the Committee. I tried to find out what the missing paper was—it was “UKSA 04”—but “UKSA” also stands for “United Kingdom Sailing Academy”, “the United Kingdom’s Strongest Athlete” and one or two other things with which I need not delay the House today.

To illustrate that statistics need interpretation, I remind the House that if the UK Statistics Authority reduces its number of staff as it intends, by 2015, the number of staff it had in 2005 would be approximately 42% higher. That is to say that it is a 29.5% reduction from the figure of 2005. That has come about via a 16% reduction from 2005 to now, and there will be another 16% reduction from now until 2015.

That is an example of how, in three sentences, one can cast a cloud over people’s understanding, but what it basically means is that we need statisticians and those who read their work. That is why the UK Statistics Authority has a vital role in getting information from the Government out into the open in a way that the outside world can understand and interpret, and feed back to hon. Members in a way that increases our understanding.

I did not believe that it was right to combine the Statistics Commission and the Office for National Statistics, but that is done. Sir Michael Scholar has clearly explained how the UKSA arrangements are supposed to retain a separation between the regulator and the producer of statistics. I am willing to accept that, but I am still not very happy about it.

When Sir Michael Scholar gave evidence to the Committee with Jil Matheson on 10 May 2011, he made some points about the problems that he put to the Prime Minister in 2010. On page 11 of the transcript, Sir Michael said that

“before any significant changes could be made to the statistical capability of a Department, or any major changes to its statistical output, the Department would be obliged to secure the agreement of the National Statistician. That would be going back to a system that pertained in this country during the time that Claus Moser”—

Lord Moser—

“was head of the Central Statistical Office. I asked the Prime Minister if he would go back to that system, which would be something that he could do through administrative action without any need for legislation or for any additional expenditure. I also asked him if he would accept the proposals we had made on prerelease access…My third proposal to him was that he should give the Authority a place in the decision making about cuts in statistical capability across the whole Government. Recognising, in the difficult fiscal position that the Government were and are now in, that there were going to be cuts, we felt it was very important that the Statistics Authority, with a view right across the scene of the whole statistical system, should be brought into the process of decision making about where cuts should be made.”

It would be very helpful if the Government, now or shortly, responded to each of those points. We know about the pre-release access—progress has been made on that and it has not brought the roof down—but the other two points still matter and should be made.

The hon. Member for Luton North (Kelvin Hopkins) referred to himself as an “anorak”—which I think is the only word we get from Greenlandish Eskimo, but I stand to be corrected—and in the hearing on 10 May 2011 he referred to time series. Sir Michael Scholar, the chairman, said, in effect, “I don’t think we can give you the assurance that we aren’t losing something that is valuable.” It would be wise if the Government and the new chairman, together with the national statistician—

[Kelvin Hopkins]

I raised my concern about the loss of time series in the Select Committee in the last Parliament. I am also worried that the squeeze on expenditure may see valuable time series lost for the future and that would be a great mistake.

[Sir Peter Bottomley]

It is not just the time series: we also need to protect the extra investment going into the longitudinal studies, which are a vital statistical treasury that can be used both prospectively and retrospectively.

I pay tribute to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) for the way in which he has chaired the Committee and to Dame Janet Finch, whose dignity helped to resolve an awkward situation. It is vital that we have a chairman who is fair, fearless and clear. That is not a comment on Dame Janet, but on Sir Michael Scholar—and I hope that it is one that we can make in retrospect when Andrew Dilnot retires. Those are the attributes we want from our statistics, and we also need them from the chair of the UKSA.

At one point, the House declined to give its support to someone for that kind of role—when Elizabeth Filkin was the Parliamentary Commissioner for Standards. We paid a price for that. It was a parliamentary price, but there will be a national price to pay if we do not give our support to the chairman and the National Statistician. I therefore commend the motion.

Question put and agreed to.

Resolved,

That this House endorses the nomination of Andrew Dilnot CBE for appointment as Chair of the United Kingdom Statistics Authority.

Business without Debate

Tuesday 13th December 2011 Commons Chamber

Charities Bill [Lords]

Motion made, and Question put forthwith (Standing Order No. 58), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Motion made, and Question put forthwith, That the Bill be not committed.—(Mr Dunne).

Question agreed to.

Motion made, and Question put forthwith, That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed, without amendment.

Prevention of Nuclear Proliferation

Tuesday 13th December 2011 Commons Chamber

17:18

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I beg to move,

That the Financial Restrictions (Iran) Order 2011 (S.I., 2011, No. 2775), dated 21 November 2011, a copy of which was laid before this House on 21 November, be approved.

Today I seek the support of the House for the financial restrictions measures against the Iranian banking sector that the Chancellor announced on 21 November. The Government have taken decisive action to respond to a significant threat against UK national interests by putting a stop to all business between UK financial institutions and those in Iran. The Treasury has laid the Financial Restrictions (Iran) Order 2011 before Parliament under the power in schedule 7 to the Counter-Terrorism Act 2008. This order contains restrictions requiring UK credit and financial institutions to cease business relationships and transactions with all banks operating in Iran, including their branches and subsidiaries, and with the Central Bank of Iran.

I turn first to the rationale behind the order. The Government have serious concerns about activity in Iran that facilitates the development or production of nuclear weapons. This concern has been repeatedly raised by the International Atomic Energy Agency, the UN body charged with monitoring Iran’s nuclear activities. Its latest report, in November, highlights its deepening concerns about

“possible military dimensions to Iran's nuclear programme”.

The restriction in the order was made in response to Iran’s nuclear activities, as highlighted by the IAEA, and the urgent calls from the Financial Action Task Force for counter-measures to be taken against Iran. Iran’s nuclear programme poses a significant risk to the UK’s national interests. This order seeks to address that.

[Paul Flynn (Newport West) (Lab)]

Is there not a danger, if we push Iran too hard, of it expelling the IAEA inspectors from the country? If that happens, instead of acting in the knowledge with which they provide us, we would be acting in ignorance.

[Mr Hoban]

It is important that we continue the twin-track approach—of engagement and challenge—that the Government have set out and which the previous Government also followed.

The November IAEA report documents Iran’s failure to co-operate fully with the agency and the possible military dimensions to Iran’s nuclear programme. The IAEA reports on Iran’s programme on a quarterly basis, but the November report set out its concerns in the strongest terms to date. It states that information available to the IAEA indicates that Iran has carried out activities relevant to the development of a nuclear explosive device. The report notes that

“while some of the activities identified have civilian as well as military applications, others are specific to nuclear weapons”.

The Government view these developments with the utmost concern.

In response to the November IAEA report, its board of governors issued a resolution expressing “deep and increasing concern” about the possible military dimensions of the Iranian nuclear programme. The board urged Iran to abide by its international obligations and called on it to engage seriously on the nuclear issue. These concerns are of the most serious nature and have far-reaching consequences for the UK’s interests and those of the region. Some 32 of the 35 countries on the board of governors supported the resolution.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The Minister might be about to answer my question, but what are other nation states doing in response to events in Iran? In particular, I am thinking about UN Security Council members Russia and China.

[Mr Hoban]

I will outline some of the action taken by several countries to exert pressure on the Iranian regime and to ensure that targeted action is taken to prevent the development of nuclear technology. I shall address some of those issues later.

The case for UK action is also underlined by the recent calls from the Financial Action Task Force for countries to apply effective counter-measures to protect their financial sectors from money laundering and financing-of-terrorism risks emanating from Iran. Those calls were renewed with urgency on 28 October 2011 and noted the taskforce’s particular and exceptional concern about Iran’s failure to address the risk of terrorist financing. It also flagged up its concerns about the serious threat that this posed to the integrity of the international financial system. The taskforce has not expressed such serious and ongoing concerns about any other country.

The UK is leading action against Iran because Iran’s proliferation-sensitive activities pose an ongoing concern for the UK and the international community as a whole. The measure that we have imposed is strong but necessary, and we encourage other countries to take similar tough action. The UK is an important global financial centre, so UK restrictions will have a significant impact on the options available to Iranian banks. That will make it more difficult for Iranian banks to use the international financial system in support of proliferation-sensitive activities and protect the integrity of the UK financial sector. Other countries share our and the taskforce’s concern about Iran’s nuclear activities.

[Mr Jack Straw (Blackburn) (Lab)]

rose—

[Mr Hoban]

I will finish this paragraph and then give way.

That includes the US and Canada, which implemented further restrictive measures against Iran on 21 November, alongside the action that the UK took.

[Mr Straw]

I sought to intervene on the Minister when he started talking about other countries. One of the things that slightly surprise me about this measure, whatever its merits, is that only two other countries supported it, which left us rather isolated and an easy target for the thugs in Tehran. Why did the Government not discuss and then take steps to agree with as many European Union partners as possible a similar measure in advance of this measure being promulgated?

[Mr Hoban]

Given the UK’s importance as a financial centre and its interconnectedness, there was an opportunity to act to close down opportunities for banks in Iran to use our facilities. The other point is that on the day that we announced our measures, President Sarkozy wrote to us supporting our financial sanctions and also proposing sanctions on oil. There will be a further debate in the European Union about that next month at the Foreign Affairs Council, where we will push this issue further. We are working in concert, not just with our European allies but with the US and Canada, as I have said. Indeed, the EU already has strong financial sanctions in place against Iran, and introduced asset-freezing measures and travel bans against 180 Iranian individuals and entities at the beginning of this month. The EU is considering taking further measures to implement that, and we will be pushing our partners to take strong measures too.

[Mr Straw]

I am grateful to the Minister for giving way, but with great respect, I am still rather perplexed. We are members of the EU, and although I am aware of the individual-specific action that the EU is taking, that is different from the measures in this order. What I simply do not understand, just to repeat the point, is this. Whatever the merits of this measure, the manner of its introduction must leave us very isolated and exposed. Why was there such a hurry? Was it because of an American timetable, or was there some other, more commendable reason for doing it in advance of getting what I would have thought the Minister might judge to be a significant number of other nations alongside us and then making a co-ordinated announcement?

[Mr Hoban]

The Government bore in mind when making their decision the strong concerns raised by the IAEA in its November report. Indeed, the way in which it expressed them marked a step change in its level of concern compared with previous quarterly reports. The increase in concern on the part of the Financial Action Task Force about how financial systems could be used to finance terrorist acts or in other areas led to the Government’s decision to move, which was an important thing to do. It is a proportionate response to the risk posed by Iran to require the UK financial sector to cease all business relationships and transactions with the Iranian banks and their branches and subsidiaries, including the Central Bank of Iran.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

Can my hon. Friend perhaps answer a technical question relating to the Treasury’s responsibilities? Is the United Kingdom in the correct legal position unilaterally to stop banks being used in trade with Iran, or could we find UK companies that abide by the European Union ruling or law, which still allows that, taking the UK Government to court to allow them to continue using those banks?

[Mr Hoban]

We are acting under powers that were put on the statute book by the previous Government. My hon. Friend will be aware that there is a licensing regime in place, and some licences have already been issued on a general basis—there are applications that I shall perhaps turn to a little later when dealing with specific examples. Permission has been given on a general basis to enable transactions to be completed, for example, so there is a regime in place. However, if my hon. Friend has particular concerns, I would encourage him to engage with Treasury officials to take them forward. I know that my hon. Friend, as chairman of the British-Iranian all-party group, has a clear interest in this subject. If there are particular concerns of which businesses are aware, I encourage them to talk to us about them.

[Jeremy Corbyn (Islington North) (Lab)]

The Minister has been speaking for about 10 minutes, during which he has come from expressing concerns about Iran’s nuclear activities to discussing financial regulations. He would, however, recognise that Iran remains a signatory to the nuclear non-proliferation treaty. Does the Minister not think that a serious diplomatic initiative by all members subscribed to the nuclear non-proliferation treaty would be a more fruitful way of dealing with the issue, rather than descending to what some of us fear will be a much more serious situation, including possible military conflict with Iran?

[Mr Hoban]

The purpose of the order is not to enable debate of the broader issues of engagement with Iran, but to put in place financial restrictions against Iran. As I said earlier, there is a twin-track approach of both engagement and sanctions, where appropriate. That is what we are doing. I think we would all want Iran to come back and engage in this process; we need to find a mechanism for that to happen.

Let me return to explaining why we have imposed the restrictions in the order. Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes. Many Iranian banks have already been sanctioned by the UN and the EU for their role in Iran’s proliferation-sensitive activities. However, experience under existing financial sanctions against Iran demonstrates that targeting individual Iranian banks is no longer sufficient. Once one bank is targeted, a new one can step into its place.

Taking this action will also protect the UK financial sector from the risk of being used unwittingly to facilitate activities that support Iran’s nuclear and ballistic missile programmes. As I said to the hon. Member for Islington North (Jeremy Corbyn), the action is in line with the Government’s dual-track strategy of pressure and engagement with Iran. The aim of the pressure track is to encourage Iran to begin serious and meaningful negotiations.

Let me explain the specifics of the order. It was made under schedule 7 to the Counter-Terrorism Act 2008, which provides the Treasury with the power to give a range of restrictions to UK credit and financial institutions in response to certain risks to the UK national interest. The power enables the Treasury to respond to proliferation risks, money laundering and terrorist-financing risks, or where the Financial Action Task Force calls for counter-measures. The restrictions in the order sit alongside sanctions already imposed on Iran by the UN and the EU, but go further, as they prohibit additional activities.

The restrictions came into force at 3 pm on 21 November 2011; shortly after that, the Treasury published a series of documents on its public website to alert the financial sector to the restrictions and to provide detailed guidance on their implementation. Those documents were also e-mailed to more than 13,000 subscribers to our e-mail alert system. In previous debates on these measures, one concern raised by the Opposition was about how we ensure that people are made aware of the restrictions.

[Paul Flynn]

Will the Minister give way?

[Mr Hoban]

I want to make some progress. This is a time-limited debate, and in looking at the number of Members present on both sides of the House, I am conscious that others wish to participate.

The Treasury asked various supervisors, including the Financial Services Authority, Her Majesty’s Revenue and Customs and other Government organisations, to publicise the restrictions and to provide information to firms on the requirements associated with them. Alongside the order, we published six general licences exempting specific activities from the restrictions. Those general licences enable credit and financial institutions with existing business relationships or transactions with the entities concerned to manage the cessation of business in an orderly and controlled way. The licences permit the provision of financial services for humanitarian purposes and of personal remittances between individuals here and in Iran. Further licences, whether general or individual, may be granted by the Treasury to manage the impact of the requirements on third parties. This approach is similar to that used in asset-freezing measures.

The restrictions apply requirements to persons operating in the UK financial sector, including FSA-authorised firms, money service businesses and insurers. Firms are required to establish whether any current or future business relationships or transactions are affected and comply with the requirements of the restrictions. Although the restrictions are given only to the financial sector, they will make it more difficult for other companies to trade with Iran. The UK Government actively discourage trade with Iran, and UK trade with the country has declined by 46% during the first eight months of this year in comparison with the same period in 2010.

As I said to my hon. Friend the Member for Wyre and Preston North (Mr Wallace), companies affected by the restrictions can apply for a licence of exemption, and we are willing to grant licences where UK companies are owed money under existing contracts that can only be paid via an Iranian bank to the company’s UK account. We will examine applications on a case-by-case basis.

The use of existing procedures means that firms will already have in place systems to meet obligations relating to financial sanctions and anti-money laundering, which should assist in minimising the burden of compliance with the restrictions. All institutions operating in the UK financial sector will need to ensure that they do not undertake new transactions or enter into new business relationships with any bank incorporated in Iran, including the central bank, and branches or subsidiaries. It is expected that compliance costs for the sector as a whole will be moderate, although any institution with significant business relationships with an Iranian bank will face higher costs.

Supervision of compliance with the restrictions will form part of the existing supervisory regime of entities such as the FSA, Her Majesty’s Revenue and Customs, the Office of Fair Trading, and the Department for Enterprise, Trade and Innovation in Northern Ireland. It is an offence to fail to comply with the requirements of the direction or intentionally to circumvent the requirements. Breaches may be subject to civil penalties imposed by supervisors, or to criminal prosecution. The maximum criminal penalties are: a fine not exceeding the statutory maximum, £5,000, in the magistrates court; or two years’ imprisonment or an unlimited fine in the Crown court. Those penalties are equivalent to those for breach of other financial sanctions regimes such as the EU asset-freezing regime in relation to Iran. The financial services sector takes very seriously the implementation of restrictions and sanctions, and takes steps to ensure its compliance with any restrictions.

To conclude, the order was issued by the Government to respond to the severe risk that Iran’s nuclear activities pose to the UK national interest. The measure is strong but necessary. Iran’s proliferation-sensitive activities are a serious and ongoing concern for the UK and the international community as a whole. It is vital that we continue to take steps to increase pressure on the Iranian regime and encourage Iran back to the negotiating table to find a diplomatic solution. For those reasons, I commend the order to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

I remind the House that the debate can continue until no later than 6.48. After the shadow Minister has finished speaking, Members will wish to do the maths in their heads to divvy up the time. If they do not do so, in the spirit of Christmas, a time limit will be introduced.

17:37

[Chris Leslie (Nottingham East) (Lab/Co-op)]

As the Minister has outlined, events in Iran in recent months and weeks have been deeply concerning. It is right that we have a debate today on the nature of the British response to those troubling developments. Elements within the Iranian regime have been fomenting public discontent outwards towards other countries, partly in an attempt to stop the Iranian people looking inwards at the regime itself. The increased fuelling of hostility to the outside world is a worrying move, to which neither we nor the international community can afford to turn a blind eye.

Last month, the comprehensive and unequivocal report from the International Atomic Energy Agency made clear the fact that there is an accumulating body of evidence regarding the possible military dimensions of the nuclear programme in Iran. As the Minister has said, in the light of that, it was right that the UK, along with the US and Canada, took the decision to increase diplomatic pressure on the regime in Iran.

We welcome the Chancellor’s announcement that the UK would sever all ties with Iranian banks, including the Central Bank of Iran. As the Minister said, a position came into force on 21 November and is now formally before the House. Since then, important developments have taken place. Following the announcement of the further sanctions, the Iranian Parliament approved a Bill that called for the downgrading of diplomatic ties between Iran and the UK, and several MPs in the Iranian Parliament chanted “Death to Britain” as the measure was adopted. Within a few days, hundreds of demonstrators overran the city centre compound of the British embassy in Tehran. They looted and vandalised the homes of embassy staff and set fire to the main buildings, while Britain’s second embassy compound in the north of Tehran was simultaneously attacked and looted.

I echo the Minister’s comments. I also fully support the remarks made on 30 November by the shadow Foreign Secretary, my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander), about the “unyielding professionalism and… bravery” of our UK diplomatic staff in Iran.

The notion that such an assault against our embassy could take place without permission, and indeed instruction, from elements in the Iranian regime is too far-fetched to be entertained, and the belated and limited response from the Iranian diplomatic police serves further to discredit such delusions. Let us be clear: this was a co-ordinated attack on two British embassy compounds by a student militia controlled by elements within the regime.

All diplomatic avenues available to the UK and the international community must surely be pursued to increase the peaceful pressure on the regime in Iran to ensure that it fulfils its responsibilities and obligations under international law, and the financial restrictions that we are discussing today should be seen in that light. The attacks on and looting of the British embassy compounds in Tehran following the measures that we are debating serve to highlight the desperation of the regime in the face of increasing pressure and isolation from the international community. It is therefore right for us to cease dealings with Iranian banks and their subsidiaries, and with the Central Bank of Iran, to avert the risk of the financing of terrorism or money-laundering activities emanating from Iran.

[Mr Straw]

May I say now what I should have said in my first intervention? I declare my interest as a co-chairman of the all-party parliamentary group on Iran, although I have absolutely no financial interest.

I am listening carefully to what my hon. Friend is saying. Does he share my significant concern about the fact that we were joined by only two other countries in advancing this proposal? If the case was as strong as is suggested, we could surely have had many others alongside us, and our diplomats would not have been exposed in Tehran as they were.

[Chris Leslie]

I understand my right hon. Friend’s point, which brings me neatly to the five questions that I wish to ask the Minister.

The Government say in the impact assessment that they want to press for further international action. They also say that

“there is a risk that the measure will be weakened by financial institutions in other countries providing financial services to Iranian banks, including in support of Iran's proliferation-sensitive activities”.

My question to the Minister echoes some of the concerns expressed by my right hon. Friend. Will he assure us that he and his Foreign Office colleagues will be active in using all available diplomatic channels to put pressure on other countries to impose sanctions similar to those bilaterally imposed by the United Kingdom, the United States and Canada? It is clear that a concerted international effort is greatly needed to put further pressure on Iran to change course.

We think it important to support the order, but some of my questions are important as well, including one concerning enforcement and penalties. We know that there have been instances of financial institutions breaking rules laid down to prevent Iran’s progress towards nuclear capability. Two years ago, in December 2009, Credit Suisse was fined $536 million in the United States for the removal of information in relation to the origination of US-bound transactions from the “Atomic Energy Organization of Iran” and the Iranian “Aerospace Industries Organization”. In January 2009 Lloyds bank was fined a substantial $350 million in the United States for similar breaches involving Iran and other international restrictions, while in August 2010 Barclays was fined $300 million.

Criminal offence and civil penalties will apply in relation to non-compliance with—or knowledge of, and intentional circumvention of—the new requirements that we are discussing. The penalties are the same as those that the enforcement authorities and courts have in respect of non-compliance under the money laundering regulations 2007—fines, imprisonment for a maximum of two years and so on. The Americans clearly take breaches very seriously, as is shown by the scale of the fines they have imposed, so my question to the Minister is: can he reassure the House that the UK will take a similarly robust approach, with penalties on a scale that reflects the seriousness of the offence, both to prevent breaches of the rules and to punish appropriately those who breach them?

My third question for the Minister relates to the explanatory memorandum, which makes it clear that a licence for exemptions from this order can be granted by the Minister on a case-by-case basis. The impact assessment states that

“it is unlikely we will license significant further exemptions for businesses as this would risk undermining the purpose of the measure”.

That is self-explanatory. We recognise that exemptions are not likely to take place on a significant scale, but will the Minister set out in what circumstances exemptions might be made to those restrictions?

My fourth question relates to the fact that the order has a time limit of a year and, under paragraph 38 of schedule 7 to the Counter-Terrorism Act 2008, the Treasury will be obliged to report every year on the exercise of its functions under that schedule. The Minister has said, as does the explanatory memorandum, that the order will be kept under review, but given the fast-moving developments and narrow time scales involved in the situation with Iran, will he commit to reporting to this House before the annual deadline if circumstances change—for instance, if negotiations on the nuclear programme were to improve or worsen? We hope that the latter would not be the case.

Lastly, will the Minister make it clear to the House, and leave no doubt about the message we are sending today to the people of Iran and to the international community more widely, that despite attacks on our channels of diplomacy with assaults on our embassy, we will not be deterred from actively and creatively pursuing all diplomatic options at our disposal to ensure that Iran upholds its responsibilities and obligations under international law? There is a widespread hope that diplomacy must prevail. We, and other nations around the globe, cannot afford to be complacent. The Opposition welcome this measure from the Treasury and hope that, with the Foreign Office, it will, as my right hon. Friend the Member for Blackburn (Mr Straw) said, be proactive in building a broader diplomatic effort across the globe to stop Iran flouting international law.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

As earlier, I ask hon. Members to look to see how many others are standing. I think that there are about nine, we have to finish in an hour’s time, and I am sure that the Minister will want three minutes or so to wind up.

17:47

[Mr Ben Wallace (Wyre and Preston North) (Con)]

May I declare an interest, as co-chair of the all-party group on Iran? I apologise to you, Mr Deputy Speaker, for the fact that I shall have to leave before the conclusion of the debate as I have to chair the group’s meeting on The Daily Telegraph versus The Guardian on the future of Iran, which we hope will be an entertaining event.

I would like to put on the record why I support the Government’s attempt to impose sanctions on financial transactions coming out of Iran. My support is not unqualified, but I support the aims and ambitions. It is absolutely clear that in the past decade or so Iran has used a plethora of its banking network to fund Hezbollah and other organisations, and to try to acquire conventional and perhaps potential nuclear parts for its programmes at home. So I understand what our Government are trying to achieve.

I would have been less supportive before June to July 2009. Before then—indeed, when I last visited Iran—whatever we may have thought of the Iranian Government, they ruled by consent, and attempts were made by a number of senior members of the Iranian Government to reform Iran. Unfortunately, after President Ahmadinejad’s last election, we have seen a clear move away from the rule of law towards a much more totalitarian state. Anyone who has contacts with the Baha’is or with mere critics of the Iranian Government will notice that these people’s human rights are constantly being exempted from the Iranian constitution under the guise of “national security”, “spying” and so on. All those traits lead me to worry about the shifting nature of the regime.

I know enough about Iranian history to put aside the rhetoric. Death to America day is still an annual event in the Iranian calendar and has been since 1981, but let us not forget that before that there were plenty of other annual events, under both shahs and even before that, which related to us, too. I put aside the rhetoric because it is a regular occurrence that the British embassy is abused. Every Tuesday rent-a-mob turn up on a bus and stones are thrown over the wall. When I was there they were pelting stones into the garden. Under the previous Government it was invaded twice, although certainly not as seriously, and without any threat. We should be in no doubt that that is certainly co-ordinated.

The antagonism towards the British embassy goes back hundreds of years to the time of the “great game”. More recently, in the ’80s, the street running parallel to it was renamed Bobby Sands avenue, just to annoy us. It is a game the Iranians play, I am afraid, and one could say that part of the Iranians’ problem is that they have too much history, not too little, to draw on.

I shall push aside the rhetoric, however, and focus on what is more worrying: the nature of the regime. I can understand that it is certainly time to send a strong message that the rule of law is the best protection for the Iranian people and the Iranian street. I mean the rule of law according to their constitution not ours, not a rule of law that we seek to impose on them. Their constitution is actually one of the few in the middle east to give automatic rights to Jews, Christians and a range of other peoples. By making those exemptions, they show the danger of the nature of regime that the west and the rest of the United Nations should seek to put right.

[Mr Brian Binley (Northampton South) (Con)]

I thank my hon. Friend for giving way, and I shall be very brief. Does not my hon. Friend agree that although the Iranians may have the constitution in place, they certainly do not act as though a constitution were in place? Therein lies the problem with human rights.

[Mr Wallace]

Absolutely. They do so less and less each day, and that is one of the major regrets for someone such as me who believes that Iran has a great future and that the west often looks to the wrong allies in the middle east in the long term. I disagree, however, with the position on the Mujahedin-e Khalq. I believe that if one of the few things the Iranians and the Americans both agree on is that the MEK should be a proscribed terrorist organisation, we should perhaps maintain that.

I have some specific questions for the Minister about the sanctions. Why did he choose to include the Central Bank of Iran? A number of cases have been brought to my attention, including one from a company in Cambridge that has gone through five regimes of British export licences, and has European as well as Treasury approval to sell engineering goods to Iran. It is owed £12 million for goods already delivered and the sanctions—either those effectively extraterritorially imposed by the United States or our own—have prevented it from getting its money. I suspect—in fact, I know—that that threatens its very viability. When I went to visit Treasury officials, the answer to the problem was that they did not really get engaged in commercial-to-commercial decisions. I am afraid that the Treasury’s decisions have caused the problem, and in the past, companies—including American companies—have used a corridor from central bank to central bank to clear certain moneys. Not so long ago, JP Morgan in New York received money from Iranians that was owed to an American/UK contractor. If they can do it, so can we.

[Bob Stewart (Beckenham) (Con)]

The only question I would ask is: would not the Iranians consider it to be part of the irritation factor not to use such a channel, if there was one? They could stop that payment, which is owed to one of our companies, just to irritate us further, even if there was such an avenue.

[Mr Wallace]

My hon. Friend would have a point if it was not for the fact that at the moment, the Iranians need our goods more than we need theirs. I meet plenty of day-to-day Iranians in business and everything else—not in my business, as I do not have any such interests—who try to do the right thing and live by the rule of law.

Secondly, I ask the Minister what our European colleagues are doing. Historically, Germany and Italy are some of the biggest traders with Iran, and my worry is that the strength of the E3 plus 3 was unity. That was its strength: we brought together the three European powers of Britain, Germany and France along with China, Russia and America. For every round of sanctions that has come before this House or the international community, there have been fewer and fewer signatories to it. As the right hon. Member for Blackburn (Mr Straw) pointed out, as we get fewer and fewer signatories we are at risk of undermining the message that says that we all agree that Iran should not be progressing along such a path.

My worry is that the Iranians are super-sensitive to such differences. They are one of the greatest trading nations in history, of course, and my word, are they canny! When I was there, there was no shortage of some of the things that were subject to sanctions. They used to use the Bahrainis as one of the greatest routes for money, goods, new cars and so on. Without Germany and without Italy, there is a real danger that we could be left high and dry.

[Mr Straw]

May I, as one of the three Foreign Ministers who got the arrangement going in the middle of 2003, underline the hon. Gentleman’s point about the E3? There were two huge advantages. One was that we were not the United States, although we consulted them, and the second was that because France, Germany and the UK were working together, each of us could reach out to a series of other allies. We did not just get three rather large countries on board but many others, too.

[Mr Wallace]

It is absolutely true that Russia and China often need to know that the west is united before they move from an agnostic position to a proactive one. One worry I have about the full closure of the embassy in Tehran is the fact that I have seen the Chinese and Russian embassies in Tehran, and the Chinese and the Russians will not waste any time in becoming the prominent voice of the E3 plus 3. I know that we have not shut down diplomatic relations, and I reiterate the importance of that.

Another thing to which the Iranians will be hypersensitive is the charge of hypocrisy in the middle east. We must always be aware of it. Pakistan is one of their neighbours, and it not only started a nuclear programme but distributed it. In fact, Mr Khan is probably the one responsible for giving the Iranian programme a bit of a boost. The response to that is that the west has done everything other than punish the Pakistanis for not being a signatory of the nuclear non-proliferation pact: therein lies part of the problem. I noticed last week that Australia has agreed to sell uranium to India. India is not a signatory of the nuclear non-proliferation pact and is not going by that rule, and although the nature of the Indian Government is entirely different, the Iranians are obsessed with treaties and they can see what is happening. We must be consistent.

The other issue is Israel, of course. This is not about the conflict or whether it is right or wrong, but Israel is another country in the middle east with a nuclear weapon that does not sign up to the UN nuclear non-proliferation regime at all. That will be used against us. As long as we are consistent and say to Iran that it must comply, but we would also like Israel to comply, that strengthens our hand.

Thirdly—and finally, because I am aware that many people wish to speak—where will we go from here on sanctions? It is important to recognise that sanctions are part of the process of trying to bring Iran back to the rule of law, and back to attempts to solve the issue by allowing inspectors in. That would allow Iran to play a full role in the world, which it should do, and would allow the Iranian leaders to understand that we are not trying to make war with Iran but to make peace and allow it to live to its full potential. The worst thing for the Treasury and this Government would not be if the sanctions failed, but a war or military intervention that would see oil prices go through the roof. I do not think that this frail economy could survive oil at $250 a barrel.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. There will now be a five-minute limit on speeches, with the usual injury time for interventions.

17:59

[Paul Flynn (Newport West) (Lab)]

The threat of war is far more serious than an increase in oil prices. The effect of a war, particularly if nuclear weapons were involved, would be almost unimaginable, particularly given the situation regarding Iran and its clients in Hezbollah and other groups. We should not treat this issue lightly or suggest that it is not important that we are seeing a new nuclear state because it would lead, I am certain, to others such as Turkey and Saudi Arabia also wishing to acquire nuclear weapons. The great fear is that a wall of sanctions can rapidly become a war of weapons. I have watched two terrible decisions being made in this House, and I believe we are on the brink of stumbling into another dreadful conflict.

When we went to join Bush’s war in Iraq, that decision was taken on the basis of a deception in the House. Eighty Labour MPs opposed the war and had signified their opposition to it, but during the debate they were bribed, bullied and bamboozled into abstaining or voting for the war. The majority on which that measure was passed was 179—coincidentally exactly the number of our brave troops who died in that war. If we had known the truth then, that war would not have taken place because 80 Labour MPs would have opposed it.

I have also seen the second-worst decision in my time here—the decision to go into Helmand province in 2006. At that time, only two British soldiers had died in the conflict. The figure is now 192. Again, the basis on which that decision was taken was the hope that not a shot would be fired and that we would be there for, at the most, three years for supervision purposes. We are now in grave danger of deepening the chasm of suspicion between ourselves and Iran.

There are reasons for saying that although the Arab awakening has not affected Iran in the same way as it has many other countries in the region, there is discontent in that country. There is division on almost all issues except one—the nuclear issue. If there is any way of guaranteeing that almost all sides of opinion in Iran join together it is the threat from outside—from us—which wants to deny it the possibility of having a nuclear power programme or the nuclear weapons that Israel, Pakistan and India already have. The great danger is that this escalation seems to be going on now. We should be seeking means of reducing the tension, building confidence and bridging the gap. We know the provocations that have taken place, but there is this grave danger. Unless we recognise the truth of the threat, we might find ourselves in another terrible situation of going along a slippery slope that could lead to warfare—in this case, possibly nuclear warfare.

18:03

[Mr Brian Binley (Northampton South) (Con)]

Let me say at the outset, in order to set my hon. Friend the Minister’s mind at rest, that I fully support the measures that the Government have taken on sanctions. I welcome the sanctions as they have been levied, but I would have wished us to have applied a whole series of sanctions in a more programmed and measured way for a longer period. However, we are where we are. The information I am getting from people inside Iran is that the sanctions are already proving quite successful, but I think the Minister mentioned that.

The action of shutting the Iranian embassy in London and downgrading our staff in Tehran desperately needs to be followed up by our European Union partners and others in the wider western world. It has been a tragedy over many years that we have consistently given messages suggesting that we were attempting to appease the mullahs as though they were friendly English vicars eating cucumber sandwiches and drinking their tea on their lawned gardens. We all know that not to be the truth, but that impression seems to have been ingrained in the Foreign Office for a long time. Every time I talk to the Foreign Office about Iran, it seems to want to bring the mullahs on board, as though any kind of appeasement would achieve a friendly outcome in which we could all eat cucumber sandwiches together. There is no hope of that, so we need to go further and apply sanctions, perhaps in the oil and gas arena, but we need the help of other nations to do that. The Germans and French seem particularly concerned about our interests at the moment, but doing that would be in their interests. We are talking about a mediaeval theocracy that is building a nuclear weapon, and that is very surprising.

Let me remind the Minister that the Iranian people had the courage and the bravery to start the first demonstration that could be described as the beginning of the middle east spring—I shall not call it the Arab spring, for obvious reasons. They were the people who recognised that their elections were corrupt and who rose up in their hundreds of thousands to make a point to a regime that they have found difficult to influence. We have talked about the constitution, but that constitution is not regarded very highly by the people who have a duty and a responsibility to operate it.

Let us look at Iran’s human rights record. Minors have been executed: Amnesty International said only a short time ago that a 16 and 17-year-old were hanged this year. Young women are being stoned, and trade unionists, students, bloggers and members of the Baha’i faith have been imprisoned and, in some cases, hanged. Three fathers who went to visit their children in Camp Ashraf in Iraq were charged on their return with moharebeh—being an enemy of God. Those three people were killed too. So much for a constitution.

This is a country that needs to see strong measures from the west and to hear strong messages that we support what is a sizeable wish for democracy and freedom. The sanctions are a measure in the right direction, but more needs to be done. I ask Ministers to make every effort to implore their fellow Ministers in the EU and beyond to send a strong message that will give hope to the people of Iran and to those Iranians who are working externally for a free and democratic Iran.

18:08

[Jeremy Corbyn (Islington North) (Lab)]

In this brief debate, we should think very carefully about the long-term implications of the path on which we are apparently setting out today. I recognise much of what was said by the hon. Members for Northampton South (Mr Binley) and for Wyre and Preston North (Mr Wallace) about human rights abuses in Iran. I draw attention to early-day motion 2526 concerning trade unionists in Iran, and there are human rights abuses against people of the Baha’i faith, Kurdish people and others. I am extremely well aware of the abuse of human rights that takes place in Iran and of the determination of many people, including working-class people, trade unionists and intellectuals, to do something about their society and to take part in that political debate. We should recognise that a lively, if robust and sometimes very dangerous, political debate is going on in Iran.

We should also think carefully about the rhetoric we use when we talk about Iran. Iran is an inheritor of the Persian tradition, a place of enormous civilisation and culture, and a place of enormous unity when faced with an external threat, as my Friend the Member for Newport West (Paul Flynn) pointed out. We should not denigrate the whole history of the Persian people and the contribution that they have made to history while ignoring our own scandalous role in their history, from the attempts at exploiting oil, which eventually led to the formation of the Anglo-Iranian Oil Company, which became BP, through to the coup in 1952 inspired by the British and the CIA. We do not have clean hands in the history of Iran, and we should have some humility when dealing with the situation there.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

To add to that point, does the hon. Gentleman agree that the last thing we should try to do now is demonise Iran?

[Jeremy Corbyn]

Absolutely. I sat in the Chamber in the run-up to the wars in Afghanistan and Iraq, when the House indulged in an orgy of demonisation of a particular country. That created a sufficient head of steam in public opinion that was deemed by the Governments of the day to endorse an invasion of those countries. I remind the House that 10 years later we are still in Afghanistan, we have spent £9 billion or £10 billion on wars in Iraq and Afghanistan, and there is no end in sight.

The reason the Minister gave for proposing the Financial Restrictions (Iran) Order 2011 to the House was that this is a banking order—a finance order—but he relied heavily on the IAEA reports and the issue of Iran’s nuclear capacity and nuclear capability. I stand here as somebody who is passionately opposed to nuclear power and nuclear weapons in equal measure. I believe nuclear power to be intrinsically environmentally unsustainable and dangerous, and I think nuclear weapons are absolutely immoral. However, I recognise that in law there is a distinction in that any country is allowed to develop nuclear power; it is not allowed to develop nuclear weapons.

Iran remains a signatory to the nuclear non-proliferation treaty. Last year’s NPT review conference came to the conclusion that the best way of bringing about a nuclear-free world—a big step—would be the creation of a nuclear-free middle east. That would, of course, mean a mechanism for negotiation involving Israel and Iran. Israel, I remind the House, has 200 nuclear warheads and the rhetoric of the Israeli leaders is strongly critical of Iran. We need to bring about a mechanism, impossible within the NPT while Israel remains outside it, and possible only within the terms of a nuclear weapons convention. I hope the Government will put considerable efforts into promoting a nuclear weapons convention, and retaining a diplomatic link and debate, negotiation and discussion within Iran.

There are those who say that the war has not started yet and there is nothing to worry about. I remind them of a number of facts. One is that the US fleet in the Gulf is enhanced and enormous. There is a US base in Bahrain. Iran shot down and captured a drone missile that had apparently strayed over the border or been deliberately sent over it, depending which narrative we care to follow. A serious and significant number of assassinations and explosions have occurred in Iran over the past few weeks, with greater and greater intensity. I do not know who is causing those explosions. It could be foreign forces; it could be internal opposition; it could be all kinds of people, but there are clearly enormous tensions. Isolating Iran in the current circumstances is more dangerous than anything else I can think of.

[Martin Horwood (Cheltenham) (LD)]

The hon. Gentleman is making some interesting points, but I am not clear whether he opposes a tougher sanctions regime. Surely a tougher regime is the peaceful means by which we will persuade Iran not to develop nuclear weapons, and therefore avoid the higher risk of another state intervening in a more aggressive and violent way.

[Jeremy Corbyn]

What I want is engagement and recognition, first, of the human rights abuses in Iran, which are clearly immoral and wrong; a great deal of attention has been drawn to those. Secondly, serious engagement is needed that does not lead us to a descent into war with all the incalculable consequences of that, not to mention very high oil prices for the rest of the world. Today’s debate is, to me, one staging post in the process. Whether the sanctions will have any effect I have no idea. I suspect they will have very limited effect, particularly as my right hon. Friend the Member for Blackburn (Mr Straw) pointed out that they are being imposed by Britain with the United States, virtually in isolation from the rest of the world.

I hope we have learned lessons about the folly and stupidity of getting involved in wars that allegedly are for our own protection, but in reality are often seen to be part of western expansionism and the assertion of US power within the whole region. We are here to make a decision on one fairly small aspect. I hope we can be a little more careful and sensible about this and recognise that there are very many people in Iran who will be united, as my Friend the Member for Newport West pointed out, in opposition to any foreign intervention and any invasion of Iran. Perhaps it is those people whom we should be thinking about now, rather than preparing for yet another war.

18:15

[Robert Halfon (Harlow) (Con)]

I welcome this debate because, contrary to what has just been said, I believe that Iran is in essence the new Soviet Union of the middle east. It supports terrorism. We know well its strong backing of Hezbollah in Lebanon. It supplies Hezbollah with the missiles and the finance that it needs to destabilise the region and to fire attack missiles on Israel. Iran also supports Hamas, and we know what Hamas has done in Gaza, overthrowing the more moderate Palestinian Authority, running a totalitarian mini-state known as Hamastan in Gaza, stopping moves towards peace and regularly firing missiles on Israel.

Iran has also undermined democratic states. Not long ago it fired missiles on to the Kurdish regional Government. It is supporting the Syrian Government of President Assad and his crackdown on the recent anti-Government protests. It has provided the Syrian authorities with equipment, advice and technical know-how to help curtail and monitor internal communications. It has provided material assistance in the form of riot and crowd dispersal material, as well as military training for Syrian troops. Hamas, Hezbollah and Syria are in essence proxies for Iran. We well know that Iran has sent suicide bombers into Iraq and attacked our troops.

All this would be bad enough were it not for Iran’s nuclear programme. As has been said, the development of the nuclear bomb in Iran is incredibly concerning. The IAEA report has been highlighted and clearly shows that Iran has been covertly developing the technology needed to weaponise nuclear material. If we think the current Iranian regime is extreme, its so-called more moderate predecessor said that it would be okay to use a nuclear bomb in the middle east against Israel, because if a few million are killed in the process, it does not matter for the wider good.

[Jeremy Corbyn]

The hon. Gentleman mentioned nuclear weapons. Does he not have concerns that Israel has 200 nuclear warheads and is not a signatory to the nuclear non-proliferation treaty? Does he not think a nuclear weapons convention including Israel would be a helpful step forward in the region?

[Robert Halfon]

I am happy for any nuclear convention to reduce nuclear weapons in the middle east, but the crucial point that the hon. Gentleman misses is that Israel is a democracy and Iran is a dictatorship.

[Mike Freer (Finchley and Golders Green) (Con)]

I agree with my hon. Friend. May I point out that it is not Israel that has threatened to wipe its neighbour off the face of the earth? Is that not the key point?

[Robert Halfon]

My hon. Friend, who is a strong supporter of Israel, is exactly right.

The one difference between Iran and the Soviet Union is that, when the Soviet Union and the west had nuclear weapons, we lived under the doctrine known as MAD, mutually assured destruction, and for MAD to work one had to be sane, but the sad fact is that Iran does not have that level of sanity, given that, as my hon. Friend says, the President often says that he wants to wipe Israel off the map. We know how the regime behaves from its recent treatment and trashing of the UK embassy, from its taking of American hostages and from its many other human rights abuses.

The hon. Member for Islington North (Jeremy Corbyn) mentioned the abuse of trade unionists and the imprisonment of women, an issue that The Times has highlighted so well, so I strongly welcome the fact that the Government have brought in the tough measures before us. This is the first time the UK has used such powers to cut off an entire country’s banking sector from our financial sector, and that is hugely important not just because of the hoped-for effect of stopping the Iranian nuclear regime, but because of the message that it sends to other tyrannical regimes throughout the world—that Britain will not be weak, but be strong and do everything it can to stop the actions of such dictators.

Although I strongly welcome these tough sanctions and praise the Treasury for having the courage to introduce them, I note that we may be too late. Iran is not far off acquiring a nuclear bomb, and we—perhaps not this country itself, but NATO—may need to take further military action to rid the world of that bomb, to put pressure on the country’s evil regime and to bring about a true democracy, with the rule of law, freedom and everything that the Iranian people deserve.

16:48

[John McDonnell (Hayes and Harlington) (Lab)]

I, too, preface my remarks by stating that I have been a consistent opponent of the regime in Iran. I founded the Hands Off the People of Iran organisation in this country to campaign for the restoration of democracy in Iran and, with my hon. Friend the Member for Islington North (Jeremy Corbyn) and the hon. Member for Northampton South (Mr Binley), have signed a number of early-day motions in support of human rights in Iran. I have focused on the persecution of trade unionists, particularly those in the Tehran bus workers union, but I also led the campaign in this country to free Jafar Panahi, the film director.

Having said all that, I am extremely fearful of the statutory instrument under consideration, because I fear that it will take us into the cul-de-sac of war, which is an all too familiar path for us in this country: we seem to find an opponent, which is usually associated with minerals or oil; we then find that it is a threat to world safety; and we then find or concoct evidence of that threat. The International Atomic Energy Agency’s recent report failed to find any conclusive evidence of nuclear weapons production and, in fact, found no evidence of Iran’s

“diversion of declared nuclear material”

to weapons production.

The report relies on past evidence, which we have debated in the House before: a laptop computer, originating we believe from the Israeli or US intelligence services and referring to the development of a nuclear weapons programme by a certain scientist, Vyacheslav Danilenko. We were told at one point that this Ukrainian was a nuclear science expert, but we now discover that he was an expert in nanotechnology and had no real expertise in nuclear weapons. We were told also that there was a technique, supposedly being developed by the Iranians, involving a test explosion chamber, but we now know from the evidence of Robert Kelly, the chief of the IAEA for eight years in Iraq, that the chamber could never be used in a test.

[Mr Binley]

Will the hon. Gentleman give way?

[John McDonnell]

I would, but we are short of time, so if the hon. Gentleman does not mind, I will not. I am sure that he understands.

All that evidence led to the conclusion by Mr Mohamed el-Baradei, the former head of the IAEA, that he had “no confidence” in the allegations based upon it, but it has convinced the new head of the IAEA, Mr Yukiya Amano. WikiLeaks has, unfortunately, exposed comments from the US on Mr Amano, however, whom it describes as

“solidly in the US court”

and “ready for prime time”.

So I begin to doubt the independence of his judgment on the matter.

It seems that we are being drawn into an atmosphere of war, and sanctions lead to war. Recent research by Professor Robert Pape of the university of Chicago demonstrates that 95.7% of cases of sanctions since world war one have led to military conflict, but who suffers? I agree with my hon. Friend the Member for Islington North that it is not the elite, but the poorest. The reaction is usually for the ruling elite to blame the ills of the country on foreign forces, and sometimes it even unites the country against a foreign foe, but the tragedy is that sanctions often motivate a regime to seek to protect itself by acquiring the very weapons that we seek to rid ourselves of.

There has been military action on the ground already. We have evidence of that from various reports—not just the drone, but intelligence assets on the ground relating to assassinations. The chair of our own parliamentary Intelligence and Security Committee could not rule out such assassinations having been undertaken by Israelis, and he confirmed that on occasions the US and Israeli Governments have given authority for assassinations.

I just want to get on the record my fear that we have trodden this path before, and that after sanctions come the bombs, then invasion, then loss of life, destabilisation and a growth in terrorism, then usually the installation of a puppet regime and the privatisation and exploitation by western countries of the mineral and oil resources. I hope against hope that we are not embarking on that tonight with this statutory instrument, but I have this dreadful fear of “Here we go again”.

18:26

[Rory Stewart (Penrith and The Border) (Con)]

In the debate about Iran, we tend to be presented with two pictures of the country: either it represents an extreme existential threat to national security, in which case any response, however aggressive, is justified; or it is not a threat at all, and therefore we do not need to do anything.

The truth is of course more complicated and tragic. Iran poses a significant threat to the United Kingdom, Europe and the United States, but our options are limited. There is not time in a five-minute speech to talk about the issues that the hon. Member for Islington North (Jeremy Corbyn) raised, but it is true that Iran is a highly complex and fragmented society. There is an elite, particularly in Tehran, Isfahan and Shiraz, who are liberal, western-friendly and progressive, but there is also an extremely conservative and isolated rural population, who provide the support base for Ahmadinejad. There is no doubt at all, however, that Iran is a priority.

Many things in which the House has become involved have not been priorities. In recent debates, we have become involved in everything from Somalia to Mauritania, and we have exaggerated the importance of Afghanistan, but Iran clearly matters—in terms of its connection to terrorism, its nuclear bomb, rights and regional stability. There is no greater potential force for regional stability or instability than Iran, but we must face the fact that our current policy of sanctions, though rational and wise, is designed to delay the development of a bomb; and we must face the fact that there is a very high probability of Iran eventually developing a bomb. It may well develop a bomb even if an Islamist Government are not in place, because an atomic bomb has become a source of national pride for many people going well beyond the Islamist supporters.

What is our appropriate response to that threat? We should continue to do the things that we are doing at the moment. First, we should ensure that we have a clear, consistent policy towards Iran. That means that we do not wish to appease the Iranian Government, or to give any impression at all that our sympathies lie with that Government. We need to be robust in our defence of Iran’s regional neighbours, because the primary threat that will be posed by an Iran in possession of a nuclear bomb, however erratic and eccentric its Government are, is unlikely to be the bomb’s deployment; it is more likely to be a considerable increase in Iran’s prestige and in its threat towards its neighbours through terrorism or border disputes.

We must also, however, do things that we are not doing enough at the moment. One is to recognise that because the problem is primarily political, the Foreign Office and our armed forces must invest more and more in area expertise and linguistic expertise in relation to Iran because that will become more and more important—either in deterring some of our allies from unwise precipitate action or in helping us support our regional neighbours.

Secondly, it would make enormous sense to diversify our energy supply. Some 30% of the oil on which western Europe and the United States depend comes through the strait of Hormuz. That is far too much. Iran has a stranglehold on us, but we can overcome it through the smart deployments of new routes of delivering oil and gas to Europe and the United Kingdom.

Finally—a new idea in the last 30 seconds—we need to change our relationship with Shi’a communities around the Arab region and in Pakistan. Too often, we have acted as though Shi’a communities are natural allies of Iran, but there is no reason for them to be so. There is no reason why Britain cannot use its history and knowledge to develop a more constructive and productive relationship with those communities. If we can get that right, continue to invest in the financial sanctions and measures that we are already taking and develop the three areas that I have identified, we can move away from a policy of lurching from extreme aggression to inaction and find a principled, moderate and passionate response.

18:31

[Andrew Percy (Brigg and Goole) (Con)]

I rise to support the motion and the words of the Minister. Some of the shadow Minister’s comments about wanting to see an international extension were perfectly reasonable, but I do not think that that alone should have prevented us from acting on our own, and acting with the United States and Canada was entirely correct.

A great deal has been said that I do not wish to repeat, although I endorse what my hon. Friend the Member for Harlow (Robert Halfon) said about comparisons between Israel’s having nuclear weapons and the acquisition of those weapons by the despotic regime in Iran. We are talking about two completely different Governments and to try to mix them up is unhelpful, to be polite about it.

I do not think that anybody who has spoken today has in the slightest attempted to denigrate or insult the history of Iran or the Iranian people. The issue that we all have is with the Iranian regime; the debate has been consensual in that we have all expressed our outrage at what that does to its own people. I do not think that those who urge us to go further are in any way seeking to denigrate the Iranian people or their history.

[Jeremy Corbyn]

I appreciate that the hon. Gentleman is not trying to denigrate anybody, but unfortunately the history of interventions is that, however supportive people are or odious the regime is, we end up with an awful lot of wholly innocent civilians being killed, as happened in Afghanistan and Iraq. None of us wants to see that in Iran.

[Andrew Percy]

I do not think that anybody wants to see conflict in Iran; more importantly, none of us wants Iran to acquire a nuclear weapon at all. We are on the same page on that one.

[Jeremy Corbyn]

We have nuclear weapons here.

[Andrew Percy]

That is a different debate for a different day, but I would rather that nuclear weapons were in the hands of the United States or this country than in the Iranian regime’s, as it is currently constituted.

The hon. Member for Hayes and Harlington (John McDonnell) commented on the International Atomic Energy Agency report—[Interruption.] I apologise for my croaky throat, Madam Deputy Speaker; it is difficult to get my words out. The hon. Gentleman’s conclusions were slightly different from those drawn by others. I want to remind him of a couple of things in that report. Crucially, the report found evidence that Iran has procured

“nuclear related and dual use equipment and materials by military related individuals and entities”;

has developed

“undeclared pathways for the production of nuclear material”;

has acquired

“nuclear weapons development information and documentation from a clandestine nuclear supply network”;

and has worked

“on the development of an indigenous design of a nuclear weapon including the testing of components”.

Further evidence is provided by the reports that we have seen about the high explosive test sites, the neutron initiator and the uranium enrichment, which all prove that Iran is closer than ever to a nuclear weapons programme.

There has also been the non-co-operation with the IAEA, of course—we know that inspectors are consistently barred from entering Iran. In some cases they have been expelled; in 2007, 38 inspectors were expelled. We can read a great deal into the response of the Iranian regime to the IAEA findings; it simply dismisses them as having been written by people acting on behalf of the United States or its western allies.

I do not think that the report’s conclusions were quite as the hon. Member for Hayes and Harlington suggested. We should be extremely concerned. It is absolutely right that we act as we have been acting and show leadership on the issue. Yes, we would like other European countries to come on board, but acting as we have, along with the United States and Canada, is right for this country and what we are all trying to achieve—Iran never getting hold of a nuclear weapon. I associate myself with many of the comments made in this debate and I endorse the position of the Government.

18:36

[Mr John Baron (Basildon and Billericay) (Con)]

I rise to suggest to the Minister not only that it is questionable whether sanctions are working but that they may be counter-productive. I also suggest that the west underestimates its ability to influence Iran. It is a complex society with multiple centres of authority and constant power struggles. I hope that our Government will recognise that better in our diplomatic efforts.

Iran is a very wealthy country when it comes to minerals; other major powers are queuing up to gain access to its oil. That lessens the impact of sanctions from the west. Anyway, if Iran has set herself on nuclear weapons, she will not be scared away; if she has not, sanctions will, in my view, serve only to encourage her to get them.

In our discussions on Iran, we tend to forget too easily that it is a complex society justifiably proud of its history. As we have heard, the Parliament has protected rights for minorities; Iran’s 25,000 Jews are represented by a Jewish MP. We forget that there is no desecration of synagogues, which is more of a problem in Europe. We also forget that there is a well developed middle class in Iran that often disagrees with Ahmadinejad, as recent protests have illustrated.

My concern is that sanctions are counter-productive. Support for the current hardliners in Iran probably increases as a result of sanctions—Iranians responded to Bush’s talk of an axis of evil in 2002 by removing the reformist President Khatami. I suggest that the only sensible course of action is calm yet vigorous diplomacy.

[Robert Halfon]

I am incredibly grateful for my hon. Friend’s thoughtful remarks, although I come from a completely different perspective. He said that sanctions have made the regime more extreme, but some years ago there were no sanctions yet the regime became more and more extreme. Can he explain that?

[Mr Baron]

I am afraid that my hon. Friend was not listening. I did not say that sanctions made the regime more extreme, but that they reinforced the position of the hardliners within Iran, itself being a complex society. There is a difference. The only sensible option is calm yet vigorous diplomacy. We need to offer implicit recognition of Iran’s status as a major power in the region—a status that we created ourselves by castrating Iraq. There is a precedent for recognising a new status. In the 1960s, when the US presence in Asia was waning and China was beginning to flex her muscles, Nixon did not respond by denying the reality of Chinese power.

As I said, the west underestimates the opportunity to influence Iran. She is a state in transition with multiple centres of authority and constant power struggles. The challenge for the west is to influence those struggles. Crude sanctions or appeals for regime change undermine local proponents of reform by making them look like imperialist lackeys. Offering Iran a new relationship with the west could strengthen the pragmatists at the expense of the hard-liners. We can, and should, go the extra mile for peace. Much greater emphasis needs to be placed on quiet diplomacy between Iran and the west.

[Mr Binley]

Does my hon. Friend recognise that we have approached the Iranians bearing gifts in that we proscribed the MEK as a way of mollifying them and encouraging them to be our friend? None of our overtures over the past 12 years has worked. Does my hon. Friend recognise that a consistent but strong voice is now the only way to proceed, and that the last thing we want is military intervention?

[Mr Baron]

I am afraid that the Iranians have a slightly longer memory than just 12 years. They remember our support for Saddam Hussein when he invaded Iran, and many other interventions in Iran by the west are still fresh in their memories.

We need to go the extra mile for peace. Much greater emphasis needs to be placed on quiet yet vigorous diplomacy between Iran and the west. The UK is well placed to help in this effort. Despite recent measures announced by the Foreign Secretary, of the three stated enemies of Iran—the UK, the US and Israel—only one still has diplomatic relations with Iran.

[Mr Denis MacShane (Rotherham) (Lab)]

Will the hon. Gentleman give way?

[Mr Baron]

No, because we are very short of time—I apologise.

I suggest that we give diplomacy a greater chance for one final push before it is too late.

18:42

[Mr Hoban]

This has been an interesting and wide-ranging debate. As anyone listening to it will have recognised, there is a range of views about Iran and how the UK should engage with it, but there is also the common strand that everyone expressed—our concern about the proliferation of nuclear weapons and how we seek to tackle that.

In response to my hon. Friend the Member for Basildon and Billericay (Mr Baron), I say that we all want to see a diplomatic solution, but we need a process whereby there is not only engagement but pressure on the Iranian Government. At the moment, unfortunately, there are no signs to suggest that the Iranians are interested in meaningful and serious negotiations on the key issue of their nuclear programme, and it does take two parties to engage. The E3 plus 3 has been trying to negotiate with Iran, and it is not that group’s fault that the negotiations have not yet succeeded. It is Iran that needs to engage in serious negotiations.

Let me reflect on some of the comments that have been made. The right hon. Member for Blackburn (Mr Straw) and my hon. Friend the Member for Wyre and Preston North (Mr Wallace), who are co-chairmen of the all-party group on Iran and are currently at one of its meetings, asked about support for the action that the Government have taken and why we did not act in concert with EU member states. It is worth highlighting two points in that regard. We have undertaken a significant programme of lobbying internationally and continue to do so. As I said earlier, the US and Canada acted alongside us in imposing the sanctions on 21 November. However, there is a balance to be struck. Clearly, we want to encourage as many people as possible to join with us to impose these sanctions, yet at the same time there is a real sense of urgency on this issue. The risk of Iran acquiring a nuclear weapon becomes more serious as time passes, as was highlighted in stark terms by the IAEA report. We consider it imperative to act now and to encourage others to follow.

[Mr Baron]

Will my hon. Friend give way?

[Mr Hoban]

I want to make progress and conclude fairly promptly because there is a time limit on this debate.

We will engage with our European counterparts at the Council meeting next month. As I said, President Sarkozy wrote to us supporting moves for financial sanctions but also suggesting broadening them to the import of oil.

Let me turn to the points raised by the hon. Member for Nottingham East (Chris Leslie). I have dealt with his first point about putting pressure on other countries to act. His second point was about whether the UK will use significant fines to promote enforcement. As I said earlier, the civil and criminal penalties for breaching these restrictions enable the authorities to levy unrestricted fines. In the context of the civil sanction, for example, the fine should be proportionate, effective and dissuasive. I believe that the authorities take this matter seriously and will act proportionately to that.

The hon. Gentleman asked about exemptions, which relate to the licensing process that we have talked about in other situations. Some general licences are in place to deal with transactions that are already in progress. People can also apply for specific licences. Fifteen specific licences have been applied for; one has been granted and 14 are in the process of being considered. This is an ongoing process. I hope that that also addresses the point raised by my hon. Friend the Member for Wyre and Preston North.

We are committed to reporting regularly to Parliament. The Counter-Terrorism Act 2008 says that we should report as soon as possible after the calendar year in which the actions have been taken. We will endeavour to do so, and we will keep the House informed about the progress that is made.

Everyone across the House recognises the dangers that attach to nuclear proliferation. This is a process of negotiation and diplomatic engagement. We need the other party to engage in that diplomacy, too, but we should not be afraid of applying pressure to the Iranian regime where we think that that is appropriate and proportionate and will help to further our objective of keeping the world a safer place. I commend the motion to the House.

Question put and agreed to.

Resolved,

That the Financial Restrictions (Iran) Order 2011 (S.I., 2011, No. 2775), dated 21 November 2011, a copy of which was laid before this House on 21 November, be approved.

Opposition Day

Tuesday 13th December 2011 Commons Chamber

[Un-allotted Half Day]

European Union

Tuesday 13th December 2011 Commons Chamber

18:48

[Mr Nigel Dodds (Belfast North) (DUP)]

I beg to move,

That this House commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK; regards the use of the veto in appropriate circumstances to be a vital means of defending the national interests of the UK; and recognises the desire of the British people for a rebalancing of the relationship with our European neighbours based on co-operation and mutually beneficial economic arrangements.

Yesterday in the House the Prime Minister referred to a period of great change in Europe. There is a sense arising out of the European Council at the weekend that something very significant has happened in the United Kingdom’s relationship with the European Union. A taboo has been broken. For the first time in living memory, a Prime Minister of the United Kingdom went to an EU summit not only prepared to say no but, in the event, actually used the veto when it became necessary in our national interest. I commend the Prime Minister for sticking to his word and wielding the veto in the circumstances that he outlined in this House last week. I have to say with regret that that is not something that we have come to expect from British Governments. We have been more used to Ministers going to crucial EU meetings in recent years and coming back having to explain why the latest EU regulation or measure is being implemented despite the implications for our national interests.

It is clear that what the Prime Minister has done has gained support from people from right across the political spectrum. That may not be reflected in some of the speeches, interventions and posturing in the House, of course, but it is clear that a large number of people from all backgrounds, whether they are Tory, Labour, Liberal Democrat or support parties in Northern Ireland, agree with what the Prime Minister has done.

[Andrew Percy (Brigg and Goole) (Con)]

May I provide my right hon. Friend with an example of that? Two of my constituents living on the Isle of Axholme wrote to me last night by e-mail to inform me that they had voted Liberal Democrat in the general election but would now vote Conservative because of our Prime Minister’s actions.

[Mr Dodds]

I am sure there will be many such messages flooding in to right hon. and hon. Members over the coming days. There is no doubt that, not for the first time, many Members are out of step with what the people think.

[Mr Denis MacShane (Rotherham) (Lab)]

Very simply, what action did the Prime Minister veto? A veto is imposed to prevent something from happening.

[Mr Dodds]

I will come on to that in detail, but he prevented a treaty from coming into place that did not have sufficient safeguards for the United Kingdom. It is a pity that when the Labour party was in government, it did not take such action to prevent some of the things that happened to this country.

[Mr John Redwood (Wokingham) (Con)]

Of course, the Prime Minister stopped a treaty for the 27. Did the right hon. Gentleman see that the statement that was issued was made only by the 17 euroland Heads of Government? The other nine have not signed up to it. That is very clear in the statement, so it is misleading to say that Britain is isolated when the other nine think it is a lousy treaty as well.

[Mr Dodds]

The right hon. Gentleman is absolutely right, and I will come to that. Even today, we are hearing of issues in Denmark and that Sweden is unlikely to sign up. In Poland, it has been pointed out that two thirds of each House will have to support what has been agreed if the country is to sign up, and it is unlikely to get that. We are hearing similar things in Finland, the Czech Republic and other countries, never mind what is going on in Germany and even France. This is potentially a watershed moment in British politics.

[Mr William Cash (Stone) (Con)]

This is a good moment to place on record the fact that the Democratic Unionist party has played a stalwart role in this whole business from the beginning. That needs to be put on the record, as part of the historic tribute that needs to be paid to that party in this matter.

[Mr Dodds]

I am very grateful to the hon. Gentleman for his kind remarks. Given that he was commended even by the leader of the Labour party in the House yesterday, those words are very welcome coming from someone with such vast experience in fighting these battles over the years.

What happened at the weekend is important not so much for the substance of the matter in itself but for the rebalancing of our relationship with the European Union that it might herald. I refer to that in our motion.

Many people say that because of the action that the Prime Minister has taken, we are now marginalised and isolated. Many of those who say that are, of course, the very same people who at one time not so long ago were urging us to join the euro. They were the people who castigated the euro-realists who dared to point out the in-built defects of the euro project. They made the same dire, doom-laden predictions then. They were wrong then, and they are wrong now.

Being outside arrangements that exist for most of the other EU members is, in any case, nothing new. For instance, the UK is not in the Schengen agreement. We were told by some that that was contrary to the spirit of being good Europeans as part of the EU, but it is absolutely right in the interests of the UK and the protection of our borders.

We heard much yesterday and over the weekend about the damage that the latest developments might do to our country’s standing in the world. For instance, we heard about how the Americans might view us. However, yesterday Hillary Clinton made very clear what she thought, saying that

“our concern has not been over the position that the UK has taken, it’s whether the decisions made by other members of the eurozone countries within the EU will work.”

With respect, that is the nub of the matter. What matters is what will happen to the eurozone.

We have talked about the role of other countries. The right hon. Member for Wokingham (Mr Redwood) referred to other countries that have not signed up, and I mentioned Sweden. It will also be interesting to see what the position is in the Irish Republic when the matter has been considered in detail. It is not so much the text of the proposal as its substance that matters in the decision whether the agreement must go to a referendum. It will be interesting to see the reaction there. It is clear, is it not, that the French Government and others have a clear policy when it comes to corporation tax? Over the years, the Irish Republic has prided itself on attracting foreign direct investment through low rates of corporation tax, and it has built its economic policy around that to a large degree. It will be watching the matter very carefully.

[Mrs Anne Main (St Albans) (Con)]

Does the right hon. Gentleman share my concern about the fact that a French MEP is suggesting this evening that Britain ought to be punished for taking a view that supports the best interests of Britain? Should countries be punished for not behaving themselves?

[Mr Dodds]

The hon. Lady is right to point to some of the vindictive language that is coming out of Europe. Indeed, President Sarkozy was talking today about consequences for the United Kingdom because of the actions that we have taken. We have to recognise that there are dangers—I think the Prime Minister talked about “risks”—in the intergovernmental approach, and I will deal shortly with what that might mean. It is one reason why we cannot let matters sit where they are. We are in an unsatisfactory position, and we need to decide how we will deal with the situation.

In France, the Opposition Socialist contender in the presidential election, François Hollande, has made it clear that if he were elected, he would seek to renegotiate any agreement that was reached, because he opposes the loss of French budgetary sovereignty. The concerns felt in the House are not some isolated, strange, esoteric or unusual position, but are shared across large parts of Europe by many parties, many of which would not be described as naturally Eurosceptic, right wing or anything of the sort. Members would do well to bear that in mind when they talk about the Government being in thrall to a small minority of MPs and others. They should recognise the reality. The idea that there is a united Europe of 26 against the UK is not correct.

Of course, many countries have to put the new euro-plus arrangements to parliamentary approval, at least, if not to a referendum. We will see what happens when they actually consider the implications of having their national budgets supervised by the European Commission, and the fact that strict rules will be imposed on their national Governments’ ability to borrow, with all the implications for sovereignty that that entails.

For all the adverse reaction from some on the Opposition and Liberal Democrat Benches yesterday, the fact is that the Prime Minister’s stance has the overwhelming backing of the people of the United Kingdom.

[Mr John Baron (Basildon and Billericay) (Con)]

The right hon. Gentleman’s points are absolutely right. May I suggest to him that many Conservative Members believe that the veto should be the start of a process to reset our relationship with the EU, based on free trade, growth and prosperity? We want to move away from political union and dead-weight regulation. That is not some utopian dream—such a relationship already exists. I ask him to reflect on the fact that countries such as Switzerland already enjoy such a relationship with Europe, so there is no reason why we should not.

[Mr Dodds]

The hon. Gentleman is absolutely right, and I will come shortly to how we should rebalance our relationship with Europe. He is right to point to the type of relationship that we should have—one based on free trade and co-operation with our European friends and neighbours, but on a sovereign nation to sovereign nation basis.

There are those who tell us that the Prime Minister has gone against the whole thrust and approach of UK foreign policy for the past 40 to 50 years. I have no doubt that there is much wailing and gnashing of teeth in the bowels of the Foreign Office and elsewhere among the professional mandarins who have seen the EU as almost a sacred cause, to be advanced whatever the wishes of the British people or the views of the temporary occupants—as they would see it—of political office. For the mandarins, the people and those who occupy political office are to be managed and dealt with—although I am sure that that does not apply to the occupants of office in this Government.

[Martin Horwood (Cheltenham) (LD)]

The gnashing of teeth is not just among mandarins, is it? Has the right hon. Gentleman heard from the business analysts at IHS Global Insight? They said that

“the European council statement made clear that a new ‘fiscal stability union’ would seek to deepen the internal market, creating stronger fiscal and economic rules.

‘Outside this union the UK is likely to become increasingly irrelevant and marginalised’”.

Does not such concern on the part of business worry the right hon. Gentleman?

[Mr Dodds]

I have heard all that before. We heard it at the time of the UK’s withdrawal from the exchange rate mechanism and when Britain decided not to join the euro. We have heard time and again the dire warnings of doom and gloom. However, if we reach the position that the hon. Member for Basildon and Billericay (Mr Baron) outlined, of a relationship based on free trade and co-operation, it will free our economy from much of the regulation, red tape, bureaucracy and dead-weight of EU laws that currently hold us back from the true competitiveness and real growth that we need.

We have not just heard from the hon. Member for Cheltenham (Martin Horwood); we have also heard the hysterical reactions of blasts from the past such as Paddy Ashdown, Michael Heseltine and the other usual suspects. It is time the House realised that focusing our foreign policy on the narrow ground of greater Europeanism and ever closer political union in Europe is contrary to the UK’s vital interests.

We make it clear that we must and should work with our European neighbours and friends on a host of economic, political and policy issues. However, let us also recognise the enormous opportunities on the wider scene: our unique position in terms of the Commonwealth, our special relationship with the United States, and our standing in the United Nations. For too long our vision as a country has been dominated by the little Europeanists, who want to take us in only one direction. It is high time that blinkered approach was discarded.

There are those who say that what the Prime Minister did was wrong because we must do all we can to save the euro. However, as was said earlier, in considering the events of last weekend, it has been overlooked that, for all the talk about arrangements to prevent future crises, not a lot was done to instil confidence that the immediate crisis will end any time soon.

[Mr Redwood]

The right hon. Gentleman is making a good point. Did he see that if, for example, Ireland or the United Kingdom joined the so-called stability pact, they would have to make massive cuts in public spending and massive increases in taxes? It is a sort of mutually assured austerity pact.

[Mr Dodds]

Yes. For precisely that reason, I believe that when the peoples of each country—and even some of the politicians, who are currently going around saying that the UK has done a terrible thing—begin to study the detail and realise the restrictions that will now be imposed on their freedom to set their budgets and taxes, to borrow and so on, they will seriously reconsider the proposal. Having caused the greatest economic catastrophe for many decades, by creating the euro and the one-size-fits-all approach, EU leaders have come up with a bizarre answer: no comprehensive solution to deal with the immediate and pressing crisis, and no overarching deal that will properly address the problems that Greece, Italy and Spain face, but a plan to deepen and extend European integration—a plan for more treaty change and more institutional tinkering.

After all the arguments about the Lisbon treaty, we were told that Europe had learnt its lesson and that there would no more institutional debates and treaty changes. Instead, Europe was to get on with the business of trying to create jobs, growth and economic prosperity, yet here they are, at it again. There is a one-track mind among many European federalists about deepening European integration, and political and fiscal union.

[Bob Stewart (Beckenham) (Con)]

When the euro was set up, were there not strict rules on compliance for those joining, which even some of the biggest countries largely ignored? Now there is again talk about strict rules on compliance. Perhaps the boy is crying wolf; I do not believe that those rules can be enforced on countries that have shown in the past that they will not comply. They will not comply in future, either.

[Mr Dodds]

The hon. Gentleman makes a good point. He is right: in the rush to set up the euro, which was a political project from the beginning—it was believed that it would ultimately lead to political and fiscal union—those behind it permitted countries that they knew were not capable of meeting the requirements to join. What they are trying to do now will not succeed in patching the whole thing together.

[Dr Julian Lewis (New Forest East) (Con)]

The right hon. Gentleman is being extraordinarily generous in giving way. To support what he has just said, does he remember Romano Prodi, then President of the European Commission, on that fateful new year’s eve when the euro was brought into effect, being asked, “This is a political project, isn’t it?” and his replying, “It is an entirely political project”? Is that not why those people are so desperate to continue with it, even though it is leading to economic disaster?

[Mr Dodds]

Absolutely. The hon. Gentleman is right to remind the House of Prodi’s words at that time, of the fact that the nature of the project is explicit, and of what lies behind it.

Some people say that the Prime Minister acted to protect the City and the big banks. If it was all about that, I would not be standing here supporting the motion. We need more regulation of the banks and of those who contributed greatly to the mess in which we find ourselves. One of the questions that arises from the Vickers report is how to regulate banks more strictly, and we need to be able to go further, unfettered by the EU. I also believe in the so-called Robin Hood tax—provided that it is applied universally and not targeted mainly at London and the UK to prop up the failing euro, of which we are not part.

[David Morris (Morecambe and Lunesdale) (Con)]

On the Tobin tax, £40 billion would have been taken out of the City. Does the right hon. Gentleman agree that that would equate to £642 in taxation for every man, woman and child in this country?

[Mr Dodds]

The hon. Gentleman is right to point to the effects if the EU had targeted the financial services sector, unfairly penalising the UK. The tax revenues of which he speaks are enormous and the contribution to employment—not just directly—is significant for the UK. There are arguments for measures such as the Tobin tax, but they have to be applied universally. The UK alone should not be picked out.

Some say that the Prime Minister’s action will cost jobs and damage British business, but the EU’s share of world trade is decreasing. Who believes that the EU would want to stop exporting to a market of some 60 million people, or inhibit trade that would cost the jobs of millions of people in the EU? That simply will not happen. All the scaremongering about that, as in the past, is not based on economic reality.

We must guard against the inevitable pressure that will come—and is already coming—behind the scenes from diplomats, mandarins and others who will try to drag the Prime Minister away from his current stance and use the back door to achieve the UK’s acquiescence. The Prime Minister has already hinted at some sort of compromise on the desire of the euro-plus countries to use the EU institutions. He needs to be careful about that. If they want to do that, we need to ask what they are prepared to do for the UK in return. I hope the Prime Minister will not accede to the pressure being exerted to allow that to happen by the back door.

Of course, it is important to recognise the limits of what has happened. As a result of what happened at the Council, 26 countries—or however many it will be in the end—cannot themselves implement agreements on financial services or other things that have an impact on the single market. That must be done through the single market Council. However, therein lies a problem. Yesterday in his statement the Prime Minister alluded a couple of times to the risks involved in the intergovernmental arrangement. As I said in my contribution yesterday, the very real risk is that other EU member states will gang up on the United Kingdom and outvote us through qualified majority voting.

[Mike Gapes (Ilford South) (Lab/Co-op)]

Is not the reality that nothing has changed with regard to financial services? Twenty-six cannot impose qualified majority voting; nor can 27. At the end of the day, therefore, the so-called veto was not a real veto, because 26 have gone ahead. The reality is that we still have the right to block changes in that respect under the Single European Act.

[Mr Dodds]

I do not agree with the hon. Gentleman. The Prime Minister is right to say that it would have been entirely wrong, without sufficient protections, to have a treaty that, as he put it, would have hard-wired the situation into the European Union treaties. The hon. Member for Ilford South (Mike Gapes) alluded to protections, but QMV does not provide the UK with much of a protection. As has been said already in the debate, given some of the vindictive language being used in European capitals at the moment, we must be very careful indeed. It is clear, in my view, that the status quo cannot stand in the medium to long term.

[Mr Cash]

Does the right hon. Gentleman accept that what he is saying is incredibly important in terms of the future path, because the real problems are contained in the existing treaties themselves, which need to be fundamentally changed, along with our relationship with the European Union? That is the real problem. We should not just nibble at the edges.

[Mr Dodds]

The hon. Gentleman is right in that regard. We cannot have a bloc of eurozone countries acting collectively by using its voting power at EU level to force through measures to the detriment of the UK’s national interest.

Even the Deputy Prime Minister has warned against the dangers of a club within a club. The new club will have a common interest and act collectively. The Secretary of State for Northern Ireland pointed that out in a recent article in The Spectator. He said:

“a fiscally united eurozone will spend as a bloc, tax as a bloc…and…vote as a bloc”,

and he is absolutely right.

For that reason and a host of others it is clear, as the hon. Member for Stone (Mr Cash) said, that a fundamental reassessment of our relationship with the EU is required. The Prime Minister’s use of the veto is very welcome. Saying no to Europe has been and remains almost unthinkable for some in the political elite, no matter what the cost in terms of our national interests, but the question now is: where do we go from here?

As things stand we are left with all the old familiar problems with the EU that we had before the European Council. We are left with the huge issues of loss of sovereignty and EU control of vast swathes of UK laws and policies. We are still committed as a country, because of the EU treaties, to “ever closer political union”. We remain subject, for instance, to the common fisheries policy, to the plethora of regulations and directives that stifle competitiveness and growth, and to interference in criminal justice and home affairs. Not least, we are still required to contribute almost £10 billion per year net to the EU at a time when domestic budgets are being slashed, and QMV provisions under the Lisbon treaty have reduced the areas where we can say no to EU intrusion.

[Ian Paisley (North Antrim) (DUP)]

On that £10 billion net that we contribute each year to the European Community, does my right hon. Friend agree that we would be far better exercised in determining how those resources are spent on our own fishermen, our own farmers, our own industrialists and our own banks, rather than letting bureaucrats and eurocrats determine how it is spent?

[Mr Dodds]

My hon. Friend is absolutely right.

I sometimes hear others, particularly elements of the media, and particularly the BBC—this will not be first time that hon. Members have referred to the BBC in that regard—argue the case for Europe by saying, “But look at the vast amounts of money we get.” That has sometimes been stated about Northern Ireland; my hon. Friends will deal more particularly with the situation there later. We are told, “But you’ve benefited from all these initiatives,” and so on and so forth, but the money involved is a small percentage of what we pay into Europe in the first place. In many cases it comes with so many strings and conditions attached that it would be far better if it were disbursed by our own Government or at a regional level.

The Prime Minister said yesterday in the House that

“the balance of powers between Britain and Europe is not right”—[Official Report, 12 December 2011; Vol. 537, c. 530.]

I prefer the use of the term “United Kingdom”, because Northern Ireland is an important part of this, but the Prime Minister is absolutely right. We must therefore build on what has happened.

Many talk about the need to have powers repatriated. I sympathise with their aims and objectives, but repatriation can be limited. We may gain here, but we will lose there. I think we need a more fundamental and simpler approach. We know what the British people want, we know what makes sense for the UK in the long run, and, as we say in our motion before the House, we must rebalance our relationship with our European neighbours.

The relationship must be based on free and mutually beneficial co-operation. It must be about free trade and commerce, to the mutual benefit of businesses and consumers throughout Europe—that is the best way to create growth and prosperity—and it must be about laws being made in this country by democratically elected and accountable representatives of the British people. That is the sort of relationship that people in this country want with Europe. I believe that for too long there has been a determination on the part of the political and diplomatic elites in this country to deny the people of this country any say on Europe. Ultimately, people must be given the opportunity—finally—to have their say through a referendum. I believe that the events of the weekend have brought that day closer, and I commend the motion to the House.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before I call the Minister, I inform the House that the amendment in the name of the Leader of the official Opposition has not been selected, and that after the Front-Bench opening speeches there will be an eight-minute time limit on Back-Bench speakers. That might need to be reviewed.

19:18

[The Minister for Europe (Mr David Lidington)]

I congratulate the right hon. Member for Belfast North (Mr Dodds) both on his choice of subject for today’s debate and on how he presented his case to the House. I should say that I was intending in any case—given the number of Democratic Unionist Members whom I am sure wish to participate—to keep my remarks briefer than normal and to give way less frequently than I normally try to do in debates on European policy. Your warning, Madam Deputy Speaker, on time limits reinforces the need for me to behave in that fashion.

I thank the right hon. Gentleman for his robust support for the decision that our Prime Minister took at the summit meeting last week and agree with him that the priority for the EU ought to be—for the eurozone countries in particular—fixing the immediate and urgent crisis in the eurozone, which is having a chilling effect not only on the UK economy, but on prospects for growth and job creation more generally in the global economy, and particularly the western economy. I also agree with the emphasis that he placed on the need for the EU to focus on growth, jobs and competitiveness in framing its priorities for the future.

[Mr Redwood]

Will the Minister assure me that the Government have no intention of agreeing to this fiscal pact or of letting EU institutions be used to enforce it?

[Mr Lidington]

The position on the use of the institutions was set out in some detail by my right hon. Friend the Prime Minister yesterday. The truthful response to my right hon. Friend the Member for Wokingham (Mr Redwood) is that we are at an early stage. The 26 countries agreed to a pact, but not to a legal instrument, and we do not yet know what action they plan to take. We want the new treaty—if it turns out to be a treaty—to work in stabilising the euro and putting it on a firm foundation, and we understand why those countries want to use the institutions, but it is new territory and raises important issues that we will need to explore with our colleagues in those other European countries.

In the months to come, our intention is to be engaged in the debate about how institutions that have been created and built to serve the interests of all 27 member states and not some subset should continue to operate fairly for all member states and, in particular, for the United Kingdom. We have been very supportive of the role that the institutions—in particular, the Commission—have played in safeguarding the single market, and we will look constructively at any proposals with an open mind, but we need to be clear that if this country had agreed treaty change without safeguards, there would be no discussions going on at all and no protection for important United Kingdom interests.

It is not the case that there was something extraordinary or wrong about the Prime Minister’s decision to veto agreement to a treaty at the level of 27 member states last weekend. The safeguards that he was seeking were safeguards not just for the United Kingdom, but for the whole of the European Union. They were modest, reasonable and relevant and, when they were not forthcoming, the Prime Minister made the right decision, which was to use our veto to protect our national interest.

As the right hon. Member for Belfast North said, we have heard before many of the dire warnings about isolation and retaliatory measures. We heard them when the euro was first created, and it turned out that far from joining the euro being a great opportunity for the UK and for UK business, we were well served by the decision to stay out of the single currency, and I have seen little evidence in the last couple of years to persuade me that—

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am sorry to interrupt the Minister. He has indicated several times that he is not prepared to give way at this point. I hope that we can hear what he has to say now, and he may feel like giving way a little later.

[Mr Lidington]

I have already explained why I do not intend to give way as frequently as I usually do in these debates. Several of my hon. Friends have had, and will continue to have, many opportunities to put their arguments to me. I am sure that they will seize those opportunities, but tonight I am conscious that this is one of the rare occasions on which the debate belongs to the Democratic Unionist party, and I do not want their members to be crowded out because Front Benchers go on too long.

The truth is that we have always had a Europe in which there have been multiple forms of co-operation. We are not in the euro and nor do we plan to be. It is good that we have our own economic policy, interest rates and ability to deal ourselves with the problems we face in our economy. The United Kingdom remains a key—indeed, a central—member of all initiatives on European foreign and defence policy co-operation, but we are not in the Schengen borders organisation. We are a key member of the single market, and in fact it is the UK that often drives change and improvement in the single market.

On the other side of the equation, at the same time as the European Council was in progress, the British Government were working closely with EU partners to shape a successful negotiation on climate change this weekend in Durban. Our intention is to continue to work hard with our many allies in Europe to advance our interests. That is not isolation: it is defending Britain’s national interest, and that is what the Government are going to continue to do. That does not mean, as some have said, pulling back from our relationship with the European Union. We remain a full member of the European Union, and that membership is vital to our national interest. Our national interest and the EU interest are not mutually exclusive; we have genuine common interests.

[Mr Cash]

I am profoundly and deeply grateful to my right hon. Friend for giving way at last. Would he care to comment on the report in the newspapers today that the Government have already received legal advice that they can use the institutions in relation to the agreement of the 26? The European Scrutiny Committee will be looking into this matter extremely carefully and will no doubt ask him to come to give advice on that matter.

[Mr Lidington]

I look forward with my usual sense of delight to the opportunity to give evidence to my hon. Friend’s Committee. Seriously, I would be happy, as would my officials and those from other Departments, to give evidence to his Committee, but my hon. Friend has been in the House long enough to know that no Minister of any Government comments on legal advice that Ministers may or may not have received.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Can the Minister give us some sense of how much British taxpayers’ money has been wasted by the allocation of Foreign Office officials to talk with members of his party—the group of 81 Conservative MPs who voted for a referendum—about the repatriation of powers? Is that a good use of taxpayers’ money?

[Mr Lidington]

I actually think that it is a very good idea for officials, not only from the Foreign Office but from other Departments, to hear creative and constructive ideas, especially from Members of Parliament of all parties—and the all-party group on European reform includes members of the hon. Gentleman’s party, as well as members of mine—and from people outside Whitehall and government. The Foreign Office has a range of contacts with think-tanks and academics as well as with Members of Parliament, so that our policy making can be informed by creative ideas from outside. That seems to be a very sensible way of governing, and I am slightly shocked that the hon. Gentleman should appear to think that a closed cadre in Whitehall, insulated from of outside advice and influence, is the best way to proceed. If that is the thinking of the Labour party, it might explain the disastrous legacy that he and his colleagues bequeathed to this Government.

The German Chancellor’s spokesman said yesterday that Britain is one of Germany’s closest partners and one of her most important allies and friends; that we work very closely together on a number of different policy challenges, including within the context of the European Union; that what Britain and Germany share are key convictions on competitiveness and on what creates jobs, innovation and creativity in the economy; and that we will both continue to work to make the single market a joint success. President Sarkozy, with whom we have had one or two disagreements, said in an interview with Le Monde yesterday that he recalled our partnership in defence co-operation signed in November 2010 and our joint intervention in Libya, as well as our shared commitment to nuclear energy as part of a balanced overall energy policy. Our partnerships with France, Germany and all our European allies remain strong and dynamic.

We need not listen only to European leaders. The US Secretary of State was asked the other day whether the position that the Prime Minister took at the summit had caused her concern, given what the questioner termed “the historic bridge” that Britain had offered between Europe and the United States. Secretary Clinton replied in very clear terms:

“I have to say it does not. I think that the role that the UK has played in Europe will continue.”

I do not think that these fears of isolation, which for obvious reasons of vested interest the Opposition want to whip up, will turn out to have substance.

If the Opposition want a little more reassurance from someone whom they might trust a bit more than the German Chancellor’s official spokesman or the United States Secretary of State, I refer them to the comments of Lord Digby Jones. It is no good the shadow Foreign Secretary shaking his head. He was happy to serve in government alongside Lord Jones. In fact, the Labour members of that Government were happy to hail his recruitment as evidence that they were attracting a Government of all the talents and bringing in people from British business to strengthen their ranks—they certainly needed strengthening. Anyway, when asked whether Britain’s business interests would survive and flourish, Lord Jones said, “Definitely.” There is a clear view that our partnerships in Europe will continue and that the opportunities available for British business in Europe will continue to thrive.

[Andrew Percy]

Should we not try to regain ownership of this word “isolation”? Surely, it is not a bad thing to be isolated from something that is not in the country’s interest, that is bad for the United Kingdom and that the British public do not want to be a part of.

[Mr Lidington]

There was a time when Labour leaders were prepared to accept that sometimes there was a need to stand out on their own in defence of British interests. Tony Blair said, when he opposed the introduction of an EU-wide tax on savings, that if we are isolated and we are right, that is the correct position to be in, but as we know, the Leader of the Opposition told his party conference:

“I am not Tony Blair”.

We have yet another example of that inheritance now being disavowed by those who were happy to serve when the opportunity arose.

[Mrs Main]

Will the Minister provide a little more clarity on one point? I believe that the British public do not expect the EU institutions to be used to deliver what they could not deliver under a treaty. Will he give his view on that? If the institutions can be so used, we have been sold a pup—we will have refused something only to be given it in a different manner and in a way that we have to accept.

[Mr Lidington]

I replied to that point at some length in response to my right hon. Friend the Member for Wokingham, and I have nothing to add to those comments.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I thank my right hon. Friend for giving way; he is being very generous. The Labour party talks about isolation and influence, but does he recall the influence exercised by the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) when he surrendered the 1984 £7 billion rebate in return for a whole load of waffle about the common agricultural policy that, of course, has resulted in precisely no action whatsoever?

[Mr Lidington]

My hon. Friend is spot on. The right hon. Gentleman was the Europe Minister when the deal was made, and it cost this country a great deal of money for no gain or reform of the CAP, despite the pledges that we were given at the time.

I want to emphasise that despite the major disagreement at last week’s summit meeting over the proposed new treaty amendment, all 27 Heads of State and Government agreed on further measures to strengthen the single market and to cut the cost of European regulation and red tape on businesses throughout the EU. As part of a long-term campaign to cut unnecessary regulation, the Prime Minister secured agreement from the European Council to endorse actions proposed in the Commission’s report on minimising the regulatory burden for small and medium-sized enterprises. Consequently, from 2012 micro-businesses employing fewer than 10 people will not be subject to European regulation, which stands to benefit 4.3 million businesses in the United Kingdom, including, I understand, about 95% of enterprises in Northern Ireland.

The European Council’s conclusions also emphasised the need to prioritise growth and the single market, and the Commission’s annual growth survey, published just ahead of the Council meeting, reflected this country’s calls for faster action to be taken to promote growth, including through the creation of a single market in the digital economy and energy.

[Ian Paisley]

I appreciate the Minister giving way on this point about business. On the pressures that the Republic of Ireland now faces, it looks like it will be forced to remove its beneficial low corporation tax as a result of this new arrangement. At the same time, however, this nation can extend to our part of the United Kingdom the right to reduce our corporation tax. I know what side of the line I would rather be on.

[Mr Lidington]

The hon. Gentleman is right to point to the risks to any country of giving up control of its tax rates to some supranational body that cannot be guaranteed always to act in the interests of any one of the nations party to the decision. It was no secret at the time of the Irish bail-out last year that the Irish Government came under enormous pressure from other EU member states to raise their corporation tax rates. As he will know, the UK Government were steadfast in supporting the Taoiseach’s resistance to that move.

I recognise what the right hon. Member for Belfast North and the hon. Member for North Antrim (Ian Paisley) said about it not always being easy to be in the EU. There are plenty of frustrations and occasions when we can see so clearly what is wrong. Any Minister from any party who has sat in European Council meetings will be able to recall times when they wanted to scream with frustration at a piece of what seemed to be unnecessary bureaucracy or expense, or at the complexity and time taken to secure reforms when agreement was needed among a collection of different Governments.

There are many areas where we would like change, but I want to make it clear that the Government’s judgment is that membership of the EU remains very much in the UK national interest. I shall briefly sketch three key areas where we believe that the benefits of our membership far outweigh the difficulties: the single market, the single voice in international trade and diplomatic leverage in foreign policy. There is little doubt that our membership of the single market has allowed us to reap the economic benefits, because the EU comprises the largest single market and most important trading zone in the world. It is bigger than the whole of the United States and Japan combined and gives British business access to 500 million consumers without customs or trade barriers.

In Northern Ireland, EU countries remain key trading partners. Export sales to Europe from Northern Ireland alone amounted to £600 million in 2010, and many Northern Ireland companies have been doing significant business in the EU for many years. The success stories include a broad range of Northern Ireland industries, from engineering to information technology, synthetic fibres, pharmaceuticals, and food and drink. Recognising where additional growth could be achieved by targeting opportunities in EU export markets is one of the keys to improving economic growth prospects for Northern Ireland. That is why for Northern Ireland, as for the whole of the UK, a resumption of growth within the EU would be of immense benefit to our own interests.

[David Simpson (Upper Bann) (DUP)]

The Minister will know that the agri-food sector is one of the biggest industries in Northern Ireland, and it could grow even more if we had a level playing field with Europe.

[Mr Lidington]

I am aware of the concerns in Northern Ireland about the operation of the common agricultural policy. As the hon. Gentleman knows much better than I do, the CAP is implemented in a way in Northern Ireland that is different from the rest of the UK. When I was in Belfast recently, the First Minister made strong representations to me about that. I ensured that they were passed on to my right hon. Friends the Chancellor and the Secretary of State for Environment, Food and Rural Affairs. The concerns of Northern Ireland are very much in the minds of British Ministers who will be negotiating these matters.

There is well documented evidence that trade integration brings wider benefits in areas such as investment and innovation. EU member states comprise seven of the United Kingdom’s top 10 trading partners and account for roughly half our overall exports of goods and services. However, the benefits go beyond exports. EU member states are the main source of foreign direct investment into the UK, with roughly half our total FDI coming from those countries.

[Tristram Hunt]

Will the Minister give way?

[Mr Lidington]

The hon. Gentleman has had a chance, and I want to make some progress.

The stock of inward foreign direct investment in the UK from the EU has risen by 800% in less than 10 years, and our membership of the EU single market helps to attract the other half of our FDI, from non-EU investors, who see the UK as a platform from which to break into European trade and access the wider single market.

[Mr Robert Walter (North Dorset) (Con)]

Will the Minister confirm to the House that Norway also has access to the single market, as a member of the European economic area, and in return has a better record in implementing EU directives, in which it has no say, than we do?

[Mr Lidington]

My hon. Friend makes the point well. Countries in the European economic area have to comply with EU regulations and implement them fully if they are to have the single market access that we enjoy by virtue of our membership. If we were in a comparable position, British business would have to meet the costs of compliance with whatever regulatory standards the UK decided to impose, in addition to the costs of meeting the differing standards of the remaining EU bloc or any of the other European countries with which they wished to trade.

[Jim Shannon (Strangford) (DUP)]

The right hon. Gentleman mentioned all the sectors that are trying to break into Europe, but there is one that cannot break in, and that is the fishing sector. Does he feel that, because of the quotas, the restrictions on days at sea and net sizes, and all the bureaucracy, the fishing industry can never really break through with Europe as it is now?

[Mr Lidington]

There is no doubt that the common fisheries policy has failed both the cause of conserving fish stocks and the cause of sustaining the livelihoods of fishing communities. It is several years ago now, but I can remember going to Portavogie, Ardglass and Kilkeel and listening first hand to fishermen and their families in Northern Ireland expressing the frustrations that the hon. Gentleman has expressed on their behalf. That is why the UK Government believe that the proposals now coming out of the Commission on reform of the common fisheries policy are, potentially, to be seriously welcomed. If they lead to a common fisheries policy based much more on regional and local management, and on rules that mean we can abolish the obscene practice of discarding, that would be of benefit to both conservationists and fishing communities alike.

The second great advantage of European Union membership is that it helps boost our international trade, because the EU’s position as a major trading power gives it weight in global negotiations and opens up new trading opportunities outside the EU for British business. The United Kingdom has already benefited from EU trade agreements with countries such as Mexico, Chile and South Korea, and is now engaged in multiple negotiations with other key trade partners, such as Canada, Singapore, India and the Mercosur nations. Let us be honest: without the size of the EU behind us, the United Kingdom on its own is unlikely to be able to secure the same deep and ambitious free trade deals with other regions or trading countries around the world. The South Korea free trade agreement alone is expected to provide £500 million of annual benefit to the United Kingdom economy. As the Northern Ireland chamber of commerce said when the deal was concluded:

“its opportunities are many and varied, and with”

Korea’s

“wealthy population, it is simply too valuable a market to be overlooked.”

The Northern Ireland chamber of commerce was right. I hope that there will be many opportunities for Northern Ireland companies in South Korea, as the EU free trade agreement is fully implemented.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I will leave the matter of the institutions—it is obviously too sensitive a point—but why would South Korea not have agreed a bilateral arrangement with a country such as Britain in any case, given that we are one of its allies and so on? Why would the South Koreans want to take protectionist measures against us if they are prepared to make a free trade agreement with the rest of the European Union?

[Mr Lidington]

The terms that one is able to extract in the context of such a negotiation will be more favourable if one can negotiate as part of a bloc of 500 million consumers. What the EU was able to offer South Korea collectively was access to a market of 500 million. The UK on its own would have been able to offer access to a market of 50 million to 60 million consumers. That is not an insignificant number, but it is a tenth of the size of the European Union as a whole. That difference in scale means that European countries have greater weight and leverage when they are able to get their act together and negotiate en bloc.

The third reason I believe it remains in our national interest to stay an active member of the European Union is that membership enhances our ability to influence events abroad. On issues where there is a genuine common European interest, where the national interests of the 27 member states converge, it makes sense for those member states to act together, pool our influence and speak with a united voice. One voice representing 500 million consumers is heard more loudly in Beijing, Delhi and Brasilia than 27 separate voices. However, it is equally the case that where EU member states do not agree, it is right and proper that, as sovereign nations with our own national interests, we speak and act independently. It is also right that foreign policy and security and defence policy should remain matters where unanimous agreement is required for a European position to exist.

[Andrew Percy]

Will the Minister give way?

[Mr Lidington]

My hon. Friend must forgive me, but I want to press on.

Collaboration over Libya has brought in many—although not all—European states, including Italy and Belgium. In recent months, the EU has exerted collective pressure on Libya and Syria, as well as on Côte d’Ivoire and Belarus. Different European countries have different contributions to make. Poland and other eastern partners can give us a unique perspective as we seek to support the democratic movements in the middle east and north Africa, and can also improve our insight with regard to our relations with countries such as Russia and Ukraine. Spain’s influence in Latin America will continue to shape Europe’s engagement there, and Portugal is now helping European interests on the UN Security Council. If we look at the EULEX mission alongside NATO in Kosovo, the EU civilian and military missions supporting NATO elsewhere in the Balkans or the Atalanta mission to tackle piracy off the coast of Somalia, we see operations of European civilian or military experts focusing on particular areas of expertise, often in tandem with NATO, the United Nations or national forces. Those are good examples of where European countries have been able to give themselves greater clout by being willing to act collectively.

The motion in the name of the right hon. Member for Belfast North says that the British people desire “a rebalancing of the relationship with our European neighbours”, and I agree with the hon. Member for North Antrim that there is too much centralised direction of many European policies.

The Government are committed under the coalition agreement to examining the balance of competences between Britain and the European Union, and as both the Prime Minister and the Deputy Prime Minister have said, there is a good case for rebalancing competences between the EU and its member states. Clearly, this would require the agreement of all 27 member states on the basis of negotiation and agreement, and could not be achieved through a unilateral decision. We have made no commitment to a particular outcome from this review. Work has begun and it is in its early stages.

In contrast to the Government’s positive and active commitment to make a success of our EU membership and our robust defence of our national interests, we have heard nothing from Her Majesty’s official Opposition save carping and an evasion of straight answers. Yet Labour was the party that committed us to the EU bail-out mechanism. This was the party that meekly surrendered £7 billion of Britain’s budget rebate. This is the party whose leader refuses to say whether he would have signed the treaty that was before the British Prime Minister last week, but tells the BBC in an interview:

“I don’t think Brussels has got too much power”.

It is a party whose leader still yearns to join the euro, but the only certainty is that if we followed its advice, we would not just be attending EU meetings, as we would be in the queue for a bail-out, along with some of the others.

The Government are committed to a positive and active role within the European Union—on the single market, on global trade and on foreign policy. That is what is in our national interest, but we will not be afraid to stand up and resist, refusing to participate in measures where we believe that they run contrary to the national interests of the United Kingdom.

19:51

[Emma Reynolds (Wolverhampton North East) (Lab)]

It is clear that the Government are deeply divided on this issue. It is also clear that the Prime Minister and the Deputy Prime Minister are at odds, that Back Benchers are divided and that the Cabinet is divided. Perhaps the Prime Minister and the Deputy Prime Minister have more in common than we think, however, given that the Deputy Prime Minister empty-chaired the Prime Minister’s statement yesterday in much the same way as the Prime Minister walked out from the summit last week. It seems that the Deputy Prime Minister could not stomach listening to the Prime Minister trying to justify his position to relegate the UK to the outer fringes of the EU in the early hours of Friday morning. I believe that the Deputy Prime Minister was right to say on Sunday that the outcome of the summit was “bad for Britain” and bad for jobs and growth. If only he had been able to convince the Prime Minister of his opinion before the summit.

[Mr Peter Bone (Wellingborough) (Con)]

rose—

[Dr Julian Lewis]

rose—

[Mr Jenkin]

rose—

[Andrew Percy]

rose—

[Emma Reynolds]

I am not giving way for the moment.

As I understand it, the Secretary of State for Energy and Climate Change has just this evening added his voice to the chorus of criticism of the Prime Minister from Liberal Democrat Ministers so I will be interested to see whether, given that the Liberal Democrats have had three different positions in five days on this issue, they have now come to a settled position. I hope that they will oppose the motion. How could they vote for it when they are on record as saying that what happened is a bad deal for Britain?

[Mr Bone]

Will the hon. Lady say whether Her Majesty’s official Opposition are going to divide the House on this motion?

[Emma Reynolds]

Yes, we are going to divide the House, and if the hon. Gentleman had let me get to the second page of my speech, which I intend to be shorter than that of the Minister for Europe, he would have found that out.

I oppose this motion—we oppose this motion—as it bizarrely commends the Prime Minister for the outcome of last week’s summit. The truth is that it was the worst possible result for the country. We have never been so isolated: 26:1. I say to the right hon. Member for Belfast North (Mr Dodds) that there is a difference between us and the other nine non-eurozone member states because the other nine are at least in the room, contributing to a decision that will have an impact on our economy. If the eurozone crisis deepens, it will have profound implications for our economy.

[Mr Jenkin]

rose—

[Dr Julian Lewis]

rose—

[Emma Reynolds]

Now we find that the UK is in a position whereby decisions affecting us could be taken without us even having a seat at the table.

[Mr Stewart Jackson (Peterborough) (Con)]

rose—

[Mr Jenkin]

rose—

[Dr Lewis]

rose—

[Emma Reynolds]

Sometimes the veto—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I think that the hon. Lady has indicated that she is not giving way until she has made some progress in her speech. I heard it and I am sure that hon. Gentlemen did. Perhaps they could remain in their seats for a little while, and the hon. Lady will make it clear when she wants to give way.

[Emma Reynolds]

I promise hon. Gentlemen that I will give way, but I am attempting to give a shorter speech than the one we just heard.

Sometimes a veto is necessary as a last resort, but it is a negative device that can be used to prevent change that we oppose. Back in the early 1990s, John Major used the veto at the Maastricht treaty summit. He got something in return—an opt-out from the single currency, which the Labour Government used to full effect while we were in office. However, the veto cannot be used as a positive device to force change that we want, as the Prime Minister demonstrated last week. He failed not only to secure the changes he demanded, but to stop the changes he opposed. The former Prime Minister got something in return for his veto; the current Prime Minister got nothing in return. It was a phantom veto; it failed to stop anything.

The truth is that the UK has never been outvoted on financial services in the 38 years during which we have been a member of the Common Market. The Prime Minister has defended nothing—walking out of the summit, leaving us weaker, not stronger. It is the greatest failure of peacetime diplomacy in more than half a century. Our partners do not recognise the Britain that walks away from a battle. As one French woman said in a vox pop to The Observer at the weekend:

“I’ve never seen the British give up.”

This is not the bulldog spirit; it is a form of diplomatic defeatism.

It is not surprising that other European leaders did not even give the Prime Minister a hearing. They were completely taken by surprise by a list of demands that did not seem to have anything to do with the discussions in the summit. Not one single line in the summit’s conclusion refers to financial services. Baroness Thatcher pioneered a single market to be decided by qualified majority voting and signed the Single European Act in 1986. The Prime Minister sought to overturn that decision last week, arguing for a removal of qualified majority voting in single market decisions. Needless to say, the Prime Minister’s handbag was not as powerful as Baroness Thatcher’s.

[Mr Jenkin]

I hope that the hon. Lady will make the position of her party clear. Would she have signed up to the presidency conclusions agreeing to a treaty of 27 in principle—yes or no?

[Emma Reynolds]

First, had we been in government, we would not have been asleep at the wheel for the first nine months of this year. Secondly, we would have built alliances, not burned bridges, and we would not have found ourselves in a situation at the summit in which nobody agreed with us. We had no support from any of those member states.

It is clear that the Prime Minister spectacularly mishandled the summit by failing to prepare the ground, failing to talk to European leaders in advance and failing to build alliances. The Foreign Minister of Poland, until fairly recently one of our strongest allies, singled out the UK for criticism in a recent speech. It now transpires—[Interruption.] Conservative Members might be interested to hear about this. It now transpires that even our lead diplomat in Brussels, the British permanent representative, learned of the Government’s negotiating position only 48 hours before the summit. What a cack-handed way to prepare for important negotiations. No wonder the blame game has started in Whitehall between the Treasury and the Foreign Office.

[Mike Gapes]

My hon. Friend should also be aware that none of the ambassadors, based in London, of the other 26 European Union states knew in advance what the British Government were trying to get out of this summit. How on earth could they report back to their countries in advance what might be the necessary concessions to get agreement if they were not told in advance?

[Emma Reynolds]

As my hon. Friend has eloquently pointed out, the Government’s attempt to get agreement at the summit was amateur—they did no preparation. As a result of the Prime Minister walking out of negotiations, it is even more likely, not less, that vital British interests will not be taken into account when key economic decisions are taken at EU level. The eurozone 17 and the other nine non-eurozone countries will meet more frequently and take decisions that affect the UK, without the UK being in the room. How on earth do Conservative Members think that is a success? Without a voice, British business is more vulnerable to decisions that our Government are powerless to change or influence.

[Dr Julian Lewis]

I much admire the hon. Lady’s verve and style, but everything that she says points to the conclusion that, given a choice between the only two options—to sign or not to sign—she would have signed. Is that conclusion right or wrong?

[Emma Reynolds]

I point out to the hon. Gentleman that nothing was signed at the European summit and negotiations are ongoing. A likely text might appear at the March European summit, but a text is not yet on the table. Yes, we would have stayed in the negotiations, because it is not in the national interest for decisions to proceed without us.

It is no wonder that businesses are concerned about what has happened over the last few days. Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, underlined the point:

“We need the government to develop a clear strategy for engaging with other member states when in theory it could find itself isolated on occasions.”

John Cridland of the CBI has called for the Government to

“redouble its efforts to ensure that the UK is not put at an economic disadvantage”.

Angela Knight—a former Conservative Member of the House—chief executive of the British Bankers Association, has stressed:

“We do not know yet what impact this new arrangement is going to have on the UK’s ability to secure agreements on sensible regulation—but that is critical.”

The penny is also starting to drop with some parts of the British press that originally welcomed the outcome of the summit. Even The Daily Telegraph states in its editorial today that it is unclear

“whether threats to the City really have been deflected”.

The Times laments in its editorial that the Prime Minister

“has not set out a vision of where Britain now stands in the world”.

In grave economic circumstances, the prospects for families, jobs, businesses and banks across our country are now all the more stark. Growth is flatlining and unemployment is at a 17-year high. Against the backdrop of that dire economic situation, the Conservatives want us to be further isolated, as if the reckless action of the Prime Minister at last week’s summit was not enough to isolate the UK from its largest export market.

[Glyn Davies (Montgomeryshire) (Con)]

I am trying hard to understand the Opposition’s position on this complicated issue, but that is incredibly difficult without knowing whether they would have taken an affirmative or negative stance. We want not clever words about whether they would have signed, but a yes or no.

[Emma Reynolds]

It is terribly complicated, because the Government have two positions rather than one. Some hon. Members want the UK to cut itself loose completely. They will be happy only when the UK leaves the largest single market in the world. The Government’s policies are already choking off the recovery and have made us more vulnerable to the eurozone crisis. Were our membership of the European Union also in doubt, the economic consequences would be devastating. In a recent written answer to my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) about the economic benefits of the EU to Britain, the Foreign Secretary replied:

“European markets account for half of the UK's overall trade and foreign investments and as a result, around 3.5 million jobs in the UK are linked to the export of goods and services to the EU.”—[Official Report, 12 July 2011; Vol. 531, c. 256W.]

Isolation could also threaten foreign direct investment.

[Mr Bone]

rose—

[Mr Stewart Jackson]

rose—

[Emma Reynolds]

I have given way to the hon. Member for Wellingborough (Mr Bone) already, so I give way to the hon. Member for Peterborough (Mr Jackson).

[Mr Jackson]

In passing, let me say that the hon. Lady owes an answer to the millions of patriotic Labour voters in the country on whether she would have signed. Is she aware, however, of a recent Civitas report, “A Cost Too Far”, which estimates the current recurring annual cost to the UK of EU membership at between at 3% and 5% of GDP, a likely figure of £40 billion a year?

[Emma Reynolds]

I say to the hon. Gentleman that all our voters are proud patriots, and so are Labour Members. In constituencies across the country, foreign companies have invested in manufacturing facilities that support millions of jobs—Nissan, Honda, Bombardier, Airbus, to name but a few. In my constituency, Indian-owned Tata Jaguar Land Rover is building a new multi-million-pound engine plant, bringing hundreds of jobs. Those companies see the UK as a useful avenue into the single market. Those investments would be at risk if the UK continues to be on the sidelines, as Martin Sorrell, chief executive of WPP, stressed only yesterday when he recounted that he had spoken to an Indian investor who is considering where to locate a plant, and it was already the investor’s perception that the UK is outside western Europe.

[George Eustice (Camborne and Redruth) (Con)]

Is the hon. Lady not aware that all the arguments about inward investment leaving Britain were made when we decided not to join the euro, and they were all proved entirely incorrect?

[Emma Reynolds]

If the hon. Gentleman remembers, it was our Government who kept this country out of the euro.

The UK’s isolation is bad not just in economic terms, but for our influence in the world. Even the Deputy Prime Minister said on Sunday that when we stand tall in the European Union, we stand tall in Washington. But it is not only our standing in Washington that is now of concern. Political and economic power is rapidly moving south and east, to Brazil, India and China. In this new multi-polar world, it is those who harbour a fanciful, nostalgic longing for the empire who naively think that the UK could be more powerful standing alone. The only game in town to further prise open markets in emerging economies and to change the rules of the trade game, is for the UK to act within the European Union—a Union that magnifies our influence. Only this weekend, at the climate change summit in Durban, we saw that by working together with our European partners, we amplify our voice on key global challenges.

[Andrew Percy]

rose—

[Emma Reynolds]

I will give way, if the hon. Gentleman will be patient.

[Andrew Percy]

I have been very patient; I am the last one to get in.

The hon. Lady talks about the issue of clarity. Will she tell my constituents what the Labour party’s position is? Would they have agreed to what was asked on Friday? Do they support further European integration? Will they rule out membership of the euro for ever? Three simple questions, to which they want three simple answers.

[Emma Reynolds]

Last but not least, a simple answer—we are not in favour of joining the euro.

The cheerleaders who toasted the Prime Minister at the welcome home party at Chequers last Friday want out of the European Union. What was once the Eurosceptic fringe of the Conservative party has now become the mainstream, as has just been demonstrated. The Prime Minister is clearly following, rather than leading, his party. Naturally, Conservative Members are happy, albeit only for the time being. The right hon. and hon. Members who now back the Prime Minister do not agree with him that our membership of the European Union is vital to our national interest. They are the same right hon. and hon. Members that he tried to get on board when he ran for his party’s leadership. He beseeched them to “stop banging on about Europe”, but they did not obey.

I am not sure what was on the menu at Chequers, but the Prime Minister should be in no doubt that his guests have an insatiable appetite. After starters of prosciutto and cured meats, they will still want steak tartare for their main course. The Prime Minister has only earned himself a gap between the entrée and the plat principal.

The Prime Minister’s actions last week were apparently taken in the face of some unidentified threat to one part of our economy, but the real objective was to toss some extra red meat to the anti-Europeans, whose appetites have now been whetted but not sated. Had the Prime Minister spent as much time and energy speaking to our European partners in the run-up to the summit as he spent pandering to his anti-European Back Benchers, we might be in a different place now—and it would be in the national interest for us to be in a different place. However, we have a Prime Minister who puts his party’s interest before the national interest, and as a result we have a bad deal for British jobs, businesses and banks. Our country needs and deserves better leadership.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. As we are running out of time, I shall impose a five-minute limit in an attempt to ensure that all who wish to speak are able to do so.

20:10

[Chris Heaton-Harris (Daventry) (Con)]

It is always a pleasure to follow the hon. Member for Wolverhampton North East (Emma Reynolds). I know that when she worked for the Socialist group in the European Parliament she was behind the scenes doing deals, but they always involved giving powers away from the United Kingdom and to the European Union. I am sure that, like me, she is desperately upset about the fact that the Deputy Prime Minister has chosen not to be a distraction in this debate either.

The motion makes three points. It

“commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK”,

it mentions

“the use of the veto”,

and it refers to

“the desire of the British people for a rebalancing of the relationship with our European neighbours”.

I shall discuss all those points, and try to destroy some of the myths that have emerged from speeches made by Opposition Members.

It is fairly obvious that the British people, as well as some Members, commend the Prime Minister. I have a list of names of dozens of people who have sent e-mails supporting him. They are not Conservative party members or head-bangers. but they are passionate about this country, and I look forward to handing those e-mails to the Prime Minister in the near future.

[Mr MacShane]

Will the hon. Gentleman give way?

[Chris Heaton-Harris]

I will happily give way to the armless right hon. Gentleman.

[Mr MacShane]

I have to hold my arm up for blood-related reasons.

I have received similar e-mails. In 1983, 50% of the British people wanted to get out of the European Community, and a further 25% wanted a total renegotiation. The Labour party adopted that as its platform and its manifesto for the 1983 election. Margaret Thatcher ignored those feelings with contempt, won that election and the next one, and created the Single European Act without a referendum. What has gone so wrong with the spirit of Thatcher that today’s Conservatives are happy to betray it?

[Chris Heaton-Harris]

I must tell the right hon. Gentleman that times have changed just a tad since then. I believe that the attitudes of the parliamentary Conservative party directly reflect the attitudes of the electorate. They certainly reflect the attitudes of the electorate in England, and they would probably prove to reflect the attitudes of those in Scotland, Northern Ireland and Wales should they ever be consulted, as I hope they will be one day.

Let me say something about the veto that we supposedly exercised. I was a Member of the European Parliament, and I saw negotiations of this type up close and personal on a number of occasions. I saw the French walk out of meetings over the common agricultural policy. I enjoyed seeing the Spanish throw a magnificent strop during budget negotiations, which eventually ensured that the bulk of the Spanish fishing fleet was rebuilt or renewed at the expense of European taxpayers. Those countries were doing what most people do in business: they were setting out a negotiating position on the basis of which they could proceed. The one thing that all Members know is that this process will take months to reach fruition. At least we have the starting block of a solid negotiating position, something that earlier Governments were been unable to secure when embarking on European negotiations.

We have other vetoes that could be used in negotiations. One example is the multiannual budget financial perspective. In 2010-11, our net contribution to the European Union was £9.2 billion. We are the second largest net contributor to this club, but we ask very little in return for the money that we give. Our contributions will average about £8.5 billion for the next five years, and we should be demanding much more value for our money.

So many myths have been circulated. Today’s Financial Times—a newspaper that some people consider to be an accurate record of what is going on, as indeed it normally is—contains an article headed “MEP threat”, which states:

“A British MEP who leads the European parliament’s most powerful committee on economics and financial regulation is facing the threat of being ousted in a post-summit backlash against Britain.”

In fact such positions are decided on the basis of the number of MEPs in a political group, and the only people who can oust Sharon Bowles are fellow members of the European Liberal group. That is a complete misunderstanding, and just one of the myths that are peddled nowadays.

[George Eustice]

Does my hon. Friend expect anything different from a newspaper that thought we should join the euro, and maintained that position for several years after we had rejected the idea?

[Chris Heaton-Harris]

Yes, I do. I expect the highest standards of reporting from out national newspapers, but I take my hon. Friend’s point on board.

[Damian Collins (Folkestone and Hythe) (Con)]

Will my hon. Friend give way?

[Chris Heaton-Harris]

I will, very briefly.

[Damian Collins]

Has my hon. Friend noted that other respected financial newspapers, such as The Wall Street Journal, have congratulated the Prime Minister on the stand that he took?

[Chris Heaton-Harris]

Indeed I have.

Other myths have been circulated. It has been suggested, for instance, that the Prime Minister’s actions caused Britain to lose a seat at the table. Given that the United Kingdom was never going to take part in the Merkel-Sarkozy pact and thus potentially be subject to EU sanctions—I assume that the Opposition would be quite comfortable with that—I would not expect us to be invited to the monthly EU meetings that will start in January 2012. If the Prime Minister had signed up, the United Kingdom would still not be sitting at that table, because we are not in the eurozone, The veto changes mean nothing structurally in terms of UK influence at those meetings.

Another myth is that the Prime Minister’s veto has created a two-tier European Union. That is complete tosh. We have a eurozone of 17, and a whole new group of Schengen countries. In 2004, when we signed up to the EU accession, a group of countries decided to allow entry to workers from the accession countries, but only Britain allowed them to hold the burgundy passport immediately. Other countries decided to move at a completely different speed.

[Mr Jenkin]

Will my hon. Friend give way?

[Chris Heaton-Harris]

Very briefly.

[Mr Jenkin]

If there is a two-tier Europe, it was created by the formation of the euro, and its foundation was the Maastricht treaty. Those who supported the Maastricht treaty cannot now complain that we have a two-tier Europe, because they voted for it.

[Chris Heaton-Harris]

I entirely agree. The Prime Minister’s actions were, in fact, a timely reaction to the signs of caucusing of the 17 eurozone countries, and those countries that rely almost completely on Germany for their trade.

There are so many myths. There is, for instance, the myth perpetrated by the BBC’s Stephanie Flanders—or, at least, the person who wrote what was on her autocue—that the Prime Minister used his veto to protect a tiny part of our economy. In fact, financial services accounted for a £35 billion trade surplus last year, 2 million jobs in the United Kingdom, and £54 million paid to the Exchequer in taxes.

The truth is that these constitutional treaty changes are the result of yet another EU summit that skirted around the problem of eurozone debt without paying off one cent of it. Many commentators, and some politicians here and abroad, may well have had a fun weekend pointing fingers at the UK and pulling shocked faces at the fact that a British Prime Minister dared, after nearly two decades, to engage properly in negotiations by setting out a solid position at the beginning rather than just saying yes. Let us now get down to negotiations. Let us talk. I commend this excellent motion,.

20:18

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

I rise not just to support the motion, but to commend the Prime Minister for the stance that he took at last weekend’s negotiations.

The reality is that a bandwagon driven by Germany and France is taking the EU inexorably towards a European superstate. Those countries are using the current crisis in the eurozone as a cover to advance their agenda, and the fiscal compact is deepening and strengthening their desire—and the mechanisms that go with it—to build that European superstate. Our experience in Northern Ireland, as one of the UK regions, is not a positive one in terms of EU membership. Some member states that point the finger at the UK today are the very ones that sign up to treaties and then drive a cart and horse through every rule that those treaties create, and it is this country that abides by the rules in the European Union. Time after time we are told that Euroscepticism is a bad thing, yet those who are most strong in their defence of the European Union are often those who do not play by the rules created by the EU.

[David Simpson]

Does my right hon. Friend agree that France is one of the biggest offenders in this regard?

[Mr Donaldson]

I accept that entirely. People who talk about vox pops in France and who quote the French ought to talk to the French farmers about the European Union and the rules that their Government sign up to. As my right hon. Friend the Member for Belfast North (Mr Dodds) said, it is all very well talking about Britain being left outside the door, but let us wait until this treaty gets to the people in these member states and see the response when they realise its full consequences. In Northern Ireland, we have of course seen the consequences, at times, of bad European policies. As my hon. Friend the Member for Strangford (Jim Shannon) reminded us, we have seen those consequences and the impact on our fishing industry in Northern Ireland. Our white fish fleet comprised more than 40 trawlers in 1999, but it now numbers just four—that is the result of the common fisheries policy. At the end of the 1990s, the Northern Ireland over-10 metre fleet comprised 240 vessels, but now it comprises 140—that is the result of the CFP. We could also say the same about our farmers, because although there have undoubtedly been some benefits, small farmers have paid a very high price for the common agricultural policy. The directives that have been imposed on agriculture have presented a real challenge for many farmers across the United Kingdom, not least those in Northern Ireland.

[Mr MacShane]

On that very technical point, I would not object if the CAP were abolished, but what would a British agricultural policy—a BAP—look like? How much would it cost in taxpayer subsidies to keep our farmers, small and large, going as we would wish? Has anybody done the figures?

[Mr Donaldson]

The reality is that we would spend a lot more of the £18 billion we give each year to the European Union—half of which we get back—in supporting our farmers to produce the food that our country needs, and we would do so without the kind of silly regulation that Europe imposes on us. If we had a national policy in place of the CAP, we would use our own money to help our own farmers.

The same applies to our haulage industry. I talk to hauliers in my constituency and they tell me that they do not understand these crazy regulations that are imposed at times by the European Union. Business faces the same situation. As we all know, business is struggling as a result of the recession, yet the endless stream of bureaucracy emerging from Brussels continues unabated and we continue to fund those who create those regulations, with no diminution in the budget that goes into the super-structure that is European Union bureaucracy. So, as the leader of my party has pointed out, there are many benefits to the concept of rebalancing our relationship with the European Union. There are benefits for the economy, for business, for farmers, for fishermen and for hauliers—indeed, it is difficult to see who would not benefit from such a rebalancing.

Northern Ireland is the only part of the UK with a land border with another European member state. When we look across the border, we see the Irish Government subjected to the ignominy of having to give their budget to Europe for approval—and it leaks all over the place—before their Finance Minister has the opportunity to get up in the national Parliament to tell the people of the country what their Government are doing. Many people in Dublin now regard Berlin as the capital of the Republic of Ireland, not Dublin, because that is where the real decisions are being taken about their future.

[Glyn Davies]

Does the right hon. Gentleman agree that there is a serious democratic issue to address in how Europe is developing, and not only in Italy and Greece? Having budgets approved by the European Commission means that there is a massive challenge to the whole democratic basis on which the European Union is formed.

[Mr Donaldson]

Indeed, and for that reason I pointed out that the real agenda is to build a European superstate, which is to denude nations of their democratic sovereignty. This fiscal compact exists precisely to benefit that agenda, and when a country and a nation cedes fiscal independence, it cedes a huge part of its national sovereignty. That is why DUP Members object so much to what some in the European Union are trying to do. We do not want to see the United Kingdom and our fiscal independence abrogated and given to those in Brussels, who are accountable to nobody, who were not elected by anyone in this country and who are not answerable to the Parliament or people of this country.

We have heard the Labour spokesperson talk about walking out of negotiations. I had the experience of doing that on one occasion and I still believe it was the right thing to do. I can do no better than quote the words of Mohandas Gandhi, who said:

“A ‘No’ uttered from the deepest conviction is better than a ‘Yes’ merely uttered to please, or worse, to avoid trouble.”

The Opposition would do well to listen to those words, and I am glad that the Prime Minister, for once, took them on board.

20:26

[Mr William Cash (Stone) (Con)]

The reality is that the markets are already demonstrating that there is almost no chance of the euro being saved. In addition, it is way beyond legal devices for people to claim that they will be able to stitch together an arrangement through some method of enhanced co-operation, article 136 and all the rest of it, against the background of the implosion going on outside in the eurozone, and indeed in the European Union as a whole. I am disturbed by some of the language that I have been reading in the papers. As I indicated in an intervention on my right hon. Friend the Minister for Europe, legal advice has already been given, presumably by the Foreign Office, to the Government that they will be able to stitch together some kind of device that will enable the European Commission and the European Court of Justice to give a spurious authority—a spurious jurisdiction—to the deal between the 17 plus the others that wish to join in with them.

I would go further and say that, as has been said by a number of my hon. Friends, there are indications that some of the countries concerned are beginning to realise that when they go back to their Parliaments they will have to look also to their electors. The idea of unanimity in the confines of the euro establishment’s comfy offices is not quite the same as having to face the consequences of the austerity measures, and to face up to protests and riots in some of those countries. That is where the decisions will eventually be taken, because we are talking about people; we are not talking about machines. We are not just talking about jurisdiction. There is far too much talk of trying to stitch up arrangements for the sake of convenience.

[Mr Stewart Jackson]

Is my hon. Friend not as incredulous as I am that those on the left in this country and across Europe are willing to be complicit in support for these fiscal policies? Working people in Europe will be subject to social discord, stagflation, unemployment and depression for the sake of the continuation of the European Union’s policies.

[Mr Cash]

Yes. This fantasy of a European Union and how it has developed through the existing treaties is the reason we have the crisis in Europe as a whole. That is why we need fundamental change: the existing treaties are the cause of the crisis. It is not just a question of the single markets or, for that matter, the single market—

[Ian Paisley]

rose—

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

rose—

[Mr Cash]

I will give way one more time, to the hon. Member for Linlithgow and East Falkirk (Michael Connarty) who is a member of the European Scrutiny Committee.

[Michael Connarty]

I am very grateful to the hon. Gentleman but I think he is perhaps getting carried away by his own conclusions before using logic. Clearly, the crisis that faces all the countries in Europe, and most other developed countries, comes from the profligate madness of the casino-based banking system that all the countries joined in with. The eurozone might be under greater pressure, but it is not in as bad a condition, in reality, as the US economy at this moment. It is just that, unlike the US, it is not united enough to deal with the crisis as one country.

[Mr Cash]

I understand what the hon. Gentleman is saying, but with about 47% youth unemployment in Spain and in Greece, for example, and 30% in Italy, and so on, youth unemployment is a really serious problem, and there is not the same problem in some of the other countries to which the hon. Gentleman referred.

I am afraid that both the Opposition and the Liberal Democrats are completely out of their depth on this subject. For the Deputy Prime Minister to say that this historic vote, which will change the whole future of the European Union and our relationship with it, is bad for Britain is simply absurd. I do not want to go further than that, but I want to get on the record the fact that it is irresponsible of the Deputy Prime Minister to make such a statement. To claim that influence can be retained in a room when you know in advance not only that everyone will vote against you but that they all have the power to continue to do so involves living in a fantasy world not unlike that of “Alice in Wonderland”.

Let me turn briefly to the question of this attempt, this device, this spurious method that people are trying to stitch together to give the measure some degree of authority despite all the realities of the crisis in the eurozone and in the European Union as a whole. There is an attempt to give the European Court of Justice and the European Commission some jurisdiction over this so-called separate treaty. I am not at all sure that it will be a treaty—at best it will only be an agreement—but people are calling it a treaty. I am very worried about the looseness of the language; I want just to make that point on its own.

The main objection to reinforcing the eurozone by means of an intergovernmental agreement is that the rules agreed under the European Union treaties—by which I mean EU primary legislation—by the 27 member states for the operation of the eurozone are to be modified by a separate agreement that does not have primacy over EU treaty law, and so cannot modify or be in conflict with EU treaty law, and that has not been agreed to by all 27 member states. It is vital to stick to that principle, which is at the heart of how the European Union functions. I might be critical of how the European Union has developed under the existing treaties, but those who are against us cannot have it both ways.

As for the objective, the hope seems to be that the provisions of an international agreement can be incorporated

“into the treaties of the Union as soon as possible.”

That is in the statement on the agreement. In other words, the objective of getting the arrangement stitched up into the new treaty has already been set. I must advise the Government that it will not be in their interests to give effect to the proposal through a stitch-up or a device. The European Scrutiny Committee, of course, will be considering all those questions. In addition, the EU treaties require unanimity, so in order to make such a change unanimity would be required—unanimity that would have to include the United Kingdom. That would lead to a great deal of trouble for the Government if they were to attempt to achieve a stitch-up.

20:34

[Mr Gregory Campbell (East Londonderry) (DUP)]

I support the motion. In the past year or 18 months, many people in Northern Ireland and some across the rest of the UK have attempted to sideline my party and say that the issues we would be raising in Parliament would be negligible, isolated and of interest to very few people. Only a few weeks ago we tabled a motion on the important topic of fuel poverty, and more than 200 Members joined us in the Lobby. I hope that more will join us tonight on this very important matter, which affects every man, woman and child across the length and breadth of the United Kingdom.

Almost 40 years ago a Euro-dream began, and we have seen the emergence, change and evolution of that dream, which many would argue is fast turning into a nightmare. Over the past weekend we saw its culmination, when the Prime Minister of this nation went into negotiations and, thankfully, when faced with a fait accompli, decided that it was time to say no. He was right to say no. What the Prime Minister has given to the Parliament and the people of this United Kingdom is a door-opening opportunity that we must not waste or cast to one side, but must seize with both hands.

In recent months we have seen the huge gulf—the chasm of Grand Canyon proportions—that exists between the economic development of countries such as Greece and Germany. But there is still insistence among the Europhiles that one size does fit all, when it is apparent to us all that that cannot and will not be the case. What we need, by way of opportunity, is for the competitiveness of the UK to emerge from the opportunity with which we have now been provided.

[Bob Stewart]

Is it not competitiveness within the European Union that is at fault—the competitiveness of the north against the lack of competitiveness in the south? That is what will kill the euro project, in money terms.

[Mr Campbell]

I thank the hon. Gentleman for those comments, and there is a significant amount of truth in what he says.

Here is a microcosm of some of the issues that might emerge. Some of my colleagues have mentioned the difference between the Irish Republic and Northern Ireland. Over the next few days millions of pounds will be spent in retail outlets in Northern Ireland by shoppers from the Irish Republic. That is good for the businesses of Northern Ireland, but why are they doing that? It is because only last week the Government of the Irish Republic had to announce an increase in VAT to 23%, so of course there is a 3% differential. We do not know where that 23% rate will go next year or the year after. The fact that this nation state retains the right not only to keep VAT at 20%, but possibly, I hope, over the next year, to reduce it back to 17.5%, will increase yet again the differential between the Irish Republic and Northern Ireland.

Colleagues have mentioned corporation tax. Again, that could add to the competitive advantage that we in the United Kingdom, particularly in Northern Ireland but in other regions as well, will have over other parts of the euro region, where corporation tax will be levelled at a rate that will not be similar to the current rate in the Irish Republic, but will have to be raised because of Franco-German demands.

In short, the issues are very clear. The Prime Minister has taken a stand. We commend him for that, but it must be only the beginning, not the end. We must now push the door open, ensure that we rebalance our position in relation to other nation states within the European region, and try to renegotiate a much better deal so that the £10 billion or £11 billion net that we put each year into the EU is deployed more cost-effectively to ensure that as we go forward, the competitiveness of this nation state benefits the people of this nation state.

20:40

[Martin Horwood (Cheltenham) (LD)]

I congratulate the Democratic Unionist party on a timely choice of topic and on some smart draftsmanship in the wording of the motion.

It is reasonably common knowledge that the Liberal Democrats think that the outcome of last week’s summit in Brussels was not a good one. The less important reason for the outcome being bad was that the Prime Minister felt compelled to threaten the use of a British veto. That has generated a great deal of media interest and political over-excitement, but that was not the big issue. The big issue, as the Minister rightly emphasised, is the economic and financial crisis still facing the continent of Europe and, by extension, still facing the UK economy and the global economy.

It is already pretty clear that the hundreds of billions of euros mustered by the IMF, the European stability mechanism and potentially the European Central Bank have not been enough to reassure the markets. Italy, Spain, Portugal and Greece are all still under pressure. Some people have talked as if overnight exits from the eurozone would be desirable, even if they were possible, but they would not be; they would be catastrophic. The prospect of disorderly defaults and eurozone exits would threaten wholesale bank failures, bankruptcies and insolvencies across Europe, and that is still possible. I do not think the eurozone countries have yet put in place the firepower required to avoid it.

The capacity needed by the financial institutions will probably run to trillions of euros. It is not just a short-term crisis, as some of my Eurosceptic friends have pointed out. There are long-term structural issues concerning the compatibility of the German economy with those much weaker and less competitive economies in the same currency union, and those problems have not yet been sorted out. Perhaps the structures and the rules of a new treaty or agreement, whatever form it takes, may prove to be the beginning of a solution, but the process is still a long way from complete and there are quite a few obstacles in its path, some of them sitting in this Chamber.

[Mr Cash]

As one of the immovable objects to which the hon. Gentleman refers, may I stress that we are talking about the rule of law? I am sure he would not want a device to be used that attempted to bypass the legal processes of the very treaties that he so strongly advocates.

[Martin Horwood]

Of course not, and the law will be followed, but we may find that European Governments have to gather yet again for more crisis summits in the not-too-distant future. That offers Britain a bit of an opportunity. We now need a process of positive and active diplomacy to persuade some of our more traditional allies in Europe—Ireland, Sweden, even Germany, and many others—of the benefits of having Britain fully involved not in the eurozone, but in the overall process of European economic decision making. Why? Because one of the medium to long-term solutions to Europe’s problems is to have a real focus on jobs and sustainable prosperity—jobs and prosperity in the UK, as well as in the rest of Europe because, as has been pointed out, half our trade and foreign direct investment comes from other EU members.

The argument about repatriating powers, let alone leaving the EU, completely misses the point. It is in our interest not just to have a competitive and vibrant British economy, but for there to be a competitive and vibrant European economy as well, and Britain can help to bring that about. It is not just in Britain’s interest to be at the heart of the European economy and European economic decision making; it is in Europe’s interests too, and that in turn will help British jobs, British business and British prosperity.

[Bob Stewart]

In those circumstances, would it not be wise for those people who want us to stay in to come to us and say, “Look, talk again. We want to give you what you want. We really require you”? I think Europe requires us rather more than we require Europe.

[Martin Horwood]

The hon. Gentleman makes a very good point. The Liberal Democrats supported the initial negotiating position. The mystery of last week’s summit is why we seemed to have so few friends in the negotiating chamber who would support those reasonable initial demands. That is why I am suggesting that we have a process of much more active and positive diplomacy in the run-up to what might be future summits.

[Dr Julian Lewis]

Will the hon. Gentleman give way?

[Martin Horwood]

No. I have taken two interventions, I am afraid, and time is short.

The reason we can go forward positively within Europe is that in Europe there are means of building alliances that do not depend on treaty changes or such complex and confrontational tactics. I cite in evidence the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), who, by collaborating with European counterparts, has lifted onerous accounting rules from the smallest businesses in Britain and created a like-minded growth group, which the UK has joined with the Czech Republic, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Lithuania, Malta, the Netherlands, Poland, Slovakia, Slovenia, Sweden and Romania to tackle common priorities and establish common negotiating positions on everything from the digital sector to services, impact assessments and smarter regulation.

We have the prospect, as the Europe Minister has pointed out, of rules over fisheries being returned increasingly to the local and national levels, and that is a positive development. There is the prospect also of co-operation leading perhaps to the reform of the EU’s budget processes, and there are plenty of opportunities for a common reform agenda.

If I may finish on a positive, coalition note, I think that mainstream Conservative MPs and Liberal Democrats can absolutely unite on the need for reform.

[Dr Lewis]

Before the hon. Gentleman sits down, can he tell us whether his party will vote for the motion, against the motion, in both Lobbies or not at all?

[Martin Horwood]

Any Liberal Democrat who votes for the Democratic Unionist party motion tonight will do so extremely reluctantly, that is all I have to say.

It is a shame to try to snatch division from the jaws of unity, however, because I was finishing on a positive note. Conservatives and Liberal Democrats should unite on a reform agenda in Europe which does not necessarily require treaty change but will, I hope, be supported by other countries. Then we can build alliances and go forward positively, with the like-minded countries of Europe putting forward a positive and good plan for British jobs and British prosperity, for European jobs and European prosperity.

20:47

[Dr William McCrea (South Antrim) (DUP)]

When my colleagues and I considered the motion for today’s Opposition day debate, we chose something that was both timely and relevant—namely, the UK’s relationship with the European Union. It is vital that we as elected politicians give leadership to the country in these uncertain times, and today we can do so here in the mother of Parliaments.

Some members of Her Majesty’s Opposition have expressed to me their surprise that an Opposition day motion would include the phrase “commends the Prime Minister”, but if the Prime Minister has done something worthy of commendation I do not understand why an Opposition would not rightly say so. We believe that we were correct to begin the motion in such a fashion.

The Prime Minister did what was right, and that is not always easy. As a young preacher, I was told, “Do right should the stars fall,” and, when the Prime Minister does what is right in our opinion, it is right for us to acknowledge that in the House.

[Naomi Long (Belfast East) (Alliance)]

Will the hon. Gentleman give way?

[Dr McCrea]

No. The hon. Lady has not been present for the whole debate, so I am going to take this time to respond to the issues that have already been raised.

The Prime Minister went in to the negotiations. Naturally, there were pressures on him from other European leaders. Their demand was to go with the flow, but he stood firm and resolute for the interests of the United Kingdom. He did not come back to the House waving a “Neville Chamberlain” piece of paper, but became the first Prime Minister to have the courage to veto a new European Union treaty.

There are those in the House who condemn the Prime Minister for doing that. I ask them what authority he had to do other than stand up for the interests of the United Kingdom—that is why he is Prime Minister. In the past, other Prime Ministers have gone into important negotiations and when it came to the point of decision, they did not do what was in the interests of the country—although their consciences were saying that they should do something, they were not willing to do it because it was not popular.

Politicians are vain enough to desire popularity; they love compliments, especially from others on the world stage. However, it is better to do right than be forced to do wrong. The Prime Minister stood at the Dispatch Box in the House before going to the European summit. He told the House that he would act in the best interests of the United Kingdom and that he would make certain demands to protect British interests, and if he could not get them, he would use his veto.

There is no use in someone’s talking tough and taking a weapon to defend themselves if they are not prepared to use it. The Prime Minister took the veto weapon with him into the negotiations. Angela Merkel and Nicolas Sarkozy flatly refused him even the most modest concessions simply because they believed that he would do what other Prime Ministers had done before and that he would not use the nuclear option of the veto. History had told them that Prime Ministers did not have the bottle to use the veto, and, after the huffing and puffing, would concede rather than hold firm.

[Bob Stewart]

The President of France and the Chancellor of Germany were acting in their best interests. They wanted to do a raid on the City of London—something that provides 11% of the income of this country—and take it away from us so that we could not use it. That is what the Prime Minister was defending and that was why he was in the right.

[Dr McCrea]

I agree. The European Union has been used to raiding our coffers over the years; we have been paying for many of its wonderful, unique programmes, which have in fact been an abuse of some of the finances hard earned by the people of this country.

[Emma Reynolds]

Will the hon. Gentleman confirm that the decision-making procedure for any financial transaction tax is subject to unanimity, not to qualified majority voting, and that no attempt at all was made to impose such a tax on us at last Thursday’s summit?

[Dr McCrea]

The hon. Lady has come to the Dispatch Box today, but has not yet told us what the official Opposition would have done had they been in government, so it is rich of her to ask questions of other Members about the issue.

What has happened is that Europe has been taught a salutary lesson, which it will not forget. Perhaps it will be one of the last lessons that Mr Sarkozy will face on the international stage; the presidential elections are coming and one never knows the results of those. Since the Prime Minister’s justifiable action in Brussels, many commentators have tried to suggest that he has lost credibility on the European stage. What kind of influence could our Prime Minister have had if he had failed to honour his pledge to act in the best interests of the British people? It is clear that Mr Cameron has the support of a vast number of people throughout the United Kingdom on this issue, and we want and encourage him to continue to stand firm.

I suggest that if some Liberal Democrats feel that this does not have the support of the community, they can test it in two ways. First, they could have a referendum; certainly, it would be interesting for them to support that idea, as they wanted a referendum recently on something that was also a side, rather than an important, issue. Secondly, they could allow the electorate to decide. If they thought that Mr Cameron did not have the backing of the people, they could allow an election to take place and let the electorate make their decision based on that situation.

It is absolutely disgraceful that the leader of the Liberal Democrats stayed away from the House but was happy enough to go to bed in his constituency when the Prime Minister was standing up for the interests of the United Kingdom. He was happy to agree with a certain standard, but whenever the chips were down he claimed that Mr Cameron was yielding to his Back Benchers. I suggest that the change came over Mr Clegg because he was yielding to the shouts from his own Back Benchers. We do not need Mr Flip-Flop on this issue. We need a definite stand for the interests of the United Kingdom, and I am delighted that our Prime Minister took that stand in Europe.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Before I call the next speaker, may I remind Members that they should refer to other Members by constituency, not by name?

20:55

[Damian Collins (Folkestone and Hythe) (Con)]

It was stated earlier in the debate that there was some surprise at the British negotiating position in Europe and that other member states were not fully apprised of the stand that we would take. That came as a great surprise to me, because I think that the Prime Minister was incredibly clear about what he was going to do. Last week, he wrote an article in The Times setting out what he would do, and then when he got to the negotiating chamber, and had no alternative, he did what he said he would do. Perhaps if there was surprise in Europe it was at the fact that we have a British Prime Minister who actually does what he says he is going to do and does not roll over in the negotiating chamber at the last minute in the face of pressure from other countries.

The hon. Member for Wolverhampton North East (Emma Reynolds) said that when John Major was Prime Minister he secured, under threat of veto, the British opt-out from the single currency. That is quite right. To my mind, that suggests that it was his Conservative Government who kept us out of the euro by creating the mechanism by which we could stay out. However, that was not the only opt-out that he secured at the Maastricht negotiations; he also secured the opt-outs from the social chapter and the working time directive, which were given away by the Labour Government with nothing in return. One of the reasons we now have a big debate about returning powers to this country and to this Parliament is that those opt-outs were given away, together with the powers that went with them.

As the right hon. Member for Belfast North (Mr Dodds) said, this is by no means a done deal. It is not true that we are isolated and that every other country is lined up against us and is committed to the compact that was set out by the eurozone members. It is clear from what we read in the European press today that the Parliaments of countries such as Denmark and Poland are raising severe doubts about what is in the compact. Speaking from the negotiating table itself, Hungary and the Czech Republic have said that they need to go back to their own countries to ask the permission of their Parliaments.

Given the wording in the compact, it is hardly surprising that people are starting to raise those concerns. For the sake of the record, I should like to share with Members some of the things that it says. For example, it says that the rule on deficit and debt reduction

“will contain an automatic correction mechanism that shall be triggered in the event of deviation. It will be defined by each Member State on the basis of principles proposed by the Commission…Member States shall converge towards their specific reference level, according to a calendar proposed by the Commission…the Commission will in particular examine the key parameters of the fiscal stance in the draft budgetary plans and will, if needed, adopt an opinion on these plans.”

[Mark Reckless (Rochester and Strood) (Con)]

Can my hon. Friend explain those repeated references to the Commission? I understood that the Prime Minister had said that we were not going to allow the fiscal union to use the EU institutions of the Commission and the European Court of Justice.

[Damian Collins]

My hon. Friend makes a perfectly valid point. Of course, this is only a communiqué produced by the eurozone countries, not a binding agreement. However, it is clear that these decisions will be taken at European level. It will be the Commission’s decision, or that of whatever European body is created to police this compact, to determine how quickly countries should reduce their deficit, to decide whether they are keeping on track, to propose what measures of intervention should take place if they fail to do so, and to create what it calls a common economic policy that is the stated aim and objective of these countries. If the eurozone members wish to proceed down that path, then that is a decision that they will take. It should be clear to all that Britain would never go down that path. We would never countenance such a transfer of power and sovereignty over our economic affairs to the European level. In setting out his objections and vetoing a treaty of 27, the Prime Minister clearly reinforced that point. There can have been no doubt and no surprise.

A question that has been asked is, what next for Britain and Europe? The summit in Brussels on Thursday and Friday was not about Great Britain, it was about the eurozone and its crisis. My concern, and that of other hon. Members, is that the crisis has not been fixed and that the measures that have been put in place do not provide the guarantees that the financial markets want. That makes it more likely that there will be a default in the eurozone, and that countries may leave the euro. The economic consequences of that are unknown, but most countries around the world predict that it will not help the world economy and, if anything, will make its problems greater. Europe has to overcome that problem.

European leaders may well reflect on the negotiations in Brussels and say that it would have been better to give the Prime Minister the concessions and reassurances that he was seeking rather than force us out and force us into using the veto, thereby delaying the possibility of a proper and sensible negotiation of a resolution for the eurozone crisis. That will be seen to be an error.

Turning to our own position, there has always been much talk about the amount of trading that we do with the European Union. As a bloc, it is worth more than 50% of our trade. Over the past 10 years, however, our trade with the developing economies around the world— Brazil, India, Russia and China—has been increasing, as has that of countries such as Germany. Those are large, developing consumer markets, and it is reasonable to expect our exports there to increase in relative terms and those to the European markets that have been the major home of our trade in the past to decrease in relative terms.

[Kelvin Hopkins (Luton North) (Lab)]

Of course, we have a massive trade deficit with the rest of the European Union, so it needs us more than we need it.

[Damian Collins]

The hon. Gentleman makes a clear point about our trading relationship, but the point that I was seeking to make was that in the decades to come, our trading relationship with other countries around the world will become increasingly important. The idea that the only expression of British wealth and interest comes through the EU is not correct. Also, not just us but other EU members will have to put far greater priority on developing and expanding markets in other countries. That issue of trade policy has been neglected, particularly by countries in the eurozone.

Our focus has to be on making our economy more competitive both within the European market and around the world and on developing our trade interests around the world. That should be a priority for Europe as well. The idea that we can ignore the euro crisis, the challenges that Europe faces and the challenge of the emerging and dynamic economies is false.

My concern about what happened in Brussels is not about the fact that Britain took a firm stand and made it clear that we would not be part of policies that are an outdated solution to an old problem. We see the world not as a series of competing blocs, with the EU fighting against China and the United States, but as a developing patchwork of economies that we want to engage broadly with. We took a stand for what I believe will be the future direction of the world. My concern is that other members of the European Union have missed that challenge and missed the opportunity to put their own house in order, which was what the summit was supposed to be about.

21:02

[David Simpson (Upper Bann) (DUP)]

I start by congratulating the Prime Minister on the stance that he took in the negotiations at the weekend. However, I also wish to sound a note of caution. Although he is currently on the crest of a wave and the people of the United Kingdom are backing him—rightly so, and I congratulate him again—there will be more trials ahead. As other right hon. and hon. Members have said, the journey is not over yet. There is still some way to go, and we expect, hope and trust that he will show the same grit and “bulldog spirit”, as it was put in the House last week, in doing again what he did at the weekend.

[Mr Bone]

I am sorry to interrupt the hon. Gentleman’s powerful speech, but I have listened to the speeches made from the DUP Benches and the speech made from the Liberal Democrat Benches. I ask him, is it not a great shame that you gentlemen are not sitting on the Government side of the House and those gentlemen on the Opposition side?

[David Simpson]

If that is an invitation—[Hon. Members: “Don’t be tempted.”] I will not take it further; I think that is probably an internal matter for the coalition.

[Martin Horwood]

rose—

[David Simpson]

I will not give way because time is short.

Of course, I rise to support the motion that my party has tabled. The whole of Europe—countries in the EU and outside it—faces a major crisis. It is an immediate crisis that is made worse by the drag or gravitational pull of long-term policies, treaties, agreements and directives that lock EU countries, especially those in the eurozone, into a negative economic cycle. Countries were allowed to join the euro that were simply in no fit state to do so and should never have been permitted to do so. Their admittance had nothing to do with their ability to survive and prosper with the euro, but everything to do with the ideology of those who have pressed for an EU superstate. The Republic of Ireland, Greece, Portugal, Spain and Italy were welcomed into the euro on the ground of a pro-European superstate rather than hard economic assessment.

At the same time as those fundamental weaknesses were being built into the eurozone, there were cries in the UK that we should be part of that disastrous undertaking. There were ardently pro-euro factions in the Conservative party and the Labour party. However, in both parties sanity ultimately won the day.

Many of us predicted that locking ill-equipped countries into a position whereby they could not devalue or set their own interest rates was a recipe for disaster. Some would say that, with the benefit of hindsight, Britain had a lucky escape. However, we do not need hindsight because we have history on our side—the history of the European Union and what has happened in it down the years.

From the phone calls and e-mails that I have received, I know that the general public in the United Kingdom are fed up to the back teeth with the money that we pour into Europe every year: £17 billion—£10 billion net, or, to put it in everyday terms, £200 million each day, only to see increasing red tape and an increasing desire to meddle in our courts, our immigration, our foreign policy, our tax system, our employment market and our national defence. For many people, that is simply not acceptable.

We should take the advice of the Prime Minister, who said at the end of October:

“This is the right time to sort out the eurozone’s problems, defend your national interest and look to the opportunities there may be in the future to repatriate powers back”

to the United Kingdom.

21:08

[Neil Carmichael (Stroud) (Con)]

The debate is important, and I congratulate the right hon. Member for Belfast North (Mr Dodds) on securing it. It has been thoughtful and measured, and it paves the way for a succession of debates in the same vein, which we will have to hold. As the previous speaker noted, much has yet to happen.

The Prime Minister made what he intended to do absolutely clear, and we should salute him for getting on and doing it. Not only did hon. Members and other members of the Government know it, but the Chancellor of Germany and the President of France knew it too, because they reacted calmly as if they had been pre-warned. Therefore, it must be recognised that our position was clear and the Prime Minister acted.

It is important to amplify some issues, one of which, of course, is that the events of last week mean that we will not have a referendum in the immediate future. There is no treaty to sign, and therefore no transfer of any power in any direction. Effectively, a line has been drawn under the referendum debate, unless or until another treaty is signed or another significant power is transferred. We should recognise that and move on to the next phase.

The next phase is something to which my hon. Friend the Member for Cheltenham (Martin Horwood) referred: renewing relations with many of our partners and establishing good, effective bilateral relations so that we can have a sensible dialogue on the kind of Europe we want to build. It is critical that we start thinking in terms of the competitiveness of Europe and the single market, but to do so we must have friends, a proper understanding and a long-term plan that makes sense. I therefore urge the Government to redouble their efforts to make good contacts and friends out of the 26 members.

Our interests are clearly associated with the fact that the euro must survive and become a sustainable currency, because if it does not we will all be in a big mess. We should say that and mean it. Of course, we must ensure that the compact that leads to further decisions is good enough and appropriately structured, but we also know that the US is equally interested in the future of the euro, because it, too, recognises that the world’s largest market—with the eurozone within it and a key part of it—is not the best place to have a major currency crisis.

That brings me to the use of EU institutions. The Minister for Europe made it absolutely clear that there is plenty to do in connection with the compact and beyond, so it is far too early to talk about who should or should not use EU institutions. I have two things to say about that. First, Germany, France and other countries have made their mind up to do something. If they do not use EU institutions, they will do what they want nevertheless, and we might have even less influence over what happens. We must think carefully about that fact. Secondly, if we want to repatriate powers—we have said very clearly that we do—we will want friends who will help us to do so. I do not believe that taking an intransigent view on the use of EU institutions will help in that respect at all.

My final remark is this: we have a clear and obvious interest in ensuring that the single market works and that it works well for us. We must understand its strategic importance not just to the whole of Europe, but especially to our industry and services, which depend on it. We therefore must make it one of our key objectives to play ball with those who want to make that market even more competitive and effective.

21:13

[Mark Durkan (Foyle) (SDLP)]

I commend the Democratic Unionist party for this timely motion. It is effectively an invitation to a party in our House for the Eurosceptics on the Government Benches, who have been good enough to turn up.

It is important to recognise, as the hon. Member for Stroud (Neil Carmichael) did, that we are not talking about a done deal as such. Some right hon. and hon. Members who have been cheering the Prime Minister’s position make him a hero because he stood outside what they have presented as an all-consuming, fixed done deal that can move only one way, whereas the reality is that the deal is not done. What the Prime Minister has done is take the UK out of the important, detailed negotiations that need to take place over the next few months. At a time when, given the safeguards that he and the Chancellor of the Exchequer have said they want for the eurozone and the separate safeguards they want for the UK—and at the time when they could most have used and built up key alliances in Europe—he has taken a position that says, “No, I am out of this.”

Let us remember that it is the Prime Minister and the Chancellor who, for nearly their whole time in office, have been saying that what is needed is closer fiscal union in the eurozone. They were the people who were commending a unitary fiscal position, together with the US Administration, and now the Prime Minister is being cheered because others have moved to the very fiscal compact that he advocated as necessary.

There is a danger in this debate that those who were yesterday grinning like horses chewing thistles when the Prime Minister came in to make his statement will get carried away and become over-jubilant. They might find in a few months that their celebrations and anticipation will turn out to be ephemeral. The same goes for those in other European countries who are jumping up and down with indignation and raging at the Prime Minister. They might find that a lot of their concerns are ephemeral as people concentrate on the shortcomings of the deal itself—the shortcomings that are written into the pact and the even bigger difficulties that are not accounted for in the pact at all.

We need to remember that the deal is a fairly weak construction. It will not inspire enduring confidence among investors. The extra resources remain insufficient and the failure to deliver a credible plan for growth will only worsen the debt problem in Europe. There are serious shortcomings with the Merkozy deal, but the Prime Minister’s approach should have been to point out those shortcomings and to build alliances in the months to come when those details have to be worked out further. We have seen the difficulties with all the previous deals that have come apart, and that will happen to this deal too.

The Prime Minister told us that he was going to the Council looking for certain golden rules to be put in place in the eurozone, but now he seems to be opposing a deal because people want to introduce some of those golden rules. The real issue has to be the difficulties that will be faced in achieving those rules. Let us remember that he did not tell us that he had vetoed a treaty because of its shortcomings in terms of guaranteeing fiscal discipline, stopping contagion and erecting a firewall. He told us that he stayed outside because the safeguards for the UK were not right. He would have been in a stronger position if he had focused his criticism and concern on the inadequacies of the deal per se, because he would have had alliances in times to come, including possibly assistance with his own safeguards.

We cannot afford isolationism, but we have heard talk of it tonight. Nor can we afford the vindictiveness that has been expressed in some political chambers in Europe. This is not the time to revert to predictable political postures on Europe and simply rehearse the totemic positions of our traditional European debate. Empty political certitudes are no answer to the raging economic uncertainties that face us in Europe, which do not affect just the eurozone, but fundamentally affect the sterling zone as well.

21:18

[Andrew Percy (Brigg and Goole) (Con)]

To continue the party analogy introduced by the hon. Member for Foyle (Mark Durkan), I am certainly a willing attendee, although judging by his speech he is a bit of a party pooper. I did not agree with much of what he said, but I certainly agreed with the speech by my right hon. Friend the Member for Belfast North (Mr Dodds) and others who have spoken from the Opposition Benches—if not always in opposition to us.

I want to mention the response from my constituents. Since the Prime Minister’s action on Friday, we have been inundated with e-mails, Twitter messages, answerphone messages and telephone calls to the office from people—people who voted for all different political parties—saying that the Prime Minister was absolutely right to draw a line in the sand. It has been interesting listening to the people who criticise us on this issue and the language that they use. It is the usual sort of Euro-fanaticism that we hear from them, the usual patronising guff, as I called it the last time I spoke.

[Neil Parish (Tiverton and Honiton) (Con)]

My hon. Friend is right. The Prime Minister used the veto to stop this European integration. Sitting in the European Parliament, of course, one finds that people are ever driving for greater union. This is one Prime Minister who has actually stood up for the British people. We must commend that.

[Andrew Percy]

I could not agree more with my hon. Friend, who, having been not at the heart of the EU but certainly present, knows a lot more about its workings than I would ever wish to know.

I was talking about the language used by those who object to or criticise the Prime Minister’s actions despite having no alternative plan. They say that it is ill thought out, that we are ill informed and ignorant and that we do not understand the issues. My response is this: we understand the issues perfectly well, we understand how the EU works; we just do not like it—and you know what, Mr Deputy Speaker? They need to wake up because the public do not like it either, if the response to opinion polls and in our constituency offices and e-mail inboxes is anything to go by.

Of course, these are exactly the same people who argued for us to be in the euro. We hear this nonsense from Labour Members that they were the party that kept us out of the euro. They were not at all. They would have had us in there had it not been made so politically inconvenient and difficult for them. That is why they spent so much money trying to prepare us for the euro. I suspect that quite a few of them, if they were honest, would have us in the euro at the first possible opportunity. So we will not take any criticism from the Opposition Benches—I mean the Labour Benches, not the finer Benches occupied by Irish Members.

[Angie Bray (Ealing Central and Acton) (Con)]

Does my hon. Friend think that the Leader of the Opposition would have been more successful at delivering a result during last week’s talks in Brussels, given that every time his party went into talks it said yes to everything? Surely, the fact that for once we have said no might make people sit up and listen.

[Andrew Percy]

Love thy neighbour, I say, and the Leader of the Opposition is my constituency neighbour, so I do not wish to speak ill of him, but I entirely associate myself with my hon. Friend’s words.

I want to concentrate on the Opposition’s position before saying a few words about the Minister’s response. The hon. Member for Wolverhampton North East (Emma Reynolds) did not answer my three questions: she did not say whether the Opposition have ruled out membership of the euro for ever; she did not say whether they believe that we have integrated too far and whether they are against integrating further or ceding more powers to the EU; and she did not answer my third question—one posed by many Members on both sides of the House—about what they would have done last Friday. There is this fanciful configuration under which they would have grabbed a deal—because the negotiating skills of the Leader of the Opposition are so renowned—that was good not just for Europe and the euro but for Britain. I simply do not buy it, and I strongly suspect that the British public do not either.

I want to say a few words about our valued coalition colleagues and their response over the past few days. I used to agree with a lot of what the Deputy Prime Minister said. Indeed, I clutch in my hand—although one must not use a prop, Mr Deputy Speaker—a photocopy of a Liberal Democrat election leaflet. They are mercifully thin on the ground in Brigg and Goole because we have no Liberal Democrat councillors. It is headed, “It’s time for a real referendum on Europe” and continues:

“It’s been over thirty years since the British people last had a vote on Britain’s membership of the European Union. That’s why the Liberal Democrats want a real referendum on Europe…But Labour don’t want the people to have their say. The Conservatives only support a limited referendum…Why won’t they give the people a say in a real referendum?”

The leaflet reads: “It’s time for a real referendum”.

[Martin Horwood]

Will the hon. Gentleman give way?

[Andrew Percy]

No, I have heard the hon. Gentleman’s explanation of this in the past, when he talked about a referendum at some time in the future, but this leaflet says very clearly, “It’s time for a real referendum”. People can even send it back to the real referendum petition, 4 Cowley street, London.

[Martin Horwood]

Will the hon. Gentleman give way?

[Andrew Percy]

I am not going to give way, because I have heard the nonsense about the Liberal Democrats’ manifesto commitment on this issue before, which was all about how there would be a referendum at some point in the future. However, I am afraid that the quotation given by the Deputy Prime Minister on this leaflet—he is named as “Lib Dem Leader Nick Clegg”—says:

“It’s time to give the British people a real referendum on Britain’s membership of the European Union.”

I can assume only that when this leaflet went to the printers, the bit saying, “At some point in the future, but not any time soon,” was missed off. Some people would say that the Deputy Prime Minister—

[Martin Horwood]

Will the hon. Gentleman give way?

[Andrew Percy]

I am not going to give way, so give up.

[Martin Horwood]

On a point of order, Mr Deputy Speaker. Is it in order for someone repeatedly to attack Members in the Chamber, and by implication the Liberal Democrat parliamentary party, and not give way when that is challenged?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I think one would say that it is a political comment rather than an attack. As both parties are joined together, I am sure that the hon. Gentleman would take it not as an attack, but as a political comment.

[Andrew Percy]

I am upset if any of my valued coalition partners thought that I was in any way besmirching their characters individually or attacking them. I am not: they are valued partners in this enjoyable coalition that we find ourselves in. However, I have said enough about the election literature.

Some people would say that the Deputy Prime Minister has acted disgracefully in the last few days. I am not going to say that. Some would say that he has acted appallingly, and I am not going to say that either. I will leave it to others to comment on that. What I would say in conclusion, however, is that I heard the Minister’s comments, and I was warmed by much of what he said. We need a little more detail about whether the institutions will be used, but I hope that last Friday shows that a line has been drawn in the sand and that we have said, “We’ve had enough integration, and the British public have had enough.” Whatever the other arguments, we have to accept that the British public are not where the political elite are in this country, but are much further on in the argument. They have looked at the European Union and they do not like it. That is why it is time we gave them a say, or at the very least ensured that nothing is given away to Brussels.

[Mr Deputy Speaker]

I remind the next speaker that we have only two minutes to go until the wind-ups.

21:26

[Ms Margaret Ritchie (South Down) (SDLP)]

I commend the Democratic Unionist party and the right hon. Member for Belfast North (Mr Dodds) for tabling the motion. However, it will be no surprise to him and his colleagues to hear that I will be in a different Lobby from them this evening.

As a committed European, I feel that there is no doubt that the Prime Minister’s unilateral decision to veto any prospective new European treaty aimed at achieving greater financial stability across the eurozone is indeed regrettable. Not only did he appear to fail to consult his coalition partners; more importantly from our perspective in Northern Ireland, he failed to consult any of the devolved Administrations, despite the fact that his actions could have profound implications for those jurisdictions. I ask the Government seriously to consider those implications in the medium and long term, because although there are many, shall we say, downsides, there are also many economic, financial and social benefits to membership of the European Union. In fact, Northern Ireland is the only part of the UK with a land and a water border with the eurozone. We are entitled to be consulted about any UK Government action that fundamentally impacts on Britain’s relationship with the eurozone. Anything short of that is, frankly, disrespectful. I hope that the Government will bring forward a solution this evening and tell us that the Prime Minister will return to the negotiating table and not turn his back on the European Union again or the opportunities that could be there for us all.

21:28

[Sammy Wilson (East Antrim) (DUP)]

It is a great joy to sum up in what has been a timely debate, touching on an issue that concerns millions of people across the United Kingdom, not only because their attention has been focused on last weekend’s events in Europe, but because of the continuing drift that we have seen. As my hon. Friend the Member for Upper Bann (David Simpson) said, on everything from foreign policy and macro-economic policy right down to the basic things that affect people’s lives every day, people are more and more concerned about the impact that Europe has on them.

A number of matters have been discussed in a good debate. Those who have opposed the motion have raised a number of issues, which I would like to go through quickly. The first is the damage done to the United Kingdom by the Prime Minister’s stance. This was epitomised by the comments of the hon. Member for Wolverhampton North East (Emma Reynolds) as shadow Minister when she said that the Prime Minister had left us on the outer fringes of the EU and that it was bizarre for us to wish to commend him for that.

[Jim Shannon]

Will my hon. Friend give way?

[Sammy Wilson]

Of course, but I want to develop this point first.

There is nothing new in this. The chattering classes have all come together to condemn the Prime Minister for standing up for Britain and for our interests in Europe. There is nothing new in those who see the European project being attacked using that tactic in debates such as this. In fact, a leader of the Liberal Democrats said, as revealed by Hansard:

“There will be a second-tier Europe”—[Official Report, 24 September 1992; Vol. 212, c. 34.]

in which we will be led into “isolation”. People may wonder how on earth that can be, when the Liberal Democrat leader has not been in the House since these events happened. How can he have anything on record in Hansard? Of course, I quoted not the present Liberal Democrat leader but the Liberal Democrat leader from 1992—nearly 20 years ago—when we had exactly the same situation. They have not even learned new lines, for goodness’ sake. If they are going to criticise someone for undermining the European project, one would have thought that they would learn to find some new arguments.

People have said that we are isolated in the world. It is interesting to note that when Hillary Clinton commented, she said that she was not concerned at all about what the Prime Minister did in Europe this weekend. She was more concerned—and America is more concerned—about whether this will be an effective way of dealing with the crisis of the euro. As a number of hon. Members—including even the hon. Member for Cheltenham (Martin Horwood) —have pointed out, even the markets agree that this has not been a good deal. How on earth can we be isolated and left alone on the edges of Europe on this issue if we find that all those looking at the effectiveness of the deal have found it wanting?

The second argument is that Britain will be left alone and other nations in Europe will not support us. Hon. Members, including again the hon. Member for Cheltenham, and the hon. Member for Folkestone and Hythe (Damian Collins) and even the hon. Member for Foyle (Mark Durkan), have pointed out that this is not the end of the matter. Many of those hailed as supporting the deal are already beginning to have second thoughts. The list is endless: Denmark, Sweden, Poland, Finland and Czechoslovakia. Ironically, even one of the candidates who might well be the next Prime Minister of France has said that he would undo what has happened. I think that, far from being alone, we will find this issue being revisited by others. That requires a word of caution: if it is to be revisited, it is important for the Prime Minister to take the same stance again.

[Mr Cash]

Does the hon. Gentleman agree that, in the light of everything he has so soundly said, it would be extremely unwise for our own Government to make any attempt to endorse the arrangement, given its uncertainty and apparent instability?

[Sammy Wilson]

Absolutely. As other nations start to look at the implications of the deal and see the essentially undemocratic nature of it, they will ask themselves whether they are prepared to put their destiny in the hands of the European Commission.

I find it strange that the party that has opposed the Government’s austerity measures in the United Kingdom has taken the view that it is better to hand the ability to impose those measures to the unelected bureaucrats in Europe. At least the Prime Minister can be held to account in this place every Wednesday and the Chancellor can be held to account here, too. We will not be able to hold European bureaucrats to account if we give them this power. That is one reason why I find the attitude of Labour Members very strange.

The third argument that has been made is that we have gained nothing and lost everything. The hon. Member for Wolverhampton North East put it succinctly: it was bizarre of us to support the Prime Minister, she said, because decisions will be made that will affect us, and we will not even be in the room when they are discussed; it has failed to stop any changes in the financial system; and it is bad for Britain, and bad for jobs. Therefore, she and the Labour party oppose what the Prime Minister has done. With such an argument, she should have found it easy to say, “We want to be in the room, we want to safeguard financial institutions, and we want to create jobs, so we will support the deal.” But no matter how many times those in the Labour party have been asked the question, they have not been able to say that they would have supported the deal. Perhaps she will now tell us that the Labour party will support the deal.

[Emma Reynolds]

Nothing was agreed on Thursday that led to a signing of a treaty change. We would have to see what was in the treaty change to decide whether we would sign up to it.

[Sammy Wilson]

This is the problem—if that is the case, why would those in the Labour party not support a deal? Why will they not say that they would also have vetoed a deal? If they would not have vetoed it, they are saying that they would support something that they believe is bad for jobs. That is the logic of their position.

The other argument is that the Prime Minister has taken this action because he is afraid of his Back Benchers. If anyone is afraid of his Back Benchers, it is the leader of the Liberal party. On Friday, he was saying that he agreed the terms, the tactics and the approach. By Sunday he had changed his mind. What changed his mind? I suspect that his Back Benchers changed his mind. It is a bit rich to say that the Prime Minister is in hock to his Back Benchers. Equally, I suspect that the Labour party has taken the attitude it has adopted because it is afraid of the public. It knows that the vast majority of the public—57%—support what the Prime Minister has done. I would rather have a Prime Minister who is cognisant of the British people’s views and then responds to those views. For that reason, we commend him in our motion.

I am sure that we will have plenty of opportunities to disagree with the Government, and times when we criticise the Prime Minister. This is not the end of the matter. The Prime Minister will have to show again the backbone that he showed last Friday, and we will look for him to do it.

21:38

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)]

I congratulate our friends in the Democratic Unionist party on securing this debate on the Prime Minister’s decision last Friday to protect the national interest. They are true allies in these challenging times. I pay tribute to the right hon. Member for Belfast North (Mr Dodds) and the hon. Member for East Antrim (Sammy Wilson) for their speeches.

As the Prime Minister explained to the House yesterday, we went to the European Council in good faith, seeking to reach an agreement acceptable to all 27 members of the European Union. In doing so, we were clear on the need to have the necessary safeguards in place to protect our national interests on the single market as a whole and on financial services. We did not seek special treatment or carve-out for the UK, but safeguards that would ensure a level playing field. As my right hon. Friend the Minister for Europe said, those safeguards were modest, reasonable and highly relevant. As he also pointed out, it was a question of protecting not just the City of London, but financial services across the whole of Europe. As it was not possible to reach agreement on satisfactory safeguards, we were not able to agree to a treaty at 27. That was clearly the responsible course for us to take in order to protect the United Kingdom’s national interest.

The hon. Member for Wolverhampton North East (Emma Reynolds) asked whether the Government had been properly prepared, and concluded that they had been ill prepared. She said that we had asked for too much, too late. Where has the hon. Lady been for the last month? The Prime Minister and the Deputy Prime Minister talked to most leaders and visited key capitals during that period. The Prime Minister saw Chancellor Merkel three weeks before the Council, and met President Sarkozy a week before it. The Prime Minister was clear about the position on safeguards, and made it crystal clear that the safeguards he wanted were moderate and reasonable. As was pointed out by my hon. Friends the Members for Folkestone and Hythe (Damian Collins) and for Stroud (Neil Carmichael), the position was well understood.

[Emma Reynolds]

Will the Minister give way?

[Mr Bellingham]

I will not, because I must cover as much ground as possible.

The course taken by the Prime Minister allowed eurozone countries and others to proceed with a separate treaty in which they could pool their sovereignty on an intergovernmental basis with the aim of implementing tighter fiscal discipline in the eurozone as part of the process of restoring market confidence. It is right and important for eurozone countries to take the action that they deem necessary to deal with the crisis in the eurozone. We want and need the eurozone to sort out its problems. That is in Britain’s national interest, as it is clear that a crisis in the eurozone is having a negative effect on the UK economy.

[Jim Shannon]

Will the Minister give way?

[Mr Bellingham]

No, I will not.

Let me say something about the UK’s influence in Europe. The decision not to proceed with a treaty at 27 has no impact on our status in the European Union. Our role in the EU is safeguarded by the existing treaties. Britain remains a full member of the EU. Our membership is vital to our national interest. We are a great trading nation, and we need the single market for trade, investment and jobs. Contrary to what was said by the hon. Member for Wolverhampton North East, we will remain active and influential in the EU. The European Council does not in any way diminish our role. As was pointed out by the hon. Member for Cheltenham (Martin Horwood) in a wise and sensible speech, this week there will be meetings of the Councils on Transport, Telecommunications and Energy, and Agriculture and Fisheries, and we will be present as full, active members in each of those Council meetings.

I am trying to respond to speeches made by a large number of Members on both sides of the House. As was pointed out by my hon. Friend the Member for Daventry (Chris Heaton-Harris) and the hon. Members for East Londonderry (Mr Campbell), for South Antrim (Dr McCrea), and for Upper Bann (David Simpson), the decision not to be part of the treaty that will be agreed by the eurozone and others does not in any way reduce our influence. The EU is not a monolithic block, and it already contains flexible arrangements.

As the right hon. Member for Belfast North observed, the United Kingdom is not part of the single currency or the Schengen no-borders agreement, but that has not prevented us from leading the way in the EU on a range of issues, from an activist foreign policy to the completion of the single market. As my right hon. Friend the Minister for Europe pointed out, our position is incredibly important in terms of not just the single market but foreign direct investment, 50% of which comes from the EU. As he also pointed out, much foreign direct investment from other parts of the world, such as the BRIC nations—Brazil, Russia, India and China—is due to our membership of the EU.

My hon. Friends the Members for Stone (Mr Cash) and for Stroud referred to the EU institutions. We want the new treaty to work in stabilising the euro. That is in our national interest, because our economy is closely tied to that of our EU partners. I understand why the eurozone member states would want to use the institutions to help to ensure fiscal discipline. We will look constructively at proposals to use the EU institutions with an open mind, but this is new territory which raises important issues.

The right hon. Member for Belfast North was spot on when he said that nothing must be done through the back door. We must ensure that institutions built for 27 continue to operate fairly for all member states, including the UK, and in particular we must ensure that the role played by the EU institutions in safeguarding the single market is not affected. I assure my hon. Friend the Member for Stroud that we will continue to intensify bilateral relations with many different EU countries. Let me assure the hon. Members for Foyle (Mark Durkan) and for South Down (Ms Ritchie) that we will not take the isolationist route.

On the repatriation of powers and the balance of competences, the Government are committed, under the coalition agreement, to examining “the balance” of competences between Britain and the EU. There is a case for doing that—as the right hon. Member for Lagan Valley (Mr Donaldson) pointed out, it is a very strong one. The work on the review has begun and is in its early stages. In taking it forward, we will look at how to engage with our EU partners on individual competences. A change in the balance of competences would require the agreement of all 27 member states on the basis of negotiation and agreement.

I wish to say a few quick words about the working time directive, because it is important at a time of economic uncertainty that we remain focused on job creation and growth. That will require all of Europe to improve its competitive position, including in respect of labour markets. A key part of that will be limiting the barriers to flexibility in the working time directive. The Government are committed in the coalition agreement to limiting

“the application of the Working Time Directive in the United Kingdom.”

Our priority is that the working time directive keeps a secure economy-wide opt-out; working people should be able to work the hours that they choose. We will also be looking to secure more flexibility in the areas of on-call time and compensatory rest.

I pay tribute, once again, to our friends in the Democratic Unionist party, because this very good debate has come at a crucial time for Europe and, throughout, the contributions of DUP Members have been incredibly consistent, solid and reliable. What can we say about the Opposition? I agree with my hon. Friend the Member for Brigg and Goole (Andrew Percy) that we have heard nothing but carping and criticism. The hon. Member for Wolverhampton North East did not tell us whether Labour would have signed the treaty. She said nothing at all in response to two interventions, including one from my hon. Friend the Member for South West Wiltshire (Dr Murrison), asking why Labour gave up Britain’s £7 billion EU rebate when the now shadow Foreign Secretary was Minister for Europe? She also made no attempt to answer the question about why Labour signed the UK up to a euro bail-out mechanism after the general election—on 8 and 9 May 2010, before the coalition agreement was completed. She also failed completely to answer the questions put to her about her leader, who first—

[Mr Dodds]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

21:47

Division 411

Ayes: 278

---

Conservative: 270
Democratic Unionist Party: 6
Independent: 1

Noes: 200

---

Labour: 192
Scottish National Party: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 1

Resolved,

That this House commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK; regards the use of the veto in appropriate circumstances to be a vital means of defending the national interests of the UK; and recognises the desire of the British people for a rebalancing of the relationship with our European neighbours based on co-operation and mutually beneficial economic arrangements.

[Mr John Spellar (Warley) (Lab)]

On a point of order, Mr Speaker. We live in some fairly interesting times, because not only do we have a Deputy Prime Minister who has gone missing, but I am reliably informed that not one Liberal Democrat Member voted in the Lobby to support the Prime Minister. Is there a precedent for that within a Government?

[Mr Speaker]

The right hon. Gentleman is a wise greybeard, and he will know that there are precedents for most things, but fortunately whether people vote or the way in which they vote is not a matter for the Chair. However, he has put his point forcefully on the record.

Business without Debate

Tuesday 13th December 2011 Commons Chamber

Delegated legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Electricity

That the draft Electricity and Gas (Carbon Emissions and Community Energy Saving) (Amendment) Order 2011, which was laid before this House on 21 November, be approved.—(Greg Hands.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Financial Services and Markets

That the draft Open-Ended Investment Companies (Amendment) Regulations 2011, which were laid before this House on 21 November, be approved. —(Greg Hands.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Bank Levy

That the draft Finance Act 2011 (Bank Levy: Amendment of Netting Agreements Provisions) Order 2011, which was laid before this House on 23 November, be approved.—(Greg Hands.)

Question agreed to.

[Mr Speaker]

With the leave of the House, we shall take motions 10 and 11 on Police together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Police

That the draft Local Policing Bodies (Consequential Amendments) Regulations 2011, which were laid before this House on 21 November, be approved.

That the draft Elected Local Policing Bodies (Complaints and Misconduct) Regulations 2011, which were laid before this House on 14 November, be approved.—(Greg Hands.)

Question agreed to.

Royal Mail Delivery Office, Kidsgrove, Staffordshire

Tuesday 13th December 2011 Commons Chamber

22:05

[Joan Walley (Stoke-on-Trent North) (Lab)]

I should like to present a petition—[Interruption.]

[Mr Speaker]

Order. May I appeal to Members who are leaving the Chamber to do so quickly and quietly so that the hon. Lady is afforded the courtesy that they would want to be extended to them?

[Joan Walley]

I am most grateful, Mr Speaker, because this issue matters to me.

I should like to present a petition of more than 1,000 signatures from the residents of Kidsgrove, Staffordshire and others. In the run-up to Christmas, all Members will be aware of the important role of Royal Mail delivery offices, and that they are busier than ever at this time of year.

We are all aware of the value of the work of the postmen and women who deliver our mail, and of the importance of local delivery offices being close at hand. We want to ensure that Royal Mail liaises with local business and with Kidsgrove town council about any changes.

My petition therefore declares:

The Petition of residents of Kidsgrove, Staffordshire and others,

Declares that the Petitioners believe that the proposed relocation of the Royal Mail Delivery Office from Kidsgrove to Newcastle-under-Lyme, without consultation with local people and businesses, will result in a deterioration of local services, will be detrimental to local businesses, and cause an increased carbon footprint.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to ensure that Royal Mail consults with local partners to improve delivery services in line with the commercial and domestic needs of the Kidsgrove, ST7 area and reviews the proposed relocation accordingly.

And the Petitioners remain, etc.

[P000988]

Illegal Music Downloading

Tuesday 13th December 2011 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

22:08

[David Morris (Morecambe and Lunesdale) (Con)]

I am delighted that this debate is happening today, and I have been told that I must declare an interest. As a former songwriter I remember that when I stood for election in Blackpool South, the local press exposed my misspent youth in the ’80s and asked me, “Can you tell us about your songs?” I said—without wanting to be political, even though we are in the House of Commons—“Let’s just say I wrote some dodgy records in the ’80s, but that’s nothing to do with the Government’s criminal record”—by which I meant, of course, the previous Government.

So, with the bad jokes out of the way, and given that nobody is laughing, let us get on to a serious subject. The purpose of my debate is not to attack any business in the entertainment industry, nor is it to propose draconian new laws. I see this debate as an opportunity to put on the record the important work being done to combat the problem of illegal downloading.

Over the next few years, superfast broadband will give rise to even greater integration between the internet and how we consume media. If we get the issue right now, we can ensure that the film, radio and television industries benefit from the experience of the music industry once they become more popular online.

Before I start setting out the issues as I see them, I want to thank the organisations that have spoken to me about the issues that I am going to raise tonight: the Performing Right Society, Google, Virgin Media, UK Music, the Internet Service Providers Association and the British Recorded Music Industry, known affectionately as the BPI. All of them have forward-looking and determined vision to help resolve the problem and protect all sectors of this important industry.

Many of the organisations have pointed out to me that real leaps forward have been made since May 2010. They have asked me to thank the Minister for the role that he has played in leading that—not least in his work in establishing the Creative Industries Council, which brings together groups with an interest in intellectual property. That new group, which first met in July this year, is part of a wider dialogue, led by the Government, to work to resolve the problems that we now face.

Let me take a moment to set out the issues as I see them. We should cast our minds back to the time when MP3s exploded into public consciousness in the late 1990s and early 2000s. Suddenly everyone was talking about a website called Napster. The music industry was left shell-shocked as huge numbers of songs were swamped by hundreds of thousands—perhaps even millions—of users. At that time the problem was that the industry was years away from developing an alternative legal way to access music online. My personal view is that most Napster users were not criminals who wanted to engage in illegal downloading and piracy; most were young people whose only aim was to create music collections on their computers. In the absence of a legal method of doing that, they turned to an illegal one.

[Mike Weatherley (Hove) (Con)]

I congratulate my hon. Friend on securing this important debate. Does he agree that there are three prongs to the protection of our creative industries? There is the carrot, which may be changing some business models to encourage people to download legally, perhaps through differential pricing. There is the stick, which would make illegal the activities of internet service providers and individual users who persistently download illegally, and address the problem of companies, such as Google, that advertise illegal sites. There is also education. People need to understand that if they continually download, that could seriously harm future creative industry output.

[David Morris]

I thank my hon. Friend for that information, and for the educational measures that he has introduced through his “Rock the House” campaign, which is gaining support across the nation and making Members of Parliament engage with the youth of today.

Today websites such as Spotify give a legal alternative to illegal downloading, but how do we ensure that people go to those sites rather than illegal ones? That raises serious questions and problems.

[Martin Horwood (Cheltenham) (LD)]

The hon. Gentleman was understanding about the fact that most young people who initially indulged in the activity were not criminals. However, does he believe that the fact that the BPI has from time to time acted in such a heavy-handed way with young people—sometimes even with their families, who had almost no connection with the downloading—has somewhat undermined its public support for very real concerns?

[David Morris]

I thank my hon. Friend for that comment. The BPI’s response may have been knee-jerk at the time, but as I have tried to set out, no real legal alternative is coming through quickly enough.

Search engines are understandably full of illegal sites. That is not the fault of the search engine providers; their spiders trawl the internet and automatically add new sites. Most of us in the House have already experienced that, because our websites are largely ignored until, after a few weeks or months, automated systems at the search engine level find them. Suddenly people start to visit our sites, so those sites are added to search engines without anyone at the search engine ever having looked at them in the first place.

Everyone accepts that creating search engines by any method other than automation is more or less impossible. That means that we then have to ask search engines to remove pages that sell or trade in illegal material. Google allows anyone who has had their copyright infringed to send it up to 10,000 pages a day to be removed. Groups such as the PRS regularly use this service, and say that Google has removed offending pages within four hours. That in itself—I can say in response to my hon. Friend the Member for Hove (Mike Weatherley)—is a step in the right direction by the PRS. The service is pretty impressive given the number of pages that have been removed, but it is also laborious for both parties. There is no obvious way to streamline the process, although I understand that discussions are now ongoing. And while the page is on the search engines it is very hard to know the difference between legitimate and illegitimate sites. Seventy-five per cent. of consumers admit to being confused.

Clearly, better education of young people is needed. I am chairman of the all-party group on media literacy. The aim of media literacy is to go into schools and teach young people how to function in this modern-day media environment, where claims made by advertisers and websites may be false. A group called Media Smart goes into schools with that aim and does a marvellous job, the BPI has a scheme called the Music Matters badge to educate consumers, and there are other schemes. However, a full programme on media literacy has not been rolled out, and is we must address that, as the internet is now so integral to modern life. The PRS suggests that we initiate a traffic light system whereby pages are rated green or red depending on whether they are legitimate. That scheme has some merit and could be considered at an industry level.

However, the fear shared across the industry is that legitimate sites will be wrongly accused of being illegal, so that perfectly legal sites are taken off search engines. Flagging sites as red could even open up search engines to legal action. We need to strike a balance between protecting search engines from this litigation and ensuring that they are not cavalier about taking down sites with no evidence. We must target sites that are built only to trade in unlawfully obtained music and are repeat high-volume offenders. The Internet Service Providers Association points out that it is hard to make companies the judge and the jury, as they may not have the expertise to arbitrate on such matters.

We must also ensure that advertisers do not place adverts on websites that trade in illegal content. All too often the offending sites are given an air of legitimacy by syndicated adverts from mainstream companies. Again, this is hard to combat, but advertisers must continue in this work. The Digital Economy Act 2010 empowers Ofcom to force internet service providers to reduce speeds for persistent offenders, and it may even suspend their accounts for short periods. Failure to comply with Ofcom leaves ISPs open to a fine of up to £250,000. The key point is that no one is expecting vast swathes of people to fall foul of these threats to reduce speeds or suspend accounts. Those are a last resort for use against those who refuse to use legitimate sites, the take-up of which is now growing. Through all those means—the development of legitimate sites, the action of search engines to remove illegitimate ones, and a limited threat of action for those breaking the law—we can start to build an environment in which people are encouraged to do the right thing.

The wider issue is the role played by free content. When I was in the music industry the country was awash with free content. Free-to-air television programmes such as “Top of the Pops” promoted artists but also allowed consumers to listen to music free. Much to the amusement of my colleagues, YouTube still has footage of me with a big mullet on “Top of the Pops” in the 1980s. Similarly, radio has offered free content for many years. Today “The X Factor” has developed into a free-to-air business model that relies on phone voting revenue in addition to advertising.

Allowing limited free content is the right thing to do because it promotes artists. YouTube does that very well because people can watch the music video, along with adverts, but it is not easy to download that video or record music from it. It is not impossible to record off YouTube, but the website itself does not offer that option. That again nudges people into doing the right thing. Watching a music video on YouTube generally ensures that artists and labels are paid properly for their work. YouTube is listed along with hundreds of other legitimate sites on Pro-Music. That project is an effort by the industry to help consumers to make the right choices, and I hope that more people will log on to the site. It does not promote any one site, but it helps to ensure that consumers can make the right choices.

The music industry, search engines and ISPs were taken by surprise by the download phenomenon. As my hon. Friend the Member for Cheltenham (Martin Horwood) said, knee-jerk reactions occurred, but companies are now coming together to help people make better choices. I do not believe that we will ever stop illegal downloading completely—after all, in my day some people were determined to tape songs off the radio and “Top of the Pops”. Dare I say it, I can remember doing that myself in my teenage years.

[Chris Heaton-Harris (Daventry) (Con)]

Lock him up.

[David Morris]

I know. However, I firmly believe that most people will act legally if they can.

I finish by congratulating the Government and the industry on working to reduce the problem. With everyone committed to getting this right, the problems of the past will soon be forgotten. Let us remember that we are world leaders in the music and entertainment industry, and our brands and artists have dominated the world for the past 50 years. The internet raises issues, but as we address those issues we make the business stronger. Finally, may I say how proud I am to have a music industry background, and put on record how much that industry contributes to our economy here in Great Britain?

22:20

[Mr David Amess (Southend West) (Con)]

I congratulate my hon. Friend the Member for Morecambe and Lunesdale (David Morris) on giving us the opportunity to participate in this important Adjournment debate.

Back when I was a newly elected young Member of Parliament, before the days of garage, hip-hop, trance or indie, and when the Beatles were listened to on cassette, I was fortunate enough to work closely with the BPI. I was even invited to many of the Brit awards; indeed, I was there when “Chombawallah”, or whatever they were called, disgracefully threw water at the noble Lord Prescott, and when Michael Jackson’s performance was interrupted by another star.

Through my association with the industry I grew to admire its work and appreciate what a jewel in the crown it is for Britain and all that is great here. I accept that, as my hon. Friend said, much has changed since those days, not least the music industry.

[Andrew Bingham (High Peak) (Con)]

My hon. Friend has worked with the BPI and says that much has changed. Does he agree that the predominantly English-speaking world of the media and music brings a huge amount of economic benefit to this country? It is not just about the social benefit and the pleasure of listening to our music. We get great economic benefit from many of our bands, such as Chumbawamba and others, as we did from my hon. Friend the Member for Morecambe and Lunesdale (David Morris) in his heyday—not that I am suggesting that he is past his pomp.

[Mr Amess]

I absolutely agree with my hon. Friend. I think the BRIT school is just fantastic, and I very much hope that the Prime Minister will showcase at No. 10 Downing street all that is wonderful about the industry.

The changes that I mentioned, particularly the switch to digital music, have resulted in many of the issues that my hon. Friend the Member for Morecambe and Lunesdale raised. However, I am glad that some things have stayed the same, not least the BPI. I pay tribute to it, because it does an absolutely fantastic job of protecting intellectual property. There are of course others who do equally impressive work, and I work very closely with Fran Nevrkla, the chief executive officer of Phonographic Performance Ltd and Video Performance Ltd. I pay tribute to many other people, too.

I strongly acknowledge the measures that have already been set in motion to tackle illegal downloading, but I cannot help but feel that we must listen more carefully to the experts, as my hon. Friend said. For example, I welcome the steps taken by search engines to rank legal download sites above illegal ones, but confusion can still be found among consumers, with up to 75% of customers still unsure about which sites offer licensed content and which offer unlicensed content.

Solutions have been suggested to that problem and to many like it, and it is our duty to listen to those suggestions very carefully. For example, PRS for Music has proposed a consumer education system to help internet users identify legal content. Meanwhile, a recent research paper has proposed the introduction of a voluntary code of practice for search engines, overseen by the Government. According to the BPI, nine out of 10 fans want legal sites put ahead of illegal ones. We must listen to suggested solutions more carefully, so that wish can be fulfilled. For that to happen, we need a closer working relationship between concerned parties—I know that my hon. Friend the Minister will touch on that. I therefore welcome efforts to bring together various groups.

I do not listen all the time to Beyoncé, I do not entirely get Lady Gaga, although she is a very interesting lady, and I do not share the world’s adoration of Justin Bieber, but I think that Amy Winehouse is a tremendous loss to the music industry. I have a broad taste in music and I can therefore understand the pressures that modern technology puts on the music and creative industries. My hon. Friend the Member for Morecambe and Lunesdale has done the House a great service in allowing us to debate the subject.

22:25

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

It is a great privilege to conduct the Adjournment debate under your watchful eye, Mr Speaker. I congratulate my hon. Friend the Member for Morecambe and Lunesdale (David Morris) on calling this important debate on the music industry and the illegal downloading of music. I thank my hon. Friend the Member for Southend West (Mr Amess) for his important contribution and my hon. Friends the Members for High Peak (Andrew Bingham) and for Hove (Mike Weatherley) for their important interventions.

During the speech of my hon. Friend the Member for Southend West, I felt that I was in the middle of a pub quiz. Let me rise to the challenge and say that the band that poured water over Lord Prescott was Chumbawamba and that Michael Jackson’s interrupter was Jarvis Cocker.

My hon. Friend the Member for Morecambe and Lunesdale is right to highlight the importance of the UK music industry. We are one of the few countries in the world that export music as a product, and the creative industries as whole form this country’s third largest export industry. For the first time since my hon. Friend the Member for Southend West was a young man—25 years ago—we have had three No. 1s in the United States, and Adele has just been nominated for six Grammys. My hon. Friend also referred to the success of the BRIT school, which celebrates its 20th anniversary this year and was brought into being not least by the efforts of Lord Baker.

We have a terrifically successful music industry as well as a tremendously successful film industry, which is enjoying one of its best years, certainly in the past 20 years. Indeed, for the past 20 weeks, a British film has been No. 1 at the box office. It is therefore incumbent on the Government to do all we can to protect the property of those who create music, films and the content of television programmes, which we all enjoy, so that they can earn a living from that. It is also important to stress that those who earn a living from music, film and television are not simply the highly successful people about whom we read in the newspapers and who may earn a significant amount, but many others, who earn relatively modest wages, whether they are technicians on films, people behind the mixing desk in a recording studio or session musicians working on a record. It is important that we work with them to support them and that we do all we can to reduce the prevalence of online piracy, which is basically theft of the property that those hard-working British people create.

I agree with my hon. Friend the Member for Morecambe and Lunesdale that we will never eradicate online piracy—such a goal would be foolish—but we can reduce it significantly.

[Jim Shannon (Strangford) (DUP)]

In Northern Ireland, we have had many unfortunate examples of organised crime groups who abuse the system, bring out copies and sell them for profit. Does the Minister feel that more can be done to ensure that that does not happen, not just in Northern Ireland but throughout the United Kingdom?

[Mr Vaizey]

Certainly, trading standards officers throughout the country work hard to counter the sale of physical counterfeit goods, but the real challenge, which the debate highlights, is the creation of the internet. It has obviously done much good for our economy and economies throughout the world, but it has also made it so much easier to pirate content digitally as well as sell counterfeit goods online.

My hon. Friend the Member for Morecambe and Lunesdale referred to the Creative Industries Council. The Government are delighted to have established the council to highlight the importance of the creative industries and to work on important issues such as access to finance and skills.

I also hold regular round tables with rights holders, be that in the music, film or television industries, and internet service providers and providers of search engines, to discuss common issues. The last round table that we held was attended by open rights groups as well, so hon. Members who are interested in what happened can find out from very public blogs.

As my hon. Friend pointed out, one of the best ways to combat illegal piracy is to provide legal services that are easy to access for consumers. The creation of Spotify; Deezer, which has recently launched worldwide; WE7, which is based here in the UK; and up to 70 other legal music services has provided consumers with a range of different opportunities to purchase music legally. Some ISPs, particularly BT, are looking very seriously at providing an easy-to-access music service to their customers, which would significantly reduce—I hope—the demand for illegal music.

[Kerry McCarthy (Bristol East) (Lab)]

I agree that the way forward is to encourage sites that allow legal downloading such as Spotify, but the share of the money that the artist gets when a track is downloaded is tiny. It is not enough for struggling artists—the ones that cannot make money out of huge tours or selling lots of merchandise—to make a living. Has the Department looked into how the economics of that stack up?

[Mr Vaizey]

I absolutely agree with the hon. Lady on that, but even some money is better than none. On the need for education, which was mentioned earlier, it is important for her and others who feel like her, including me, to emphasise when we go to schools that many musicians and artists are not Adele, Coldplay or similarly successful groups and artists, and do not earn a great deal of money. The more prevalent illegal downloading becomes, the less opportunity they have to earn a living.

The Digital Economy Act 2010 was passed by the previous Government and this Government are in the process of implementing its procedures. Hon. Members will be aware that, in effect, this is the “three strikes” Act. We are in the process of putting in place the initial obligations code and the cost-sharing code, which should happen next year. It is important to stress that the letters that go out to people who might have infringed the law will be of an educative nature. They will not be of a penal nature and they will not cut people off; they will simply make the point that it is apparent that illegal downloading has taken place from their computer. The letters will also advise them how they can access legal music sites and protect their computer.

On supporting legal download sites, I am delighted that Richard Hooper has been appointed to take forward the digital copyright exchange. We hope that the exchange will be an industry-led initiative that will make it much easier to license intellectual property, music, film and television so that it can be used for innovative and new services. That is part of the Hargreaves report, which, although we are absolutely intent on protecting copyright, is looking at how we can bring copyright law into the 21st century.

Hon. Members will also be aware of the success that the Motion Picture Association of America had in seeking an injunction against BT to block the Newzbin2 site using section 97A of the Copyright, Designs and Patents Act 1988. That is something that the previous Government and this one urged on the industry, and we are delighted that existing law was used to seek an injunction to block a site that was intent on infringing copyright and on effectively selling illegal products over the web. That injunction has now been in place for two weeks, and I gather that the MPAA is seeking further injunctions against other ISPs.

I should stress that that process, too, is a legal process. Rights holders go to court and seek a legal injunction. It is not a voluntary process or a process outside the legal system, and that is exactly how it should be.

We are also working with internet advertisers to try to reduce the amount of advertising that appears on infringing sites. This can often be inadvertent, given the wide spread of internet advertising, but the Internet Advertising Bureau has made significant progress in reducing the amount of advertising that appears on illegal sites, and it continues to work on the issue. In fact, it is probably a world leader in the work that it is doing alongside the Internet Advertising Sales Houses association. We also work with credit card companies to ensure that their payment systems do not appear on illegal websites. So significant progress is being made on this issue on a range of fronts—credit cards, advertising, the blocking of websites and the implementation of the Digital Economy Act, as well as bringing rights holders together with ISPs and promoting legal sites for music and other content.

My hon. Friend also mentioned the work that Google is doing, and over the last 18 months relations between rights holders and Google have improved significantly. Google has set the bar in dealing with notice and takedown, and it is now possible for infringing pages to be removed from Google’s search engine in four hours, which is a very impressive turnaround time.

There remains a vigorous debate between rights holders and search engines, which in this case means Google for all intents and purposes, about the ranking of different sites. It is certainly a matter of extreme frustration to rights holders that typing in the titles of songs produced as if by a factory by my hon. Friend in the 1980s—such as “Never Gonna Give You Up” by Rick Astley—results in some infringing sites appearing above the legitimate site, thus depriving my hon. Friend of income that he richly deserves. Some voluntary procedures have been put forward, and we understand that Google’s issue is that the algorithm is its DNA, as it were, but we also understand the concerns of rights holders. We are hoping to find a voluntary solution.

This has been a good debate, and it is important to highlight the work that we are doing to try to protect our content industries. I also wish to highlight the interest in the House at this late hour from a range of Members, all of whom have an impressive background in the creative industries.

Question put and agreed to.

22:37

House adjourned.

Petition

Tuesday 13th December 2011 Petitions

Tuesday 13 December 2011

Legal Aid for Gypsies and Travellers

Tuesday 13th December 2011 Petitions

The Petition of the Community Law Partnership on behalf of Gypsies and Travellers,

Declares that the Legal Aid, Sentencing and Punishment of Offenders Bill, if brought into force, will have disastrous effects on the provision of advice and representation to Gypsies and Travellers on accommodation issues. Gypsies and Travellers are one of the most disadvantaged groups in the United Kingdom. The Bill denies them access to the legal advice and assistance which is available to any other group. It is due to the failures of successive central and local governments to ensure adequate site provision that some 25% of the Gypsy and Traveller population who live in caravans are on unauthorised encampments and unauthorised developments. This is through no fault of their own.

The Petitioners therefore request that the House of Commons urges the Government to ensure that legal aid in the Legal Aid, Sentencing and Punishment of Offenders Bill is available for Gypsies and Travellers to defend evictions from unauthorised encampments and to be advised and represented in the County Court and High Court planning matters.

And the Petitioners remain, etc.—[Presented by Jeremy Corbyn, Official Report, 14 November 2011; Vol. 535, c. 664.]

[P000982]

Observations from the Secretary of State for Justice:

The Government recognise that the Community Law Partnership is concerned about the potential impact on Gypsies and Travellers of the Legal Aid, Sentencing and Punishment of Offenders Bill.

Under the Bill, legal aid will generally continue to be available for any person facing repossession or eviction from a property or site where they are residing. Advice and representation will therefore continue to be available for planning matters in the County Court and High Court where that matter might result in the individual being legally required to leave their home or the land on which their home is situated.

However, the Government do not believe that providing legal aid funding for possession and eviction matters is a justifiable use of taxpayers’ money where the individual entered, and has remained on, the property or site as a trespasser.

Legal aid will also be retained for most judicial reviews.

The Government consider that the Bill’s proposed changes to the provision of legal aid are necessary and proportionate to the Government’s objective of targeting legal aid to those who need it most whilst achieving a more affordable legal aid system.

In addition, the Government are encouraging local authorities to provide an appropriate number of Traveller sites that reflect local and historic demand. Work is also under way to explore incentives for site provision and innovative ways to fund and maintain traveller sites.

Westminster Hall

Tuesday 13th December 2011 Westminster Hall

Tuesday 13 December 2011

[Mr David Amess in the Chair]

School Sport

Tuesday 13th December 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Angela Watkinson.)

09:30

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Amess. I am delighted to have the opportunity to discuss an important issue that I feel passionately about.

It has been more than a year since the Government first announced their intention to dismantle the sports infrastructure put in place by the previous Labour Government to deliver our commitment to increase participation in sport and physical activity. It had a clear structure—the Youth Sport Trust was set up to deal with school and youth sport; Sport England was set up to deal with community sport through national governing bodies; and UK Sport was set up to deal with the elite level—and it was renowned around the world. It has also been more than a year since the Government announced that they were ending funding for school sports partnerships and scrapping ring-fenced funding for specialist sports colleges. Next Tuesday will be the first anniversary of the partial U-turn on school sport, when the Government were forced to introduce a hastily cobbled together package of funding.

Why did I call this debate? Twelve months on, the threat to the future of school sport has not dissipated. In fact, the cuts announced last year will devastate the national sport structure that was the envy of the world, and new threats have emerged within the past 12 months that have the potential to create a perfect storm for school sports.

The army of volunteers within our schools and sports clubs are getting on with making the best of a bad deal. We take that army for granted, but on their shoulders rests much of our country’s sporting life. Those volunteers might not be the type to march on Whitehall, but they are still angry, confused and frustrated by the Government’s seeming indifference to their work. Their voice deserves to be heard.

If we do not hold the Government to account at every step, we risk losing the massive strides forward that we have made over the past decade. There has been a fog of misleading statistics, reviews and cross-departmental hand-wringing. If we do not question and challenge the Government every step of the way, we will wake up one day to find that we have abandoned a generation of young people to substandard sport and physical education.

Why does it matter if our kids do not play sport or do PE at school? Children who play sports do not only benefit physically, because research shows that involvement in sport helps general educational attainment. Sport helps young people to develop self-discipline and to learn how to get along with others. Involvement in sport can help tackle antisocial behaviour and youth crime and overcome psychological problems and loneliness. It can also help to tackle problems of bullying in school and help youngsters with disabilities enjoy sport with other children. Furthermore, children get those benefits whether or not they excel at sport. They do not need to be part of the sporting elite, because merely participating makes children healthier, happier and better pupils. The present Government’s policies threaten young people’s chances to take advantage in school of the enormous benefits offered by participation in sport and PE.

We cannot have a debate about any aspect of sport, particularly sport and young people, without mentioning the 2012 Olympics and Paralympics. In Singapore six years ago, when London was awarded the games, we made a solemn commitment to the international community and to the people of this country that we would use the games to inspire a generation of young people through sport. It was a crucial element of London’s bid and set us apart from our main rivals, Paris and Madrid. How can we be serious about that commitment if we dismantle the structures that will help us deliver it and send a message to our young people and our army of sporting volunteers that we do not value sport and are downgrading our commitment to sport in schools?

London 2012 has given us an once-in-a-lifetime opportunity to leave a lasting sporting legacy, not of stadiums and facilities, important though they are, but of a new generation of young people for whom sport and physical activity are an integral part of their lives. The Government should not have decided to drop the commitment to involving 2 million more people in sport and physical activity. However, it is not too late. The situation is not irretrievable, but the threats to school sport are so great and serious that Ministers must ask themselves how they intend to meet the commitments to ensure an Olympic legacy if they maintain their current course.

I was proud to serve as Sports Minister from 2007 to 2010. It was one of those jobs in government to covet. I was proud of what we achieved in those three years, but I was even prouder that we made sport a cross-departmental policy priority during our 13 years in government, and made massive progress in putting sport at the heart of Government thinking, especially through our investment in school sport and PE.

Let me remind Members of what we inherited when we were first elected in 1997. It is no exaggeration to say that school sport was in a dire situation. PE and competitive sport were often seen as optional extras, and many schools had substandard sports facilities, if any. What sport took place in schools relied almost exclusively on the good will of dedicated teachers, parents and volunteers. Only one in four schoolchildren took part in two hours of quality PE per week. Playing fields were too often seen by local authorities as development opportunities. An astonishing statistic and a damning indictment of the previous Tory Government’s policy on education and sport is that between 1979 and 1997, 10,000 playing fields were sold for development. That is more than 10 every week for 18 years, which is shocking.

The new Labour Government acted quickly to rectify the situation. The School Standards and Framework Act 1998 introduced the toughest ever protection for school playing fields. Further legislation in 2004 made the sale of playing fields an option of last resort, and local authorities were compelled to use the receipts from any sales to improve existing sports facilities. In contrast to the 10,000 playing fields lost between 1979 and 1997, just 192 were lost between 1997 and 2008, and in the majority of those cases, although the playing field was sold, the site benefited from increased sports provision.

Our physical education and sports strategy, which was supported by £1.5 billion in funding between 2003 and 2008 and by a further £755 million from 2008, enabled us to put in place a network of 450 school sport partnerships. Partnerships were centred on specialist sports colleges, which were linked to local secondary and primary schools and sports clubs. By 2010, thanks to the work of the SSPs, 90% of pupils in partnership schools were receiving two or more hours of high quality school sport.

We hear much from coalition Ministers about competitive sport and how Labour supposedly did not prioritise it. I am sure that we will hear the Minister repeat misleading statistics on competitive sport and participation—I hope we do not, but I think that we might. The lead academic evaluator on SSPs criticised the Prime Minister for a

“selective use of statistics that ignore the tremendous improvement over the past decade”.

Competitive sport was increasing under Labour. The number of children taking part in competitive sport, not just between schools but in schools, increased from 58% in 2006-07 to 78% in 2009-10.

Labour did not emphasise sports participation and physical activity because we were a Government of sports fanatics, although there are a few of us about. Sport was a cornerstone in tackling numerous key policy issues, such as obesity and related health issues, antisocial behaviour, educational attainment and citizenship. It was a genuinely cross-departmental priority. Interestingly, there was general cross-party consensus that Labour got it broadly right on school sport, and certainly cross-party support for school sport partnerships. There was no indication that Opposition parties had an alternative agenda.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for giving way and for focusing on a very important issue for local schools. Although sport and education are a devolved matter in Northern Ireland, the same principles apply. Does he feel that school sports should be twinned with the issue of diet control, obesity and eating habits? Does he feel that the issue is not just about getting fit, but about weight control, too?

[Mr Sutcliffe]

Very much so. I thank the hon. Gentleman for his comments. He will know about the statistics on obesity in young people and about the health risks. He is right that sport is an integral part of life skills. Not everybody can be a champion, and not everybody can be elite, but we can be the best that we can be. I do not look like a healthy specimen, but my own involvement in sport through the parliamentary football team, school sport, the friends that we make through sport and the life skills that it gives us, all show that sport is an integral part of what we should be trying to achieve.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Of course, we all agree about the benefit of sport, but does the hon. Gentleman agree that it is about a bit more than that? It is also about getting kids out of classrooms—not necessarily on to a sports field—and into different areas of the great outdoors, which relates to the benefits that he has mentioned. That has been held up as a result of extreme regulation and red tape. Does he accept that the Government have made some progress in stripping away that red tape to get children from the classroom to the outdoors?

[Mr Sutcliffe]

I am grateful for that intervention. I understand the hon. Gentleman’s premise in terms of getting youngsters outside. School sport was fairly stereotypical in that girls played netball and hockey, boys played football, rugby and cricket, and basically that was it. The previous Government were proud—the Government’s misleading statistics come into play—of being able to widen the range of sports on offer. Mountaineering, canoeing, sailing, cycling and so on get people out into different environments. People who are not good at ball skills can get into cycling and other sports. We worked with those sports’ governing bodies to develop this framework. I am sad that that seems to be being reversed. I do not think that that is irreversible, and it can be put right.

There was a cross-party consensus to see that delivered and developed. It was only after the election in 2010 that that consensus seemed to disappear. Labour’s record was rubbished by Ministers as a justification for implementing a scorched earth policy promoted by the Secretary of State for Education, who is known to be hostile to the very concept of organised sport. The school sports partnership network, the cornerstone of school sports policy, was decimated to the astonishment of experts around the world all to save £162 million. The vast majority of that money had been spent on pupils in schools. It was seen as a world-class model and the shock throughout the sporting world was genuine. The director of community sport at the Australian Sports Commission said:

“I am absolutely devastated to hear of the cuts to the School Sport Partnership models. I am astounded that such an amazing and world-leading initiative has been lost to the communities they serviced.”

Labour’s then shadow spokesman for education, my right hon. Friend the Member for Leigh (Andy Burnham), begged the Secretary of State not to dismantle the SSP network. He even offered Labour support for a reduction in funding to SSPs, as long as the infrastructure was kept in place. I am afraid that his pleas fell on deaf ears.

Within weeks, the Government were forced into a partial U-turn because of an unprecedented backlash against their proposals—a backlash lead not just by politicians, but by Olympians, sports bodies, sports journalists and the grass-roots volunteer army. What we got was a cobbled together set of announcements that still leave the future of school sport in jeopardy. SSPs and school sports organisers have been told not to expect funding beyond August 2013. Those cuts will effectively mean an end to the infrastructure that supports the school sport network at the very time that we should be seeking to increase activity in the run-up to next year’s Olympic games and Paralympic games. What makes matters worse is that the Secretary of State has removed the need for schools to collect data on pupils’ progress. That will make it almost impossible effectively to monitor future participation rates and the effect of those cuts.

The much heralded school games, the new flagship Government policy, in actual fact already existed in the guise of the UK school games, which were supported by Sainsbury’s. The funding for the school games represents a massive 60% annual cut for school sport, which is well above the average for departmental cuts imposed as part of the austerity measures. Are we really saying that an annual competition, which is most likely to be of real value only for children at the elite end of their sport, is a replacement for a whole school sport network that improves the life chances of all children? This cobbled together funding has left school sport in disarray and left school organisers, clubs and volunteers with no idea about what will happen after 2013.

There is nothing wrong with competitive sport in schools. I speak as someone who spent a large part of my childhood, and indeed early adulthood, playing competitive sport. I completely understand the benefits of competitive sport, but competitive sport alone does not constitute a holistic Government policy towards PE in our education system. I will tell the Chamber why that is, and it goes to the heart of the problem. There is a fundamental lack of understanding about sport at the most senior levels of Government policy making. The Secretary of State for Education and the Secretary of State for Culture, Olympics, Media and Sport simply do not comprehend that successful participation in competitive sport can be achieved only by first mastering the basics of sport and PE. As the Youth Sport Trust has said, high quality physical education is essential for developing the necessary skills and confidence to participate effectively in competitive sport. Simply throwing all pupils into competitive sport, without first building what the Youth Sport Trust refers to as “physical literacy”, is both unfair and unrealistic, particularly in larger schools. Current Government policy, with its fixation on competitive sport at the expense of all else, is building our sporting future on sand.

What of that future? Talk to people involved in grass-roots sport—in schools, clubs, community sports networks and the national governing bodies—and they will tell you that there is deep concern and confusion. I thank the national governing bodies that have been in contact with me—rugby league, rugby union, tennis and other sports—to talk about how their sports are helping the wider environment. Our sporting volunteer army and our dedicated PE and sports staff in schools are an innovative lot. They will be looking at ways of maintaining the networks that we created over the past decade to ensure that the enormous progress that we made is not lost. In many places, they will succeed. If they do, it will be because of the enormous dedication and passion of those involved. If they succeed, it will be despite Government policy, not because of it. However, I fear that in some schools and communities, school sport will cease to be a priority. As if they did not have enough to contend with, there are threats on the near horizon that could create a perfect storm for school and youth sport.

In January 2011, the Government announced a comprehensive review of the national curriculum. The review is likely to see a slimmed down curriculum for sport in schools. Although PE is likely to be retained as a compulsory national curriculum subject, there is no guarantee that the two-hour offer, never mind the five-hour offer, will be retained. A recent review of global policy in schools showed that all the countries it looked at provided PE time targets, following this country’s lead. How sad and ironic will it be if, after leading the world on increasing children’s participation in school sport, we abandon one of the key mechanisms by which that was achieved?

The national curriculum review will not be completed until September 2012. That creates more uncertainty for all those involved in school sport. Steve Grainger, the then chief executive of the Youth Sport Trust, in response to the review, said:

“The quality and quantity of PE and school sport that is now being offered in schools has improved vastly in recent years. Ensuring it remains a vital part of the national curriculum will allow young people to continue to enjoy the many benefits that sport and physical education can bring.”

I appreciate that the review is ongoing, but will the Minister outline current coalition thinking about exactly what a “slimmed down” sports and PE curriculum would look like? What assurances can the Minister give that the slimming down of the sports and PE curriculum will not lead to the Government abandoning the two-hour commitment?

The coalition Government’s national planning policy framework will undo the protections for playing fields that the previous Labour Government put into place in 1998 and 2004. The Football Association stated, in its written evidence to the NPPF, that the proposals put

“playing fields and facilities at great risk”.

Are we going to see a return to the ’80s and ’90s, where playing fields were seen merely as development opportunities to be sold to the highest bidder? Will the Minister give a categorical assurance that measures contained in the NPPF and the Localism Act 2011 will not relax the restrictions on decommissioning school playing fields introduced by the previous Labour Government? Will he give an absolute assurance that the sale of school playing fields will be allowed only as an option of last resort?

What of the Government’s free schools policy? How will the Government meet the sports and PE offer for pupils attending free schools? How can the Government remain committed to sport and PE, if they are willing to allow free schools to open in buildings where there is no space for outdoor recreation? Will the Minister give a categorical assurance that free schools will not be exempt from providing sport and PE as part of their curriculum?

As hon. Members can gather, it is a source of great personal sadness to me to see much of the work on school sport that we did in government undone in such a brutal and senseless fashion. That has been sanctioned by people at the top of Government, who have little or no understanding of the power of sport to change lives. What has happened particularly saddens me because, during my time as Minister for Sport, there was a general cross-party consensus about sport and school sport in particular. I worked closely with the then shadow Ministers—the right hon. Member for Bath (Mr Foster) and the hon. Member for Faversham and Mid Kent (Hugh Robertson), who was my successor as Minister for Sport—to ensure that sport was not used as a political football, if hon. Members will pardon the pun. Despite their public pronouncements, I cannot imagine that either of those hon. Members is personally happy with the Government’s direction on school sport.

Next year, London will host the largest sporting event ever held in Britain. That should be a catalyst for embedding participation, commitment and aspiration into a generation of young people. However, we risk losing that opportunity because we are sending out a mixed message to young people. We tell them, “Get involved and participate,” but we are taking funding away from them and from the networks that facilitate their participation. The year before we host the Olympic and Paralympic games, we have ended the ring-fencing of sports funding for specialist sports colleges. Yet, last week, I was amazed to hear that an extra £40 million could be found for the opening and closing ceremonies of the Olympic and Paralympic games, which is one quarter of the budget for school sports partnerships. What message does the Minister think that that sends out to the hundreds of SSP staff losing their jobs, to the volunteers who give their time and money, and to the pupils hoping to emulate their Olympic heroes?

As I have said, playing sport was a major part of my childhood and early adulthood, and I made many friends through sport. With the decade of sport that we have in this country—the Olympic and Paralympic games next year, the rugby league world cup in 2013, the Commonwealth games in Glasgow in 2014 and the world athletic championships in 2017—we have a wonderful opportunity. These should be inspirational times for our young people, but they will not be if we cannot develop school sport in the way that we did.

I hope that it is not too late and that Ministers will listen. I do not expect the Minister to give in completely to me this morning, but I certainly hope that he will acknowledge some of the points I have raised, that he will have discussions with his colleague, the Minister for Sport, that he will look at what is happening and that he will listen to those parents, teachers and people involved in school sports partnerships who were getting to the primary schools that, in many cases, did not have the facilities for sport. I also hope that he will listen to the young sports leaders whom I met as Minister for Sport who were going into primary schools and helping PE teachers. There is a great opportunity here. I hope that it is not lost, that the Minister listens and that we can have a sensible debate on the way forward.

09:52

[Justin Tomlinson (North Swindon) (Con)]

It is a pleasure to serve under your chairmanship, Mr Amess, and to follow the hon. Member for Bradford South (Mr Sutcliffe), who is an exceptionally well respected former Minister for Sport. I certainly agree with the spirit of many of the things raised in his speech, although I will perhaps tweak one or two points in my contribution.

I speak very passionately on this subject because I benefited from sport. I went to a very challenging school. We were bottom of the league tables and, as I mentioned in last week’s debate in this Chamber on sport and tackling youth crime, two of my friends spent time at Her Majesty’s pleasure. Sport kept me active and by the end of the day, I was too tired to cause any trouble—although some people might say that as I am now a Member of Parliament, I took an even worse path.

I was a councillor for 10 years prior to becoming an MP, during which time I spent four years as the lead member for leisure. I therefore have a lot of first-hand experience of dealing with these sorts of issues in the community. As we know, sport can play a very positive role. It helps to promote a healthy and active lifestyle, which is important in tackling the increasing concern about obesity. Sport channels young people’s energy, boosts self-esteem and provides enjoyment, friendship and personal fulfilment. It can have significant benefits for focusing good behaviour and as I said, that was something I saw at first hand when I was growing up.

[Mr Sutcliffe]

I know that the hon. Gentleman is a strong supporter of school sport both from his past record as a councillor and since he has been a Member of Parliament. He made a point about prisons. I was the Minister responsible for prisons. What is the busiest place in a prison in terms of people getting involved in sport and physical activity? The gym. Such things made me think as I do about what sport can do for people.

[Justin Tomlinson]

I absolutely agree, and I will come to that point in a bit more detail later.

I will touch on three points: first, the school sports partnerships; secondly, what is physically going on in schools as we speak; and, thirdly, wider community access to schools. I shall then put my personal requests to the Minister.

On school sports partnerships, I raised a number of concerns in debate that led to the Government changing their position. I support the principle of the school sports partnership, but a premise that attracted a lot of criticism of the scheme is that it did not necessarily drive up levels of competitive sport. That was a flawed assessment because, generally, if someone is very good at sport, it is probably because their parents are that way inclined and encouraged sport from an early age by providing access to sports clubs.

School sports partnerships were good for people who were not naturally inclined to sport or gifted at it, because they offered a wider breadth of sporting opportunities. For example, I remember that we played football pretty much every week at my school, which suited me because I liked football. However, some people were not necessarily enthused by the opportunities that football presented. The main driver behind the school sports partnership was that it brought in other sporting opportunities and showed people that there was something out there for everyone. There were encouraging signs that it was making a difference to the majority of children who are not necessarily naturally gifted at sport.

[Clive Efford (Eltham) (Lab)]

The hon. Gentleman will correct me if I am wrong, but I think I just heard him say that school sports partnerships did not drive up participation in competitive sport. Can he tell me the figures he bases that statement on?

[Justin Tomlinson]

The point behind my remark was that when the Government were making their judgment about whether the school sports partnerships were delivering value for money, they looked only crudely at the number of children taking part in competitive sport, which was two in five children. That figure did not change. However, what did change significantly was the number of children who were not doing any sport at all who then took up sport. They might not have been playing in regular leagues outside school, but they were at least being active—whether that was just for the two hours a week or whether it led to other opportunities.

For example, when I was touring my constituency, we saw encouraging signs; people were doing things such as cheerleading and street dancing, which were incredibly popular but because they were not strictly sports in the traditional competitive sense, they were not included in those crude statistics on competitive sport. However, those people were being active. When I was the lead member for leisure, I did not care what people were doing, as long as they were doing something that increased their heart rate. I also say that with my hat on as vice-chair of the all-party group on heart disease. We are keen to encourage such activities.

The change in position allowed nine months for the school sports partnerships to, in effect, go to schools and secure funding. I do not recognise the point about cuts to the funding; it is just that the funding is no longer ring-fenced. The challenge that remains for school sports partnerships is that not every school necessarily identifies sport as a priority. The Swindon school sports partnership has managed to ensure that around 20 schools have signed up to carry on in pretty much the same format as before. However, a number of schools have decided that there are other priorities for that money and, by removing ring-fencing from the funding, they are free to make that choice. I think that such a choice is wrong for those schools and when I meet those who work in them, I regularly push the benefits of providing sport. We must deal with that challenge. It comes down to individual heads; it is fair to say that if a head has a personal interest in sport, it is certainly pushed to the forefront.

[Jim Shannon]

Does the hon. Gentleman consider that there is a role for private investment and partnership with schools as a way of getting more money for the programme? Is that something he has considered and, if so, how does he think it will work?

[Justin Tomlinson]

I absolutely do, and I will come to that point shortly.

There are some advantages to the changes that have been introduced, but we need to work out a way to ensure that schools continue to see sport as a priority. There was another reason why we had to look again at how the school sports partnerships worked. In my constituency, it was a very good partnership, but we heard in the debates on the subject that in other constituencies people who work in schools were saying, “They aren’t delivering very much. I am very passionate about sport as a head teacher. I would like to employ my own choice of sports coach directly.” To a certain extent, therefore, some schools now have better provision, because they have gone directly to the person they think can provide sporting provision in the areas where they had gaps.

It is also fair to say that the school sports partnerships that are still in existence, including my own in Swindon, have had to step up their performance, because that cheque is no longer guaranteed. They have to go to schools and make a pitch about how they will deliver additional benefits to them. There is still a role to play, however, in helping those SSPs to be in a position to deliver improvements, because, by and large, they are sports enthusiasts and are particularly good at organising sports events. They are not necessarily geared up to be a semi-business—a not-for-profit business—so there should be a role to provide additional help in that way.

In response to the intervention, I would like to see SSPs identify additional partnership opportunities, not just through the private sector, but through working with local authorities, the local NHS and sports forums and local sports clubs. To give a good example, if a school offered only football every week and wanted the SSP to bring in street dance, it should bring in not a one-off coach, but representations from street dance clubs, so that children who enjoy a taster session in school then have the opportunity to join a club and take up the activity on a regular basis. Local authorities can play an important role in that regard. The equivalents of the lead members for leisure and the key officers should sit down with the SSP organisations and say, “You can bring the following people to the table and we’ll help co-ordinate that,” so when the SSP then pitches to individual schools, it will be able say that it will not only provide two hours of street dance, but will bring in supporting clubs and give advice on nutrition and on how to do a variety of other beneficial tasks above and beyond the obvious reasons for it to go into the school. That is about asking what more we can do to make SSPs seem much more attractive to schools and to keep sport as a priority.

On what is happening in schools at the moment, I would like to see changes in relation to two particular challenges. The first is the cost of insurance, which is an issue that I have raised in a number of debates. The majority of teachers are relatively young, and young people are very expensive to insure. We need to be able to bus pupils around in order to promote school games and take them to learn outside the traditional school environment. Many teachers are young and new recruits are getting younger, so the cost for schools—it is a burden—is incredibly expensive. I keep urging the Government to consider a national deal; schools throughout the country purchase things, so surely, as a collective with huge economies of scale, we should be able to get a better deal from the insurance industry. I encourage that.

I have been told by an inspirational local physical education teacher, Julie Lewis, about a second element in relation to insurance. In order to drive a minibus, the driver needs a certain D-class element on their licence. Julie already had that—she is of a similar age to me—so it was a relatively simple process. She just had to go to the local authority and carry out a simple test. She passed and was then able to drive the minibus. The younger teachers now have to do three days of training, which costs about £2,000, so that is another burden that the school has to weigh up: when budgets are tight, is it worth releasing teachers for three days? All too many schools like the idea of doing it, but they cannot afford it, either because of the cash or because they do not have the time to release teachers. We need to look at that.

PE teachers also face a dichotomy in relation to their priorities. Julie told me that she is extremely keen to provide after-school clubs. The children love them and embrace them, and really want to take them up. If she could offer as many sessions as she would like, they would all be full. However, she has to plan them at the same time as she should be planning her lessons, and planning her lessons to make sure that they are delivered in the correct manner is what is judged by Ofsted to determine whether she is a good PE teacher and whether the school is a good school. There is a clash; one area is being judged and rewarded, but it is as if she has to magic up a way of providing the after-school classes that might be of most benefit to the children.

I have talked to other teachers. A friend of mine worked in a challenging school in Oxford. During his first year as a qualified teacher, he was full of enthusiasm and provided a huge range of after-school sports clubs. They helped with behaviour and with tackling crime in the local area, because the children were not hanging around street corners straight after school. They were doing something constructive and positive. My friend then had the opportunity to do one-on-one tuition, for which he was paid. He could not be in two places at once. His heart said that he wanted to do his bit for the children he was there to inspire and for whom he played a positive role, but his brain said that he wanted to go on holiday and that he needed to buy a new laptop. In the end, the financial reward prevailed.

[Mr Sutcliffe]

Is there not an opportunity for national governing bodies to get coaches to help teachers do such things? One of the things that we looked at was the possibility of coaches from a wide range of different sports running after-school clubs, paid for by national governing bodies.

[Justin Tomlinson]

I absolutely agree and I will build on that point shortly.

Schools have some opportunities at present. The school Olympics principle, for example, is fuelled by next year’s Olympics, which will give us a wonderful opportunity to drive up participation, particularly because they will advertise on the television a huge variety of new sports for people to try. When I was growing up, we very much followed the television. We played football predominantly, but out came the cricket bats when the cricket was on and out came the bikes during the Tour de France, and when Wimbledon was on, the tennis rackets would come out for the three days that the British participants lasted.

I have a slight plea on this issue. It is not just about getting people to be healthy and active, although that has to be the priority. There is a chronic shortage in this country of coaches and—this is often overlooked—of volunteers. When I talk to sports clubs, they tell me that they can normally find somebody to organise things, but that they cannot find a club secretary or treasurer, or someone to sort out all the insurance.

[Simon Hart]

As a former parent governor of my local school, Tavernspite, and a keen volunteer cricket coach at it, one of the obstacles that I came up against was the Criminal Records Bureau checks. There was one CRB check to be a parent governor and another to be a cricket coach. For all but the very determined, it was difficult to volunteer.

[Justin Tomlinson]

That is a valid point and I know that the Minister is championing the cause to change that situation. I would like to hear more about it.

To return to the issue of coaches as volunteers, when school games are being organised, the best athletes are selected to represent the school. Incidentally, my school always came last in everything; we were so short of people that I ended up having to do four events in one day and got progressively worse. The key is that we should also identify those who have not been selected to participate and ask one of them to act as the coach on the day, another to organise the promotional posters, and another to be the treasurer and organise payment for the minibus. There are all sorts of other roles, so later, as they grow up, those people could fill the massive gaps in community sport. That is something that we should champion.

I welcome the decision to fast-track troops into teaching. When I talk to school head teachers, particularly in primary schools, they tell me that one of their biggest challenges is that not enough teachers are enthusiastic or confident enough to be able to carry out a wide breadth of PE. It is often the case that the last person to leave the staff room suddenly finds themselves delivering the lesson. One would hope that troops would be sports-minded—they are certainly well attuned to physical activity—which could help to fill a major skills gap.

On the issue of sport helping behaviour, I have visited schools with challenging behaviour problems and, time and again, have seen them use sport as a reward incentive to maintain behaviour in the school. It is amazing that when a child misbehaves and is told that they cannot go to the after-school football or street dance session, that is not only the first time that they misbehave, but the last time, because such sessions are the hook for a lot of children.

Turning to the community, I hear the points about the loss of playing fields and I fully support the call to protect them. There is, however, a further challenge. The vast majority of schools that were built post-1997, which is true of pretty much all, bar one or two, of the schools where I was a ward councillor in a high-density, new-build housing estate, were private finance initiative schools, so they had wonderful playing fields, but after 4 o’clock, a huge amount of money had to be paid to use them. Even enthusiastic PE teachers could not use them, because they were not the school’s property after 4 o’clock, and the local community would have to raise money. They looked wonderful and the turf was great, but they could only be seen through the fence. That is something that we need to look at in future school building. Sports facilities need to be accessible both to the school itself—it is a crime that an enthusiastic PE teacher who wishes to provide after-school sports opportunities cannot do so because it is not the school’s facility—and to the community through sports clubs.

Opening up those facilities should be an absolute priority not only for sports clubs but for youth clubs. I have spoken in other debates about how in the old days, sports clubs dealt with competitive sport and youth clubs were at the other end of the spectrum, but they should be one and the same. Street dance is the classic example; it is not technically an ultra-competitive sport but is something in which young people wish to engage. We can use sport as the hook in the school facilities, and youth workers can come along to where children are being active and can provide the advocacy that youth clubs are normally good at.

I get frustrated when local authorities make mistakes with opportunities. As I mentioned in last week’s debate, Stratton parish council identified £4,000 to provide extra activities for young people. Rather than consulting those young people and asking them what they want to do, the council will spend the £4,000 on providing mobile graffiti walls—nothing more than a training ground for more graffiti artists to wreak havoc in local communities. What the council should have done, to build on an earlier intervention, was to say, “Right, we’re going to open up our schools or community centres on Friday and Saturday evenings and pay for coaches”—it could be a football coach or a street dance coach—“who can then come into our community, and we will only charge the children 50p.” Something—a nominal fee—needs to be charged so that the children take ownership, but without pricing them out, and they can come along and participate for a couple of hours. We would then see children being active and positively engaged in something constructive, and we can build on that. Remarkably, when I go to schools and ask, “What do you want?”, they say they want organised sports provision and opportunities, not silly bits of plywood that they can spray some paint on. That frustrates me. Local authorities and Government are always hard-pressed for money so whenever we have an opportunity to spend relatively limited amounts of money, let us ensure that it is on engagement. Everything should be judged on the maximum number of people participating in whatever it is that gets them active. As I have said on a number of occasions, I do not care which sport it is, as long as something is going on.

Another opportunity that we need to look at is when schools close, as populations shift. In my town, schools are closing in the older housing estates and opening in the new estates, as young families shift across the town, and we need to insure against the loss of not only the playing fields but the buildings. We had a fantastic success story in Swindon involving a successful gymnastics club, with 450 people a week participating. The club was so successful that its landlord served it an eviction notice because the neighbours were annoyed at all the parents turning up after school and taking all the car parking spaces. They got together and said, “Either it moves or we all move”, so the landlord said to the club, “You are very good at paying your rent but I’m afraid you are off.”

To find a new gymnastics facility in any town is a challenge, because high walls and lots of parking are needed. Through the Swindon sports forum we identified a £4 million sports hall that was only a couple of years old and about to be bulldozed; a school was being knocked down because a brand-new £25 million school was being built a few miles down the road, so the sports hall would have been lost. To cut a long story short, we managed to arrange for the gymnastics club to take on that sports hall, paying a commercial rent for the facility, and the old school was bulldozed around it. The club took on the sports hall, which was bigger than needed, so the facility also has the Kirsty Farrow dance academy and the Leadership martial arts club. Now, instead of 450 children a week being active, we have 2,000, with parents dropping children off, one for Esprit gymnastics, one for martial arts and one for the dance academy. We were so close to bulldozing that facility, and 1,550 children —on top of the initial 450—would have missed out. Instead, some joined-up thinking was driven through our sports forum, in which 60 different sports clubs sit together with the council officers. We married together the collective thinking—“This is our challenge, we need a facility”—and the opportunity, not only to the benefit of the gymnastics club but of the other clubs that have piggybacked on it. We should do that wherever buildings or facilities might be lost.

I conclude with my pleas. Collectively, we need to sort out the challenges of insurance, whether the basic cost of insuring people or the cost of being able to drive a minibus, as well as the time. We need to support school sports partnerships to remain a priority for schools, if they are good enough to justify that, and, if so, to give them help and support with business plans and building up their partnerships so that they can offer not only two hours of street dance but additional benefits. We must never forget the need for volunteers and coaches, as well as for getting people to be active in one form or another. We need to make facilities accessible, affordable and open and, wherever possible, not to lose them as populations change.

10:14

[Clive Efford (Eltham) (Lab)]

I congratulate my hon. Friend the Member for Bradford South (Mr Sutcliffe) on securing the debate and on his contribution to sport in this country as a former Minister. He is still highly regarded in the sporting industry and fraternity. As he has demonstrated, he has a real depth of knowledge, and we are grateful to him for the opportunity of a debate. It is a pleasure also to follow the hon. Member for North Swindon (Justin Tomlinson), who clearly has a depth of knowledge. I agree with many things that he said, particularly about maximising participation.

What is school sport about? Why sport? Why do we want to encourage participation? What is the role of schools in sport? If we do not understand what we are trying to achieve, we will get things horribly wrong. As the previous speakers have said, school sport must be about providing a broad experience not only of sports themselves but of things associated with sport. One intervention mentioned experience of outdoors and various other forms of recreation. Dance has been mentioned, which can be associated with sport through the sporting activities that engage young women in particular, but not only young women; I have seen community sports activities involving dance that include young boys, so it is not only about young women, but about that broad experience of sport.

By providing that broad experience, we hope that the understanding of what sport can deliver and the experience of what it can achieve throughout someone’s life will lead to people having a lifetime’s engagement. Whether it is the joy of participating in a team sport or individual competitive sport, or simply physical recreation, such as going to a gymnasium or jogging, such activity improves a person’s health and well-being.

By providing regularly in schools, from an early age, the opportunity for young people to participate in sport of all kinds, to experiment with sport and to understand sport, we may encourage them to participate in those physical activities throughout their lives, with all the benefits for people’s improved health, and perhaps engage them in community sports, so that they do not become involved in antisocial behaviour and things like that. All that flows from what we achieve in broadening experience in school. I have to say that the Government do not get that, which is a real problem.

One of the starkest examples is the slashing, without any consultation, of the money for school sports; £162 million was cut without any discussion beforehand with the school sport partnerships. No one asked what infrastructure we could retain to keep school sport partnerships going and to build on their success, and the Government believed that they were successful, because in March 2010, before the general election, the then shadow Sports Minister, now the Minister for Sport and the Olympics, said in a Five Live debate that it would be wrong to dismantle “13 years of work” and that his party “would build on them”. In April 2010, during the general election campaign, he said:

“There has never been a more important time for school sport, and the Olympic legacy must have school sport at its heart”.

Only a few months later, we had an announcement from the Secretary of State for Education that school sport partnerships were of no value whatever and were to be cut. It was not until the hue and cry that my hon. Friend the Member for Bradford South described that the Secretary of State was forced into an embarrassing U-turn and announced that money would be made available over the following two years to cobble together something to replace the funding that was previously available for school sport. We ended up with £32.5 million for this financial year and the following one for PE teacher release, £11 million for the next five years from the Department for Culture, Media and Sport, £11 million for the next two years from the Department for Education, and £4 million over the next five years from the national lottery.

We have seen a 64% cut in investment in sport in schools. Not a single Department has had to suffer such a cut. The Minister will probably say that the Government have removed the ring fence, are not acting in a top-down way and will allow schools the freedom to invest where they choose, but what message is that sending about the Government’s priority for sport in schools when direct funding is cut in that way? A 64% cut is not acceptable. So what do we get then? We get an announcement that we will have school games and an amazing statement from the Secretary of State for Culture, Olympics, Media and Sport, who said:

“I can sum up our sports policy in three words: more competitive sport.

By banishing once and for all the left-wing orthodoxy that promotes ‘prizes for all’ and derides competition we allow sport to do what it does best of all: teach children to learn about how to cope with both success and failure—and most importantly learn to pick yourself up when things don’t go according to plan.”

What a home-spun homily that is. My God, in this modern day and age, what a load of nonsense.

Let us return to where we started. In 1997, participation in sport in schools was one in four in years 1 to 11. After investing in school sport partnerships and so on, that rose in 2003-04 to 62%, and in 2009-10, it was more than 90%. In fact, we had virtually stopped measuring it because we had started to measure participation rates in three hours a week. Our target for the Olympic legacy was to achieve 60% of children in schools doing five hours a week during the curriculum period and after school, and to make sport available at that level. We did that through work with the Youth Sport Trust, and I pay tribute to the trust’s work and what it achieved for participation in our schools, and particularly to the leadership of Baroness Campbell. The Youth Sport Trust has come under attack from a number of people, and there was a ridiculous outburst from Lord Moynihan, chair of the British Olympic Association, who claimed that participation in school sport had not risen significantly.

Let us look at the statistics, the focus on competitive sport and the suggestion that something acts against participation in competitive sport if sport for everyone is encouraged, which is what the hon. Member for North Swindon eloquently suggested is the right thing to do. We did not start to measure the figures for who took part in intra-school competitive activities—competitive sport within a school—until quite late in the process, because obviously we inherited very low participation in 1997. In 2006-07, 58% of those in years 1 to 11 took part in intra-school competitive sport, and by 2010 that had risen to 78%—that was 79% for boys and 77% for girls. That was a very high figure indeed. Regular participation in intra-school sport then fell to 39% for years 3 to 11 in 2010. But let us look at the figures for interschool sport—sport between schools in a local area. In 2004, that was 33%, and by 2010 it had risen to 48%.

The issue is regular sport. The Government have said that only one in five children participate in competitive sport. That is correct; it was about 21% in 2010. But that is based on key stage 2 young people participating in interschool competitive sport three times in a year. At key stages 3 and 4, in secondary school when children have gone to another school, the requirement to be recorded is the number taking part in regular school sport nine times a year. If we are to see a significant increase in teachers regularly taking pupils out of school to qualify under those statistics, which the Government used to justify their determination to increase competitive sport, we must see an increase in the number of pupils who are taken out of school nine times every year to compete in competitive sport. That is a significant demand on resources.

I would be interested to hear what research the Department has done and what consideration it has given to that. It is okay to provide money for PE teacher release, but that is targeted mainly at organising school games and co-ordinating local primary schools in competitive sport; it is not intended to free up PE teachers to ferry about the competitive teams and sports people who will be involved. The Government’s policy is confusing. If secondary pupils are to play sport nine times every year to increase the figure from one in five, I would like to know where the resources will come from, where the planning is and what discussions the Government have had.

We have been told that competitive sport will lead to the national games as though that is something new. The national games have taken place for a number of years, and are extremely successful. Some 1,600 pupils took part in the national school games this year. In fact, records were broken when Jessica Applegate broke the 50 metres freestyle swimming world record for her age group. There was also a 100 metres running championship best and a 1,500 metres running championship best. Competitive sport has not suffered as a consequence of the previous Government’s work with the Youth Sport Trust and in our schools. The suggestion that the Government invented the national games network and that that is a triumph is frankly ridiculous.

The Government have now stopped collecting statistics. The Minister answered a couple of my questions on that very subject. He said:

“The annual PE and Sport Survey collected data on pupils’ participation in PE and sport. While participation rates increased in areas targeted by the previous Government”—

that was virtually everywhere—

“the proportion of pupils playing competitive sport regularly remained disappointingly low... We have removed from schools the burden of having to fill in long, time-consuming and cumbersome sport survey returns, which was a requirement under the previous Government.”—[Official Report, 21 November 2011; Vol. 732, c. 86W.]

So there we have it. The 21% figure for the one in five pupils who are playing regular competitive sport is worthy of using to take money away from the school sport partnerships and focus on competitive sport, but it is not a figure that is worth continuing to collect. If the baseline is 21% participation in competitive sport, how will we ever know whether the Government have improved their performance? They are doing away with that measure, although it is used to justify their case and to do away with the data in the first place. The Government’s policy is very confused indeed.

My hon. Friend the Member for Bradford South mentioned the sale of playing fields. Fields in Trust, the Football Association and many others have expressed concerns about the relaxing of restrictions and the requirement to consult before school playing fields are decommissioned and sold off. The Government are like a burglar released from prison after 13 years who immediately goes back to their old ways. Between 1979 and 1997, the Government sold 10,000 school playing fields. We introduced the School Standards and Framework Act 1998, and between 1998 and 2010, we sold 230. Almost half were in schools that were closed. Many were in schools that used the sale to improve their sports facilities in the remaining parts of the grounds. A very small number of the others were sold for development outside education. There is a great deal of concern about the Government’s approach to sport in general and how they are straight away starting to relax restrictions on the sale of school playing fields.

From day one, the message sent loud and clear from the Government is that they do not value sport. The active people survey shows that active participation has gone down for the first year since the bid for the 2012 Olympics was won—small wonder with the messages going out from the Government.

Consider the elite end of sport, from the merger of UK Sport and Sport England to distinctive bodies that perform very different roles. One brings our athletes at the top of their game to the podium, so that we perform well at events such as the Olympics. Sport England improves facilities and works within our communities. Consider school sport partnerships, where we saw all the money taken away at a stroke with no consultation whatever, with something having to be cobbled together, including £11 million for two years from the Department of Health. The Department is investing in competitive sport specifically, and I have asked what it is about competitive sport that improves people’s health that general participation in sport does not. I have not yet had an answer, but I am interested in the research that shows competitive sport improves health the most.

Abolishing the collection of statistics is evidence that the Government do not want us to find out what they are doing. Whether it is participation in general sporting activity or in competitive sport, we need to know what is going on in our schools. All those things show that the Government lack any serious commitment to long-term investment in schools. If we look ahead, we know that the Department for Education has told school sports organisers to expect no funding beyond August 2013. The whole thing falls off a precipice in the next 18 months. We are concerned that the people involved in those organisations will already be starting to look elsewhere. Just when we should be increasing participation on the back of the Olympic games, the whole thing falls apart.

We are concerned about the implications of making it clear that funding will end. There is a lack of planning for sport as we go towards Rio, even though there is the Olympic legacy to consider and the interest that will be generated around the Olympic games. There appears to be no concept coming from the Department for Education or from the Department for Culture, Media and Sport about how they will harness that interest and take it forward. It is all dumped on the sports governing bodies as though the Government have no role to play whatever.

Can the Minister tell us how participation will be measured in future? He has told us that he is doing away with the annual PE and sport survey, so how will he measure participation so that we know what is going on? It would be helpful if we knew that the Government had a plan. Will sport be protected within the national curriculum and given the status that it deserves? How will we measure participation in competitive sports? We have a measure that has been used as a baseline, which is one in five. I have set out how that is measured, but how will it be measured in future? What is the Minister doing to protect our playing fields? What is he doing about the national policy planning framework? Will he ensure that sports bodies are consulted as part of the decommissioning of education’s playing fields? Will he ensure that the safeguards put in place by the School Standards and Framework Act 1998 will still stand and protect places? If we do not protect them, young people will not be able to play sport in future. If we are to have sport in our schools, it is essential to have quality playing fields in which to participate in sport.

10:37

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I am grateful to have the opportunity to contribute to today’s debate on behalf of the Opposition, Mr Amess. I wholeheartedly congratulate my hon. Friend the Member for Bradford South (Mr Sutcliffe) on securing this important debate. I also congratulate him on his work as the Minister with responsibility for sport in the previous Government, when he worked tirelessly to extend opportunities for engagement in sport to children and young people.

Given the contributions made during the debate today, it is clear that this matter needs to be far from a political game in this House. There have been positive contributions, and I am pleased that there still seems to be cross-party agreement on the importance of sport for children. The previous Labour Government and the coalition have focused on the Olympics in school sport. That emphasis is correct, given our commitment to host the Olympics next year. However, I want to use this debate to urge the Secretary of State for Education, through the Minister responding today, to rethink the Government’s decision to make such drastic and damaging cuts to support for school sport—I concur with my hon. Friend the Member for Eltham (Clive Efford) that the support has been cut—not just to ensure that we deliver on our Olympic promise, but to ensure that young people today get the sporting opportunities that can transform their educational outcomes and their lives.

School sport partnerships were at the forefront of ensuring that the second key Olympic pledge—to transform a generation of young people through sport—was met. Sadly, and regrettably, the coalition Government do not seem to have recognised the value of SSPs, despite their international acclaim. They were one of the reasons—along with the hard work of teachers, sports leaders and volunteers around the UK—why between 2002 and 2010 the number of young people doing at least two hours or more of sport a week rose from 25% to 90%. There has been a marked drop since the figures for 2010 were released, which is extremely worrying.

All the evidence suggests that cutting funding for school sports results in fewer young people accessing high quality sport opportunities. Some reduction in funding was expected, but to announce a cut to the entire £162 million grant so close to the Olympics, and when childhood obesity is such a key public health concern, was clearly wrong and sends out alarming signals.

The Secretary of State’s justification for the cuts is that the Government want to focus on encouraging more children to play competitive sports through the school games project which, as my hon. Friend the Member for Eltham explained, is funded by multiple bodies including the Departments for Education, for Culture, Media and Sport and for Health, as well as the national lottery. There are, however, serious concerns about whether that funding will go any way to meet the requirement for sustainable funding that the school sport partnerships initiative offered our young people, and I seek clarity from the Minister about what consideration his Department has given to school sport post-2013.

Now is not the time to put our children’s sport at risk. One simple reason for that is because the cost of the sporting activities taken up by a young person, regardless of their ability, will negate the potential cost to the Exchequer of treating obesity and health-related problems later in that person’s life. In my constituency, about 25% of pupils in year 6—10-year-olds—are defined as clinically obese. They are not just overweight; they are obese. If the Government do not make a commitment now to provide sustainable funding for school sports, there is a genuine risk, both in Newcastle and around the country, that that percentage will increase, as will the cost of providing obesity-related health care.

We have not yet mentioned the benefits to educational standards that derive from participation in sport. Research from Sport England, and around the world, has shown that young people who participate in sport are higher educational achievers. I do not doubt the Government’s sincerity in wishing to raise educational standards, but I wonder whether they genuinely appreciate the support that schools require to increase levels of participation in sport, and the lost opportunities for academic attainment that will result from cutting that support.

We warmly welcome the funding that has been committed to school sport by the Department for Education and will provide £32.5 million per year for PE teacher release funding over the next two years. There is, however, still great uncertainty about the future of that money and the extent to which it will be ring-fenced and protected. In allocating that money, the Government have deliberately placed a focus on competitive sport. That is important if we are to encourage the talented sportsmen and women of the future, and so that children and young people have the opportunity to engage in competitive sport and enjoy the challenges and benefits that it brings. None the less, competitive sport and non-competitive sport are not mutually exclusive, and we should encourage young people to participate in sport regardless of whether it is competitive. There are clear advantages for the health and general well-being of an individual if they engage in sport and exercise, in whatever form.

The Department for Education must accept that sport plays a key role in encouraging all children to be the best they can, both academically and in the lifestyle choices that they make and the relationships that they form with their peers and others. Sport plays a vital role in that development process, and the results achieved by school sport partnerships in reversing the trend of youth inactivity were clear and—as my hon. Friends have noted—internationally acclaimed.

A huge concern has been raised about the Government’s ability to measure their success or failure with regard to school sport. The school sport survey was conducted annually from 2003-04 until 2009-10, and those data have been invaluable for measuring the success of policies and highlighting opportunities for improvement. When defending their actions on school sport, the Government routinely respond with the claim that only 21% of children regularly took part in inter-school competitive sport. I reiterate the plea made by my hon. Friend the Member for Bradford South who called on the Minister to avoid reeling off misleading statistics when he responds to the debate.

Although arguments about the use of the school sport survey as a measure of success have been well rehearsed, my point is that the Government relied on that survey to make their case for cutting some support for schools, and to increase funding in other areas. That survey has now been scrapped in the name of reducing red tape, and it will make it difficult—I would hate to think that this is intentional—to measure the success or failure of the Government’s policies on school sport, and in particular the level of participation in sport and the effects of the cuts to school sport partnerships. Data from the active people survey show that adult participation in sport has—unsurprisingly—fallen in 19 sports over the past year, and increased in only four. That is the first fall in levels of participation in sport among people aged 16 and over since we won the Olympic bid in 2005.

Although the Government have definite ideas about deficit reduction, it is crucial that short-term savings are not made at a greater expense to the public purse in later years. Participation in sport at school plays a vital role in combating inactivity among young people, which can contribute to ill health, obesity and lower educational attainment.

I welcome some of the constructive comments made by the hon. Member for North Swindon (Justin Tomlinson) about areas in which the Government could invest and improve participation in sport for young people. He made a constructive suggestion about a national insurance deal to aid sports leaders, volunteers and teachers in encouraging out-of-school activities for young people. He also made useful comments about the way that school sport is judged by Ofsted, and whether encouraging sports teachers and rewarding them for their hard work could provide an incentive and help achieve higher levels of participation in sport. Sports teachers contribute many hours to running clubs for young people or sports centres, and that work often goes unrewarded and unnoticed. I am conscious of the number of sports facilities in this country that fall within the remit of the Department for Education. The vast majority of sports facilities in this country are found in schools, and it is vital that those facilities are made available to all young people.

School sport partnerships undeniably played a major role in increasing and supporting wider participation in sport. The Government have not only put those partnerships at risk, but dismantled the means by which the impact of the funding changes can be measured. The health and well-being of our nation is greatly enhanced and enriched through participation in sport—all sport, whether competitive sport or that aimed at increasing a person’s fitness levels or mental agility—and I am sure that all hon. Members share that vision. Will the Minister reassure hon. Members, as well as our young people, their parents and teachers and the army of sports teachers and volunteers up and down the country, that we will deliver not only on our Olympic promise, but on our commitment to helping our nation’s children develop into healthy and active achievers of the future?

10:48

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

I congratulate the hon. Member for Bradford South (Mr Sutcliffe), a distinguished former Sports Minister, on raising this subject. It is an issue to which he is dedicated, and we all appreciate that. I also thank other hon. Members for their well informed contributions. A lot of questions have been raised, and hon. Members seem to have anticipated what I am about to say. Therefore, in order to confuse those pundits, I will not give the speech that I had planned, even though it does not say a lot of the things that people anticipated that I would say.

Several statistics have been used, in particular by the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), who cited a recent survey that shows a downturn in sports participation by over-16s and adults. That, however, is the problem, because after the £2.4 billion spent on the previous Government’s programme since 2003, the idea that sport is a good thing has clearly not embedded itself in the ideas of people moving through school and college and into adulthood. It is not just something that young people do because they have to turn out for an hour or two hours a week on a school games pitch. It is something that they have to do because it is good for them and fun; it is a socialising activity; and it is about teamwork and team building. Young people would want to carry that on into adulthood, so why do the statistics clearly show that it has not been embedded? Despite the best of intentions, spending an awful lot of money has not had the desired effect of ensuring that young people in school want to do sport and carry on doing it into adulthood as something that one naturally does.

While I am talking about the use of statistics, I have to say that all the statistics that are used by the Department and by my right hon. Friend the Secretary of State—despite an awful lot of accusations, he is in no way opposed to organised sport; he is a big fan of it—are from the previous Government and have been endorsed by the chief statistician as well.

Perhaps I can take up a few of the points in between the hyperbole used by the hon. Member for Bradford South. I absolutely endorse his comments about the army of volunteers, who are the backbone of sport in the community and sports clubs in our towns and constituencies. We want them to work more with schools, so it is not just a case of sport that people do in school and sport that people do over the weekend at the local football club. We need much more interaction between the two. I am the president of a very successful local football club that typically on a Saturday sees 300 or 400 kids out on the local sports pitches. That is achieved largely through volunteers. The children range in age from five upwards, and both girls and boys are involved. We want to see more of that type of activity. That is one reason why we have given additional funding, through the school games additional funding network to fund further volunteering. I am talking about county sports partnerships recruiting more volunteers to help with the school games and beyond both at level 2, between schools, and at level 1, within schools.

I absolutely endorse the comments from the hon. Gentleman to which I have referred, but he did also make a comment about the school games, which seemed to come under quite a lot of attack. I think that most people agree that the school games will be a good thing as an extra tool to encourage more schools and more schoolchildren to become involved in competitive sport as a matter of routine. More than 11,000 schools have already signed up in the past few months, which is remarkable. We encourage all schools to do that.

[Clive Efford]

I point out to the Minister that the school games did not come under attack. We were merely pointing out that they already exist. To present the school games as some new creation on the back of the emphasis on competitive sport is just misleading people.

[Tim Loughton]

The school games, which were launched last summer, involved more than 10,000 children in the summer pilots. I launched the version in the north-west. They have a particular focus on disability sports, which is something that has very much been missing. They will have a programme of endorsements and accreditations of the schools taking part. That builds on the success of the games that have gone before—sponsored by Sainsbury’s, I think—but is taking it to a whole new level. Surely that should be welcomed, but there seems to be a mindset against competitive sport. I find that extraordinary.

The hon. Member for Eltham (Clive Efford) referred to a quote about learning to “pick yourself up”. Sport is not just about physical fitness, important though that is. It is about life experiences, socialising, working together as a team, and winning and losing and moving on. That is what competitive sport is designed to achieve. The hon. Gentleman’s contribution seemed rather confused. He used the statistic about only 21% of children doing regular competitive sport and talked about wanting to move towards children participating in such activity at least nine times a year. Is it really ambitious to want our kids to be involved in competitive sport nine times a year, particularly after so much money has been spent on trying to embed a culture of sport as a good thing that everyone wants to do on a regular basis in schools?

[Clive Efford]

rose—

[Tim Loughton]

I had better move on or I will not answer any of the hon. Gentleman’s points, but I think that there is a real poverty of ambition.

Let me return to the issue of disabled sport and the charge about the elite nature of the school games. The opportunity to take part in competitive sport is not elite; it is at four levels. It is within schools, where we want every pupil to be able to take part; it is between schools; it is at county level; and it is at national level, with the showcase of the first national championships taking place next May in the Olympic stadium, before it is even used for the Olympics. Within that, I want to see opportunities for disabled pupils. I think that the former Minister for Sport, the hon. Member for Bradford South, would probably admit that we have done very badly on encouraging disability sports in schools. If someone happens to have a disability, PE time is when they go to the library or do something else like that, which is entirely unacceptable. We are far more ambitious than that. Part of the programme for the school games is about encouraging able-bodied pupils to help to set up tournaments and to engage with children who have disabilities, so that they feel every bit as involved at every stage. There needs to be recognition of the various challenges that they will have, but those are surmountable.

[Mr Sutcliffe]

I am grateful to the Minister for giving way; I know that he has only a small amount of time left. I welcome what he is saying about disability sport. He is right about that, and I welcome his personal commitment to it, but the transport costs for disability sport outweigh the costs for able-bodied people. Has he considered those transport costs and what he needs to do to help people to get around to the different venues?

[Tim Loughton]

The hon. Gentleman raises a good point. That is why, again within the school games, we have made specific money available for promoting disability sport, resourcing the national governing bodies of sports to develop a clear competitive pathway for young disabled people, ensuring the availability of follow-on activity linked to level 3 festivals and resourcing a network of schools to develop and deliver school-centred continuing professional development for teachers as well, and to take into account all those practical difficulties.

My hon. Friend the Member for North Swindon (Justin Tomlinson), in a well informed contribution, raised a number of important and practical points about embedding sport as a way of turning round poor behaviour. We all agree with that. I do not think that there is any disagreement between us about the many-faceted contribution that sport can make. I set up in my constituency a midnight football tournament. On a Saturday evening, between 10 pm and 12 midnight, when there is not usually sporting activity, we took over a local leisure centre. I worked with the police on this. We had mostly young boys, aged 13 to 17, who otherwise would have been on the streets, getting up to no good. Instead, they were playing football against one another and against the police as well. It was a whole new dynamic. There are so many creative ways in which we can use sport to help with the problems of poor behaviour.

My hon. Friend made good, practical points about insurance and minibuses. I will certainly take those away and consider them further. I am glad that he mentioned the Troops to Teachers scheme. Those teachers will provide a different perspective. We hope that for kids who are more difficult to engage in some of the academic subjects, they will provide the role model and authority figure that is so often lacking.

My hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) mentioned CRB checks. Again, that is something that is standing in the way of ordinary decent people who want to come forward, volunteer and give their time. There is an issue about multiple CRB checks, which the Protection of Freedoms Bill will deal with. We want a common-sense level of health and safety. Things have been regulated out of sight, and we have to get back to where we should be.

We heard the comments of the hon. Member for Eltham. Again, we had the whole business about selling off school playing fields. Let us just remind ourselves that the present Government do not and the previous Governments did not sell off playing fields, because local authorities sell off playing fields. I seem to remember that in the 1990s, when these charges were flying around most of all, Conservatives ran just one council. Rather a lot of those councils were run by the Labour party, which was responsible for overseeing selling off playing fields, so people need to take their share of the responsibility.

On the question of what the Localism Act 2011 will change, there are no intentions to change the level of protection for school playing fields. That may be provided in different ways, but certainly there is no intention to reduce the level of protection as a result of the localism legislation and the planning changes.

An awful lot of red herrings have been thrown about, but the Government are absolutely committed to promoting competitive school sport and embedding it within schools, rather than just assuming that because there is additional money or there are additional co-ordinators, it will automatically happen. Clearly, according to the statistics that the hon. Member for Newcastle upon Tyne North cited herself, it has not been embedded. That is a problem that we now have to pick up. We hope that the school games will be a flagship way of ensuring that more people want to become involved in sport not just at school but outside the school gates, and that they will want to carry it on into adulthood as well. That is the most important thing that we need to achieve, for all the reasons that we have already mentioned.

The new Government’s approach to school sports has three important characteristics: decentralising power, incentivising—

[Mr David Amess (in the Chair)]

Order. We now move to the next debate.

Welfare of Laying Hens Directive

Tuesday 13th December 2011 Westminster Hall

11:00

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Good morning, Mr Amess. It is a pleasure to see you in the Chair and to see the Minister in his place. I am delighted to have secured the debate. It is a matter of note that it was requested by all the members of the Select Committee on Environment, Food and Rural Affairs, who deem it of great importance. The thrust of my remarks relates to the legal position and legal advice on which the Government appear to have based their decision on how to proceed when the ban on battery cages comes into effect. Effectively, the issue is when is a ban not a ban?

Directive 1999/74 on the welfare of laying hens is well known to everybody in this country and across the EU; indeed, it has been in existence for 12 years. It will take effect from 1 January 2012, when there will be a ban on what are normally known as battery cages, and only eggs laid by hens in enriched cages will be allowed. That is an historic decision, which is welcomed by all across the EU, not least consumers. Animal welfare has enjoyed growing momentum across the EU, and this is the first time the Commission has sought to introduce a ban on animal welfare grounds.

Were the ban not to take effect on 1 January, the implications for the consumer would be very serious. Consumers are very much in favour of a ban. This country’s egg industry has invested £400 million in putting new facilities in place for 1 January, and I pay tribute to all the egg producers who have made such a massive contribution, not least Yorkshire Farmhouse Eggs and others in my constituency. There are also serious implications for the next ban—on sow stalls and tethers—which is due to come into force across the EU on 1 January 2013.

I want to focus for a moment on the implications of the legal aspects of the Government’s case. As I said, the directive is due to come into force on 1 January 2012. It was agreed 12 years ago, in 1999, so egg producers across the EU have had 12 years to prepare. The directive will prohibit the use of conventional cages—commonly referred to as battery cages—which contain about five birds, with a minimum of 550 sq cm, or less than the size of a sheet of A4 paper, per bird. In December 2010, such cages accounted for 28% of all laying hens in the UK. The new enriched cages provide at least 750 sq cm per bird and have a minimum height of 44 cm. They also provide a nest, a perching space and a scratching area. In December 2010, such cages accounted for 21% of all laying hens in the UK.

The directive was intended to prohibit the marketing of eggs produced in conventional cages. Here, I turn to the semantics of what the ban relates to. In this regard, there are flaws in the Government’s legal advice, their argument and the basis on which they are proceeding. I pray in aid a letter—I am happy to share it and to leave a copy in the Library and with the Department—from Commissioner John Dalli, who is the person at the directorate-general for health and consumers responsible for implementing the ban. He wrote to the Committee on 30 November, after we had written two weeks earlier—on 14 November—asking for the ban to take effect across the EU. He states:

“Currently available data suggest that there is a risk that more than 51 million hens in at least 11 Member States will still be kept in un-enriched cages on 1 January 2012.”

He goes on to say that he will

“without undue delay propose to launch infringement proceedings early next year against those Member States that appear to not enforce the Directive.”

However, as we and the Commission know—the Committee had cause to share this with a Minister from Denmark, which will hold the EU presidency from 1 January 2012—all the Commission will do then is issue a reasoned opinion against the member states that are in default. As we all realise this morning, that will give those member states three months to reply. It will therefore be le jour de poisson—April fool’s day—1 April 2012, before legal proceedings commence against any of those member states.

In arguing against the Government’s inaction, I rely on a key paragraph from the commissioner’s letter:

“Concerning unilateral action, Member States are responsible for the enforcement of Union law. They have the power and the duty to keep products produced illegally off their markets.”

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

indicated assent.

[Miss McIntosh]

The Minister is nodding. The key phrase is that member states

“have the power and the duty to keep products produced illegally off their markets.”

I put it to the Minister that it is not for manufacturers, processers or retailers to police these things. I pay tribute to the Department for Environment, Food and Rural Affairs for being the first Department to come forward with a taskforce to remove extra regulations and gold-plating. Under successive Governments, it has been expert at introducing such things, but gold-plating and the addition of extra regulations have cost our industry. It would be completely perverse to offload all the costs of policing these issues on to retailers, processers and others, when it should, as the commissioner says, be the Government’s responsibility to police the ban.

[Jim Shannon (Strangford) (DUP)]

I am glad to have the opportunity to make a quick comment and to congratulate the hon. Lady on bringing forward this important issue. Northern Ireland and the rest of the United Kingdom have pursued the rules and regulations with almost evangelical zeal. However, it has been reported that battery cages that are now obsolete in Northern Ireland and the rest of the United Kingdom have been sold to other European countries that flagrantly disobey Europe’s rules. Does the hon. Lady feel that the Government should make strong representations to Europe to ensure that such contravention of the legislation does not take place?

[Miss McIntosh]

The Minister will have heard the hon. Gentleman’s comments, and I invite him to respond. It is perverse to introduce regulatory costs for manufacturers, retailers and processers at this time.

[Jason McCartney (Colne Valley) (Con)]

Will my hon. Friend give way?

[Miss McIntosh]

I would like to make some progress.

I put it to the Minister that he has three options before 1 January. The first is to do nothing, as he set out in his recent written statement to the House, and to let the ban lapse before it even takes effect and to offload the costs of policing processed products—not shelled eggs, but eggs in powdered, liquid and other forms. That would be unacceptable.

The second option is to take unilateral action, and the Commission clearly states that the Minister would be entirely within his rights to do so. Indeed, he said in the Government’s response to the Committee’s ninth report on the welfare of laying hens directive:

“We will be pressing to ensure that the Commission initiate infraction proceedings against Member States whose caged egg producers are non-compliant”.

He went on to say that the Government would also consider taking unilateral action:

“The Government has thoroughly investigated the possibility of taking unilateral action and bringing in a UK ban on all imports of egg and egg products which have been produced in conventional cages in other Member States”.

What has changed the Minister’s mind between the quite recent date of publication—25 November—and today? The Minister should take unilateral action, rejecting shell eggs or egg products in powdered, liquid or any other form, based on the legal letter and the legal basis of the directive, backed up by the commissioner’s response to the Committee.

The third option that I invite the Minister to consider is to tour European capitals. It is not up to members of the Committee. We had a warm response from the incoming President, the Danish Agriculture Minister, when we made a visit two weeks ago. She asked the Committee which other capitals we had visited, and which other Ministers we had met. I regret to say that I had to respond that we are not allowed out very often, so it is not really the role of the Committee. It is the role of Ministers from the 14 compliant member states to tour member states to secure—if the Minister does not want to take unilateral action—a multilateral ban on their part. There are 14 or 16 other countries—we are not entirely sure how many—who will not comply.

[Mr Paice]

I am interested to hear that my hon. Friend spoke to the new Danish Minister. Did she ask what the Minister was planning to do? I did, last week, and the answer is nothing.

[Miss McIntosh]

I am delighted that the Minister met his counterpart, but that is not what she said to us. She said she was aware that the Commission would take action. I put it to her, as I put it to the Committee this morning, that there will be inaction for three months, while just a reasoned position is issued under the Court proceedings. When we left, that Minister—the incoming EU President—had a completely open mind. As I said to her, it is quite within the rights of the Council of Ministers to overrule the Commission and rely on a multilateral ban. That is a matter of disagreement between the Minister, the Committee and the egg industry, and it would help us this morning if the Minister provided the legal advice on which the Government depend.

In his conclusions in a written statement on 6 December the Minister mentioned marketing regulations:

“Because of a loophole in the egg marketing regulations, we cannot prohibit the marketing of any eggs produced in conventional cages from 1 January 2012 which are sent to processing (whether sent as ungraded or class B), nor can we prohibit the use of any products made from such eggs.”—[Official Report, 6 December 2011; Vol. 537, c. 17WS.]

That is not the case, and I repeat the words of Commissioner Dalli:

“Concerning unilateral action, Member States are responsible for the enforcement of Union law. They have the power and the duty to keep products produced illegally off their markets.”

The Food and Drink Federation is equally concerned and has said, in its briefing for today’s debate, that it shares concern that a number of other EU member states still do not appear ready to meet obligations first set out in the 1999 directive. It continues:

“It is also highly regrettable that the absence of mechanisms to prevent intra-community trade in non-compliant eggs exposes food manufacturers and others to the risk of inadvertently buying them.”

[Mr Paice]

They agree with us.

[Miss McIntosh]

The Minister says that retailers agree with the Government, but with the greatest of respect, retailers and processors do not agree with them. The Government are offloading the responsibility for applying the directive on to retailers, processors and the manufacturers of quiches, pizzas, cakes and other products.

[Mr Paice]

Will my hon. Friend reread what she just read out from the FDF? It clearly states that it agrees that it is a pity there is no mechanism. That is what she read out, and that is the Government’s position. The FDF agrees with the Government that there is no mechanism for us to establish the ban that she wants.

[Miss McIntosh]

That highlights the kernel of the disagreement between the Minister and the Committee. Will he explain precisely what the loophole is in the egg marketing regulations? Are they EU regulations or UK regulations implementing EU regulations? The Committee is at a disadvantage, because we do not have access to the legal advice on which the Government have based their opinion. If the Minister would be good enough, in his response, to clarify the legal position on the importation of non-compliant shell eggs for processing, liquid and powdered egg and egg products contained in prepared foods, it would be a great step forward. Will he also state precisely what loophole in the egg marketing regulations he believes allows the marketing and sale of all eggs and egg products, aside from class A eggs? Will he satisfy us this morning as to whether he really means that because only class A eggs are covered by the egg marketing regulations DEFRA has simply chosen to put that interpretation on the legislation?

As a currently non-practising lawyer, who practised law in two different law firms in Brussels, I accept that asking two lawyers for their opinion might produce two different legal opinions. It seems that the British Egg Industry Council has one legal opinion, and the Government rely on another. It would be helpful for us to learn precisely the terms of that opinion. I have quoted Commissioner Dalli’s belief, which is widely held, that the European Commission is clearly saying that the United Kingdom would be entirely within its rights to choose to prohibit the importation not just of class A shell eggs but also shell eggs destined for processing, and liquid and powdered eggs, from non-compliant sources, from 1 January 2012.

The Commission infraction proceedings will take place only from 1 January, with a reasoned opinion against the 10 or 11 remaining member states that do not comply with the directive. That will mean that no reference to the Court of Justice, or legal proceedings against the ban, can happen until 1 April 2012. The consequences of failing to act are huge. Bearing in mind the fact that we all—consumers, manufacturers and parliamentarians—welcome a ban on battery cages, the consequences of failing to act cannot be quantified.

Consumers were led to believe that the ban would be in place from 1 January 2012. Egg producers have made an enormous sacrifice and invested hugely—£400 million —in enriched cages. There will be huge consequences for producers who are disadvantaged. As to what the costs will be to the manufacturers, processors and retailers who are being asked to check the eggs on import, to make sure that they are compliant, perhaps the Government would like to share a figure with the House this morning. Perhaps we should also look ahead to 1 January 2013.

When the Conservatives were last in power, we imposed a unilateral ban on sow stalls and tethers, which disadvantaged our pig sector and has led to consumers buying cheaper cuts of pigmeat produced with less animal welfare-friendly methods since the early ’90s. I want an assurance from the Minister that a level playing field is not elusive, that we can achieve it, that we can allow our egg producers to compete across the European Union and that we will not accept any imports of shell eggs or any other products from 1 January 2012.

11:20

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I congratulate the Chair of the Select Committee on Environment, Food and Rural Affairs, the hon. Member for Thirsk and Malton (Miss McIntosh), and the other members of the Committee on securing today’s debate and on raising an important issue.

I came to the issue because there are a number of small and sizeable egg producers in my constituency, which support the local rural economy and provide jobs. Over the past few years, they have invested heavily in upgrading their facilities. I am aware that, of the £400 million that has been invested across the UK, at least £7 million was invested in my constituency by small and medium-sized firms.

The comments made by the British Egg Industry Council are important to the debate. The critical issue for the producers who have contacted me is that, although they have invested heavily, they are being put at a competitive disadvantage. They are concerned about their businesses in what are already difficult economic times for all rural businesses, and they are concerned that the reward for their investments and for improving what they do is to find their profits reduced and their businesses becoming ever less viable.

[Jim Shannon]

Clearly, in the hon. Lady’s constituency, similar to my own, many people have borrowed from banks at a time when they can least afford to do so. They feel that they are comparatively disadvantaged as a result. Does she feel that banks should give some leniency at this time?

[Dr Whiteford]

The hon. Gentleman makes a valid point. Certainly, banks in the rural economy have recently tightened up their lending processes, which is regrettable when agriculture globally is ripe for investment and is a good investment. Such businesses are often asset rich, but they need credit, as farmers all over the world do. Banks can do a lot more at present to support the rural economy.

I confess that I was incredulous when the BEIC raised the issues with me. It struck me as bizarre that some EU members are still not complying with the legislation 12 years after it was passed. One of the most pertinent points today is that not just new accession EU countries are failing to comply with the legislation, but long-standing and established EU members seem to be shrugging their shoulders and letting the issue go by.

One of the most significant issues is that there has been a complete lack of foresight regarding compliance measures. I still find it quite incredible that the enforcement measures are so weak. Enforcement measures by member states may be dismissed as a business expense by the companies that are failing to comply with the law. There are big lessons to be learned about how seriously we take legislation. At the heart of the matter, it is a legal issue. It became clear back in July just how weak the legislation and compliance measures were; that is important.

I welcome the fact that the Government have looked at contingency plans. I wrote to the major supermarkets in July this year, asking them to confirm that they would ensure that their own-brand products would comply with the law and that they would not import products. To be fair to Asda, Morrisons and Tesco, they all wrote back to me to say that they could do so with their own-brand products and the eggs on their shelves, but there was no commitment on the other products that they import from suppliers. That is where the challenges lie.

In a context where the law is absolutely ineffective, I welcome the contingency measures taken by the Animal Health and Veterinary Laboratories Agency, but they are not a substitute for proper legal enforcement. We still face the issue that liquid eggs from Holland and Germany might originate from non-compliant countries. Until we deal with the legal issue, I do not think that we can move much further forward—it makes a mockery of the law.

The hon. Member for Thirsk and Malton absolutely hit the nail on the head when she posed the key question about the loophole in regulation. Does that originate from our own laws and regulations, or is it an EU-wide issue? I hope that the Minister will address that and share the legal advice that has been given. The loopholes need to be closed with some urgency.

As we consider how we move forward, I hope that we will ask how on earth we will instil any confidence in new legislation if it cannot be enforced. Farmers are already talking about the problems of complying with regulation. If there is one issue that farmers in my constituency—not just poultry farmers, but livestock and arable farmers—are concerned about, it is compliance. They feel that our compliance, regulation and inspection regimes are much more rigid than those in other parts of the EU. In some cases, they are absolutely right, and that makes it more difficult for them to earn a living and operate internationally. If we cannot even enforce the laws that we make with a 12-year lead-in period, it makes a mockery of the law. I hope that the Minister will take that on board.

11:26

[Neil Parish (Tiverton and Honiton) (Con)]

It is nice to serve under your chairmanship today, Mr Amess. I, too, thank the Chair of the Select Committee on Environment, Food and Rural Affairs, my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), for securing the debate; we all supported her in securing it.

I do not think that the Minister should be in the dock this morning; it should be the European Union and the European Commission. As has been said, directive 1999/74/EC is 12 years old. What has the Commission done about it in the meantime? Last June, Commission officials came to see us in our Select Committee, and we had figures from Spain. There are 42 million hens in Spain, of which 2 million are free range and 40 million are either in enriched or in non-enriched cages; people did not have a clue as to how many hens have been put into enriched cages. How can we be confident that Spain is converting? Will it have one or two poultry houses on each farm that have converted to new enriched cages? In that case, an awful lot of eggs produced in non-enriched cages in other parts of the same farm could find their way on to the market as grade A eggs. There are many reasons for the Commission to get strong.

Spain has a record of non-compliance, especially on welfare standards. When I was in the European Parliament, I chaired an all-party group on animal welfare. When it came to achieving welfare requirements, Spain was always one of the worst for compliance. Basically, the responsibility goes from the national Government to the regional and local governments—people pass it from one to another and wring their hands, and nothing gets done.

The Commission has seen this coming. In our Committee last June, we told it that hens, which will lay for 13 months, were going into non-enriched cages. One does not need to be Einstein to work out that, when 1 January arrives, lots of eggs will still come from non-compliant cages. We want to see action taken on that.

It has cost our industry £25 a bird to convert to enriched cages. Let us not forget—I have said this before—that the poultry industry does not receive any money from either the common agricultural policy or the single farm payment. It has to compete on not only a national stage, but an international stage. This country has a good and highly competitive poultry industry, but the industry cannot stand having many inferior eggs, produced under lower standards, coming into the country. The industry reckons that it costs 11% less to produce in non-enriched cages than in enriched ones. We need to take action.

I commend the Minister for his work with retailers. In the end, whether it is the law or not, we must physically ensure that such eggs do not come in. The best way to do that is to look at what we are eating and where the egg has come from. Not only shelled eggs are imported; we reckon that about half the 18% that we import comes in liquid and powder form. That is the area—where they could well get in—that causes me most concern. By working with retailers, we can stop a lot of that happening.

The Commission has a problem because it has taken no action for so long. At this time of higher food prices, it will be difficult for the Commission to smash 45 million eggs a day. That will not look terribly good to the consumer.

[Glyn Davies (Montgomeryshire) (Con)]

I have huge respect for everything that my hon. Friend the Member for Tiverton and Honiton (Neil Parish) says on such issues and I sympathise hugely. The issue comes down to whether the UK should take unilateral action on 1 January. I think that the Select Committee would agree on everything else. I am interested to know my hon. Friend’s view on whether the UK should take unilateral action.

[Neil Parish]

I am sure the Minister will cover this matter in his summing up, because it relates to legal advice. As my hon. Friend the Member for Thirsk and Malton said, one can get two or three lawyers in a room and have two or three opinions. I am interested to hear what the Minister has to say on legality.

I still maintain that we must look at the market; otherwise we will be left with inferior eggs produced under lower welfare standards. From a food point of view, there is probably nothing wrong with the eggs, but they are not compliant. We must ensure that they are driven down in price, so that it is uneconomic for farms to produce them across Europe, and in the end that becomes a matter of the market. If we can drive those prices down, so that those eggs are only worth half a grade A egg, it will not take too long. Farmers may be many things but they usually work out the law of economics, and they will soon find that it is uneconomic to produce those eggs, especially with the high cereal prices at the moment. That must be our main goal. I am happy to slate supermarkets when they do not get it right, but they have got it right in this instance.

[Huw Irranca-Davies (Ogmore) (Lab)]

The hon. Gentleman is making a powerful contribution to the debate. Assuming that the Minister will not say that he has found alternative legal advice and that we can have a unilateral ban, does the hon. Member for Tiverton and Honiton (Neil Parish) agree that it is right to have a live updated rolling register positively identifying those supermarkets that comply with the Minister’s request and, by implication, identifying those that do not? The only way to do this through a market as opposed to a legal mechanism is to name and shame, as mentioned by the hon. Member for Montgomeryshire (Glyn Davies). Let us recognise the good producers and processors and vilify those who do not maintain the highest standards of animal welfare and British food production.

[Neil Parish]

I could not agree more with the shadow Minister; it is a case of name and shame, and we need to know where the eggs have come from. I have looked at where all the beef, lamb and so on in supermarkets comes from. It would be good to discover not only the method by which the eggs have been produced, but where they have come from. I believe that the British public are more and more interested in where their food comes from and are keen that it is produced not only under higher welfare standards, but in this country. It would be a double-edged sword: we would look at not only non-compliant eggs, but where they were produced. That could be very good.

[Jason McCartney]

I join my hon. Friend in praising my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) for securing the important debate. I am here because two egg producers from my area got in touch. One has willingly and enthusiastically invested tens of thousands of pounds in new facilities, believing in high welfare standards in the UK. However, I would like to echo the point about the economic argument. At a time when supermarkets are pushing prices down and when people are suffering because of the economy, it is important not to put such producers at an economic disadvantage. We need to support them in any way that we can. I like some of the ideas that we have just heard on naming and shaming and supporting high welfare standards in British eggs.

[Neil Parish]

That anticipates my final point. The industry has to deal across Europe in a single market. The European Commission is not taking the right steps to ensure that that single market works properly; there are inferior eggs on the market, and it is not doing enough about it. I commend the Minister for the agreements that he has made with retailers and supermarkets. If we can work with them to stop as far as possible these eggs coming in and drive down the price of B quality eggs, so that they are uneconomic to produce, it will not take so long for those countries that have not conformed to do so quickly. In the end, we have to ensure that we look after our own highly competitive producers, to ensure that their investment bears fruit and that we have high-quality, good welfare standard eggs, which we can all buy with confidence.

11:36

[Mr Mark Spencer (Sherwood) (Con)]

It is a privilege to serve under your chairmanship for the first time, Mr Amess. I congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing the debate. The last parish notice that I want to draw attention to is my entry in the Register of Members’ Financial Interests, as I am a free-range egg producer.

This matter has been a long time coming. For 12 years, the EU has had the legislation in place. Some colleagues have already referred to the pig industry. In the Sherwood constituency, a number of pork producers have disappeared over the past 10 years simply because we introduced legislation to improve animal welfare and our colleagues in the EU did not do so at the same speed. In effect, we exported our pig industry to Holland and Poland, which produced cheaper pork products due to their lower animal welfare standards. We are in danger of allowing that to happen again to our egg producers, which is simply morally unjustifiable. Any assistance that the Minister can give to our egg industry—I know that he is working hard to make it a fair playing field—would be most welcome.

The matter comes down to policing. Who will police the issue to ensure that the legislation is enforced and that we can deliver that fairness not only for our farmers but for hens crammed into tiny cages for their whole lives? The Government clearly have a role to play, if they can find a way to enforce this. Producers also have a role in ensuring that consumers and the general public understand the issue. It is important to include food production in the curriculum, so that people understand it, because more such issues will inevitably occur.

Let us cast our minds back to how some of our colleagues on the continent took direct action. Many hon. Members will remember images of Welsh lamb being pulled out of refrigerated lorries and burned by our colleagues over the channel and how the Germans put a unilateral ban on British beef some years ago because they decided there was a safety issue. We are very passive in the UK at times—we play by the rules and we play fair—which is sometimes to our disadvantage. We need to find a legal way to ensure that we deliver.

My real call is to consumers of products to put pressure on retailers and food producers to ensure they have the criteria in place, so that those egg products are sourced from enriched cages or free-range units, and not from battery hens. The power of the market will deliver, but that will require consumers to put people under pressure. In a restaurant, if we order a boiled egg, we ask “Is this free range?” but we never ask where our mayonnaise, or products that involve egg paste, come from. If we buy a sausage roll, it is probably basted with an egg wash, but we never ask if the egg is free range.

Consumers have a big role to play in applying genuine pressure. Every time they go for a pub meal, they should ask the manager whether the eggs are free range, and when they buy mayonnaise in the supermarket, they should write to the mayonnaise company asking whether it is made from free-range or enriched-cage eggs. In that way, the market will deliver, and the £400 million that British producers have invested will have been worth their while. Perhaps we can find a way to support British egg producers, who have the highest welfare standards and the best quality eggs in the world. If we can get that message across, I am sure that we will work our way through this.

[Mr David Amess (in the Chair)]

We have plenty of time before the winding-up speeches, if any other colleagues wish to contribute. I call Huw Irranca-Davies.

11:39

[Huw Irranca-Davies (Ogmore) (Lab)]

I will do my best to fill the available time, Mr Chairman, and will happily take interventions. This is a good chance to have a detailed debate.

I welcome the debate, and I genuinely congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing it, in her role both as a constituency MP and as Chair of the Environment, Food and Rural Affairs Committee. I also congratulate the members of the Committee on making this very much a live issue. It should be attracting the attention of parliamentarians and the wider public, and I will consider in a moment how we should deal with the consumer and market issues. I also welcome the expert, knowledgeable and detailed way in which the hon. Lady introduced the debate, and I note—as the Minister will have done—the significant differences that have emerged between her, as Chair of the Committee, and the Government, even though their positions support each other in many ways.

I very much welcome the comments from other contributors, including the hon. Member for Banff and Buchan (Dr Whiteford). Am I pronouncing the constituency name correctly?

[Dr Whiteford]

It is Buchan.

[Huw Irranca-Davies]

Ah, it is a Welsh pronunciation, with the “ch” sound. I am dying to see how Hansard transcribes that. The hon. Lady mentioned the importance of recognising and rewarding good producers and the investment they have made, and that has been a common theme of the debate.

The hon. Member for Tiverton and Honiton (Neil Parish) made a very good contribution about how UK producers’ investment should bear fruit, or at least produce good eggs. He was certainly supportive of the idea, and I saw nodding heads on both sides of the House, of clearly identifying which producers, processors, retailers, supermarkets and restaurants use not only good shell eggs but good liquefied and other processed eggs, and which do not. There is some scope for the Minister. We might have a way forward, together with the UK egg producers and the various representative organisations.

The hon. Member for Sherwood (Mr Spencer) spoke very well about his experience with free-range hens. My household has always had a few, just for our own consumption. It has been a long-standing tradition on our smallholding, but I cannot compete with the hon. Gentleman’s much more extensive expertise. He rightly pointed out that we could do a lot with the power of consumers and the markets, but we have a heck of a long way to go.

I draw parliamentarians’ attention to research by YouGov and the Royal Society for the Prevention of Cruelty to Animals. The RSPCA would like to go even further towards free range and away from any sort of caging, but it has done an interesting analysis, which the Minister might not be aware of because it has, I think, come out only in the past few days. It looked at people’s awareness of the legislation, and at their buying power as consumers; 69% of them wrongly assumed what the law would mean for hens and animal welfare. A further 19% had not heard about the legislation at all. A fifth wrongly assumed that all battery cages would now be banned; 8% thought that all hens would now be free range and 1% thought it was something to do with farmers having to play music to their hens. We have a long way to go, not only in working with the retail sector, including supermarkets, but in highlighting the issue to consumers so that they can genuinely drive change in the market, but that is not all that I shall talk about today.

[Glyn Davies]

I cannot allow that 1% figure about playing music to hens to pass without comment. I may be the only person here who has been a farmer, with 20,000 battery cages. It was unheard of not to play music. The whole point is that opening a door should not surprise the hens and make them jump around, so playing music in battery cages is common practice.

[Huw Irranca-Davies]

I will not exhaust your attention, Mr Chairman, by asking what music the hon. Gentleman played. As an ex-punk, I think my taste in music might startle the hens, but I am glad to hear that music is played. Was it classical?

[Glyn Davies]

Springsteen.

[Huw Irranca-Davies]

As we know, Council directive 1999/74/EC will make it illegal to have laying hens in conventional battery cages across the EU from 1 January 2012, after which date egg production will be allowed only in enriched colony or non-cage systems; for example, free range, barn or organic. We have heard today that Members on both sides of the House agree that that is appropriate, and there has been none of the discussion about gold-plating that we often have with EU regulations. The directive has been welcomed, both for animal welfare and for food production standards, and it might well benefit UK production and producers, if we can get it right. It is also good for the quality of the eggs and egg products that we eat every day. The significant problem is that not every EU nation will comply with the directive—13 of them will not—which poses enormous challenges for the UK egg industry. The industry’s response to the Minister’s written ministerial statement on 6 December 2011 was that it feels “totally let down” by Ministers on this important matter, and I want to look today at why it feels that way and at what must be done.

I compliment the UK egg industry on its responsible approach to the directive over a number of years, with investment in the region of £400 million to convert conventional cages to enriched ones. The capital cost of an enriched colony unit is between £20 and £24 per bird place, and the National Farmers Union has stated that for a producer with a medium-sized cage unit of about 100,000 birds the cost of erecting the new units is, on average, in excess of £2 million—not an insignificant amount. Free-range egg producers have also invested heavily in preparation for the directive, and that has been a draw on the industry, which, as has been mentioned, is a competitive market that does not receive EU support. The NFU has also stated that the majority of birds in the UK will be in enriched cages by January 2012, which is to be welcomed, and that all lion scheme producers will be converted in time.

A lot of work has been going on over recent years, with many people investing heavily to comply, but the problem is that the UK is not self-sufficient in eggs and egg products. We import 15% of our egg requirements, and valid concerns remain about whether imports from January 2012 onwards will come from EU nations that comply with the directive, and about the possible impact on the UK egg industry, including on prices. One of the industry’s fears is that prices will be driven down, with cheaper eggs and lower standards.

In a move that was openly welcomed by the UK egg industry, the Minister recently dangled the potential for a unilateral ban on eggs from EU nations that do not comply. However, in his statement last week, he decided that it was “not a realistic option”. Having raised that possibility, why can the Minister not now deliver it? It will leave many egg farmers feeling that he failed them.

What has the Minister delivered? He has given an unequivocal assurance that DEFRA and the devolved Administrations will enforce the conventional cage ban from 1 January 2012. I think that everybody in this debate will welcome that and how the industry, the devolved Administrations and DEFRA have risen to the challenge. He also stated that a risk-based surveillance scheme would be introduced to ensure that imported shell eggs from other member states produced in compliance with the cage ban would be in place from 1 January 2012. [Interruption.] He is nodding.

The Minister also said that Animal Health and Veterinary Laboratories Agency surveillance would be conducted on imports of shell eggs, using ultraviolet light analysis, to identify batches of caged eggs that are not from an enriched environment. However, he also acknowledged that due to the loophole in the egg marketing regulations, he could not prohibit the marketing of egg products from conventional cages sent for processing, nor could he prohibit the use of products made from such eggs. That is a significant loophole.

However, the Minister made the welcome announcement that retailers, food manufacturers, food service companies and processors have come out in public support of the UK egg industry. I do not make many puns in debates such as this, but those good eggs, reflecting earlier campaigns on the issue, are to be complimented on the steps that they have taken and will take. The British Retail Consortium, whose members include McDonald’s, Starbucks, the four major supermarkets and many other brand names, will ensure that they do not buy conventional caged eggs or use them in their products. Furthermore, he outlined that the Government would make necessary changes to the Government buying standards’ mandatory criteria to ensure that eggs produced in conventional cages are not used in any form, whether fresh, powdered or liquid.

After that seemingly wide-ranging set of measures, why does nobody in the industry seem happy? I suggest to the Minister that it may be a case of trying to look busy while failing to deliver the one thing that he strongly hinted was possible, a unilateral ban. The industry is now being overwhelmed with many different initiatives as a diversion. Perhaps they will forget the fact that they think they have been led up the garden path. It is a classic case of over-promising and under-delivering, which is never a good strategy.

[Sandra Osborne in the Chair]

The British Egg Industry Council says that the measures are not good enough and that the Government could have introduced a complete ban on all illegal products in the UK. Its chief executive, Mark Williams, said:

“The UK egg industry feels totally let down by the Government. Whilst we have received repeated platitudes of support from DEFRA, it has failed to back these up with any real action. Our legal advice has confirmed that the UK Government is able to enforce UK and EU law by banning illegal eggs and egg products, so why have they chickened out?”

That is his pun, not mine.

Although the National Farmers Union has welcomed the measures taken by Government, it has stated categorically that

“our members will certainly be bitterly disappointed that it has not been possible to take tougher action.”

One British egg farmer, Duncan Priestner, echoed the concerns of many, including the NFU, when he said this week that he feared some food producers would be tempted to buy eggs from illegal systems in Europe, because they will be cheaper. He said:

“It will drive down the prices that farmers get. Like the pig industry”,

which has been referred to,

“that will put us in a very difficult financial position."

[Mr Spencer]

The UK is clearly not the only country in the EU that will be compliant on 1 January. Does the shadow Minister know of any other Ministers in the European Union who will take unilateral action within their own country?

[Huw Irranca-Davies]

The hon. Gentleman raises a good point. I will come to that, if he will bear with me. There is a case, if not for unilateral action, then for doing what the Chair of the Environment, Food and Rural Affairs Committee suggested and considering the possibility that like-minded countries might take multilateral action to enforce the EU directive much more rigorously and aggressively and in a joined-up way. There are like-minded countries out there. With my limited experience of EU negotiations, I suggest to the Minister that that is a fruitful way forward. We should be sitting down with those of the same mind and discussing how to work within the EU directive after 1 January. Even if we cannot do it unilaterally—I will ask about the legal advice in a moment—we could do it in a joined-up way with like-minded countries. As I have given him that forewarning, I am sure that he will be able to tell me what discussions are occurring.

The good work of the NFU Poultry Board has been referred to. Its chairman, Charles Bournes, said:

“We are concerned that although the Government has repeatedly pledged its support for the industry, it cannot prohibit the use of illegal egg products and food manufactured from such products.”

On the back of those comments, I have a series of questions for the Minister.

Given that the British Egg Industry Council and others have stated that their legal advice is that a unilateral ban is possible, will the Minister publish the legal advice that he received on whether the Government would be able to enforce a unilateral ban on the import of conventional caged eggs? As he knows, we requested that advice in a written parliamentary question last week. We expect the Department’s reply any day now, if not today.

In response to the intervention by the hon. Member for Sherwood, will the Minister update us on whether he intends to work with like-minded countries to see whether a rigorous form of enforcement or a multilateral ban could be employed by other countries that have complied with the directive and are concerned for their own industries? It is not only about supporting British industry; it is also about supporting higher animal welfare standards. I am sure that those countries would be willing to work on that, with some good negotiation and persuasion from the Minister.

In the absence of full compliance from 1 January, will the Minister commit to making a quarterly statement to the House about the progress he is making within the EU on negotiations, particularly on getting the 13 other members to implement the directive fully, and on what additional work he as a Minister, his officials at DEFRA and UKRep are undertaking to level up the playing field promptly? Will he also update Parliament on the level of non-compliant imports? I think that we will all be extremely concerned if, as a result of the non-level playing field after 1 January, imports increase, particularly eggs and egg products from non-conventional and enriched cages.

We have all seen the recent furore under this Government over humans arriving in airports and ports and being waved through. What hope is there for eggs? What assurance can the Minister give people who are sceptical that imports can be checked for compliance with the EU directive? As an hon. Member said in the debate earlier, what specific additional resources will the Minister make available for policing the directive, and at what cost?

AHVLA surveillance of imports of shell eggs will use ultraviolet light analysis. I understand that the method has not been used specifically to identify different types of caged egg production, although it has been used to identify eggs from alternative systems. What assurance can the Minister give that that type of monitoring is 100% effective? If it is not 100% effective, what level of surety do we have that it is an effective way to monitor and police egg imports? His recent statement made little mention of powdered or liquefied egg. What assurance can he give that imported powdered or liquefied egg will not come from hens in conventional cages?

Will the Minister push the European Commission to take swift action with meaningful financial penalties against any country guilty of non-compliance on shell eggs or egg products after 1 January? Will he take a hard line in discussions with the European Commission on non-compliant countries? That would give some assurance to egg producers in this country that there was at least an attempt, in the way we know other countries do with us, to try and level up the playing field rapidly. What can the Minister do to ensure that the UK egg industry will not be undercut on price by eggs and egg products from conventional cages from any of those 13 non-compliant states? We welcome the Government’s commitment to introduce changes to the Government buying standards mandatory criteria, but why did it take so long to produce them? Why were they so late? Will he guarantee that the changes will be completed and enforced by 1 January 2012, and that all Departments, without fail, will not be using, in this context, conventionally caged eggs in any form—shell, liquid or powdered? It would be wholly inappropriate for the Government to fail to introduce these measures properly, and to fail their own standards, after asking much of the egg industry and many retailers—food manufacturers, food service companies and processors—to invest heavily in preparation for the ban.

Given that the UK’s enforcement strategy is to ensure that all those in the industry have stringent traceability tests in place to ensure that they are not using conventional cage eggs, what assistance is the Minister giving them—not policing, but giving the industry—to ensure that they are fully prepared? Are there additional costs that the industry will now have to take on to ensure compliance, and what assistance is the Minister giving if that is the case? Is he undertaking further action to assist our whole supply chain in the UK to prepare for this directive, or is that now it? They are ready, up and running, and it is a competitive market.

The Minister promised much, but the results have fallen short, as we have heard from the industry. In EU negotiations, there was a failure to level the playing field upwards in favour of higher animal welfare standards, and, I have to say, in favour of UK producers and jobs. However, he had a plan B, which was nothing to do with walking out on negotiations; it was actually to impose a UK unilateral ban. Despite the good promises and the fine words, I wonder whether he has been “Sir Humphried” by his officials on internal legal advice. We must now rely on voluntary enforcement—a sort of big society approach to welfare in UK food production. Perhaps I could suggest to him a reliance on the good and bad in business, highlighted by the Leader of the Opposition in recent contributions.

Finally, when all else has failed, will the Minister work with the industry, hon. Members here today and us to produce a definitive and up to date rolling register of all those who source shell, powder and liquefied eggs from enriched cages? Food processors, retailers, restaurants and others on the list would be demonstrably good eggs, and by implication everybody else would be bad eggs. We would support the Minister strongly in that, but anything else will be seen as a slap in the face for the UK egg industry.

I have already written to all those in the supply chain in the UK, asking in detail what they are doing to comply with the EU directive, both those on the list produced by the Minister and all other significant players. I guarantee our support if the Minister produces a live rolling register, because that seems to be the only tool left in the box at the moment. We have a lot of work to do, as I alluded to with the findings of the RSPCA, and we will do it. If the Minister does not, I am convinced that the industry will do it separately and alone, and we will work with them.

This is by no means a complete list of questions or of the concerns of many inside and outside the UK egg industry, but they are some of the key questions left to be answered by the Minister. I hope that he can provide the assurances that many are seeking—in the industry and in the Environment, Food and Rural Affairs Committee, which has done such good work on this—so that we can drive up animal welfare standards and the protection of the very best in UK food production, as I know he is convinced we must do.

12:04

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

I thank my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) for securing the debate and for the way in which she introduced it.

Obviously, I am aware of the importance of this issue. Hon. Members from all parts of the House have written to me about it in the past year to 18 months. Indeed, as I shall come to describe, it is something with which I have been closely involved ever since I took up my ministerial responsibilities. There is much on which I think we can all agree. However, before launching into that, I want to put on the record that I strongly resent and resist accusations that I have done nothing—as my hon. Friend suggested, when she said that I could do nothing, as was clear in my statement. I also reject the hysterical comments that have been made by those who allegedly represent the industry. They are not constructive, and they are not factual in a number of cases.

As hon. Members, including the hon. Member for Ogmore (Huw Irranca-Davies), have clearly stated, the provision has been in existence for 12 years, since the 1999 directive that bans the keeping of hens in conventional battery cages from 1 January. It has been widely welcomed on all sides of the debate, even from those who would prefer it to go further, as the hon. Gentleman has said. I have said in the Agriculture Council and in this country that every country has had 12 years to prepare. Even the newer member states, which were not members at that time, knew what they were signing up to. There is no excuse, in the Government’s view, for any country not to have done everything it could to ensure that its producers comply.

Clearly, the directive is a huge challenge and great concern to the industry. I join my hon. Friends and hon. Members from other parties in congratulating the producers who have invested approximately £400 million in preparing for the ban by converting either to the enriched systems or to other systems. We know that the vast majority of UK producers will be compliant by 1 January. Of the remainder, we expect many of them will be leaving the industry at the end of the year or shortly after that, as soon as they can get their hens into an abattoir. As has been said, there is a different picture across Europe, with 13 of the 27 member states saying that they will not be ready. It has taken a long while for the Commission to get that information. As several hon. Members have said, there could be approximately 50 million hens in conventional cages across the EU. On 1 January, those will be unacceptable conditions.

We have been working hard to try to protect our producers, who have invested £400 million. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) has said, that works out at about £25 per hen. I have said several times to the industry, and I do not resile from this, that we will do all that we can to protect it. I believe that we have done that within the bounds of legislation, and I shall come on to that. Alongside what we could be thinking about doing in this country, we are still pursuing the UK’s interests in Brussels. Despite the fact that it is not satisfactory, we have made some steps forward.

It is more than a year ago now—in fact, it was September 2010—when Commissioner Dalli visited this country and came to the Department for Environment, Food and Rural Affairs. At that stage, I said to him that we were very concerned that member states would not be compliant. At that stage, the Commission felt that it would be “all right on the night”. However, early this year it began to realise that that might not be the case. It asked all member states for a status report by the end of April. Not all member states complied, but it has recently received more information, to which I will refer, and which is the origin of the 50 million figure that I mentioned just now.

We have had a number of further discussions, both privately between myself and the Commissioner and at Council meetings. In September, the Secretary of State wrote jointly with nine other concerned member states to the Commission, urging it to act quickly. However, at the October Agriculture Council—this is very important in light of what my hon. Friend the Member for Thirsk and Malton has said—the Commission ruled out the option of an inter-community trade ban, which it said is not legally possible. That is clearly on the record as a result of that Council meeting. I have to emphasise that it has warned member states not to do so individually. The Commission has told us clearly that there is no legal basis for a ban.

[Huw Irranca-Davies]

I thank the Minister for clarifying that point. Have he and his officials accepted that, or have they challenged it and sought alternative legal advice to take back to the Commissioner?

[Mr Paice]

I assure the hon. Gentleman that, of course, we have sought our own legal advice. I was going to mention that issue later, but I am happy to address it now. Please forgive me, Ms Osborne, if I read from my notes verbatim, but I need to get it right. I must stress that I am not reading out direct legal advice. Perhaps I can use this opportunity to say to him that I have answered his parliamentary question and that I suspect that he will get the answer today. As I am sure that he knows, I am afraid that the answer is no. Governments do not publish legal advice given to Ministers. That was not the case under the previous Government, and it is not the case under this Government.

The treaty on the functioning of the EU prohibits quantitative restrictions on imports between member states and all measures that have a similar effect, with limited exceptions to that general rule, including where they are necessary on animal health or human health grounds. The advice that we have received shows that it is extremely unlikely that a court would extend those exceptions to animal welfare grounds in these circumstances. The treaty also states that any restriction of trade must not constitute arbitrary discrimination.

Given the traceability issues around distinguishing between imported eggs that have been reared in conventional cages in other member states and those that have not—I will come back to traceability in a moment—any ban would have to be on imports of all eggs from a particular country, whether reared in conventional cages or not. That would clearly penalise compliant producers in other member states, which runs contrary to the principle of the free movement of goods. The hon. Member for Ogmore and my hon. Friend the Member for Thirsk and Malton raised the ban on sow stalls, which we implemented a long time ago in this country. If we apply the logic of the argument that we are discussing to that, we would have had to introduce a ban on all pigmeat, including that not introduced in sow stalls. Neither the Government at the time nor the previous Labour Government believed that they had the power to do that. It is quite clear that we do not have the legal basis to take such action.

[Miss McIntosh]

I am most grateful to my right hon. Friend for sharing the advice with us. The sad fact is that if we claimed there was an animal health issue with shelled eggs or their products, we could reject them. I submit to the Minister that the legal basis on which we can rely for either a unilateral or multilateral ban is the EU directive coming into force from 1 January, which finds its legal base in the treaty. We are breaking new ground here. This is the first time that the Commission has imposed a community-wide ban on animal welfare grounds. I therefore submit that the legal instrument is the directive. I ask the Minister to respond to John Dalli’s comments that I read out about having the power and duty to keep products produced illegally off our markets, either unilaterally or, as the hon. Member for Ogmore (Huw Irranca-Davies) has said, multilaterally. I cannot accept that there are no grounds for a ban, because the EU directive is the legal instrument.

[Mr Paice]

My hon. Friend is right, but she needs to read that legal instrument to see what powers it gives member states to introduce a ban. The fact is that it does not give those powers. The Commissioner has been through this over and over again. I have had private meetings with him and with others as well. He is absolutely adamant that there are no powers available to him or member states to introduce the ban in the way in which my hon. Friend has advocated

I hope that I can clarify the matter by coming to traceability, which is right at the heart of the issue. Before getting to that, I shall finish my point about the Commission’s role. Once Commissioner Dalli realised that there was going to be a big problem, the Commission started looking for a robust enforcement approach that would avoid a large number of producers having to close down their operations. More importantly, as my hon. Friend the Member for Tiverton and Honiton has said, the Commissioner also wanted to avoid the destruction of millions and millions of eggs, which clearly would not have been right when many people are struggling to make ends meet.

At the same time, the Commissioner wanted to protect producers who have complied with the ban. He came up with the concept of what has been described as a gentlemen’s agreement, which does not have a legal basis. Most of those member states who were expecting to be compliant did not like the idea. Those who were not compliant reluctantly agreed to the idea. I took the view that, although we did not want any slippage in the timetable, we had to face up to the reality that there would be non-compliant eggs and therefore something had to be done. In fact, the gentlemen’s agreement died. There was clearly no prospect of a gentlemen’s agreement, and it has not been progressed.

The Commission has acted on the practical things for which the UK has been pressing. As several hon. Members have said, it has begun pre-infraction procedures. More importantly, it has also asked for the action plans from all non-compliant member states to contain measures to accelerate compliance. In answer to the hon. Member for Ogmore, its intention is for a monthly report of those plans to be given to the Standing Committee on the Food Chain and Animal Health, which is known as SCoFCAH for short.

[Huw Irranca-Davies]

Once again, I thank the Minister for clarification on those points. Returning to the legal advice, has he sought clarification from his officials on the risk of the UK being found guilty and prosecuted for infraction for trying to abide by the very standards that the EU Commissioner wants to apply eventually throughout Europe? Considering the backdrop he has just explained about the EU Commission driving forward pre-infraction procedures, if the UK or other countries were to go for a unilateral ban or a multilateral ban with like-minded countries, what is the likelihood of the UK facing infraction? If a country is infracted for not doing something, it is different from being infracted for doing the very thing the EU wants countries to do.

[Mr Paice]

The hon. Gentleman makes a perfectly reasonable suggestion. Obviously, I cannot tell him what the risk is. This is an extremely important point and, to go back in history, his Government took such a view about earlier issues when the boot was on the other foot. It is very difficult for someone to argue that other people are not complying with the law if they then proceed to break it themselves. Someone would lose a great deal of moral standing if they did that.

I want to make a final point about the Commission before I come back to the key issues. The Commission’s Food and Veterinary Office missions will be targeted from the beginning of 2012 at non-compliant member states and, to help that, all member states have been asked to submit lists of compliant producers. We have asked for all those measures, because they will give some protection to compliant producers in the UK and across the EU. Clearly, that is not enough, which is why we have said that we reserve the right to take our own actions. Yes, we have thoroughly investigated the possibility of unilateral action and, when I have said in the past that we were considering the matter, I was saying it exactly as it was. I think that hon. Members who know me well enough will know that I would be keen to take action, but, unfortunately, the legal advice that I have had from within, plus the statements from the Commission to which I have referred, have led me to believe that we cannot do so. That is partly because of the practical issues and difficulties in enforcing such an approach.

[Miss McIntosh]

rose—

[Mr Paice]

Let me continue, because I am addressing my hon. Friend’s point about the issue of traceability. Perhaps I can also mention the point about the egg marketing regulations, because the two matters are interlinked. The answer to her question about the egg marketing regulations is that class A are shell eggs and they have to be marked with a producer number and a mark defining the production method—in other words, it would be code 3 from a battery cage or, from January, from an enriched cage.

Class B eggs, however, which are mainly used in manufacturing, are not required to be marked with anything—with either a producer number or a code—so there is no traceability, which is the key point. If we were to introduce a ban, it would have to be on all non-grade A eggs or on all powder and/or liquid. We could not differentiate them, which is the nub of the challenge that we faced. Because of that, as I suggested earlier in relation to the legal advice, we would have been accused of a discriminatory approach and would certainly have been in breach of the legislation.

[Miss McIntosh]

Will the Minister confirm whether the marketing regulations are European Union regulations or UK regulations? If they are EU regulations, we, as a country, would have had the opportunity to query them and, presumably, amend them when they were drafted. Will the Minister comment on that? I look forward to his response to other questions, but what will be the cost to the industry—to processors, retailers and manufacturers—of doing what the Government are asking it to do from 1 January?

[Mr Paice]

They are European regulations—there is no question about that—as I am sure the advisers to the Environment, Food and Rural Affairs Committee will have confirmed to my hon. Friend. We have, in recent months, asked the Commission—and we will continue to ask it—to amend those regulations. That has not happened so far, and I must confess that the Commission officials with whom we have had detailed discussions do not seem overly keen on the idea, so we are faced with having to operate within the existing legislation.

On the issue of what exactly is an offence, it will be an offence to keep hens in those cages, and we would prosecute under the Animal Welfare Act 2006. That is clear. However, it will not necessarily be an offence to be in possession of an egg from an illegal cage, but it would be an offence to try to pass it off as an egg from a legal cage. It is important to be clear about that.

On the efforts that we have made within the constraints, the hon. Member for Ogmore challenged me about the Animal Health and Veterinary Laboratories Agency and my description of the use of ultraviolet light. He is right that the technique has never been used directly in the way that we propose, but, as he has also said, it has been used to identify eggs from caged hens within batches that have been described as free range or barn eggs. Not until now has it been specifically used to identify different types of caged egg production, but we have had it independently validated, and I have looked at it myself. When an egg is laid, the shell is momentarily a bit soft and takes an imprint of the material on which it is laid. If it is laid on wire, it comes through clearly under ultraviolet light, which is obvious. If it is laid on any sort of softer egg-laying surface, which is a requirement of an enriched cage, that comes through as a completely different pattern.

I must also make it clear, however, that the use of ultraviolet light is simply a marker for us and would not, by itself, be the basis of prosecution. If any suspect eggs are found, we will ask the country of origin to confirm our suspicions about whether the producer—do not forget that the information will be on the egg—is compliant or not. That is how the system will operate. If the eggs are found to be from an illegal system, they will be prevented from being marketed as class A eggs and sent for processing—that is, as I have said, downgraded to class B. I have now explained the point about marketing regulations.

As of today, as far as we can establish, the average price per dozen of class A caged eggs, which are, of course, legal at the moment, is about 54p, while the average price per dozen of class B eggs is 29.4p. That is nearly 25p per dozen cheaper, which is close to 50% of the price. That is a massive price differential. I cannot believe that anybody will seek to import eggs from non-compliant cages and risk losing half the value of the eggs if we detect them. We have to be sensible. The economic impact on anybody who has their eggs downgraded will be absolutely massive, and I do not believe that they would risk it happening. As far as shell eggs are concerned, our measures will be sufficient.

Let me turn to the understandably more concerning issue of processed eggs, which, as has rightly been said, represent about half the imports of egg and egg products into this country and approximately 9% of total consumption. As I have said, they are much less easy to trace, because the eggs are not required to carry any identification. That loophole causes us immense problems, which is why we have been pressing, and will continue to press, to get it closed. In the absence of that, we have had to use what opportunity we have, which, as I have said, is to work with the industry. The hon. Member for Ogmore is right and that is why I published a list in my statement, and was happy to do so, unusually, on the basis of name and shame. I am happy to update the list and, as of today, can add two more processors—Bumble Hole Foods Ltd and D Wise Ltd. That now means that nine of the major processors are on board, reducing still further the likelihood of eggs from conventional cages or their products being imported.

That is the situation. I am approaching the end of my allocated time and have almost finished addressing the issues, but I am conscious that I also need to respond to a number of questions. In the absence of the ability to instigate a ban, we have tried, as I have explained, to throttle the market. That is what it boils down to—we have tried to make sure that there is no market in the UK for illegally produced eggs or egg products.

I have dealt with the issue of legal advice. To return to my earlier intervention on my hon. Friend the Member for Thirsk and Malton, I have been in contact with like-minded countries in the EU. In the week before I made the statement, I telephoned them myself and not one of them is proposing any action yet. As far as we can establish, we are the only country proposing any measures from 1 January. Of course, I continue to work with them and, if there are prospects for more unified action, I will take it, but, as I have said, they are not minded to take action.

I have mentioned the regular monthly updates to the Standing Committee on the Food Chain and Animal Health and, in response to a question asked by the hon. Member for Ogmore, I will ensure that, somehow, that is brought to the House’s attention. I cannot give him the information about non-compliant imports, because of the issue of traceability, which I have mentioned. We do not know whether such imports are non-compliant, and we are trying to ensure that they are not. The European Commission cannot impose financial penalties, which is a matter for the courts following infraction proceedings. On the industry’s issues, it has not provided us with any form of costings. We are open about that. I am sure that if the costings had been onerous, the industry would have been quick to tell us.

Finally, I fully understand the importance of the issue. We have tried very hard to use the weapons available to us.

[Huw Irranca-Davies]

Will the Minister give way?

[Mr Paice]

I am sorry, but I must finish. The fact that I have been able to list not just retailers, but all the major bakery brands, such as the producers of Mr Kipling and all sorts of biscuits, and the major caterers, such as Compass Group, BaxterStorey, Sodexo, and a number of, if not all, the major importers of egg products, demonstrates that we have gone a long way to throttling the marketplace in this country for eggs from non-compliant cages. My final point for anybody who tells me that it is too difficult and that the eggs cannot be traced is that the importers of processed eggs have their own traceability systems, because that is what they are trying to do and, they have assured us, what they will do. However, when we are faced with an egg that has no indication of where it came from, we cannot trace it, which is the harsh fact. I hope that the House will accept that the Government are doing all that we can to protect our producers.

West Midlands and Coventry

Tuesday 13th December 2011 Westminster Hall

12:30

[Mr Jim Cunningham (Coventry South) (Lab)]

It is a pleasure to be involved, for the first time, in a debate that you are chairing, Ms Osborne. I also take the opportunity to thank Mr Speaker for granting us the debate.

I will start with an overview of the employment situation in Coventry. Coventry suffers from high unemployment, with just less than 10,500 claimants; that is above the west midlands average, which, in turn, is well above the UK average. The public sector accounts for 23% of the total employed, which is more or less the same throughout the west midlands. In the past six months, there have been 1,648 redundancies in the public sector. Coventry was home to a number of national public bodies and has been hit harder by public sector job cuts: 155 jobs have gone at Becta, 153 at the Qualifications and Curriculum Development Agency, with 400 more by the end of the year; and 258 at the Skills Funding Agency. Additionally, at least 620 jobs have been cut by local authorities and other public services; the main casualty so far has been Coventry city council. In the private sector in the past six months, according to Jobcentre Plus, there have been 1,237 redundancies, with 204 in the manufacturing sector and 38 in a small catering company.

Coventry is a city where many jobs can be lost and won in the space of a day. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), will no doubt be aware of the Gateway development, which was designed to create 10,000 jobs and had secured £250 million in private sector investment to develop airport infrastructure, a technology hub and a business and distribution park. However, both bids by the local enterprise partnership, for enterprise zone status and to the regional growth fund, were unsuccessful. I understand that, despite the plans to go ahead, the project could now be in jeopardy, given the Chancellor’s recent announcement of £110 million for highways infrastructure improvements. The money from the Treasury would need to be fully integrated with the Gateway scheme, which has allocated funds to a solution for the Tollbar issue—most of the Coventry and Warwickshire MPs know what I am referring to—or else the project could be scrapped. Can the Minister update us about what he understands to be the progress in that matter?

On the problems facing small businesses in particular, I have already mentioned a small business in Coventry that was forced to lay off 38 people, and there are 9,240 small businesses in Coventry, with 44,090 in Coventry and Warwickshire county. That example is symptomatic of the problems facing small businesses throughout the west midlands; 31% of them miss out on growth opportunities because they cannot get credit from the high street banks and 70% experience late payment and have cash-flow problems. Furthermore, the Government must take steps to simplify the tax system and to introduce targeted VAT cuts for key sectors, as a temporary measure. There are also problems at big companies, and we have held various meetings with the Rolls-Royce combined shop steward representatives. In particular, we have some concern about Ansty, despite the company’s assurances.

On young people’s prospects, I have heard a lot from young people in my constituency about their employment anxieties. To take one example, highly skilled medics are graduating from the universities in the Coventry area and are unable to find work. I am concerned that we are not retaining the skills in the area that are necessary to regain a balanced economy. The Minister might be aware of Coventry’s recently launched plan for 100 apprentices in 100 days, and it is hoped that 100 firms will join the scheme. Can the Minister tell us whether the Government will bring forward proposals to encourage firms to take on apprentices, with a view to giving them a full-time job?

Not all is doom and gloom in the region, however. The manufacturing sector has a vital role in the recovery of the west midlands economy. The biggest recruiter has been Jaguar Land Rover, which has two bases in Coventry and is powering ahead with a multi-million pound investment; it has taken on 525 new staff throughout its businesses. The other big recruiter has been Ricoh Arena, with 86 posts, mainly in catering. The most symbolic deal for the city has been the news that car production is set to return—we hope—to the site of the former car plant at Browns Lane.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

I have listened with great interest to my hon. Friend’s comprehensive review of the situation in Coventry. I am pleased that he is emphasising some positive aspects; but, sadly, the return of any sort of car production to Browns Lane crashed when the Government turned down a bid from a local company under the regional development fund, with which we have so far had no success for Coventry city.

[Mr Cunningham]

I was aware of that, but there are still indications that something might happen, although the possibility is pretty remote given what my hon. Friend has said.

[Mark Pawsey (Rugby) (Con)]

I compliment the hon. Gentleman on securing an important debate on a serious matter, but I was interested in his remarks that not all is doom and gloom. My constituency, which is immediately adjacent to his, has over the past 12 months had a fall in unemployment of 13.2%, which we attribute to a progressive council going out to seek new businesses, bringing them in and having a constructive attitude to development. Does he think that there is some good news and that there is a way forward?

[Mr Cunningham]

I do not know about good news. As the hon. Gentleman knows, the economy goes up and down in patches, so we cannot ever predict what the future will hold. We like to think that things will improve, but we will have to see—I do not want to diversify too much and get on to Europe, but after what happened on Friday, I will be very careful what I say about the future, frankly.

Returning to the Coventry situation, the city has embraced new technologies and is leading the way for the whole of the UK. A Coventry coach company has won £3 million of new contracts and taken on 40 new staff. It will produce the UK’s first electric bus—we hope so this time, although we have been down that road before. Only last week, I visited the Institute of Digital Healthcare, which was established in 2010 and is a five-year, £4 million project, which will have a real benefit for patients and their care support networks. I advise any of my colleagues that, if they get the opportunity to go up to the university of Warwick, the IDH is well worth visiting. It will address a number of health care issues, including the use of monitoring and communication devices to support people in their own homes, the development of new platforms to measure, analyse and communicate health data to support health care and to promote well-being, meeting the information and training needs of clinicians and health care technologists and improving the targeting of activities by health and social care teams.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

My hon. Friend is absolutely right to emphasise some of the positives, but there are some huge negatives, as he is aware. I do not know whether he read the report only the other day in the Coventry Telegraph about the massive increase, because of the rise in unemployment, in the cost to the Government of benefit pay-outs in the city, which is not out of line with what is happening elsewhere and is by no means the worst. That in itself is an indication that the Government will not get the deficit right, despite people being thrown out of work because of the austerity programme.

[Mr Cunningham]

I saw that article in the Coventry Telegraph, and I am also aware that my right hon. Friend’s constituency is probably the top of the list; my hon. Friend the Member for Coventry North West (Mr Robinson) is second and I am at the bottom somewhere. What I am saying is that, despite the Government’s measures, there are things happening in Coventry. That is the message that I am trying to get across.

Some hon. Members will remember the major improvements planned for the Coventry to Nuneaton rail corridor, which is known as the Nuckle project. It will help to improve accessibility and encourage increased use of the train for journeys that might otherwise be undertaken by car. When Warwickshire county council has received outline funding approval, it will aim for final approval by the end of the year or the start of 2012.

On Friargate, a recent meeting with the local enterprise partnership revealed that the project is making reasonable progress. It is an office-based project with residential, retail, car parking and delivery facilities, and an acclaimed arrival point for rail passengers. It, too, is expected to start in 2012 and has the firm backing of Coventry city council.

We have seen Coventry and the west midlands benefit from private sector investment. However, I am deeply concerned about the prospects for young people throughout the region and, more generally, about the loss of skills in various sectors. We have already seen a fall in university applications of more 19,200 in the west midlands region. We have also seen a fall in the number of skilled graduates in medicine and nursing who can find work in their qualified field because of public sector cuts, and that is against a backdrop of high youth unemployment.

[Lorely Burt (Solihull) (LD)]

I am sure that there is deep concern on both sides of the House about youth unemployment. Does the hon. Gentleman accept that the coalition Government are seeking to extend opportunities for young people in particular through enhanced apprenticeships and the Work programme to ensure that we do not lose a generation of young people? All employers are being galvanised to take youngsters on and to give them experience, so that when the upturn comes, they will be able to utilise the skills that they have developed.

[Mr Cunningham]

There is weakness in what the hon. Lady says. We have been here lately, and frankly we have seen this before. If we really want to give young people work experience, we must pay employers to take them on for six or nine months. Two or three months are not really helpful, because they do not then get another job. If I had my way, I would make it 12 months, but that is another argument.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate my hon. Friend, who is making a passionate case for Coventry and on issues that affect us all more generally. Is not part of the answer to the hon. Lady’s question that many employers would like to take on more apprentices and provide more skills training, but they need demand in the economy and demand for their products to do so? The Government’s failure to achieve that demand in the economy is leaving it flatlining. We need the plan for growth that the Labour party has suggested.

[Mr Cunningham]

I do not disagree with my right hon. Friend, but I would add that the Government, despite their protestations, must consider small businesses and help with their financial situation and their liquidity problems, perhaps with loans from the banks. If my earlier suggestion about six to nine months’ payment was adopted, they might be able to take on young people. The Government will never crack the problem unless they provide that.

To wind up, I want to ask the Minister some questions. Will he tell us what evidence-based assessment he has made of the Government’s industrial policy? What confidence can he give to global manufacturers with long-term investment horizons? What confidence can he give to companies to take on apprentices? How will the Government support small and medium-sized businesses to retain skills in the region?

12:43

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

I thank Mr Speaker for granting this debate, and I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing it. For us in Coventry, it is an important and timely debate, and we look to the Minister to give what answers he can today and some sense of a future for Coventry and similar cities in the west midlands and beyond. At the moment, with the dramatic situation in Europe, the likelihood of a further recession there and the possibility of a double dip in this country, the outlook for employment and prosperity in the west midlands particularly is grim indeed.

I want to follow my hon. Friend in saying that we are pleased to see guests and supporters from Birmingham and Oxford with us for this debate. Its national significance and relevance should not be overlooked. I shall speak first about unemployment. Coventry always seems to suffer a double whammy. The first public sector cuts were pushed through by the Secretary of State for Education, who went for Becta—the Bringing Educational Creativity to All agency—the Qualifications and Curriculum Development Agency and the Skills Funding Agency.

Those good-quality jobs had been located to Coventry from London because it is central and as part of a clear-cut Government policy to promote growth and quality jobs in the region; but they were cut just like that, in a disgraceful and wanton act without notification, without warning and without consultation. The Secretary of State issued a rude letter closing them down without more ado. He then mended his ways to some extent. We had a debate about the matter in this Chamber, and told him that that was no way to behave and that we hoped he would reconsider. I note that the number of job losses is somewhat lower than was announced, but the total number is 1,237 in the private sector, plus 620 in local authorities and public services. That has created a grim situation in Coventry city, and we can do nothing about it until the Government stop the national cuts, to which my right hon. Friend the Member for Oxford East (Mr Smith) referred.

There is no salvation for Coventry in isolation, although we shall make some suggestions to the Minister today about what he could, and should, do to help. But in the background is the single objective that the Government have set for their economic policy—the reduction of the deficit, come what may. Whatever cuts and deflation are necessary, that is what the Government intend to achieve. We have pointed out many times, and my hon. Friend the Member for Coventry South said again today, that they cannot achieve that objective with policies that are destroying so much of the economy. It is as simple as that, and until they change their policies, the outlook for Coventry and Britain is grim indeed.

Where do we stand on some of the Government’s initiatives that were intended to improve the situation? Some were referred to by my hon. Friend. First, we have had no luck in Coventry with the regional growth fund, and the Minister knows the situation with CPP, which was turned down. I do not want to reopen the matter at this stage, but we hope that it will return. It might have restarted car production at Browns Lane, but I do not think that it will, nor do I think that we will have much luck there. We tried for enterprise zone status, but failed for some reason, and I would like the Government to reconsider that and to explain the criteria that Coventry failed to fulfil.

Similarly, Coventry is suffering badly with youth unemployment, and that is the most serious aspect of unemployment. Some unemployed kids are the third and fourth generation of families that have never been in work and will never get into work because they do not know what it is about. That is why the Government were so wrong, when they came to office, to cut Labour’s scheme that was running successfully. They have now scored the unique achievement of promoting 1 million young people out of work. That came as a shock to everyone in the country, not least the Government. They are now trying belatedly to do something about it, but unless they change their economic stance and the sheer deflationary course on which they have embarked, that will simply not happen.

I turn to something else that the Government could do that would be useful to the nation as a whole and to Coventry: credit easing. Where do they stand on that? Various schemes have been suggested, and we are supposed to hear the details of the present scheme in January. Can the Minister tell us when the credit will flow from that and when it will be available in Coventry? As my hon. Friend said, many small companies that are okay at the moment could do so much better with credit easing in place; they could obtain the credit they need for working and investment capital to improve their output and their sales. It is as simple as that, but until we know the details, we have nothing to go on.

The situation with the Nuckle project, which involves transport, is similar. The paraphernalia and bureaucracy surrounding various Government investment projects were supposed to be cut back. It is a good scheme for linking the north-south train run through Coventry. It is a very good project. We have been dealing with it for about five years or more, partly because of Government bureaucracy, but this Government are even worse. I hear now—I think that my hon. Friend referred to it—that they have promised a decision this month, before Christmas. Can we at least have some indication? What assurance can the Minister give us that the decision will not only be taken, but be positive? That would be the most important thing that we could hear from him today. I hope that he will take that on board. If he cannot answer this morning, will he answer as soon as possible?

We are looking for Government action. The people of Coventry are finding it more and more difficult to respond to the situation. There is no future in cuts, in recession and in an economy that is depressed and looks like remaining so. We shall have growing youth unemployment and growing national unemployment, and we will never create the new businesses, jobs and growth that we need to put the deficit right. Coventry is a microcosm of that problem. It certainly highlights all the problem’s worst aspects in an area that has suffered so much in every recession and throughout the period since this Government took office.

12:51

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I am pleased to have the chance to discuss economic opportunities in the west midlands, particularly in Coventry. I commend the hon. Member for Coventry South (Mr Cunningham) for securing the debate. He highlighted several practical issues around job losses and questions for small businesses. I will address all of them, including the specific transport schemes that have been mentioned.

It is worth taking a step back and remembering that the west midlands is a key part of our national economy. If we look at the most recent complete gross value added figures, it accounted for just over 7% of the UK’s GVA in 2008. It is important that the area is successful and prosperous. Clearly, there have been problems. I understand that it is a difficult time for individuals caught in unemployment or facing redundancy. However, there has been positive news. I welcome the balanced view that the hon. Gentleman presented of the challenges and also the good news. The Opposition will understandably challenge what the Government are doing, but we have to be careful that we do not start to talk down Coventry or other areas and that we strike a sensible balance. We must recognise the problems, but we must also look at where the opportunities are, because I think they are strong.

We have seen, for example, the £355 million investment by Jaguar Land Rover at i54. It is not immediately within the Coventry area, but it is crucial for the whole JLR programme. We have seen the £31 million that JCB is putting forward for its next generation of engines, which will form a crucial part of the skills base in the west midlands. We have also seen investment in BMW at Hams Hall, just outside Coventry. This is welcome news because not only is it good for businesses, it is a tribute to local workers. I want to put that point on the record. The hon. Gentleman and I have met the trade unions with regard to Rolls-Royce at Ansty. I hope that conversations between unions and management will persist to ensure that is somewhere that can remain competitive.

[Lorely Burt]

For many of us in the coalition, it seems that there is tremendous potential for the west midlands, because of the tremendous skills base. The Minister mentioned Ansty; he did not mention the fact that in my constituency of Solihull, Land Rover is creating 1,000 jobs in addition to the ones that he has already mentioned. There is so much potential for jobs and for the development of research and technology in our west midlands area, particularly close to Coventry.

[Mr Prisk]

I am grateful for the hon. Lady’s contribution. I will come to the broader Jaguar Land Rover issue, because it is crucial for the whole network of engineering and manufacturing in the region. We must be careful to remember where the roots of the problem lie. In 1975, GVA was ahead in the west midlands—above the national average. In the first decade of this century, from 2000 to 2008, the increase in GVA per head in the region was the lowest of any part of the country. In Coventry, the decline is clear. In 2000, we saw GVA per head 10 points above the national average; by the time we get to 2008, it is eight points below, so there are significant challenges. Indeed, the west midlands was the only part of the country where the number of private sector jobs fell between 1998 and 2008, so there are real underlying issues.

We are committed to rebalancing the economy; that includes sectors and geography. I turn to the specific areas of activity that I think are relevant. First, local enterprise partnerships are crucial. In the few months that they have been in existence, the Coventry and Warwickshire LEP has established a business mentor network; it is working with the banks to unlock credit at local level in addition to what we are doing at national level, and it has also identified key development and infrastructure opportunities. If I may, I will come to the question of Tollbar End and the development of that site in a moment. I know it is very important.

We have put £248,000 into the Coventry and Warwickshire LEP to get it up and running. That is not designed to provide a vast administration. I am not sure that we want a vast administration. We want outcomes. That is why the LEP is getting its funding strategy in place; it is why it is putting in place its evergreen fund and it is why we are making sure that there is a portal in place so that it is actually able to engage with small businesses.

[Mr Ainsworth]

Will the Minister give way?

[Mr Prisk]

If the right hon. Gentleman does not mind, I will not give way, because I want to try to answer some of the points raised. There are important issues that will advantage his constituency in Coventry as well.

I entirely agree that apprenticeships are crucial. The LEP is addressing that issue with its local project, on top of the work that we are doing to help small and medium-sized enterprises. I can direct the hon. Member for Coventry South to the new programme recently announced to make it easier and simpler for SMEs to take on apprenticeships. We are providing funding to the tune of up to £1,500 per apprentice. I agree that there is an issue around making sure that SMEs are able to do this. Accessibility will make it easier for Coventry’s SMEs.

There are 24 enterprise zones. I am aware that the Coventry and Warwickshire LEP will have been disappointed that its own bid did not make it. However, just beyond the area, the MIRA technology park will be of some importance to local businesses. On transport and the Tollbar End commitment, the Government have brought forward their intention to ensure that £110 million is available to sort out the congestion. We recognise that there are still live issues about whether the development next door could be hindered by it. I have made that clear to officials and they are engaged in discussions with the LEP to see whether we can keep the £110 million to get the investment, but not lose or unduly delay the development programme.

[Mr Ainsworth]

Members representing the whole of the LEP—from both parties—met earlier this week and will be seeking a meeting with the Minister to try to make absolutely certain that his Department is focused on that problem, because it is enormously important. Can the Minister give us a commitment to meet a delegation from the whole Coventry and Warwickshire area on that issue?

[Mr Prisk]

I understand the issue. Given that the Department for Transport is in the process of finalising its decision, I should not pre-empt it. If it becomes necessary for Ministers to have a meeting, I am sure that I or my colleagues will be willing to do that.

The hon. Member for Coventry North West (Mr Robinson) said that Coventry had not had any successes with the regional growth fund. Perhaps I can bring him up to speed. In fact, £3.6 million from the second round of the regional growth fund has brought two relevant projects to the area. There is the Aston Martin body construction facility with £1.6 million of public investment, unlocking between £5 and £6 for every public pound put in. There is also, perhaps more importantly, the LNX distribution programme with £2 million of investment from the Government, which should bring some 340 manufacturing jobs directly to Coventry. I understand the specific issue that the hon. Gentleman raised and that he may have been disappointed by the bid, but there has been some success, particularly in Coventry, and I hope that he welcomes that.

I welcome the points that have been raised; we need sensible dialogue about them. Parties may disagree on the bigger economic issues, but we are committed to ensuring that businesses and workers in Coventry and the wider west midlands are able to unlock their potential. We need to support them through skills and investment, to make sure that they can fulfil their potential and overcome their historical problems.

Children’s Access to Parents

Tuesday 13th December 2011 Westminster Hall

12:59

[Charlie Elphicke (Dover) (Con)]

I am delighted to have secured this important debate. Week in, week out, our constituency surgeries are all too often full of parents who are struggling to see, have contact with or have access to their children. Evidence suggests that around 3 million children in the United Kingdom live apart from a parent, and 1 million of them have no contact with the non-resident parent three years after separation.

In recent years, the number of court applications, and the number of backlogged cases in the system, have increased. In 2005, there were 110,330 court applications, compared with 122,330 in 2010. The CAFCASS—Children and Family Court Advisory and Support Service—case load has also been growing: in 2007-08 there were 39,432 cases, but in 2010-11 there were 43,759. A massive delay in family court cases is not in the best interests of children or parents.

Although the numbers of court applications and cases in the CAFCASS backlog look slightly better than last year, they are still far too high and I suggest that mediation would be a faster and better way forward. Mediation is cheaper at £752 per case compared with £1,682 for full court proceedings, and on average it takes 110 days, while court cases take 435 days. Some 95% of mediations are complete within nine months, while only 70% of court cases are over within 18 months.

In such circumstances, time is of the essence to provide stability for the child and their parents, and to ensure the protection of the child’s welfare and that there is closure and a settlement regarding how they will be looked after, with arrangements for parental contact and access. It is important that such situations are dealt with quickly, and from paragraph 115 onwards the Norgrove report promotes mediation, which is to be welcomed. My only caveat, however, is that the report goes on to state that if people do not like the results of mediation, they should still be able to apply to the courts. I do not agree; one needs closure as soon as possible, and parents who are busy arguing with one another should not be allowed further bites of the cherry.

A key issue is the right of children to see their parents following a separation. It is not an issue of dads’ rights, or fathers’ rights, or about those of the mother; it is about the fundamental and basic rights of the child. I believe that child welfare is best served by ensuring that children know and have a relationship with both parents after separation. Too often, parents sink their children’s rights in a sea of acrimony when they split up, which must be fundamentally wrong.

[Andrew Percy (Brigg and Goole) (Con)]

I congratulate my hon. Friend on securing this debate. He is right to say that such cases should be about the rights of the child, but does he agree that those rights also extend to a child’s right to see their grandparents?

[Charlie Elphicke]

The right of grandparents to see their grandchildren is important, although not, I hasten to add, in the teeth of the unity of both parents if the grandparents are, shall we say, of the more interfering busybody variety who destabilise families. In general terms, however, a relationship between a child and their grandparents is positive and should be encouraged. It is not good if one parent who has custody of the child tries to frustrates that relationship, just as they should not try to frustrate the non-resident parent. My hon. Friend is a passionate advocate of grandparents’ rights, and once again he makes a powerful and forceful point. If there is acrimony between families, it is flatly wrong for parents to inflict their mutual loathing, which too often exists in a relationship breakdown, on the child.

In its conclusions in paragraph 109, the Norgrove report states:

“The child’s welfare should be the court’s paramount consideration, as required by the Children Act 1989. No change should be made that might compromise this principle. Accordingly, no legislation should be introduced that creates or risks creating the perception that there is a parental right to substantially shared or equal time for both parents. For that reason and taking account of further evidence we also do not recommend a change canvassed in our interim report that legislation might state the importance to the child of a meaningful relationship with both parents after their separation where this is safe. While true, and indeed a principle that guides court decisions, we have concluded that this would do more harm than good.”

The most important words are,

“no legislation should be introduced that creates or risks creating the perception that there is a parental right to substantially shared or equal time for both parents.”

The difficulty with the report is that it confuses the issue of time with that of an emotional bond. An emotional bond—love and affection—is not about the amount of time spent with someone. A person could have a best friend from university they have not seen for years. When they next meet, however, the friendship will pick up as if it had been only five minutes and that is because a relationship exists. The person may not have spent much time with their friend over the intervening years, but they know and have a relationship with them. That, in essence, is what we must ensure for our children, because they have the right to know both their parents and to have a relationship, reasonable access and contact with them following a separation.

The Norgrove report has confused those two issues. A relationship is not about time but about that bond, that sharing between parent and child, and the love and affection that goes with it. A clear social message needs to be sent out, which is why I have tabled the Children (Access to Parents) Bill, and why I secured this debate. A relationship is not about the amount of time spent together but about the bond created, and that lies at the heart of my case.

We need action because 1 million children do not see both their parents. Society has changed and is still changing, and social change means that over the past few decades, both parents have become more actively engaged than was previously the case. One study showed that parental involvement by fathers rose 200% between 1974 and 2000, and the change in work patterns seen over recent decades suggests that there is more joint parenting. According to research that I requested from the House of Commons Library, the number of men in part-time work has risen from about 500,000 in 1985 to 2 million today, while the number of partnered mothers in work rose from 52% in 1986 to 71% in 2010. That suggests that parents are sharing work and bringing up their children, and all of us, particularly the younger Members of the House, know that the work-life balance includes more juggling and sharing of parenting and parental responsibility.

[Mr Dominic Raab (Esher and Walton) (Con)]

I congratulate my hon. Friend on securing this extremely important debate. He has mentioned some of the latest data but is he aware of recent research by the insurance company Aviva showing that the number of stay-at-home dads has doubled in a year? That is part of the trend that he mentions.

Together with taking on more of the burden and responsibilities of parenting should come more of the rights. I agree with points raised earlier about the rights of the child, but there is also an issue of securing paternal access. I have heard cases in my constituency surgery where although an access order has been passed by the court, it is flouted, sometimes dozens of times, by the other partner. Does my hon. Friend agree that we must take a firmer, clearer look at enforcement action against recalcitrant partners?

[Charlie Elphicke]

I thank my hon. Friend for that powerful intervention. I will come later to the key issue of orders being flouted.

Parents share work and the bringing up of children, and that should not end at separation. It should not be a case of falling off a cliff; it should not suddenly be the case that children never see one of their parents any more. That is a mad way to proceed and it is destabilising for the child. The welfare of the child is best served by ensuring a continuing relationship with both parents.

The same is true in respect of educational attainment. In December 2010, the Fatherhood Institute published a report showing that better school results, better behaviour, lower criminality and less drug abuse are associated with children having the type of relationship with both parents that I have described. That is why it matters that the child has the right to know both parents and have a relationship with them through reasonable access and contact. It is essential to the rights of the child, the welfare of the child and the success of the child.

My hon. Friend made a powerful and telling point: too often, court orders are flouted. One sees this from the Norgrove report and the sixth report of Session 2010-12 of the Select Committee on Justice. People say, “Oh, there’s no need to change anything. We can see from the court figures that it all looks perfectly fine. In only a couple of hundred cases is contact denied.” However, the reality is that even if orders are made, they are just ignored. Even if people go down the route of a court process, they may be forced into abandoning it simply because of how long it all takes.

That is why a change in the law should send a social message as much as a legal message. I urge the Minister to reject the aspect of the Norgrove report that I have described and to support a change in the law. We need that change to send a clear message to the courts, but also to all parents who, as my hon. Friend the Member for Esher and Walton (Mr Raab) said, deny their children the right to see and know both their parents through reasonable access and contact. That right should be enshrined in law. I hope that if I end my contribution now, it will allow a little time for my hon. Friends the Members for Harlow (Robert Halfon) and for Brigg and Goole (Andrew Percy) to speak.

13:09

[Robert Halfon (Harlow) (Con)]

It is a pleasure to speak under your chairmanship, Ms Osborne. I congratulate my hon. Friend the Member for Dover (Charlie Elphicke), who has expressed the feelings of millions of people throughout the country in what he has said. As ever, his speech contained an enormous amount of research and interesting facts.

I will speak for only a minute or so, because other hon. Members want to speak. I want to talk about just two things. First, there is a father in my constituency of Harlow, Mr Colin Riches, whose children have been denied access to him. It is a tragic case, which shows why the law must change. Secondly—this relates to what my hon. Friend the Member for Brigg and Goole (Andrew Percy) has said—I am campaigning on behalf of the Grandparents’ Association, whose headquarters is in my constituency. We are asking for children to have the legal right to letterbox access to their grandparents. Put simply, that is the right to send and receive cards at birthdays and Christmas.

I have worked with Mr Colin Riches to table an e-petition—No. 23102—and I have raised his case many times in Parliament with my right hon. Friend the Leader of the House and others. The crux of his e-petition is this:

“Shared parenting should become the natural position in the UK. It’s in the best interest of the child. The law should be there to protect children’s relationships with both parents. It needs to show children that both their parents are treated with equality. So that children who have been cared for by both parents and grandparents do not suffer the pain of a living bereavement.”

I welcome the fact that the Government are looking into this matter, most recently through the family justice review, as mentioned by my hon. Friend the Member for Dover. That review was a ratchet in the right direction, because it accepted this point:

“More should be done to allow children to have a voice in proceedings.”

However, although I welcome some of the review’s contents, it does not go nearly far enough to help families such as that of Colin Riches.

I have had a very positive letter from the Minister—by chance, it arrived today—regarding my constituent, Mr Riches. In that letter, the Minister mentions that the review stops short of recommending a change in the law, because of the risk that a change could both encourage litigation and compromise the key principle of the Children Act 1989. As has been said, however, the law is clearly balanced too far in one direction—it is weighted against fathers and grandparents—and we need a change in the law to redress the balance.

I am nevertheless grateful to the Minister for his sympathetic response to my letter. He says that the Government will

“explore possible options for strengthening the expectation that both of a child’s parents should continue to be involved with the child’s care, post-separation”.

Will the Minister meet me and Mr Riches to discuss these issues more fully?

Secondly, I want briefly to ask the Minister about the work of the Grandparents’ Association. Last Thursday, I joined my hon. Friend the Member for Brigg and Goole at No. 10 Downing street to hand in a petition with more than 7,000 names calling for children to have the right to letterbox access to their grandparents—the right to send and receive cards on special occasions. That is a very small but symbolic thing, especially in the run-up to Christmas. Sadly, throughout Britain today, thousands of children are denied any access to their grandparents, even on birthdays and during the holiday season, which is often caused by family conflict.

Again, to be fair, the Government are considering the issue. I had a very positive response from the Leader of the House last week, when I raised the matter at business questions, but if the Minister could give a clear commitment to examine the issue, it would be hugely welcomed by grandparents in my constituency, the Grandparents’ Association and millions of grandparents up and down the land. It would be a tiny gesture, but it could transform the lives of many families. Ultimately, this is about the right of children to know who their family are and to have a chance to communicate with them. In the context of what the Government are doing to support the family, surely that is the right thing to do. Both the issues that I have raised fit with what we said in opposition, so I very much hope that we will be able to do something in the months and years ahead.

[Andrew Percy]

rose—

[Sandra Osborne (in the Chair)]

Order. Not all hon. Members have given notice that they want to speak. I am sure that they will want the Minister to have adequate time to respond.

13:17

[Andrew Percy (Brigg and Goole) (Con)]

I apologise for that, Ms Osborne. I will make this an extended intervention. I just want to agree with the words of my hon. Friend the Member for Harlow (Robert Halfon), who delivered the petition to No. 10 Downing street, and to give two quick examples from my constituency. I have two ongoing cases of constituents who have lost access to their grandchildren. In the first case, that was, very sadly, through the death of the daughter. In the second case, it was through a daughter’s new relationship with someone who exercised considerable influence over her. Consequently, the children left the country before legal processes could be put in place by the grandparent. I have met my hon. Friend the Minister to discuss this matter before, and I would welcome an opportunity to discuss it with him again. Those of us who are campaigning for grandparents’ rights fully accept the rights of parents, but at the end of the day this is about the rights of children, and those rights should extend to including grandparents. I hope that the Minister will meet us—I will end there, having taken less than a minute.

13:18

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

I will try to get through as much as possible of my speech in the time left to me, but I start by congratulating my hon. Friend the Member for Dover (Charlie Elphicke) on securing the debate. I agree with virtually everything that he said and with other hon. Members who raised points as well. The whole point of mediation is that it is quicker and cheaper, and we are of course examining that through the various devices being promoted by the Ministry of Justice and with which the Department for Education is involved. I agree with the points made about grandparents. Part of establishing greater stability for children who find themselves in a broken family is that grandparents often offer an anchor of continuity when parents split up. I am sympathetic to those points, and we are looking at various ways to make sure that, wherever possible, grandparents remain engaged. Too many of them do not, as I know from my constituency.

This is a highly emotive issue, and one that is important to the well-being of hundreds of thousands of children and young people. As my hon. Friend the Member for Dover mentioned, an estimated 240,000 children experience the separation of their parents every year. Overall, more than one in three children will see their parents split up before their 16th birthday. That is a huge number, and I am afraid it is a reflection on society today.

There is great pressure on the courts at the moment, not least on the public law courts, post Baby P, which is having a knock-on effect. It is therefore absolutely right and urgent that we sort out some of the often acrimonious cases in the private law courts. My hon. Friend is absolutely right when he talks about parents sinking a child’s rights in a sea of acrimony. In too many cases, parents use their children as pawns, and the instability and emotional pressure that causes for children cannot be good for them. For all concerned, but particularly for the children, we must make sure that we do a lot better.

Just about everyone agrees that a child’s welfare is best served if both their parents are as actively involved in their upbringing as possible, unless there are good reasons for their not being involved, and the child’s welfare would be undermined—that must remain the safety net. All the evidence tells us that children genuinely benefit from a relationship with both parents, with the potential for each to make different contributions to their child’s development. Yet, as we have heard from my hon. Friend, many children grow up with little or no relationship with one parent—usually, although not exclusively, the father.

This is a topical issue. My hon. Friend mentioned his Bill, which had its First Reading in March. Since then, the family justice review has carried out its consultation, and it produced its final report last month. It is right that we consider the issue of a child’s contact with their parents in that wider context.

I would just make two points. The Norgrove report, excellent thought it is, is a Government-commissioned report, not a Government report. The Government will, I hope, produce their response to it in January. I am working with colleagues from other Departments, including the Ministry of Justice, to reflect on many of the issues that have arisen from the Norgrove review, with which we are very familiar.

Some of the review’s concerns about having a presumption in favour of shared parenting were based on its visit to Australia. However, I think there were concerns about the Australian experience because, too often, the focus was interpreted as being about equality of time. As we know, we cannot carve up a child’s existence on the basis of some spurious 50:50 split in terms of time. As Members of Parliament, we probably know that better than others. We are not good role models as parents. If, heaven forbid, I were to split up from my wife—she has tolerated my being an MP for 14 and a half years—it would be bliss if I was expected to spend 50% of time with my children, because it does not happen now. However, we need to be realistic and not to base things on artificial equalities in terms of time.

There is, however, a much broader issue about the culture of parenting. The culture has shifted away from the traditional view that mothers are primarily responsible for the care of children. Increasingly, society recognises the valuable and distinct role of both parents. My hon. Friend the Member for Esher and Walton (Mr Raab) mentioned the Aviva survey, which pointed to the increasing existence of stay-at-home dads and dads’ wish to be much more involved in their child’s upbringing.

The Government are doing much to encourage that societal change, promoting fathers as equal parents and encouraging them to be fully involved with their children from the earliest stages of their lives. Co-operative parents, both actively involved with their children, are more likely to continue that pattern after separation, and a co-operative, flexible approach is more likely to lead to contact arrangements that actually work. In that, I include the important role of grandparents.

As we know, however much education and awareness-raising we carry out, many parents separate in a hostile environment that fosters selfish perceptions. I am not seeking to downplay in any way the trauma of relationship breakdown, particularly where children are involved. Rebuilding a new life after separation or divorce can be one of the hardest things any of us will face. It is a sad truth, though, that the outcome, all too often, is that loving parents are frozen out of their children’s lives, and those who stand to lose the most are the children themselves.

My hon. Friend the Member for Esher and Walton spoke about the serial flouting of contact orders in too many cases. Too often, the resident parent can use the weapon of delay to freeze out a non-resident parent, such that a large portion of non-resident parents lose contact with their children altogether within two years. Whatever changes we do or do not make to the law, we need better enforcement of what exists now. That is absolutely essential, and I have been holding conversations to that effect with colleagues in the Ministry of Justice and the family courts themselves.

A relatively small proportion of families—about 10%—end up seeking help from family courts to resolve disputes about contact. These are the most complex and difficult cases, often involving multiple problems. The examples mentioned by my hon. Friends the Members for Harlow (Robert Halfon) and for Brigg and Goole (Andrew Percy) reflect some fairly acrimonious marriage breakdowns.

We should not kid ourselves that the remaining 90% of separating parents, who do not seek help from the courts, are happy with the degree of their involvement in their children’s lives. Of course, many manage to put their children’s needs first and to reach an amicable settlement, but far too many non-resident parents feel they must accept unsatisfactory or unfair contact arrangements, because of the fear of long, drawn-out and expensive court procedures. That is why up to a third of non-resident parents have no meaningful contact with their children. Once that happens, it can be almost impossible in some cases to resume contact, particularly where young children are concerned. At every stage, we must remember that the most important part of this whole equation is the child. The delay and continued uncertainty caused by an acrimonious dispute going through the courts over a long period can only be damaging to the child.

That is a tragedy, and one the Government intend to address. Our vision is to establish a clear expectation that, under normal circumstances, a child will have a relationship with both his or her parents, regardless of their relationship with each other. We want to achieve that by creating a climate in which separating parents are able to see through their personal differences and to recognise the importance of their both remaining involved in their child’s lives. For those who need support to focus on their children’s needs, there will be a range of interventions to facilitate the making of practical and lasting agreements.

This will be a society where family courts are a last resort, used to determine only the most difficult cases, particularly those where there are welfare concerns. This court system will be transparent and accessible to those who need it, with no perceptions of bias based on sex or resident or non-resident status. Children will feel that their views count and are listened to, and the minority of parents who take their dispute to court will do so in the knowledge that it is only in exceptional cases that a child will not be able to maintain ongoing contact with both parents. Crucially, parents will adhere to court orders in the knowledge that action to enforce breaches will be swift and decisive—if I am reading quickly, it is because I am determined to get to the end of my speech.

Whether the Government achieve that vision is only partly in our hands. We cannot prevent acrimonious break-ups or change the way individual families choose to organise their lives. However we must do everything we can to improve the system so that it gives children the best chance of growing up under the guidance of two loving parents.

As I have said, the family justice review panel reported last month. It paints a grim picture of the experience of families in a private law system that is too slow, too expensive and too emotionally damaging for children and parents. The panel’s view is that shared parenting is best encouraged through education rather than legislation. It proposes a range of measures to encourage out-of-court dispute resolution and to support parents in putting their children’s needs first. Such pre-court processes would focus on giving parents effective tools to resolve their problems and change their behaviour. They would include mediation, as my hon. Friend the Member for Dover has said, parenting information programmes and the drawing up of parenting agreements. Most of us would agree that those are sensible. In addition, an online hub would, in the first instance, provide information and advice on a wide range of issues faced by parents. The Government are carefully considering the panel’s proposals for reform and will respond to them early in the new year. However the rationale behind these pre-court plans—more support for parents to make child-centred agreements, and fewer parents going to court—fits with the vision I outlined earlier.

I turn now to the nub of my hon. Friend’s proposal, which is legislation to promote shared parenting. As we have heard, the family justice review opposed such a move. It is concerned that any such changes to legislation risk creating the perception of a parental right to shared time with their children. It has also taken on board the concern that legislation could be seen as undermining the fundamental principle under which courts operate—the principle in the Children Act 1989 that paramount consideration is given to the welfare of the child. As I have said, I have some concern about that.

This debate has been raging for some time. Five and a half years ago, I myself argued in the House for an amendment to the Children and Adoption Bill that would have inserted a presumption in favour of shared parenting into the 1989 Act. The concerns that gave rise to that have not diminished today. It would be wrong for me to try to pre-empt the Government’s decision, but I can say that we are looking closely at all the options for promoting shared parenting through possible legislative and non-legislative means.

The debate is often polarised around two issues. On the one hand, we have the frustration that an obstructive resident parent can stop the non-resident parent seeing their child. On the other, there is, understandably, considerable pressure for robust safeguarding processes to ensure that potential welfare issues are properly identified and that care arrangements are safe. Ultimately, both concerns centre on harmful impacts on children, and any solution we come to must maintain a clear focus on the welfare of the child.

The Children Act 1989 is a landmark piece of legislation, and we approach any debate about amending it with the utmost caution. We are clear that the paramountcy principle, which has universal support, must not be diluted.

Empty Homes (Hyndburn)

Tuesday 13th December 2011 Westminster Hall

13:30

[Graham Jones (Hyndburn) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Osborne—for the first time, I think. It is also an honour to have secured this Adjournment debate on empty homes in Hyndburn, an issue close to my heart and a huge problem in my constituency. The debate is very welcome, after the recent launch of the Government’s housing strategy, with much surrounding national publicity.

The causes of empty homes and the issues and problems connected with them are complex and vary around the country. In Hyndburn and other parts of Pennine Lancashire, the biggest factors are over-supply and low demand. Hyndburn has a total housing stock of 36,447, but there are only 34,201 resident households in the borough. Simply put, we have more residential dwellings than households that require homes. Most up-to-date figures indicate that we have 2,546 vacant dwellings—nearly 7% of the total housing stock—of which 1,579 are long-term empties. Vacant housing is therefore almost inevitable, as we do not have a housing shortage.

The causes and solutions go beyond housing. We need support for growth, which will stimulate the local economy. We need to boost the local gross domestic product. Our housing offer needs to support the growth agenda, so we need to provide greater choice and flexibility, as well as affordable homes. Unfortunately, choice is limited in Hyndburn, and more than 50% of our housing stock is terraced, most of it with two bedrooms. There is nothing wrong with terraced housing—I live in a terraced house—but we need to modernise and improve those houses; otherwise we will not retain households or attract new ones. In fact, demand for new housing only exaggerates the problem of the older stock.

Demand and modernisation are the focus in dealing with empty homes in Hyndburn. Nearly half the vacant homes are in neighbourhoods surrounding the centre of Accrington and most are pre-1919 two-bedroom—as we would expect—terraced houses, many of which are in serious disrepair; the climate is of course damp, and private landlord activity is significant, at around 30% of overall tenure. We currently have 1,310 people in need on the housing register, mainly because of inappropriate housing and related poor conditions. The reasons for homes being vacant vary, and in Hyndburn the reasons are certainly different from those described by the hon. Member for Colne Valley (Jason McCartney), when he raised the matter of empty homes in the House on 29 November. Our problem is not overdevelopment, but over-supply and a lack of choice.

High concentrations of long-term vacant dwellings blight our neighbourhoods and the solution that is needed is a long-term, comprehensive approach to regeneration. Although the housing market renewal programme was not perfect, it was as close as we have come to a comprehensive approach. The ending of the programme has left a legacy, and community expectations remain. The recent award of £2.3 million transitional funding allows us to meet our remaining legal obligations, as well as to relocate a number of households that are trapped in potential clearance areas. However, low demand has not gone away and there is a continuing need to regenerate some of Hyndburn’s neighbourhoods that were never included in the HMR programme.

I welcome Government support for new house building, but I am seriously concerned that elements of it will not work in areas of low housing demand. Government housing policy remains driven by the south, ignoring the nuances of the housing problems in northern towns. Greater flexibility is required. Regeneration is a long-term, comprehensive process, which is aimed at tackling social, economic, physical and environmental issues in places where the market has simply failed. There is a risk that the remaining resources will go to growth areas, rather than to help more deprived areas, and that that will exacerbate the problem. I understand that value for money is important, but I ask the Government to identify, or top-slice, funding to assist growth in less affluent areas, such as Haslingden and Hyndburn. That would at least give more deprived areas a competitive chance, as well as supporting economic growth.

I understand that the second tranche of the £50 million for low-demand areas must be match funded. That is a significant problem. I must advise the Minister that that is nigh on impossible in Hyndburn, so his policy will disadvantage Hyndburn in comparison with larger local authorities with greater access to resources. As a small district authority, Hyndburn receives only 15% of the council tax that is collected. Lancashire, the shire authority, has no interest in empty homes. Hyndburn has already matched funded the transitional grant from HMR, to the tune of £2.3 million. It no longer receives capital funding, with the end of the Government’s support for a housing capital fund.

As I have previously pointed out in the House, the new homes bonus is insignificant in Hyndburn. The amounts have been residual and small, and new house building only exacerbates the problem of over-supply, because it disadvantages areas of low demand. In short, Hyndburn has run out of available resources with which to generate match funding. The local authority’s budget is due to diminish from some £17 million to about £11 million in 2014. Unfortunately, the funding will not be anywhere near enough to address the 300,000-plus long-term empty homes across the country.

On 29 November in the House, I expressed my shock that local authorities cannot bid for the empty homes fund, and the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), advised me that that was not the case, as reported at column 915 of that day’s Hansard. I have now had the opportunity to review the guidance for the £100 million fund, and it is clear to me that only registered providers and community and voluntary groups can apply—not local authorities such as Hyndburn, which are not registered social providers. I welcome the support for community and voluntary groups, but otherwise limiting the funding just to registered providers is a missed opportunity in an area with a significant problem. Allocating funds to local authorities would have provided more flexibility and innovation.

In addition, the guidance for the £100 million does not allow bids for vacant dwellings in council ownership. That is another missed opportunity. Hyndburn council owns long-term vacant houses not because it is a landlord, but because it is a former housing market renewal pathfinder. Allowing the former pathfinder local authorities to use the funding in partnership with others, including registered providers, would allow greater flexibly in addressing some of those depressing images that Channel 4 recently highlighted in the former HMR areas, and there would be viable alternatives to demolition, which is what I believe the Government want to encourage. I therefore hope that when the Government draft their guidance for the £50 million for empty homes in low-demand areas, they will bear my comments in mind: more freedom and flexibility, led by local authorities, will achieve more innovation and better value for money. Unless I am mistaken, that is the Government’s objective.

I am led to believe that bids for empty homes funding will be made from at least one registered provider in Hyndburn and from the local authority if the second tranche of funding permits. Our priority area is known as Woodnook and has nearly 350 vacant homes, with ownership in both the private and public sectors. I am pleased to inform the Minister that we are working with a private sector partner to bring in £7 million of investment to convert and refurbish 89 long-term vacant homes—many of which have been vacant for two years—without public sector funding. However, I hope that the Department for Communities and Local Government will look favourably on applications from our partners to extend the innovative work that we are doing to more vacant homes in this neighbourhood, as well as elsewhere in the borough.

I have on several occasions in the past raised the issues and problems caused by some landlords in Hyndburn; I find it necessary to do so again in relation to empty properties. Unfortunately, private landlords contribute directly to the problem of empty homes and of low housing demand through poor standards of management and maintenance. When I requested the information, I was told that slightly more than 80% of the empty properties are in the hands of private landlords. Although I acknowledge that legislation exists to introduce selective licensing in areas of low demand, the measures required to introduce a licensing scheme are onerous and potentially costly to the public purse, as Hyndburn found, regrettably, to its cost, having had to fork out £100,000 in a lost case in the High Court during—I must add—the previous Administration.

The Government’s new housing strategy quite rightly acknowledges the private rented sector’s essential role in the housing market. However, I would welcome a commitment from the Government to hold an independent review, to try to improve standards in the private rented sector and to relax the bureaucracy that currently exists when seeking to establish a selective licensing designation. I understand that the council is considering a new licensing designation, but the potential for a legal challenge and subsequent cost may be a deterrent. If the rules and guidance were simplified and made more transparent, thus making such a designation easier, more local authorities would be encouraged to consider using the power.

I welcome the consultation on an empty homes premium on council tax, payable on homes that have been left empty for more than two years. I fully support the initiative, but I ask that in two-tier authorities—this problem keeps coming back—district councils retain the premium, as that is where the burden to council tax payers currently exists.

[Jason McCartney (Colne Valley) (Con)]

I congratulate the hon. Gentleman on securing this debate, thus building on the progress made in my Adjournment debate, to which he contributed, and keeping empty homes well and truly on the agenda. I also thank the Minister for attending.

I particularly appreciate the way in which the hon. Gentleman has progressed the arguments. He has considered cases in his constituency and identified that the question, which also applies to my constituency, is about overdevelopment on green fields and about bringing rural properties back into use. I welcome the cross-party approach on the issue and praise the Minister for the way in which the Government have reacted.

[Graham Jones]

There is some consensus that the problem needs tackling. There are variances, particularly between the north and the south—between under-supply of housing in the south and over-supply in the north. There are also complexities regarding low demand. The hon. Gentleman, who has a constituency not far from mine that has some of the problems, is quite right in saying that there is some sort of a cross-party consensus, but there is a difference between certain areas in tackling empty homes.

I end my contribution by expressing a sense of disappointment and frustration that the Government’s housing policy is driven from the south and that they seem unwilling or unable to see the disjuncture between their strategy and the realities of places such as Hyndburn—my constituency—and Haslingden.

13:43

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

I congratulate the hon. Member for Hyndburn (Graham Jones) on bringing the matter back to the House. As he says, it is crucial, and I personally and the Department take it seriously. It is set out in some considerable detail in the housing strategy document that we published a fortnight ago. There is quite a lot of common cause between the hon. Gentleman’s intentions, those of my hon. Friend the Member for Colne Valley (Jason McCartney) and mine.

The first point to acknowledge is that there is not one housing market in England—there are not even 10. In fact, if I look at my own borough of Stockport, I would say that there are 10 different markets, even in Stockport.

[Graham Jones]

indicated assent.

[Andrew Stunell]

The hon. Gentleman acknowledges that. In every square mile, some bits are seen to be more desirable than others and accommodation is more popular. That is not a function of the private market alone; it is also true of social housing, where estates are seen to be desirable, undesirable or less desirable. Therefore, we cannot have a one-policy-fits-all solution, and I think that we have common cause on that. I want to assure him that, as a fellow north-western MP, I am well aware of the market’s complexity and the differences even between places that are adjacent to one another.

I agree with the hon. Gentleman’s starting contention that the way out of the current problems faced by Hyndburn and other similar communities is to get the economy going again and ensure that we have growth and investment in industry and jobs. I am sure that he is aware of the Chancellor’s autumn statement and the huge emphasis that the Government place on securing those outcomes. He will also be aware of the Government’s central task, which is to bring our finances and our economy back into balance, so that growth can be based on secure foundations.

I think that we also agree that, when people need homes, the fact that we have empty homes is a scandal. I accept the hon. Gentleman’s point that his district has 36,000 homes and only 34,000 households to fill them. That makes his area distinctive, although not unique—certainly not in the north-west.

At the latest count, there were 720,000 empty properties across England, which was down by 17,000 from the past year. Around 279,000 of those are long-term empties, which are properties that have been empty for longer than six months. The number of long-term empties has fallen by a larger number—some 21,000—since 2010. That is the biggest year-on-year decrease since 2004. I am pleased to report those figures to the House.

According to the figures supplied by Hyndburn, it currently has 2,547 empty properties, which is a rise of 101 since 2010. It has 1,160 long-term empty homes, which is a reduction on the previous year—31 homes were brought back into use, for which the borough gets a new homes bonus.

The hon. Gentleman pointed out that empty homes can rapidly fall into disrepair. They can attract antisocial behaviour and certainly do not enhance the general environment of the neighbourhood. We need to make better use of them. That is why our housing strategy sets out a strategy for empty homes.

I have already mentioned the new homes bonus, which has now been running for two years. In the first year, the decrease in the number of long-term empty homes was just over 15,000. That produced a reward for local authorities of almost £19 million.

[Graham Jones]

The Minister makes a good point, and I am not going to decry it. The issue in Hyndburn is that we cannot build and we do not have households. It is understandable how the new homes bonus was £67,000 last year and £53,000 this year—we are now into the second year of the £67,000. It is difficult, and I hope that the Minister will address the problem of how we match fund when there is no money; we have found the last £2.3 million that we had at the bottom of the barrel.

[Andrew Stunell]

I hope to develop that point in the remainder of my remarks. The new homes bonus year goes from October to September. In the first 12 months, £19 million was paid out in new homes bonus to local authorities for bringing empty homes back into use. I accept that the figure was modest for Hyndburn borough. It had a net decrease of six empty homes and was paid £12,537 as a result. In the second year, which ended this September, Hyndburn had a net decrease of 31 empty homes and will receive an additional £25,460. In total, because the scheme runs for six years, this year it will receive £37, 997. That is the existing mechanism in place.

The housing strategy added a £100 million fund to bring empty homes back into use as affordable housing. Housing associations and local authorities can apply via the Homes and Communities Agency. The bidding guidance for that was launched by the HCA on 21 November and the deadline for applications is 23 January 2012. The HCA bidding guidance sets out that the ultimate landlord of the property must be a registered provider of social housing. That point was made by the hon. Gentleman, both in his intervention in the debate the other day and again today. It is true that bids must come from a current registered provider or an organisation that intends to apply to become one.

I have some good news for the hon. Gentleman. Local authorities that are not currently registered providers—usually because they were housing authorities but have transferred their stock—can still access the funding. There are two routes by which they can do so, the first of which is by partnering a housing association that is a registered provider, as I set out in a letter that I sent yesterday to the hon. Gentleman, which I hope he has received. The second route is to become a registered provider itself.

Hyndburn borough council is not currently a registered provider. What does it need to do to become one and therefore become eligible to make a bid against the £100 million directly, rather than working through a partner? Under section 114A of the Housing and Regeneration Act 2008, all that it has to do is to notify the Tenant Services Authority by letter that it intends to become a provider of social housing, owing to a change in circumstances. In this case, the change in circumstances would involve gaining access to the empty homes funding allocated via the HCA. It does not need to fill in the application form on the TSA website or go through the full application process. It will simply be added to the register as a registered provider of social housing within a few days of notification of its intention to do so.

I strongly suggest to the hon. Gentleman that he may want to get on the phone straight after the debate to recommend to Hyndburn borough council that it does exactly that. It can then choose either route for accessing the money: either to bid in association with a registered provider, such as the housing association that is managing its housing stock, or to make a separate application to become a registered provider itself. I hope that that gives him the confidence that he needs that this scheme is open and accessible to his local authority.

The hon. Gentleman made a number of other points, including that the housing stock in Hyndburn is not of the right mix or quality. The empty homes strategy will not address that to a serious degree; other elements of the housing strategy will be helpful. We have in place a social and affordable home construction programme: 170,000 social and affordable homes are to be built by 2015. The affordable home model is providing new homes in every housing authority area in England, including Hyndburn. Again, those homes are being delivered through registered providers, and the hon. Gentleman might want to check with the HCA the nature of the bids that have been made and accepted by the HCA for his area.

We are, of course, continuing to fund a substantial decent homes programme to bring social housing stock up to standard. The hon. Gentleman did not specifically set out the case in Hyndburn, but the number of non-decent homes has been halved since the Government came to office 18 months ago. We have a substantial decent homes investment programme and have made substantial progress already. I apologise, Ms Osborne, I wish to correct that figure. We have reduced the number of non-decent homes by 26% and are on course to halve it by the end of this Parliament. That involves more than £2 billion in investment, which shows not only earnest of intent but good news for Hyndburn.

The hon. Gentleman appealed to my better nature with regard to how the funding for the additional £50 million is to be set out. The fund was announced on 21 November and is designed to tackle some of the worst concentrations of empty homes in areas of low demand. I put it to him that that money is essentially targeted at areas such as Hyndburn. That is, of course, on top of the money that he referred to, to ensure that the worst excesses of the market renewal project are patched up in the areas of greatest need. The bid submitted by Hyndburn and other local authorities in east Lancashire was accepted in full by the Department.

The funding details for the additional £50 million have not yet been finalised. Further details will be announced shortly. There are key differences between the £100 million fund for social and affordable housing and the new £50 million fund. In particular, it will not be appropriate under the additional programme for all the homes to be brought back into use as affordable housing. The schemes are all backed by cash rewards through the new homes bonus. We have also made it clear that the £50 million fund will take into account the need to look at environmental and broader works in association with bringing homes back into use, not simply the refurbishment of the homes themselves.

The hon. Gentleman also drew attention to the plans that we are currently consulting on regarding the introduction of an empty homes premium, to be a strong encouragement to landlords and home owners to bring homes back on to the market or into productive use. That consultation is going on and I take the hon. Gentleman’s contribution to this debate as a response to that consultation in favour of the introduction of the empty homes premium. I would be even happier if he wrote formally to the Department to put that clearly on the record.

[Graham Jones]

I would be delighted to do that, but in the last few seconds, will the Minister address the fact that we have no match funding?

[Andrew Stunell]

I listened carefully to the hon. Gentleman, but I do not wish to pre-empt anything that may be in the criteria for the £50 million. I will undertake to convey his view and the circumstances in Hyndburn to my right hon. Friend the Minister for Housing and Local Government, who is working on that.

14:00

Sitting adjourned without Question put (Standing Order No. 10(11)).

Written Ministerial Statements

Tuesday 13th December 2011 Written Statements

Tuesday 13 December 2011

EU Competitiveness Council

Tuesday 13th December 2011 Written Statements

[The Minister for Universities and Science (Mr David Willetts)]

My noble Friend the Parliamentary Under-Secretary of State for Business, Innovation and Skills, Baroness Wilcox, has today made the following statement:

The EU Competitiveness Council took place in Brussels on 5 and 6 December 2011. I represented the UK on internal market and industry issues on 5 December, and the Minister of State for Universities and Science, represented the UK on research issues on 6 December. A summary of those discussions follows.

The main internal market and industry issues discussed on 5 December were: patents; industrial policy; business competitiveness; impact assessment in the Council; results of the single market forum; customs co-operation; and companies registers. Additionally, there was a lunchtime discussion regarding patents.

A lengthy discussion on patents failed to conclude after the presidency presented a compromise proposal on political aspects of the draft Court agreement. The proposal included the seats of different bodies, principles of financing, an extended transitional period during which users of the Court could continue to use the existing litigation arrangements for European (non-unitary) patents, and greater opportunities to bring infringement cases directly to the central division. Discussions continue and the presidency is planning an initialling ceremony on 22 December, if agreement can be reached.

The Council agreed conclusions on industrial policy without discussion. The Council also took note of a presentation by the Commission on a proposal for a competitiveness and SME (small and medium-sized enterprise) programme 2014-2020.

On impact assessment in the Council, the presidency introduced draft conclusions, recalling the recent Court of Auditors report on impact assessment, the inter-institutional agreement on better law-making and the recent Council conclusions adopted by ECOFIN on impacts of legislation. The UK and other member states stressed the need for the Council to act quickly to translate agreements into practice. The conclusions were adopted.

Conclusions from the single market forum were also adopted, which responded to the outputs of the single market forum held in Warsaw. I did not intervene, but other member states did both to congratulate the Polish presidency on hosting the event and to push for the “professional card” idea, likely to feature in forthcoming proposals on professional qualifications.

Conclusions were also adopted on a further substantive agenda item regarding customs co-operation with eastern neighbouring countries. The presidency and the Commission stressed that co-operation on the eastern border was a priority to facilitate trade and ensure safety of EU citizens.

The final substantive agenda item was regarding interconnection of business registers. The Council agreed a general approach on a directive that will facilitate the interconnection of business registers across the EU. The presidency proposed a Council statement as drafted by Germany to clarify concerns from some member states. This was agreed.

There were also a substantial number of AoB items on the agenda. Of note were the discussions on REACH and services of general economic interest. I intervened in both cases.

The Czech and Slovak delegations presented a paper on EU chemicals legislation (REACH) emphasising the need to focus on the original principles of REACH relating to smart regulation and the “think small first” principle. I supported the paper, and questioned the Commission’s intention to set a numerical target for the candidate list.

Some member states had written to the Commission to criticise a number of elements in the services of general economic interest package. The Commissioner, Alumnia, defended the proposals. I defended the importance of controls on state aid which are instrumental in ensuring a level playing field for competition and promoting competitiveness, as well as the overall thrust of the Commission’s package.

Other AoB items that were covered included: the state of European shipbuilding; European standardisation; results from the European tourism forum; the lead markets initiative; Horizon 2020; the annual growth survey; customs enforcement of intellectual property rights; the single market and services directive states of implementation; European observatory on counterfeiting and piracy; protection of orphan works; the consumer marker scoreboard; alternative and online dispute resolution; and the consumer programme.

The Danish delegation also reported on the Work programme of their incoming presidency.

The main research items discussed on 6 December were: Horizon 2020; joint programming initiatives regarding “healthy and productive seas”, “urban Europe”, “connecting climate knowledge for Europe”, “water challenges for a changing world”, and “the microbial challenge”; partnering in research and innovation; and a Council resolution on space orientations.

The primary discussion concerned Horizon 2020, the EU’s research funding programme for the period 2014-20. The UK supported the package. We, along with other member states argued that the international thermonuclear experimental reactor (ITER) and global monitoring for the environment and security (GMES) programmes should be included in the multi-annual financial framework (MFF) proposal.

The Council adopted conclusions on joint programming initiatives and on partnering in research and innovation without comment.

Day two also covered several AoB items. These were: framework programme of the European atomic energy community for nuclear research and training activities; cohesion policy; plan for the European innovation partnership on active and healthy ageing; information about the Budapest declaration on agricultural research; and report of the informal ministerial expert group on simplification.

Future of the High Street

Tuesday 13th December 2011 Written Statements

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Together with the Prime Minister and Deputy Prime Minister, I would like to inform the House that Mary Portas has today presented the Government with a report presenting the findings of her independent review of the high streets, and recommendations for action.

This timely report is published alongside new Government commissioned research, “Understanding High Street Performance”, which shows that although some high streets continue to thrive, a third are degenerating or failing, and by 2014 less than 40% of retail spending will be on the high street.

In May, with town centre vacancy rates doubling in the space of two years, the Prime Minister and Deputy Prime Minister asked Mary to look into how we can create more prosperous and diverse high streets.

The report sets out Mary’s recommendations which include:

Free car parking in all town centres and a national league table of the best places to park in England.

Introduction of “Town Teams” made up of landlords, shopkeepers, businesses, local politicians and residents to put in place a visionary management structure to create high streets that people want to use.

Empower successful business improvement districts (BID) to take on more responsibilities and powers and become “Super-BIDs”.

A new “community right to try” allowing local people who do not have the means to buy empty property to test co-operative ventures.

Making explicit a presumption in favour of town centre development in the wording of the national planning policy framework.

A new national market day to encourage the talent of the future and bring people into our high streets.

A number of pilots across the country to put the recommendations of the report into practice.

The report is the culmination of six months of diligent inquiry by Mary Portas and we thank her for her hard work.

The Government will respond to the recommendations in the spring.

Copies of the Portas report have been placed in the Library, Vote Office and Printed Paper Office, and an electronic copy is being sent to all MPs.

Cabinet Committees List

Tuesday 13th December 2011 Written Statements

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

Today I am publishing an updated Cabinet Committee list. I have placed a copy of the new list in the Libraries of both Houses.

Fire and Rescue National Framework for England

Tuesday 13th December 2011 Written Statements

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

I have today published a consultation document on the fire and rescue national framework for England. A statutory requirement under the Fire and Rescue Services Act 2004, the consultation sets out our proposed priorities and objectives for fire and rescue authorities in connection with the discharge of their functions. A copy of the document has been placed in the Library of the House.

The document marks a key milestone in resetting the relationship between fire and rescue authorities and Government. It proposes moving away from Whitehall prescription, enabling fire and rescue authorities to deliver their services in a way that makes sense locally, while continuing to meet the wider needs of national resilience. This includes working collectively with other fire and rescue authorities and collaboratively with a wide range of other organisations to improve public safety and cost-effectiveness.

It sets out the risk that occasionally we may be faced with incidents of such scale or complexity that all available resources could be overwhelmed, even if pooled or reconfigured. Her Majesty’s Government retain an over-arching responsibility for defence of the realm, ensuring we are resilient as a nation to such risks but this must be based on and drawn from local capability, expertise, knowledge and leadership. This will be supported by a new strategic governance arrangement in partnership with the fire sector to be developed with key partners alongside the consultation.

This more localist approach builds on the approach of the coalition Government in ending the regionalisation of the fire service and dismantling regional government in England. We have already announced that fire and rescue authorities no longer have to work through regional management boards, and we have stopped the forced regionalisation of fire control rooms through the termination of FireControl.

The Government are continuing to fund the existing national resilience capabilities to build specialist capability to manage fire and rescue related risks, for example: additional, specialist urban search and rescue capability; high volume pumps; mass decontamination equipment; detection, identification and monitoring equipment for chemical, biological and nuclear incidents; and additional command and control capability.

The document builds on existing notable practice by fire and rescue authorities to promote greater accountability to local taxpayers, more partnership working and open data transparency. It proposes high level expectations for fire and rescue authorities to develop arrangements that are effective locally along with a requirement to produce assurance statements and to make comparable performance data available to communities.

I am grateful to the national framework partner working group for its assistance in developing this consultation document and look forward to receiving responses from across the fire and rescue sector and more broadly. The consultation closes on 19 March 2012.

Local Television

Tuesday 13th December 2011 Written Statements

[The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)]

Today, the Government are publishing their response following two public consultations on a proposed new framework for local TV in the UK. The Government received over 310 responses from interested parties, members of the public and businesses who commented on the proposals or advocated a specific town or city to receive a local TV service. The Government will shortly lay three orders that will put in place the framework to give new powers to Ofcom and to incentivise the market to provide local TV services.

The framework the Government are creating combines market incentives and regulatory mechanisms to provide new local TV opportunities. The outcome will see a new generation of genuinely local TV services broadcast on Freeview (and potentially satellite and cable) across the UK. The Government are providing Ofcom, the communications regulator, with a power to award a series of local content licences and a multiplex licence for these purposes. Upon enactment of the legislation, the Government expect Ofcom will award a first tranche of 20 local TV content licences in 2012 along with the single multiplex licence. Further licence awards and roll-out to additional locations will follow, depending on market demand and cost viability.

The orders the Government intend to lay in the very near future will do three things: require Ofcom to make available sufficient local spectrum for the purposes of local TV; create new provisions to enable Ofcom to run a fit-for-purpose local licensing award process; and require electronic programme guide providers to give appropriate prominence to the licensed local TV services. In addition, up to £40 million from the television licence fee will be provided to support capital build and content acquisition.

The published Government response lists the principal locations expected to be in the first tranche of licence award and offers further details on how the framework will work in practice.

The Government believe the new local TV services will contribute towards the local democratic process through news and other programming, offering information, reporting and content which will hold institutions and individuals to account; it will provide opportunities for journalism, creative industries and syndication across local media.

Recall of MPs

Tuesday 13th December 2011 Written Statements

[The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)]

Today the Government have published draft legislation and a White Paper setting out proposals to introduce a power of recall, allowing voters to force a by-election where an MP is found to have engaged in serious wrongdoing and having had a petition calling for a by-election signed by 10% of his or her constituents, as set out in the coalition programme for Government.

These proposals form a key part of our efforts aimed at rebuilding trust in politics, ensuring that politicians are properly accountable to the people they represent.

Currently a Member could commit serious wrongdoing but will only be disqualified if convicted by the courts and sentenced to more than 12 months in prison. Otherwise such a Member may not have to account to their constituents until the next general election.

Key to any recall mechanism is the trigger for a recall petition. Members must not be left vulnerable to attack from those who simply disagree with them or think that they should have voted a different way on a particular measure. Recall should be used to hold to account Members who have not maintained the high standards of behaviour that are rightly expected of elected representatives. Recall should not be used as a way of re-running elections.

The draft Bill provides that a Member should face a recall petition if one of two conditions are met. The first would fill the existing gap in the disqualification regime by providing that where a Member receives a custodial sentence of up to 12 months they will automatically face a recall petition. The second is the House of Commons passing a resolution stating that a Member should face a recall petition. This is designed to supplement the House’s existing disciplinary powers, and ensure that MPs who have committed serious wrongdoing which has not resulted in a prison sentence may be recalled, if the wrongdoing is considered to be sufficiently serious. The draft Bill deliberately does not set out the internal procedures of the House of Commons which would lead to such a resolution; such matters fall within the exclusive cognisance of the House. We would hope, however, that the House would put into place procedures based around those which it already has to deal with reports from the Commissioner for Parliamentary Standards.

The draft Bill proposes that the recall petition should be open for signature for eight weeks and will be administered by the local returning officer. The petition may be signed by anyone on the parliamentary electoral register for the relevant constituency, provided that they made their application for registration before the recall petition procedure was started. If, at the end of that period, more than 10% of those on the electoral register have signed the petition, then the Member’s seat will be vacated and a by-election will be held. The former Member will be free to stand in the by-election.

There is no precedent for a recall mechanism in the United Kingdom. In bringing forward this draft Bill the Government hope to stimulate a debate on what would be the best model for a recall mechanism.

We are publishing this White Paper and draft Bill for pre-legislative scrutiny, and I am inviting the Political and Constitutional Reform Committee to scrutinise the draft Bill. We will consider the results of this process with great care.

Education Funding

Tuesday 13th December 2011 Written Statements

[The Secretary of State for Education (Michael Gove)]

Today I am announcing details of education funding for 2012-13. My announcement includes the dedicated schools grant (DSG), funding for 16-19 education and training and capital funding for maintained schools, academies, the voluntary aided sector and 16-19 provision.

School funding

As set out in the “Consultation on School Funding Reform”, issued in July, we will continue with the current methodology for funding schools in 2012-13 through the dedicated schools grant (DSG). The underlying school budget will be kept at flat cash per pupil for 2012-13.

To protect local authorities with falling pupil numbers we will continue with arrangements to ensure that no authority loses more than 2% of its budget in cash terms.

Although the overall schools budget will stay at the same level on a per pupil basis before the addition of the pupil premium, the actual level of each school’s individual budget will vary. It will depend on local decisions about how best to meet needs and priorities. This does mean that some schools will see budget reductions, either because they have fewer pupils or local changes to funding distribution. To protect schools from significant budget reductions, we will continue with a minimum funding guarantee that ensures no school sees more than a 1.5% per pupil reduction in 2012-13 budgets (excluding sixth form funding) compared to 2011-12 and before the pupil premium is added.

Details of these arrangements, including per pupil funding for each local authority, are being sent to local authorities today and have been published on the Department for Education’s website.

The “Consultation on School Funding Reform” set out proposals for the funding system from 2013-14. I am grateful to all those who have responded to these important issues. I am publishing today a report on the consultation responses: there was a good deal of consensus around some proposals, such as the factors to include in both any national and local formulae, and the need for careful transitional arrangements. However, the responses also reflect a variety of views over some of the key aspects of the system. We are now working on developing further proposals in the light of the responses.

Funding for 16-19 provision

The Young People’s Learning Agency (YPLA) is today publishing a statement setting out the funding to be made available for 16-19 education and training for 2012-13. The funding statement shows that the Government plan to fund an increased number of places as we approach the raising of the participation age. We plan to fund 1,577,000 places in the 2012-13 academic year compared with the 1,543,000 learners we expect providers to have recruited in 2011-12.

Transitional protection was introduced in 2011-12 in order to help schools and colleges to manage unit cost savings that need to be made. We will continue to provide transitional protection for these policy changes for 2012-13 and will continue to make this available until 2015-16.

Capital funding

Today’s capital announcement covers funding for 2012-13 and includes allocations for basic need (funding for additional pupil places), maintenance and devolved formula capital. This is a further one-year allocation. This will enable me to reflect, for subsequent allocations, the rapidly changing situation in local areas on both demographic growth and numbers of schools converting to academy status.

At a national level, overall capital funding remains the same as last year—£800 million to address the shortage in pupil places and £1.4 billion for maintenance, including £200 million for devolved formula capital. I have agreed however to change the methodology for allocating funding for pupil places to better reflect local need.

Funding for pupil places needs to take account of the capacity of schools. For this reason, I have agreed that basic need allocations for 2012-13 will be decided using both numbers on roll and capacity data. That is, it combines the two methodologies used in 2011-12 for allocating basic need funding. Moving to this method will result in changes in levels of funding for some local authorities. Because of this, I have introduced a protection so that no local authority will receive, in 2012-13, less than 80% of the funding they would have received had we taken the same approach as taken for 2011-12.

This allocation does not include the additional £600 million for basic need allocated to my Department in the autumn statement. I am considering how best to allocate this funding. I will also consider how we can improve the collection of local data on pupil numbers and available school places so that allocations for the remainder of the spending review period are better targeted towards need.

Maintenance funding for local authorities will remain at the same level as last year and will be allocated in the same way. Some local authorities will see a reduction because their maintained schools have converted, or are about to convert, to academy status. Local authorities should take into account the maintenance needs of all maintained provision, including Sure Start centres, when deciding how to prioritise this funding.

I can also confirm the same funding levels for the locally co-ordinated voluntary aided programme (LCVAP) as in 2011-12 and we are taking the same approach to its allocation.

Devolved formula capital will remain at similar levels to last year so that the limited capital available can be more strategically targeted.

We have retained £276 million centrally to meet the maintenance needs of academies. This amount is based on numbers of academies already open and those due to open in the coming months. We expect local authorities to honour any commitments they have made to fund projects in their maintained schools, including where those schools may be intending to become academies during the next year.

The academies central fund next year will be administered in a similar way to this year, and we will provide further details early in 2012 when we are ready to receive applications for funding. We will also consult with sponsors and academy chains to explore options for giving them more flexibility to address the maintenance needs of their whole academy estate.

Capital funding for 16-19 provision

Over £107 million of capital funding will be available in 2012-13 to meet maintenance and building needs of sixth form colleges and demographic pressures for new 16-19 places in schools, academies and sixth form colleges.

Some £59 million of this funding will be allocated to the sixth form college building condition improvement fund (BCIF) in 2012-13 to address priority building condition needs within the sixth form college sector. All sixth form colleges will remain eligible for devolved formula capital (DFC) and it will remain at the same rate as 2011-12.

In addition, I want to ensure that funding is available to meet the need for additional places where there are demographic pressures in schools, academies and sixth form colleges. I have therefore made a further £44 million available in the coming financial year for basic need funding for additional places for 16-19 year old students in these areas. This funding will also support the provision of new places in mainstream settings, including in FE colleges, for students with learning difficulties and disabilities.

The Capital Review

The consultation on the capital review ended in October and I intend to publish a final Government response to their recommendations in January 2012.

The Priority School Building Programme

Finally, I would like to update the House on the latest position on the priority school building programme (PSBP). Partnerships for Schools (PfS) is currently reviewing applications to ensure there is a fair and rigorous selection of schools for admission to the programme. Until applications have been fully assessed, I will not be able to announce which schools will be in the programme. I understand the high level of interest in this programme and expect to be able to make an announcement in the new year.

More details about today’s capital allocations are being sent to local authorities and will be published on my Department’s website at: www.education.gov.uk.

A list of resources associated with today’s announcement can be found at annex A and I shall also make copies available in parliamentary Libraries.

Annex A

Accompanying documents

Dedicated Schools Grant

Dedicated Schools Grant: Technical note for 2012-13

Dedicated Schools Grant calculator

Dedicated Schools Grant Q & A

Work book containing:

A summary of the Guaranteed Units of Funding (GUFs) for 2012-13 for each local authority;

Details about how the GUFs for 2012-13 are calculated;

A flow diagram showing how the 2012-13 GUF allocations are calculated.

These products can be found online at:

http://www.education.gov.uk/schools/adminandfinance/financialmanagement/schoolsrevenuefunding/settlement2013pupilpremium.

Funding Reform

Analysis of consultation responses.

These products can be found online at:

http://www.education.gov.uk/consultations/index.cfm?action=conResults&consultationId=1756& external=no&menu=3.



Capital investment

A table of capital allocations.

A technical note explaining the methodology used to calculate these allocations.

These products can be found online at:

http://www.education.gov.uk/schools/adminandfinance/schoolscapital/a00200794/schools-capital-allocations-for-2012-13.

Integrity in the Police Service (HMIC Report)

Tuesday 13th December 2011 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

On 18 July, I informed the House that I was asking Her Majesty’s Inspectorate of Constabulary (HMIC) to consider instances of undue influence, inappropriate contractual arrangements and other abuses of power in police relationships with the media and other parties and to make recommendations as to what needs to be done. I am pleased to tell the House that HMIC have concluded their review and have today published their report: “Without Fear or Favour: a review of police relationships”. A copy will be placed in the House Library.

The integrity of the men and women who work in the police service of England and Wales is critical to public trust in policing. Real or perceived conflicts of interest dent that trust and make policing by consent more difficult. The vast majority of police officers behave appropriately and conscientiously and I welcome HMIC’s conclusion that corruption is not endemic in the police service. HMIC do however identify a range of integrity issues on which the service is neither robust enough nor consistent in its approach. HMIC found that police force and authority leaders have, on the whole, failed to grasp the importance of integrity and are therefore insufficiently compelling in setting the values and standards that should apply across all aspects of policing, as well as in setting a personal example to their staff.

Where forces and authorities get this right and police officers and staff operate to the highest standards of integrity, it is because of the presence of strong and effective leadership by example, setting both the direction and the tone. I want all forces and authorities to recognise this and to aspire to the standards of the best. I welcome HMIC’s work and accept the recommendations they have made. It is now time for all police service leaders to work together urgently and constructively to agree and apply a coherent set of national standards of integrity and behaviour for police officers and staff.

HMIC’s findings will be supplemented in the next few months by the work that Elizabeth Filkin has been undertaking in the Metropolitan Police Service and by the view of the Independent Police Complaints Commission as to whether there are further powers necessary to enhance their ability to be able to hold the police service to account. The Serious Organised Crime Agency (SOCA) will also be concluding a review next summer into the extent of corruption by organised criminals operating in the public and private sectors, including recommendations for addressing this. The police service’s leaders should draw on these, as well as the findings that will emerge next year from the inquiry being led by Lord Justice Leveson. The standards they set need to give the public confidence in the integrity of those who police their communities, and the service’s leaders themselves. I will expect a clear set of proposals to be ready for wider consultation by spring 2012.

To support police leaders in this, the Government have been consulting on establishing a national professional body for policing, the scope of which I intend to say more on to this House shortly. This is in addition to legislating to make the inspectorate itself more robust, better equipped to act and to shine an expert light on policing.

I intend to accept the offer made by HMIC to re-visit these issues next October. In doing so, they will be able to offer the public, and the police and crime commissioners who will be elected in November 2012, a clear view as to the effectiveness of the service’s leadership on these matters, as well as the progress made towards both operating, and being clearly seen to operate, to the highest standards of integrity.

Dartford Crossing Petition (Correction)

Tuesday 13th December 2011 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mike Penning)]

On 14 September 2011, the hon. Member for Dartford (Gareth Johnson) presented to the House a petition:

“The Petition of residents of Dartford and readers of the Dartford Messenger newspaper, declares that the Petitioners are opposed to any increase in tolls charged for the Dartford Crossing. The Petitioners therefore request that the House of Commons urges the Department for Transport not to increase tolls on the Dartford Crossing and to reconsider the emergency measures to lift the barriers during severe congestion and extend the local residents discount scheme. And the Petitioners remain, etc”. [P000960]

Regrettably, the “Observations by the Secretary of State” published by the Department for Transport on 14 October were incorrect, and related to another petition. The observations should have been as follows:

The Government set out its intention to revise the road user charging regime at the Dartford-Thurrock River Crossing as part of the outcomes of the Government's 2010 Comprehensive Spending Review in October 2010.

Subject to consultation, the Government proposed increasing the levels of road user charges in 2011 and 2012, in order to continue the prioritisation of improvements to the Crossing in the short, medium and longer term. The improvements include the suspension of charges at the times when an emergency exists such as severe congestion, the implementation of new, free-flow, charging technology, and the review of options for additional crossing capacity.

The Department for Transport published for consultation the details of its proposed revisions to the road user charging regime on 30 June 2011 and the consultation period closed on 23 September 2011.

The Department recently announced that there will be no increase in charges in November 2011 or April 2012.

The Department is considering the responses made during the consultation, and will consider carefully all the representations made before making any announcements on its conclusions.

The Highways Agency began a six month trial of an operational charge suspension protocol in July 2011, and it will review the effectiveness of the trial following its conclusion in December 2011.

Driver and Vehicle Licensing Agency

Tuesday 13th December 2011 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mike Penning)]

The DVLA has a long history of providing driver and vehicle licensing support to Great Britain’s drivers and motorists and in providing essential services to the police and other agencies to keep our roads safe. But times change and so do the needs of customers. To make sure the DVLA meets those changing needs, I am announcing today the launch of a consultation on a programme of work which will transform the way that the DVLA delivers its services to customers.

This programme will make it easier for motorists to carry out their business with the DVLA. This will be achieved by centralising services and providing much more choice and flexibility around how and when motorists deal with the DVLA. The proposals could deliver significant efficiencies with an estimated £28 million year on year saving.

As a result of these proposals I expect the DVLA to centralise services at its Swansea offices and to deliver those services electronically and in partnership with others. To this end, the DVLA will withdraw from its network of expensive, regionally located offices by the end of 2013. As this proposed centralisation of services is expected to have an impact on resources, the DVLA will now consult staff in these offices and the trade unions on the impact of the changes.

Also, motorists in Northern Ireland currently do not have access to all vehicle services that are available on the mainland, for example, the facility to tax a vehicle online is currently unavailable in NI. As part of this programme, the DVLA will also look to offer the full range of services to motorists in Northern Ireland.

The DVLA will ensure that the motor trade and customers are fully involved in the consultation on the transformation programme and that service delivery will not be adversely affected; rather, the expectation is that for many, services will be enhanced.

I am committed to improving the service all motorists receive while increasing efficiencies. I believe these changes will bring service improvements, better value for money and a faster, more responsive service for customers, while at the same time delivering greater productivity from the DVLA’s workforce.

Grand Committee

Tuesday 13th December 2011 Grand Committee

Tuesday, 13 December 2011.

15:30

Arrangement of Business

Tuesday 13th December 2011 Grand Committee

Announcement

[The Deputy Chairman of Committees (Lord Haskel)]

My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Protection of Freedoms Bill

Tuesday 13th December 2011 Grand Committee

Committee (1st Day)

15:30

Relevant documents: 20th Report from the Constitution Committee, 20th Report from the Delegated Powers Committee

Clause 26 : Requirement for consent before processing biometric information

Amendment 85

Moved by

[Lord Lucas]

85: Clause 26, page 19, line 27, leave out subsection (2) and insert—
“(2) A parent shall be given the option of not having the child’s biometric information processed and consent is deemed to be granted if a parent does not request the relevant authority not to process the child’s biometric information.”

[Lord Lucas]

My Lords, if I may start off with a general remark, let me say that I suspect that I will end up preferring the amendments of the noble Lord, Lord Rosser, to mine. My purpose in tabling these amendments is to give us a good chance to discuss this part of the Bill, which I think has gone too far in trying to apply to schools special arrangements for dealing with biometric data that are neither required nor sensible.

In the wider world, letting one’s biometric data go is perhaps frightening. What Facebook is up to at the moment—for example, allowing people to tag photographs, such that I can be identified from photographs on other people’s websites because they are tagged with my name and details and the way in which that allows information about me to spread around the world—is worrying enough in our society but would be extremely worrying in, say, Syria. One should be aware of the dangers posed by the widespread ability to identify people remotely. If it became possible at a distance to pick up people’s identity as they passed shop-fronts and gazed into window displays and to have information on fingerprints widely available so that, for example, as soon as I touched a door-handle the store would know who I was, that would, to my mind, be a fairly nightmarish world to be part of. I am very grateful that our Government show no inclination to go down that road and, indeed, at an early stage abandoned identity cards, which would have been a step in that direction.

However, to my mind, in a closed community like a school, those worries do not apply. The school is supposed to know where each kid is all the time. I remember getting terribly upset when a friend of mine had their child knock on the door, having walked a mile home from school without the school having known that the child was absent. You expect a school to know where the children are, you expect it to know what they are doing and you expect it to be in control of them. Within a closed arrangement like a school, having one’s biometric information available is not such a big thing. Within this community of the House of Lords, the place is full of people—thank goodness—who know who we are. That is a biometric recognition system. One of the reasons why this place is secure is that it is full of doorkeepers who would recognise someone who did not belong. Within a school, an automatic system does no more than that, and it is fundamentally no more frightening than that.

A school has a lot of information on the pupils under its charge. A lot of that information is much more sensitive than a hash of some fingerprint—something that would take a great deal of ingenuity to make any real use of if it escaped. A school has information on what children have done in terms of their academic endeavours, what special needs they have, what mischiefs they have committed and people’s opinions of them, which could be extremely sensitive if they appeared in later life. Schools are used to guarding a lot of data about their charges. Whether they do that as perfectly as possible, I do not know, but one very rarely comes across occasions when this information has escaped to people’s embarrassment—when it does, it has usually been released by their mothers who are so proud of the reports that their children have received at school.

This is the context within which we must think about the sort of information which will be available as a result of a biometric recognition system. All that it is doing is scanning the proportions of a face or taking a few data points from the ridges of a fingerprint—but not as many as you would take if you were doing a proper security scan because you want something that works fast rather than completely accurately. There is no common storage format or easy way of that data being made use of by outside people even if they did discover it.

In these circumstances, as I say, you are supposed to know everything that is going on—knowing whether a child is in a classroom is something that a school is supposed to know. By and large, it is quite rare that these systems are used even to that extent. Mostly, they are used just for tagging library books to see who takes them out and to see who is entitled to free school lunches in order to avoid the use of cash and people being labelled as free school-meal kids. There is no identification—they are in a way disguising someone’s identity and protecting their information when used as meal systems. Fundamentally, though, biometric systems are used because they enable a school to do what it should be doing more efficiently and more cheaply than it could without them.

I agree that there is some basis for asking for parental consent. I probably do not naturally start out from that position, but I am convinced of it by what the Government have said, and by things that have been said to me in a long e-mail correspondence with some of the people promoting this side of the Bill. There are a lot of things that parents are asked to consent to, and it is quite reasonable that a school should explain why it wishes to use these systems and get general parental consent for it. If a parent wishes to say no, the school should make arrangements for that particular child to be excepted. I go along with that.

However, I really want the systems and rules that we put in place for schools to fit in with all the other rules that are there for asking parental consent for this, that and the other—whether it be religious observance, sex education or whatever else. These are taken seriously by schools and there are ordinary systems for them, the basis for which is single-parent consent. If two parents are involved and one objects, that nullifies the consent, but if you are seeking consent all you need is the consent of one parent. With a lot of schools, for parental arrangements it is really hard enough to get that; to go beyond that, in what seems to be an entirely ordinary matter for schools, does not seem sensible.

The other aspect that I want to look at is where facial recognition systems in particular, and other forms of ID, are going to be built into the systems that kids are using. If they are accessing Facebook from school—as many will be, because it is a common way of finding out information and communicating with other children who are collaborating on a project—there will be biometric information systems built into that software that will not be within the school’s power to disable. That will be within the individual child’s power to deal with, and the school will not have responsibility for it. If the school is using Windows 8—not yet out, but in beta form—there will be facial recognition systems built into that, so that when you sit down, your computer knows that it is you; if someone else sits down at your computer, it does not turn on. That, again, is a personally activated system. A school can disable that on school computers, but if the school is allowing children to access laptops and to take them home, as many secondary schools now do, then you would expect the child to be in control of the system and it would not be reasonable to require the school to impose or be responsible for the way in which biometric recognition systems are used without the school’s own systems. Some of the wording that we have at the moment crosses those boundaries.

On my individual amendments, Amendment 85 is completely garbled and I have no idea what it means. It may be that my noble friend’s officials have been able to decipher it, but I think it must have been my handwriting and I cannot now work out what the amendment means. I apologise to him and to the Committee for that.

Amendment 87 is a version of the amendments tabled by the noble Lord, Lord Rosser. It is really saying that you must have single-parent consent and that an objection by the other parent nullifies that, but otherwise you only need one parent’s consent. Amendment 88 is another way of saying that, while the second part of Amendment 87 deals with the point that I made about some bits of biometric recognition being outwith the school’s control. Amendment 90 covers that same point, as does Amendment 92.

Amendment 94 is a worry about the wording in that part of the Bill. There are a lot of schools with these systems in place—several thousand of them, probably including the large majority of secondary schools and quite a lot of primaries. The wording of that part of the Bill might be used to allow a school not to go for retrospective parental consent. My view is that, if we are to have parental consent, all those schools that have the system should write to parents asking for their consent, rather than that consent being assumed or being taken to be too difficult—an exception being claimed under this subsection.

Amendment 97 reduces the age limit to 16, which I think is the common age within schools at which pupils should be allowed to take responsibility, while Amendment 98 questions the width of “equipment”, which in common parlance has animate as well as inanimate means. I beg to move.

[The Deputy Chairman of Committees (Lord Haskel)]

I have to tell your Lordships that, if Amendment 85 is agreed, I cannot call Amendments 86 to 88 because of pre-emption.

[Lord Rosser]

My Lords, we have four amendments in this group: Amendments 86, 89, 93 and 96. Amendments 86, 89 and 93 would simplify requirements for consent for the processing of biometric information. In particular, Amendment 86 would establish an opt-out rather than an opt-in system and remove the requirement for both parents to consent; instead, it would require notification from just one parent to withdraw consent. Amendments 86 and 89 remove the current provision allowing children of any age to override parental consent, and instead permit only children above the age of 16 to object. Amendment 93 makes consequential changes to requirements for parental consent while—although I will leave this to the end—Amendment 96 establishes a new duty upon schools to consult the views of teachers, parents and pupils before introducing biometric recognition systems into schools.

Our amendments in this group, as I have said, seek to simplify requirements around consent for schools and to prevent new rules from rendering costly, high-tech equipment in schools defunct. There are apparently no official figures on how many schools use biometric systems, but there are estimates. There was an estimate in a House of Commons Library note earlier this year that 30 per cent of secondary schools and 5 per cent of primary schools use them. Perhaps the Minister could tell us what he thinks the figures are.

The Home Secretary’s description of the Bill's provisions as a double lock on the processing of biometric information in schools is a tellingly accurate reflection of the regulatory bulwark that schools will in future come up against in order to use existing biometric processing systems. By requiring both parents of every child to provide written consent, the Government are creating a potential bureaucratic nightmare for schools that use these systems. In the words of the Association of School and College Leaders:

“What is proposed here is a very burdensome and bureaucratic new regulation that will address no significant problem. In short, it is exactly the kind of legislation that the present government promised to repeal, not enact”.

15:45

Confusion also abounds about the scope of the Bill’s definition of biometric information, with the Information Commissioner noting that the definition,

“as it stands is considerably broader than that in general use”.

In that connection, will the Minister confirm whether in future schools will be required to gain written permission by parents in order to use digital photographs on file and CCTV cameras?

There appears to be an in-built bias in the Government’s proposals that belies an inherent mistrust of new technologies that runs throughout the Bill. The requirement for parental consent from both parents is an example of this. Such a high bar is in no way consistent with other issues of moral conscience in schools, such as over the question of participation in collective worship, on which the law permits a child to be excused on the request of one parent. The provisions also display a lack of awareness about some family arrangements, requiring schools in some cases to contact estranged parents but offering no guidance on how a school is to judge whether the welfare of the child requires that the parent is not contacted under the exceptions in Clause 27 of the Bill. Perhaps the Minister can tell us how schools should decide whether the welfare of the child requires that the parent is not contacted.

Yet more potential confusion is created by provisions in the Bill that would allow a child of any age to override the wishes of their parent and refuse to use biometric processing systems. The Bill seems to assume that children of five years of age should have the same legal competency as those of 16 years of age. Parents are trusted with the mental, physical and moral welfare of their children on most other issues, so it seems bizarre that a child should have the final veto on this.

It is even more puzzling, considering the memorandum submitted to the Public Bill Committee by the Home Office, why the Government believe that parental consent is still needed for children beyond the age of 16. I quote what the Home Office said:

“The issues around the use of biometric data are particularly subtle and complex, and even more mature children may not be able to fully appreciate them. In other areas such as marriage and making a will children under the age of 18 need parental consent. In our view the issues around the giving of biometric data are similar in that respect”.

Could the Minister say why, if the Government believe that the use of biometric recognition systems by children in schools is as serious an undertaking as the question of marriage, they believe that a child as young as five would have the competency to make an informed moral objection to both parents’ wishes?

While we support the principle of parental objection for the processing of children’s biometric details, the Government’s proposals go far beyond anything practical and necessary, taking a sledge-hammer to efforts by the most innovative schools to take advantage of new technologies. It is likely to end up costing the schools hundreds of thousands of pounds over three years.

There is a considerable amount of misunderstanding surrounding the use of these systems in schools, which in no way resemble the forensic use of biological material in criminal investigations. As the Association of School and College Leaders points out:

“The biometrics systems in use in education do not precisely identify individuals in the general population in the way that police fingerprinting may do, but merely distinguish between different students well enough to charge the correct ones for their lunch. The information would not be sufficient for investigative, forensic or evidential purposes even if made available for such, as of course it cannot be under the data protection registration of the institution concerned”.

This is an attempt to tap into an agenda which fails to recognise the positive contribution that the use of these pioneering techniques makes to schools. Biometric recognition systems can provide privacy for children who receive free school meals by concealing the source of funding and removing the need for cash or the use of cards. They can be used for registration of pupils and borrowing books from school libraries; they can also help to ensure that unauthorised people do not gain access to school premises. More broadly, they expose pupils to pioneering technologies, helping to inspire the interest in science and hi-tech industries which must form the basis of our future economy. Yet the Government’s heavy-handed regulation means that the use of these new technologies in schools will become much more hassle than it is worth for many schools, which is presumably this Government’s hidden objective.

A leading provider of these technologies has criticised the Government’s approach to regulation, saying that there has not been proper consultation or clear thinking about consequences of the new policy. It is the same pattern of mixed signals and rushed policy as occurred in the chaos created by the reduction in feed-in tariffs on solar panels. That, too, harmed and is harming one of Britain’s hi-tech industries. These amendments are in line with the recommendation of the Information Commissioner in 2008 that parents be allowed to opt their children out of participating while minimising the bureaucratic burdens on school.

The Government have claimed that this Bill is about restoring common sense to public life. However, we would suggest that requiring schools to chase written consent from two parents and allowing children of five years of age to override the wishes of their parent stretches the definition of common sense.

I made reference earlier to Amendment 96, which would establish a new duty on schools to consult teachers, parents and pupils before introducing biometric recognition systems into schools. In relation to the previous three amendments, we support the principle that parents should be able to excuse their children from having their biometrics processed where they felt strongly on the matter. It is to the unnecessarily burdensome and prohibitive framework that the Government propose that we object. This amendment provides for a common-sense approach to parental and pupil consultation by requiring a full consultation of views by the school prior to the introduction of any new biometric recognition system. Like the Association of School and College Leaders and the Association of Managers in Education, we are confident that most parents and pupils will continue to welcome the opportunity to access new technologies in schools and that, by ensuring full prior consultation by schools and allowing parents and pupils over the age of 16 to opt out, we would strike the right balance.

[Baroness Hamwee]

My Lords, I have Amendment 91 in this group, which is in my name and that of my noble friend Lady Walmsley. The noble Lord, Lord Lucas, has obviously not been subject to Black Rod’s little talk about security in this place, which urges us all to wear our passes at all times—which I acknowledge I am not at this moment—rather than rely on people knowing who we are.

[Lord Lucas]

My Lords, I know that we are all supposed to do that, but I am sure that the noble Baroness has seen, as I have, groups of guests wandering around with unidentifiable passes and noble Lords with their passes on back to front so that you cannot see even whether they are a Lord let alone who they are. Eyeball recognition by the doorkeepers is much more reliable and efficient, and is probably cheaper at the end of the day.

[Baroness Hamwee]

Perhaps I had better not continue down this route—I could, but it would take more time than the Committee might like to devote to it.

Another point on which I am perhaps not with the noble Lord is that every school knows what every child is up to all the time—I wish that were so. I am sure that we are going to hear from the Minister about the balance between privacy rights and sensible use of technology—I hope that we are not going to hear about feed-in tariffs, which seemed to stretch the analogy a bit far.

The noble Lord, Lord Lucas, did not know, on reflection, what his Amendment 85 was about. I have been in that situation as well, but that is not so on this amendment, against which I wrote “silence equals assent”—I think that it is the difference between opt-in and opt-out.

Before I come to the detail of my amendment, I wish to pick up on the point made by the noble Lord, Lord Rosser, about the technology being used in schools not being as sophisticated, if I can use that term, as technology used in other contexts. Can the Minister say how reliable the equipment is? That was the immediate question I had in response to the noble Lord’s comment.

My amendment does not contradict any of the other amendments that have been spoken to and is not inconsistent with the Bill. It provides that the relevant authorities, schools, academies and FE colleges should tell parents and children of their rights to refuse consent at least once in every academic year—in other words, it is about informed consent. The suggestion comes from the Children’s Rights Alliance for England, which supports the provisions in the Bill for ensuring that the institutions cannot process biometric data if consent is refused. I know that my noble friend will say a word about the convention rights.

I have been told by the Children’s Rights Alliance about research which shows that most children using these systems have not considered how long their fingerprints would be held for and they generally were not concerned. My response to that is that of course they would not—they are children and they do not necessarily think through all the implications of what they are being asked to agree to. Therefore explaining exactly what the subject matter is, both to them and their parents, is important. Other research—again, I am not surprised about this—shows that when schools have introduced a biometric system they have emphasised the benefits and not talked about the problems. All of this is natural human reaction.

The noble Lord, Lord Rosser, referred to the report of the Information Commissioner in 2008. The Information Commissioner made it clear that schools which collect data must be aware that children are data subjects and that they,

“should in the first instance be informed and consulted about the use of their personal data”.

This being the first principle of the Data Protection Act, he went on to say that,

“Fairness requires that schools ensure that pupils are informed about and understand the purpose for which their personal data is being processed”.

Our amendment would require that they are in a position to give consent—or, indeed, withhold it—but on an informed basis.

[The Earl of Erroll]

My Lords, this is an area which I have been thinking and worrying about because of the practicalities of it all. The part about children and schools is a well meaning and well intentioned effort to introduce legislation to make sure that children’s privacy is not breached and that no information is kept on them which could make things difficult for them in later life. It is very important that we should not do that.

However, as the noble Lord, Lord Rosser, said, we could try to make sure that the biometric information that is used for administrative purposes is not kept to evidential standards. In other words, the information could not be used in courts; it could not be linked up with the police computer; it could not be linked up elsewhere. That could be done simply by making sure that it is kept to a standard which is good enough to identify people for administrative purposes in populations of a few thousand, but once you raise it up to a national scale it does not work. For instance, under EU directives there have to be 13 matching points for a fingerprint to be admissible in evidence in court—that is, 13 out of 18. If only 10 or 11 were kept, which is probably quite sufficient for the school’s purposes, the information could never be linked with the main national databases. That might well be a way round it. That is contained within this group of amendments.

16:00

We need to have schools running efficiently. Having a system in which everyone has to opt in in writing is lunacy. Parental permission should be dealt with by adopting one of the amendments that deals with that. The consent should come from either parent. It is only an opt-out, not an opt-in. All that is quite correct. I do not know what happens to foreign students with the UKBA requirements that they prove what they did when and where they attended. We may find that we will need biometric information for that, so it would be quite good to be able to cover all those situations. It may be that that applies only to older students. I do not know enough about it.

Amendment 89 takes out Clause 26(4), which I think is very important. Otherwise, a disruptive child or set of children could cause chaos by just opting out suddenly and unilaterally and requiring things to be removed. If someone opts out at some point in the middle of term, what is that going to do to the administration systems? Is it practical? We have to look at when people can do this. You cannot have people moving in and out of the system willy-nilly.

I like all the amendments tabled by the noble Lord, Lord Lucas, apart from the pre-emption issues. Reasonableness has to come into all this. Sometimes it is difficult to remove things. Amendment 95, which removes the need for consent to be given in writing, is sensible. In this modern age when we are trying to go electronic, why should stuff have to be in writing? If you are going to allow people to opt out, why not have an opt-out thing on a website so that they can click on it or do something? Perhaps they can send e-mails. There are other ways of doing things electronically, and with adult illiteracy rates running at whatever they are—10 per cent—I do not think we should insist on writing. Some parents might have a problem. We should look at issues like that, and these amendments deal with them and should be looked at.

Amendment 97 deals with the age of adulthood. Are we adults at 16 or 18? One minute we want to give people the vote at 16, but the next thing we say is that they have to be 18 if they are not to be considered as children.

I do not like the two amendments that require consultation or going out and explaining things to people every year, which I think will be an unnecessary cost. I do not think it will get us any further. Although I think that Amendment 91 is very well meaning in thinking that we should explain everything to parents and children every year, it is hard enough to get the law understood. If we are going to interpret the law correctly, if we rewrite it, is that not going to cause problems? I do not know. Perhaps we should write clearer laws, and then they could read the law and not have a problem.

[Baroness Hamwee]

My Lords, the amendment simply provides for the turnover of pupils generally on an annual basis. I certainly did not intend it to be reworded every year. Information goes out from schools frequently on an annual basis. Sometimes, it sits in the bottom of a child’s bag.

While I am on my feet, the noble Earl may be comforted if the Minister can confirm that, for the purposes of these provisions, writing includes e-mails and other forms of electronic communication, which I suspect it does.

[The Minister of State, Home Office (Lord Henley)]

In the interests of time, I confirm that that is correct.

[The Earl of Erroll]

Thank you. I am sorry to have wasted the Committee’s time. In general, I think that a lot of these amendments are very useful, and they should be taken away and looked at hard by the Minister. We should be moving from an opt-in basis to an opt-out basis and avoiding adding costly burdens to the school system.

[Baroness Walmsley]

I support my noble friend Lady Hamwee on Amendment 91 and will make a few comments about other noble Lords’ comments.

Amendment 91 is necessary on the basis of children’s international convention rights: the privacy rights that a child has under Article 8 of the ECHR and Article 16 of the UN Convention on the Rights of the Child. In particular, Article 12 of the UNCRC says that a child has a right to be heard in decisions that affect them. The UN Committee on the Rights of the Child has made it very clear that, in order for a child to realise that right, it is necessary that,

“the child be informed about the matters, options and possible decisions to be taken and their consequences”.

Therefore, this amendment is very important especially since, under the proposals before us, the child has the right to refuse consent as well as the parents. It is important that the parents and the child are given the information that they need in order to make an informed decision.

Further to what the noble Lord, Lord Rosser, said, I think that the reason why the child should have a final veto is because we are talking about very specific information about the child’s body—the fingerprints, the retina, the face or whatever. The child’s body belongs not to the parents but to the child. Therefore, it is very important that appropriate information is provided. Most children are very compliant and they like to co-operate with people who are in authority over them—their parents, their teachers and so on—so it is important to let them know that they do not have to do so. There may well be very good reasons why they should agree to co-operate, but they should also have the right not to do so if they wish.

Let me make just one or two other points. I listened with interest when the noble Lord, Lord Lucas, said that schools should know where every child is physically at all times of the day, and I quite agree. However, I think that that should rely on the attention of the teachers, rather than on the likes of CCTV or electronic cards passing through doors. There is a danger that, if there is too much of this sort of thing—electronic ID cards or CCTV—teachers will come to rely on it too much and the teacher’s vigilance will be reduced. We really have to ensure that the technology tail does not wag the human rights dog.

Going back to what the noble Earl, Lord Erroll, said about letting people know every year, I agree that the information should be reworded if the system changes or is enhanced in any way, but otherwise I agree with my noble friend Lady Hamwee that it is not necessary to reword it every year. That can be done very easily, given that every school has a website or newsletter or something that gets sent out regularly to parents or to which the parents have access. As long as the school makes sure that, one way or another, the parents have that information in not too much gobbledegook or jargon, so that they can understand what the consequences of this system are, the school will have fulfilled its obligation under our amendment.

It is important to have the information in order to make an informed decision, and we all expect that. When we enter into any sales transaction or credit agreement or any kind of contract, we read the small print—or we need at least to be provided with the small print, so that we can tick the little box saying that we have read the terms and conditions, even when we have not done so. The point is that we have a right to have that information, and we really must be provided with it.

[Lord Henley]

My Lords, my noble friend Lady Hamwee suggested that I should not talk about feed-in tariffs and solar panels, and I am tempted to follow her suggestion on that. I used to speak a great deal on those issues in my previous job, but I do not often do so now that I am in the Home Office. I am not sure that they are quite relevant to this debate. Possibly we ought to have a new award for relevance in amendments—we could call it the Lord Rosser award for relevance—and I could congratulate the noble Lord on winning the award on this occasion for bringing in feed-in tariffs and solar panels.

[Lord Rosser]

I am sorry if the Minister could not understand the point, but I quoted from one of the leading providers of this technology in schools who said that there had not been proper consultation or clear thinking about the consequences of the new policy. My point was that that lack of proper consultation or clear thinking about the consequences of a new policy seems to have become a feature of this Government, because that is precisely what happened with the new feed-in tariffs. I am sorry if the Minister cannot understand the relationship between the two.

[Lord Henley]

My Lords, as regards consultation, we consult till the cows come home in this department and every other department, and I am distinctly happy about the amount of consultation that has taken place on this issue. We will move on now from feed-in tariffs and solar panels and get on to the gist of the amendment.

My noble friend Lord Lucas is obviously not completely convinced that there is a need for parental consent at all, but accepts that he could be persuaded as long as, as I understand him, it is not overburdensome. That point is probably behind the amendments from the noble Lord, Lord Rosser, and others. By the way, the noble Lord, Lord Rosser, did ask in passing for confirmation of the figures he used, and I can confirm, if I heard them correctly, that he is broadly right. Our figures are that some 30 per cent of secondary schools and some 5 per cent of primary schools are making some use of biometric systems for dealing with matters which, again one ought to stress, are largely related to access to school dinners, libraries and that sort of thing—so not major matters that affect them in other ways.

My noble friend obviously needs a degree of persuading about these matters. It is probably best if I go through the amendments in the appropriate order. I will deal with them in an order that I will take rather than as they are set out, but possibly I will leave Amendment 85, the first of my noble friend’s amendments, which even he described as being garbled; it is possibly best if I say little about that. I think my noble friend will understand why I take these a little out of order. I will start with Amendment 88.

Amendment 88 would have three consequences. First, it would obviously narrow the definition of who is a parent for the purposes of these provisions. Secondly, it would change the scope of the requirement for consent in that only one parent will need to consent. Thirdly, it seeks to introduce legal protection for schools and colleges where a child’s biometric information is processed beyond the control of that school or college. I will begin by addressing the first and third effects of that amendment.

For the purposes of these clauses, a parent means the child’s mother, father or any other individual who has parental responsibility for the child. Where it is not possible to obtain consent from any such persons, the parent is the person who cares for the child, unless the child is accommodated by a local authority or some voluntary organisation, in which case consent will be needed from that authority. My noble friend’s amendments obviously narrow this definition to include only individuals with parental responsibility. This would mean that, where there is no individual with parental responsibility who is able to consent, a school or college would be able to process a child’s biometric information without any person providing consent. I am sure that is not my noble friend’s intention, and he would probably want to adjust his amendment if he comes back to it—and I see my noble friend nod. The Government believe that all children, whatever their care arrangements, deserve the same level of protection in relation to the use of their personal information by a school or college. That is why we believe it is right that the definition of a parent goes wider than that suggested by my noble friend. Again I see my noble friend nod, and if he wants to come back to that he will no doubt amend his amendment.

The third element of this amendment seeks to provide protection for schools and colleges where a child’s data are processed outside of the control of the school or college. I know that my noble friend is concerned that these provisions should not apply when pupils access commercial websites or software systems that use face recognition to control access. I can give reassurance to my noble friend that the provisions in Clause 26 cover only the processing of biometric information that is carried out by, or on behalf of, the school or college.

Let me move on from Amendment 88 to the alternative approaches suggested by my noble friend in Amendments 85 and 87. It is also appropriate to consider here Amendments 86 and 89, from the noble Lord, Lord Rosser, which address a similar point and which I think my noble friend said he possibly preferred to his own. All those amendments seek to adopt a different approach to consent. At their most radical, they seek to replace the opt-in arrangement provided for in the Bill with an opt-out process. As a variant of this, they seek to provide for consent to be given by a single parent. Given the sensitive nature of the data involved, a positive decision should be made by both parents. This approach would afford them the opportunity to act on any concerns that they may have about the use of their child’s biometric information. In the vast majority of cases I would expect parents to discuss the issues between themselves and reach some agreement. As those of us who are parents will know, that is not always necessarily possible but, in the main, parents can reach that conclusion among themselves.

16:15

On safeguards, as noble Lords will be aware, Clause 26 includes two important safeguards, which ensure that the rights of children are properly respected. The first prohibits a school or college from processing a child’s biometric data where the child objects to such processing or where they refuse to participate in a process involving an automated biometric recognition system, regardless of whether their parents have consented or not. The noble Lord, Lord Rosser, does not agree with that and thinks that the parents’ rights should overrule the child’s. I put to the noble Lord the example of a 15 year-old child who refuses point blank to have his biometric data taken, despite his parents being perfectly happy about it. Would the noble Lord be happy for that 15 year-old to be dragged kicking and screaming to the fingerprint machine to have his data taken, or is he suggesting something else? My belief is that we need parental consent—I will deal with that later—but the child’s consent is equally valid. I am sure the noble Lord would not consider it right for that 15 year-old to be dragged kicking and screaming, as I have said, to the fingerprint machine.

The second safeguard requires the school or college to make reasonable alternative arrangements for pupils to access services or facilities where parental consent has not been given or where the child objects. Again, that is quite right and something that is perfectly easily managed by those who provide the machinery for these things.

Amendments 90 and 92, tabled by my noble friend Lord Lucas, require only that schools and colleges must,

“as far as they are reasonably able”,

ensure that biometric data are not processed where the child has refused; and, as far as they are reasonably able, provide alternative arrangements. Again, that is technologically easy and can be done. I recognise that my noble friend seeks to ensure that schools and colleges are not saddled with unnecessary burdens and I am in full agreement with him on that. However, those amendments would weaken two very important safeguards that will protect the rights of children in relation to their biometric information.

The two amendments of the noble Lord, Lord Rosser, Amendments 86 and 89, would have a significant impact on the first of those safeguards. They would remove the right of children aged 16 and under to object to their biometric information being processed. As I have made clear, we believe that children should have that right, regardless of their age. Again, I put that question about the 15 year-old—although it might be a seven year-old—to the noble Lord. It is one that he needs to address.

In respect of Amendment 90, I cannot envisage any school or college having difficulty in ensuring they do not process the data of a child who has refused or where parental consent has not been given to such processing. It should be abundantly clear when a child refuses to have his or her biometric information taken or to participate in a process involving an automated biometric recognition system, even in the case of very young children.

On Amendment 91 in the name of my noble friend Lady Hamwee, I am sure that she would agree that it would be unacceptable for children to be disadvantaged because they did not want to use an automated biometric system or if their parents refused to give consent for such purposes.

Amendment 95 would remove from Clause 27 the requirement on schools and colleges for consent, or withdrawal of consent, to be obtained in writing. We believe that requiring schools and colleges to gain written consent ensures that parents are aware that their child’s school or college uses an automated biometric system and that, by signing the consent form, parents are actively involved in determining whether or not their child participates in that system. Again, I confirm to the noble Earl, Lord Erroll, that written consent includes electronic as well as other means. I hope the noble Earl will accept that.

I turn now to the age limit. Amendment 97 seeks to alter the requirement for parental consent to be obtained in relation to all children under the age of 18 so that it would be required only for children under the age of 16. Noble Lords will be aware that the Joint Committee on Human Rights suggested in relation to older children—16 or 17 year-olds—that they should be capable of reaching their own decisions on such matters. It has been suggested by some that people can drive—I cannot remember whether they can smoke—and do all kinds of things when they are 17 years old. They can also serve in the Armed Forces, although they tend not to go abroad until they are 18. There are different ages for different matters for which people need consent: it is 17 for driving, 16 for marriage and I think that for the issue of firearm certificates the age goes down quite a lot. However, people can vote only at 18. Some believe that that should be reduced to 16, but I do not support that and I do not think it is a part of the coalition agreement. However, I need not get into voting ages.

A variety of different ages affect us in different ways and, given these complex factors, we consider that it is a question of balance. Even 16 or 17 year-olds may not always fully understand the issues that arise in relation to processing biometric information. Even then it is important that parents should have a say in the matter. Similarly, we believe that children should have a say in it and that is why we are, in effect, giving children a veto in this matter. Such an age limit is not without precedents. As I have made clear, there are different age limits for different matters. Again, as I said, it is a question of balance in these matters and it will be difficult to get it right. We believe that 18 is the right age and that children under that age should have a right to opt out.

Amendment 94 relates to the provision in Clause 27(1)(d) which, as currently drafted, provides that parental consent is not required where,

“it is otherwise not reasonably practical to obtain the consent of the parent”.

My noble friend is concerned to address the question raised by the Information Commissioner as to whether schools which currently process pupils’ biometric information without specific parental consent would be able to rely on the provision in Clause 27(1)(d) and claim that, because of the administrative and financial burden of doing so, it would not be reasonably practical for them to obtain parental consent in relation to children who were already participating in an automated biometric recognition system. I can reassure my noble friend that the exception he seeks to remove cannot be used simply because it would be inconvenient or difficult to obtain consent.

Amendment 98, the last of my noble friend’s amendments in this group, seeks to add to the definition the word “inanimate” before “equipment”. I believe that my noble friend’s intention is to ensure that any living being or object capable of animate interpretation is excluded from this definition. I can assure him that the clause as drafted already provides for this.

[The Earl of Erroll]

I want to go back to the business about being able to assume that there is implied consent, when it is very difficult to get it. Does the Minister not accept that inertia can be quite large among people and that, if you have to get positive consent, there will be a whole raft of parents who will not get round to doing it, for one reason or another? Therefore, you will suddenly find in these systems such a large failure to opt in because of inertia that they will be quite expensive and will have to be replaced by manual systems. That could put a huge burden on some of the schools, which would have to be paid for by the Government. Is it not much more sensible to move into a positive opt-out rather than a positive opt-in? I think that it will be much more burdensome than the Minister thinks. People are full of inertia, and you are not going to get that many people opting in.

[Lord Henley]

I accept that there can be a problem with inertia. It is what one might refer to as the “cheque is in the post” syndrome. People say that they are doing things and they do not. I suspect that we have got it right, but I am more than happy to have a further look at this if the noble Lord thinks that there will be concern over that. But this is something that schools are already doing a great deal about in terms of consulting or talking to their parents, and it is something that schools are used to. But perhaps we could talk about that at some later stage or between now and another stage.

[Lord Rosser]

The Minister has raised a number of issues, but could he confirm that under the Government’s proposals a child of five could say no, even though the parents had said yes, and it would be the view of the child of five that prevailed? If a 15 year-old agrees and one parent says no and one says yes, will the Government then seek to uphold the right of the 15 year-old? Also, he said that under my proposal the 15 year-old would be dragged kicking and screaming. Could he just confirm that school teachers are not allowed to use force against pupils, or has the government policy changed?

[Lord Henley]

Government policy has not changed, and the noble Lord will accept that the words I was using were metaphorical.

[Lord Rosser]

Careless.

[Lord Henley]

Careless words they may be, as the noble Lord is saying, but I will go on using them. The simple fact is that he was suggesting you would force a child to be registered. How is he suggesting that that could be done other than by dragging the child kicking and screaming? We think that it is right at any age. I think that it would be rather unusual for a child of five to say that he was not going to do something when his parents insisted that it should be done.

[The Earl of Erroll]

If I could assist—

[Lord Henley]

No, I will not give way, because I am answering the noble Lord. I can confirm that a child of any age can refuse; similarly, if a child of 15 wants to register but one of the parents refuses, it will not happen. We are trying to get the right balance.

[The Earl of Erroll]

I was only going to try to help the Minister by saying that all that would happen is that you would not get such a service. In other words, if it was a biometric lock that allowed access to a laboratory at certain times, the child just would not get into it. They would have to decide whether they wanted access or not. If it was about school meals, and the parents said that they would only get the meals that way, the child will just not get fed. They will soon come round.

[Lord Henley]

No, we are not looking for them to “soon come round”, as the noble Earl puts it. We are suggesting that schools should have to provide some alternative arrangement so that those who do not want to have biometric processes used can still get access to school meals or the library or whatever by some other means. It might be by a PIN or a swipe card. It does not have to be, but it is very convenient for a lot of them if they can put a finger down and get out their library book or get their meal. I hope that satisfies the noble Lord.

16:30

If the noble Lord, Lord Rosser, does not want to interrupt me further, I shall move on to the amendments tabled by my noble friends Lady Hamwee and Lady Walmsley. I understand that Amendment 91 is prompted by a concern that children and parents should understand the important rights that are being afforded by these clauses, but I do not believe that it is necessary to include a specific provision that would place an additional burden on schools and colleges to notify parents and children every year of these rights. Parental consent given under Clause 26 must be fully informed and freely given. That means that schools and colleges should provide parents with all the relevant information to enable them to understand exactly what they are being asked to consent to. This will include notice that any consent given by the parent will extend for the duration of the child’s time at the school or college, unless, of course, consent is withdrawn—because it would be open to parents to change their mind and withdraw it—or the child subsequently indicates that he or she does not want to continue to use an automated biometric recognition system.

[Baroness Walmsley]

If the system is considerably enhanced, does the Minister accept that further information should be provided to parents?

[Lord Henley]

My Lords, I think this is what lawyers refer to as a question of fact and degree. If the system were, as my noble friend puts it, enhanced considerably and that involved a real change, then there would have to be further approval from the parents and children concerned. If it were a minor or technical change, I think that would not be the case. I shall leave it there, as it is a question of fact and degree as to whether there has been a proper change. I am in the hands of my noble friend Lord Lucas, but I hope that with those explanations of the various amendments he will feel able to withdraw his amendment. I think this debate has been very useful. We might not all agree totally but, as always, it is a question of getting the balance right on these matters, and I hope we have got it more or less right.

[Baroness Hamwee]

Am I right in understanding—and I apologise if this sounds as if I am trying to put words into the Minister’s mouth—that his concern is the bureaucratic provision of a requirement to make information available every year but he accepts that consent under these clauses would not properly be given unless the parent or child, as the case may be, is properly informed?

[Lord Henley]

Parents and children, to the extent appropriate for the child’s age, must be informed in the appropriate manner, and we want to get that right. We just do not think it needs to happen every year. If, as my noble friend Lady Walmsley said, there were substantive changes to what was being proposed, then further consent would be required, but we do not have to do that each and every year. Once should be enough for the duration of that child’s journey through that school.

[Lord Lucas]

My Lords, I am very sad indeed to learn that my noble friend’s equipment is entirely inanimate, but if for the purpose of legislation that is the meaning of the word, I am sure that having it in Hansard will suffice.

I am not at all sure that I understood the scope of “reasonable” as he expressed it. He said that the biometric system had to be run by or for the school, if I remember his wording exactly. I do not see where the boundaries of that are. If a bit of software provided by the school is being used on the school’s computers, why should that fall outside the prohibitions in this Bill just because it is a built-in component of a commonly available system? I would be very grateful if I could sit down with officials between now and Report to go through that.

I would also like to explore the scope of electronic means where we are looking at this consent. What forms of registering consent will be acceptable? This occurs as a general question. How is a school to know that a parent has given consent? How is it to know that it is the parent who has given consent? Schools do not have a stock of signatures to compare signatures against. If it is hard enough with something in conventional writing, how they are going to do it in electronic form I am not at all sure.

[Baroness Farrington of Ribbleton]

My Lords, I have listened carefully to this debate. My experience is that electronic means are needed to be used by parents because an awful lot of messages from school end up in the washing machine.

[Lord Lucas]

Yes, my Lords, and in the ordinary way where something is not, as it were, being mandated by law in the way that is occurring in the Bill, that would seem sufficient. I would like to be sure that that ordinary common-or-garden communication that the noble Baroness describes will be acceptable under the Bill. Clearly, there is the matter of a verifiable electronic signature. When we came to introduce electronic means into the definition of writing it was with the concept of an electronic signature that was verifiable so that you could complete documents by electronic means, but that is not what is being talked about here. What we are talking about is getting an email that says, “Yes, I’m happy and so is Fred”. Is that consent by both parents, or is there some greater degree of identification required for electronic communications to be acceptable under this thing? Or is it just the reasonable best efforts of the school? I am not asking the noble Lord to respond now if he has prepared—

[Lord Henley]

If I may, I will just briefly respond to the noble Lord. Obviously, on the question of what is reasonable, great tomes have been written about reasonability in legal terms for years and years, and it is something that we want to discuss. In regards to, as he said, what forms of consent will be required I think he was quite right to take the intervention from the noble Baroness, Lady Farrington, who as a mother and a grandmother speaks with great experience as to what happens to these messages and where they end up. However, if my noble friend would like to discuss this with myself and officials, that would probably be very useful, just to make sure that we can get it right between now and Report. I will certainly be more than happy to offer a meeting.

[Baroness Farrington of Ribbleton]

Can the Minister clarify before the next stage of the Bill whether or not, in circumstances where a school were to decide to use this form of recognition for people entering and leaving the school premises, he thinks that there are many 14, 15 and 16 year-olds who would withhold consent in order that they can slip out in the lunch hour unknown?

[Lord Henley]

If it was a matter of getting in and out of the school, there would have to be some other provision—as with school meals and libraries and so on—by which they could get in and out. It would not just be by biometric data; it might be by a PIN or a smart card or whatever. But I will certainly look at the point made by the noble Baroness, who speaks, as I said, with such great experience in these matters.

[Lord Lucas]

My Lords, I am grateful to my noble friend for offering a meeting. There are clearly also other subjects to discuss: what form of records schools commonly have about parenting and guardianship arrangements; whether those are sufficient to deal with the requirements of the Bill; whether the Bill allows sufficient flexibility to deal with occasions when parents should not be communicated with; and how commencement is proposed. The Bill will introduce a considerable process of adjustment even if it is taken carefully. As the noble Earl, Lord Erroll, said, it threatens effectively to make these systems inoperable and therefore to require schools at considerable expense and in a great hurry to put other systems in place and make alternative arrangements. The way in which this section of the Bill is to be commenced is quite important.

I would be delighted to have a meeting; I would be delighted if the noble Lord, Lord Rosser, wanted to join me, because it is clear that we have common concerns about how this will work in practice and a common suspicion that what the Government are about is trying to ban these systems all together. However, for now and particularly with regard to Amendment 85, I beg leave to withdraw my amendment.

Amendment 85 withdrawn.

Amendments 86 to 92 not moved.

Clause 26 agreed.

Clause 27 : Exceptions and further provision about consent

Amendments 93 to 95 not moved.

Clause 27 agreed.

Amendment 96 not moved.

Clause 28 : Interpretation: Chapter 2

Amendments 97 and 98 not moved.

Clause 28 agreed.

Clause 29 : Code of practice for surveillance camera systems

Amendment 99

Moved by

[Lord Rosser]

99: Clause 29, page 22, line 7, leave out subsection (1) and insert—
“(1) The Secretary of State must establish an independent inquiry into the use of surveillance camera systems in England and Wales.
(1A) Having considered the recommendations of that enquiry, and following a report on those recommendations to Parliament, the Secretary of State must prepare a code of practice containing guidance about surveillance camera systems.”

[Lord Rosser]

Amendment 99 would place a duty on the Secretary of State to commission a full independent inquiry into the use of surveillance camera systems in England and Wales, as recommended by the House of Lords Select Committee on the Constitution, which also recommended statutory regulation. Amendment 110 would require a similar inquiry before any steps were taken to extend the code of practice into the private sector, as provided for by Clause 33(5)(k).

In its evidence to the Public Bill Committee, the Association of Chief Police Officers questioned the assertion that there are 4.2 million CCTV cameras in the UK, as is commonly cited, estimating that the figure was much closer to 1.8 million. Such wildly different estimates indicate the lack of information that exists on the extent and nature of closed-circuit television cameras and surveillance systems in this country. Where real evidence and information are lacking, misinformation will often move in to fill the gap.

The code of practice that the Government seek to introduce would place additional regulatory burdens on cash-strapped local authorities that could see a reduction in the use of CCTV technology and in the detection and apprehension of crime by the police. Yet a fundamental assessment of the extent and varying nature of CCTV use in the UK and its value has not been undertaken. My noble friend Lady Royall of Blaisdon, whose name is also on the amendment, visited Stevenage last month to see the hugely impressive system developed by the council there for the safety and security of residents. The idea that these surveillance systems should be targeted for further regulation is surprising.

16:45

Stevenage Council, like others, was in fact approached by the Home Office when it was drawing up the existing guidelines, and local authorities have led the drive for the highest standards within the industry. In particular, it was noticeable that cameras positioned to cover public space that overlooked private property blanked out the part of the image that would have displayed areas of private property. Indeed, that council conducts an independent inspection of its surveillance systems in order to ensure that the highest standards are met and is now providing services that are a model of best practice across the county and adjacent boroughs. The local police rely on this information for the real-time apprehension of criminals and as a vital source of evidence.

This experience of the responsible and effective use of CCTV by local authorities is borne out across the country. The interim report by the Riots, Communities and Victims Panel into the August riots note:

“Use of CCTV footage has proved very important in bringing rioters to justice”.

The panel recommended:

“Local authorities and other relevant organisations should review local CCTV coverage and consider if it needs to be extended”.

The Local Government Association and ACPO estimate that the surveillance cameras that will be required to have regard to the new code of practice will be just 3 per cent of the total number of cameras. By and large, these cameras conform to the highest standards of data protection and privacy safeguarding as well as image quality. Indeed, the recently published government consultation on the scope of the CCTV code notes, on page 1:

“Not all respondents recognised the references to concern over the invasion of personal privacy and state intrusion into people’s lawful business. … The number of serious documented cases of misuse or ill considered deployment was regarded by some as having been miniscule in relation to the vast overall volume of CCTV data that has been captured … Others considered the suggestion that civil liberties have been eroded as a result of increased numbers of CCTV cameras is a result of grossly exaggerated media reports”.

The Government assure us that they do not believe that local authorities and the police have some sinister use for CCTV. Instead, the rationale provided in the recently published response to the consultation on the introduction of such a code within the public sector first states:

“This is not to imply that there is any greater need for progress to be made by local authorities and the police. It is to recognise that their behaviour can be a powerful driver of public confidence and of standards in other sectors”.

Amendment 99 would ensure that the code of practice is founded on a comprehensive understanding of the current state of UK surveillance. It has been difficult to assess the full extent of the impact of the Government’s proposals because of the absence of detail on what a future code of practice would, or would not, contain. We note the Government’s release of the results of the first consultation on the scope of the code of practice, but while this provides more detail on the nature of the code, the lack of detail on what it will contain—on the impact that it is expected to have on the use of CCTV by local authorities and the police and the associated advantages and disadvantages and how those are to be assessed—does not help in coming to conclusions. By requiring a full and independent inquiry into the use and extent of CCTV cameras in the UK before the introduction of any code of practice, the Government would be ensuring that any further and future regulation of this sector was evidence led.

Amendment 110 provides for a similar prior independent inquiry into the use of surveillance camera systems should the Secretary of State in future choose to utilise the order-making power contained within Clause 33 to extend the code of practice to the private sector. The fact that we have so little information on the use and extent of surveillance cameras by private operators should be reason enough to require a comprehensive review.

I hope that the Minister can agree to these proposals. I beg to move.

[The Earl of Erroll]

My Lords, having listened to the noble Lord, Lord Rosser, I suddenly realised about the extension into the private sector, which I had not really worried about. Presumably, that is going to mean door-entry systems, systems where you might be watching a childminding camera over the internet from somewhere else and security things which were in private use. It suddenly occurred to me that we have to worry about how far this could extend. That sudden thought came to my mind.

[Lord Selsdon]

My Lords, I have asked more questions on CCTV cameras in your Lordships’ House than anybody, I think, and I have been confused. The figure of 4.2 million was introduced twice by Labour Ministers in the past; there was also a code of good practice. It was estimated that there were 400,000 cameras in the London area alone. Some of the other estimates which led to private television cameras said that there was one for every three office buildings. I therefore support in principle the proposal that we should have more information. By my own knowledge from throughout the continent of Europe, we are the only country that has no knowledge of how many CCTV cameras we have, or of the latest technology that comes with them.

I will give your Lordships only one example. French policemen now have wonderful helmets, partly British designed, which have two cameras in the front and two in the back. As the French do not charge you for having a licence for a car, they make quite a lot of money out of some speeding offences but that technology is quite remarkable. I find it strange that we have not yet embarked on any programme to determine how many cameras there are and who they might belong to.

[Lord Marlesford]

My Lords, I should first declare an interest as I have CCTV cameras around my house. My main point is that the emphasis has perhaps very much been on what is to some extent a sort of fear and constraint: “Let’s find out how much”. I can see that, absolutely. However, CCTV is actually one of the great advances in protection, liberty and freedom and in having a safer society. I would always caution against standing against it. I recollect very well that many years ago when Citizens’ Band radio first came out, the Home Office in those days was very opposed to it. It reckoned that radio communications were for the broadcasting authorities, the military, the emergency services and itself. For a long while, people were illegally using CB radios but eventually the Home Office came round to recognising that CB radios, and any other intercom system by wireless, was a perfectly legitimate method of life. It is now in the ultimate in the mobile phone.

I can see that information is always interesting to get, but sometimes a survey such as this can be very expensive. There could be a commercial interest; no doubt, companies who supply mobile phone networks and, indeed, the hardware for mobile phones do a great deal of market research in order to maximise their sales all over the world. However, one wants to be quite careful before one takes something which has become an absolutely standard method of life and starts to spend a lot of money—public money in particular—in making great inquiries into it. I am happy for the commercial people to spend their money.

The example of the police in France was fascinating, and I had not heard about that. I do not think that we must do anything which stands in the path of progress in using modern technology. CCTV is not a particularly modern technology but it is an absolutely everyday technology. All of that said, there must of course be constraints on abuse or misuse of a technology. That is all I would like to say.

[Lord Henley]

My Lords, I can be quite brief on this. I start by agreeing with the noble Lord, Lord Rosser, that CCTV is a vital tool in fighting crime. I believe that the public and the police are generally supportive of its use. The provisions in the Bill build on that support and will, I hope, maintain public confidence in the use of CCTV. However, as we saw with Project Champion in Birmingham—the noble Lord will remember this—such confidence can be very rapidly undermined if CCTV systems are seen as spying on local communities, rather than as a tool that helps keep them safe and secure. Therefore, we propose that our code of practice—for which guidance is set out in Clause 29—will form a coherent framework that will enable the public to challenge any system operator over how and why they use CCTV. It will also assist operators in maximising the effectiveness of their systems.

Calling for an inquiry is not only a very expensive option, as suggested by my noble friend Lord Marlesford, at a time when we do not want to spend money on such things, but also adds very little other than delay to the proposed code of practice, which will help to ensure the right balance between protecting the privacy of the citizen and the security and safety of the public. Our approach is designed to make sure that those using CCTV do so appropriately, proportionately, transparently and effectively. I think that was broadly endorsed by the various responses to our consultation.

[Baroness Farrington of Ribbleton]

My Lords, the Minister helpfully referred to the responses. The Local Government Association develops guidance for member local authorities in many areas of activity. What was its view of this process for getting a code? Will it be fully involved in looking at how a code would work?

[Lord Henley]

I cannot at this stage remember precisely what the LGA’s response was. However, I can assure the noble Baroness—who, with her local government background, is presumably a distinguished former member of the LGA—that we will certainly want to listen to its views as we get that code of practice sorted out. The Secretary of State must prepare it, as set out in Clause 29. We want to make sure that it is appropriately, proportionately, transparently and effectively designed to ensure that the right approach is taken in dealing with these things and we get—dare I say it again—the balance exactly right. I believe that there is consensus that further regulation is necessary. However, there is also consensus that there should be no further delay in this matter.

I object to the amendment, although I am grateful to the noble Lord for tabling it because it is useful to discuss the code, because we want to move ahead with getting that code of practice right. We will consult not just the LGA on that but a great many other bodies. However, having the inquiry, as suggested by the noble Lord’s amendment, would not achieve much. It might be that other inquiries will take place later but, for the moment, we want to get the code right and that is exactly what we will do. I hope the noble Lord will feel able to withdraw his amendment.

[Lord Selsdon]

Maybe my noble friend could help me with something. I have asked previously how many cameras are registered. The answer was that all cameras should be registered with the Information Commissioner. I then asked how many cameras are registered with the Information Commissioner and the answer was none. Presumably my noble friend will be introducing a new form of commissioner who will register certain cameras. Could he perhaps explain the difference between the new system and what was meant to be the old system?

17:00

[Lord Henley]

The noble Lord has me there at the moment because I cannot assist him. We will be discussing further commissioners in due course. As regards the number that are registered, the noble Lord is ahead of me because he has seen that answered by one of my predecessors. I prefer to write to my noble friend about the details of his inquiry. Perhaps we can have further discussions between now and Report.

[Lord Rosser]

My Lords, the Minister said that his concern is about delay, and I will come back to that in a moment. If that is his concern, it does not explain why he does not accept Amendment 110, which relates to the private sector and those who may be covered by Clause 33(5)(k), since there is no intention at the moment of introducing it into these areas, and therefore it would be possible without causing a delay to agree to an inquiry there. I take it that in view of the fact that the Minister has not accepted it in relation to Amendment 110, it is a fundamental objection to an inquiry, not simply about delay, because Amendment 110 would not result in a delay.

[Lord Henley]

That is not the only aspect. There is also the cost. The noble Lord has not said who is going to pay for this inquiry.

[Lord Rosser]

If the Minister would care to tell me how much he thinks it is going to cost, perhaps we could discuss that issue and look at some of the other things that the Government are spending money on.

Our concern is that the code of practice—when it is drawn up, and we have not seen it yet—will act as a deterrent and prove to be something of an exercise in bureaucracy and additional cost. Additional cost is obviously an issue that is of considerable concern to the Minister. We do not sense that this Government look particularly favourably towards CCTV and that that may be one of the motives behind this proposal. We do not know, and the Minister has not told us, what the code will contain or what its impact will be on the use of CCTV. He has remained silent on that issue. The advantage of an inquiry is that it would show the extent or otherwise to which CCTV is being abused, and the Minister referred to that, so clearly he considers it an issue. It would also identify quite clearly the advantages and disadvantages of CCTV and what it has achieved, because some of us think that it has achieved a not inconsiderable amount. At least when the code was being drawn up, it would be drawn up against the background of a proper inquiry having taken place and looked at some of the allegations that are made. Therefore the code would be relevant and would address hard evidence instead of views or perceptions, and it would also make sure that the code would not in any way go over the top. That is why we are putting forward this proposal.

We note that the Minister has rejected it. He said that it was on grounds of cost as well as delay and had to agree that Amendment 110 would not cause any delay. Our argument is that when he draws up his code of practice, it may well lead to additional costs and a reduction of CCTV in areas where it would be beneficial for it to continue. However, we note what the Minister said. I will not pursue that matter any further at this stage, and I beg leave to withdraw the amendment.

Amendment 99 withdrawn.

Amendment 100

Moved by

[Baroness Hamwee]

100: Clause 29, page 22, line 19, after “to” insert “and operational practices of”

[Baroness Hamwee]

My Lords, I shall speak also to Amendment 101, and there are other amendments in this group. My amendments are quite simple. They are probing amendments. Clause 29(3) provides that provision may, in particular, be made in the code about standards applicable to persons using systems or processing information. When I read that, I hesitated and wondered what was meant by “standards” in this context. My amendment proposes inserting a reference to operational practices because it seems to me that they are relevant, rather than the people who are using or maintaining the systems as individuals. I beg to move Amendment 100 in order to help me understand the clause a little better.

[Lord Tunnicliffe]

My Lords, I rise to speak to Amendments 102, 106 and 112A. I thank the noble Lord for ensuring that the results of the first consultation on the proposed CCTV code of practice were published before the Committee stage in order to ensure proper scrutiny. The opposition amendments in this group seek to probe the Government’s thinking in this area and to tease out more detail of the shape of the final code now that they have reflected on the results of the consultation.

On Amendment 102, we are concerned that any future code should not force local authorities and police forces into disclosing the location of cameras. The consultation notes that some respondents,

“considered that there ought to be public access to a full list of camera locations and data retention periods”.

I note that the Government, although not committing to such a view, stated in response:

“The Government intends that the Code of Practice will increase transparency over the operation of surveillance cameras”.

It is right that, in some cases, CCTV locations are made public. Indeed, many cameras are clearly visible to the public and their visibility acts as an important deterrent to crime. However, it must be right that local authorities and police should reserve the right to conceal the location of other cameras, particularly those positioned in sensitive locations and deployed temporarily in order to apprehend criminals. There is also a real concern that, by disclosing the location of cameras and surveillance centres, there is a risk that these will become the targets of vandals and criminals wishing to prevent the detection of crime. Will the Minister give a clear assurance to the Committee that any future code of practice will not include a blanket requirement to disclose the location of surveillance cameras?

Amendment 106 probes the Government’s intentions with respect to the code of practice in relation to CCTV and ANPR footage that is used as evidence in court. Clause 33 currently provides:

“A court or tribunal may, in particular, take into account a failure by a relevant authority to have regard to the surveillance camera code in determining a question in any such proceedings”.

In fact, this would appear to be the only real enforcement tool at the disposal of the Government. Local authorities will be required to have regard to the surveillance camera code but they will commit no criminal or civil offence if they fail to adhere to it. The implication is that the Government envisage that local authorities and police forces will feel compelled to comply with the code for fear that otherwise evidence provided by their cameras will not be admissible in court.

This view is reinforced by the response to the consultation in which the Government note that the failure to comply can be tested in judicial proceedings. It is one thing to conclude that evidence should be inadmissible on the basis that it violates requirements under the Data Protection Act; however, it is quite another to jeopardise whole trials on the basis that, for instance, the location of the camera in question was not adequately disclosed to the public. What assurances can the Minister give to the Committee that enforcement of the code in this way will not lead to the police being hamstrung in their use of key evidence derived from CCTV cameras?

Finally, Amendment 112A seeks again to probe the Government’s intentions with regard to ensuring that there is clarity for local authorities on the overlap of existing requirements under the Data Protection Act and those under the proposed code of practice. This point was raised by a number of sources when the Bill was debated in another place. Indeed, the Information Commissioner has himself expressed concerns about the implementation of the code in this area. In a letter to my noble friend Lady Royall on 22 November the Information Commissioner noted:

“There is potential overlap between these provisions, including my role, and those set out in the bill relating to the Secretary of State’s Code of Practice and the activities of the Surveillance Camera Commissioner”.

In his memorandum to the Public Bill Committee, the commissioner goes further, stating that,

“there is a risk that regulation becomes frequently fragmented, confusing and contradictory, especially if commissioners take different approaches … there will be overlaps in their responsibilities running the risk that commissioners may adopt differing interpretive approaches and guidance on each other’s statutory provisions”.

The Government’s consultation recognises that there is an issue to be dealt with, and states:

“We shall take note of the concern expressed by respondents in the way we develop the role of the Surveillance Camera Commissioner and how this interacts with that of the Information Commissioner and the Surveillance Commissioners”.

To prevent unnecessary bureaucratic burdens and confusion in the public sector, I ask the Minister to take this opportunity to expand on how the Government aim to ensure maximum clarity and minimum overlap in the roles and requirements of the two commissioners.

[Lord Henley]

My Lords, my noble friend Lady Hamwee moved Amendments 100 and spoke to Amendment 101, and the noble Lord, Lord Tunnicliffe, spoke to Amendments 102 and 112A.

In the amendment that we have just dealt with, the noble Lord, Lord Rosser, complained that we knew nothing about the code. Obviously, we do not know about the code at this stage because it has not yet been prepared. Some detail is given in Clause 29 about what the code may include particular provision about; we lay it out in subsection (3), which says:

“Such a code may, in particular, include provision about”,

and then goes from paragraphs (a) to (i). Subsection (4)(a) then provides that such a code also,

“need not contain provision about every type of surveillance camera system”,

and subsection (4)(b) says that it,

“may make different provision for different purposes”.

We have amendments from the noble Lord, Lord Tunnicliffe, dealing with that.

I start by dealing with my noble friend’s amendments, which seek to extend the list of matters that may be covered by the surveillance code of practice. As I have said, subsection (3) is intended to set out a very broad framework in the Bill for which issues may be covered in the code of practice. We have deliberately adopted a very flexible framework so that the code of practice can be revised over time in the light of experience and to reflect the wide range of circumstances in which surveillance cameras are used. For these reasons, the list of matters that may be included in the code is not intended to be prescriptive. Nor is it intended to be an exhaustive or exclusive list. The nature of such non-exhaustive lists is that they inevitably attract debate as to why this or that matter has not been included. Certainly, on first seeing Amendments 100 and 101 from my noble friend, I was unsure what she had in mind. However, I am grateful for her explanation that she wanted a degree of reassurance about what might be included. She also expressed concerns about standards and how they could concern not only the competence of an operator of CCTV but whether the operator was a fit and proper person. Those standards might also apply to operational processes but the code is intended to provide a degree of advice, rather than absolute prescriptive requirements. With that reassurance in mind, I hope that the noble Baroness will accept that, as we develop the code further, we can consider her points and make sure we get it right.

17:15

[Baroness Hamwee]

My Lords, it may be helpful if I address this issue now so that we do not need to come back to it later. The wording is “standards applicable to persons”. Is the Minister saying that this refers to the standards used by persons but it is not applicable to them? If anything, it is about them: it is not who they are but how they work and the standards that they use. It reads as though it is much more personal.

[Lord Henley]

I think that my noble friend has got it right. If she has not, I will certainly write to her. The point I was trying to get across is that the standards apply to the process and not just to the person. I expect my noble friend is a better draftsman than I am—I give her an assurance that I did not draft this myself—but Parliamentary draftsmen are a law unto themselves. If we have not quite covered the point that my noble friend is making, we will look at it.

I was slightly surprised that Amendment 102 was spoken to by the noble Lord, Lord Tunnicliffe, but I appreciate that it is a probing amendment and seeks to find out what we are trying to do. I repeat that the Government, despite what the noble Lord, Lord Rosser, said, are committed to supporting the use of CCTV and ANPR—automatic number plate recognition—as very effective crime-fighting tools and to their being used with the support and confidence of the public. That is the important point we must remember. We need the support and confidence of the public, and that is why I mentioned the experience of Birmingham when debating an earlier amendment.

Such support will be dependent on transparency on the part of the system operator about the purpose of their camera deployment and the area in which the cameras are being used. Not only would Amendment 102 send a signal that operators can be more covert about their use of CCTV but, more fundamentally, it is likely to run contrary to the Data Protection Act. The Information Commissioner’s existing CCTV code of practice is very clear on the general requirement to let people know that they are an entering an area with CCTV coverage. The guidance states:

“The most effective way of doing this is by using prominently placed signs at the entrance to the CCTV zone and reinforcing this with further signs inside the area. This message can also be backed up with an audio announcement, where public announcements are already used, such as in a station. Clear and prominent signs are particularly important where the cameras themselves are very discreet, or in locations where people might not expect to be under surveillance. As a general rule, signs should be more prominent and frequent where it would otherwise be less obvious to people that they are on CCTV”.

As I said earlier, we saw in Birmingham that public confidence can very rapidly be undermined if the police and others are seen to be imposing these systems without the appropriate public consultation or support.

That is not to say that there will not be occasions when covert surveillance needs to be conducted using CCTV. We are not ruling that out. However, in such cases the surveillance will need to be properly authorised under RIPA. Clearly, in such cases there would not be the same expectation that the location of the relevant cameras was publicly disclosed.

On Amendment 106, I appreciate that it stems from a concern that justice might be prevented or denied in a criminal trial where the defence argued successfully that a small technical breach of the code is sufficient to demonstrate that CCTV or ANPR evidence is flawed and not of a sufficient evidential standard. From that starting point it might be possible to construct a scenario where, in an attempt to invalidate that evidence against their clients, lawyers would be falling over the detail of a relevant authority's performance against the code and seeking auditable records of any decisions made. We believe that that evidence may be very valuable in any trial, but it is rarely going to be the only source of evidence. I find it difficult to foresee a scenario where a case would be dismissed just because CCTV evidence is argued as inadmissible due to the system operator being in some way non-compliant with the code. The amendment should be seen in the context of a code that is intended to be a reference document to help ensure that surveillance cameras are used proportionately and effectively but which does not impose absolute requirements on operators. Against that backdrop, we do not believe that the provisions will give rise to the fears expressed by the noble Lord.

On Amendment 112A, I have a degree of sympathy for the spirit that underpins it. It seeks to ensure coherence between the requirements in the surveillance camera code and the Data Protection Act and I can see why there might be concerns about overlapping guidance in this area. Those concerns are precisely the reason why we are proceeding with the development of the code through close discussion with the Information Commissioner and his office. The Information Commissioner is keen to work with us to help ensure that there is effective regulation of surveillance cameras with clarity and coherence for both system operators and the public. I believe that that work will ensure that not only the code of practice but the roles and responsibilities of the two commissioners fit together and everyone can be directed to the right place for guidance, information and advice.

I think that I have dealt with the point raised by my noble friend Lady Hamwee, and I hope I have dealt with the points raised by the noble Lord, Lord Tunnicliffe. I hope that my noble friend will feel able to withdraw her amendment.

[Baroness Hamwee]

Indeed. I beg leave to withdraw the amendment.

Amendment 100 withdrawn.

Amendments 101 and 102 not moved.

Clause 29 agreed.

Clauses 30 to 32 agreed.

Clause 33 : Effect of code

Amendment 103

Moved by

[Lord Lucas]

103: Clause 33, page 24, line 36, leave out “any such” and insert “criminal or civil”

[Lord Lucas]

My Lords, the amendments in this group are intended to ask a short trio of questions about how line 36, which is about the admissibility of evidence, will work. First, I want to be sure that it covers civil as well as criminal proceedings because an awful lot of surveillance camera evidence is used in, for instance, parking ticket or traffic enforcement, which are civil proceedings. It is important that if there are rules and regulations being passed about how these cameras should be used, they and the guidance should be equally effective in dealing with traffic enforcement as in dealing with a mugging.

Secondly, if one goes by not general, but certainly frequent, local authority practice, local authorities will rely in civil cases on the fact that most people do not appeal, so the case never comes to court. People pay their fines. Knowing that whenever a particular breach of the code comes to the tribunal the local authorities lose their case, they will none the less continue enforcing because they are losing only 1 or 2 per cent of revenue and the rest of the people are paying up as usual. What the guidance in the code is supposed to do is nullified by the fact that there is no mechanism for spreading the opinion of the tribunal more widely than the individual cases which reach it.

Amendment 104 is intended to propose such a mechanism so that a tribunal can say, “No, you have to stop this. We have seen this five times already and each time we have found for the appellant. You must cease enforcing until you have put this right. We will not allow you to issue any more tickets on the basis of something which we consider to be an unreasonable breach of the code”. The other end of it is that where a tribunal has found a local authority to be in frequent breach of the code and has on each occasion found for the appellant, none the less the local authority will have extracted a very large amount of money out of other people who have not appealed because there is a very substantial disincentive to appeal. If you lose an appeal, you double your fine. There is also a large amount of time taken up in the process of appeal.

I would like to see some mechanism where a tribunal can say to a local authority, in particular, or to other people who are seeking to use camera evidence as the basis of fines, that they must repay not only the appellant but all the other people on whom penalties have been imposed on the basis of the practice that the tribunal disapproves of. I beg to move.

[Baroness Stowell of Beeston]

My Lords, I am grateful to my noble friend for explaining and introducing his amendments. I recognise that he is focusing on the specific use of surveillance camera technology, particularly in its use for enforcement of parking and traffic regulations. It is probably worth me pointing out for the benefit of the Committee that the surveillance camera code of practice is not intended to include any speed camera technology. I know that my noble friend—

[Lord Lucas]

My Lords, I am not talking at all about speed camera technology.

[Baroness Stowell of Beeston]

My Lords, I was just about to say to my noble friend that I know that he was not talking about speed camera technology at all. It was just for the benefit of the rest of the Committee. I thought it was an appropriate point for me to make that clear, in case anybody else might not be as clear as my noble friend is on this matter.

I refer first to my noble friend’s Amendment 103, which, as he has explained, seeks to clarify the drafting of Clause 33(3). I believe that the meaning of that subsection is already clear, as “such proceedings” unambiguously refers back to “criminal or civil proceedings” in subsection (2); we simply do not need to repeat those words in subsection (3).

My noble friend’s Amendment 104 suggests that this Bill takes away the right to seek redress where a court has ruled that the code of practice has been breached. We believe this would have significant implications for litigants. In the context of civil proceedings—just to be clear, for example, we might be talking here of someone seeking to enforce the payment of parking charges—a claimant should be able to present all relevant evidence in support of his or her case. Given that the surveillance code of practice will set out guidance rather than rigid requirements for the operation of surveillance camera systems, it would in our view be disproportionate to prevent, as a matter of course, CCTV evidence being presented where a court or tribunal has ruled that there has been a breach of the code.

Clause 33(4) makes it clear that the court should have discretion in taking into account a failure by a relevant authority to have regard to the surveillance camera code in determining a question in any such proceedings. In the context of criminal proceedings, the ramifications of the amendment in terms of the overall fairness of the process are potentially more significant. The effect of the amendment might be to exclude key prosecution evidence or evidence that might exonerate the accused. Our general approach, as I have already explained, should be to leave decisions about the admissibility of CCTV evidence to the court or tribunal in question.

17:30

Amendment 105 proposes that if the organisation levying the penalty is a “relevant authority” under Clause 33, and the court rules that it has in some way breached the proposed code of practice, it could require it to repay moneys that it had received through those notices. There are already existing powers and procedures under the Traffic Management Act 2004 for appealing penalty charge notices issued in designated civil enforcement areas. These are well established and provide every opportunity for justice to be done effectively and proportionately. These powers and procedures apply equally to all parking and enforcement agencies issuing penalty charge notices under that Act and provide adequate safeguards for the public from any operator who steps over the line in issuing penalty charge notices.

My noble friend’s amendment would create a two-tier arrangement that would deny a “relevant authority”, as designated in the Bill, access to justice and place substantial financial risks on it, but would not affected other operators in the same way. A further unintended consequence of the amendment is that it would define the nature and content of the code of practice from the perspective of establishing a judicial assessment of compliance. That is not our intention. The code of practice should provide clear and practical advice about when and how such systems should be used and how to get the best use out of them. Given the wide range of purposes for which surveillance cameras can be deployed and the settings in which they are used, it would not be desirable to prescribe absolute standards for interpretation by the courts in determining such profound consequences for any breach.

One of the functions of the Surveillance Camera Commission is to encourage compliance with the surveillance camera code. I would expect the commissioner to have a central role in ensuring that any relevant judgments in respect of the code were widely publicised.

I hope that I have provided enough information to my noble friend for him to consider not pressing his amendments.

[Lord Lucas]

My Lords, I am very grateful to my noble friend for that answer, particularly the sudden inspiration which struck her at the end and which gave me great comfort so far as Amendments 104 and 105 are concerned, which I agree were pushing it a bit. However, I still have concerns on Amendment 103.

I agree that Clause 33(3) refers back to Clause 33(2), but the latter refers to the acts of people who are running surveillance cameras, not to the acts of people who are caught on surveillance cameras. It is not clear to me that the inference that she suggested should be imported into Clause 33(3)—that the civil and criminal proceedings in Clause 33(2) apply—is justifiable, given that they refer to completely different sets of court cases. One is cases taken against people who are using cameras and the other is cases against people who are caught on camera. I should be very grateful if the Minister could write to me to answer that point in detail if she does not have an answer in front of her now.

[Baroness Stowell of Beeston]

My Lords, I would be very happy to take away the points that my noble friend has raised and will, of course, write to him in due course.

[Lord Lucas]

My Lords, I beg leave to withdraw the amendment.

Amendment 103 withdrawn.

Amendments 104 to 106 not moved.

Amendment 107

Moved by

[Baroness Randerson]

107: Clause 33, page 25, line 1, at end insert—
“( ) any government department or any other public body or authority in receipt of money provided by Parliament,”

[Baroness Randerson]

My Lords, in moving Amendment 107, I will speak also to Amendment 109 in my name and to Amendment 108 in the name of my noble friends Lady Walmsley and Lady Hamwee, as these amendments really provide a set of options. These probing amendments seek to ensure that the range of bodies that will be subject to the code is clarified by the Government. They also seek to find out whether there are intentions to widen the range of bodies involved beyond the local authorities and the police, as specified in the Bill. I realise that Clause 33(5)(k) gives the Secretary of State power to widen the scope. This may indicate a gradualist approach on the part of the Government, which I will touch on later.

Amendment 107, which gives the widest interpretation of the options provided by these three amendments, suggests that any body in receipt of public money should be subject to the code. Among many others, that would encompass quangos, a host of arm’s-length bodies, schools, colleges and universities, plus the devolved Administrations and their associated bodies. It might be argued that, once you introduce a code for some bodies, there is no logical way of dividing up public bodies and quasi-public bodies between those that should follow the code and those that need not do so. The amendment would require all bodies in receipt of public money to abide by the code.

Amendment 109 gives a detailed description of a variety of educational institutions, hence narrowing down the first tranche of bodies to be subject to the code as a possibility for the Government to pursue. Thus amended, the Bill would apply not just to local authorities and the police but to educational institutions as well. Of course, the Bill does apply to schools in other respects.

Amendment 108 has raised concerns, because schools will not be required to have regard to the code of practice on the use of CCTV in the same way as is required of other organisations. Research done for the Association of Teachers and Lecturers in 2008 found that 85 per cent of teachers worked in schools with CCTV. I venture to suggest that, with that research now three years old, the percentage is now probably higher. Of those questioned, while 98 per cent of teachers believed that the cameras were there for security purposes and to monitor vandalism, more than half of them said that the cameras were there to monitor the behaviour of children in school. In other words, there was confusion in the minds of the teachers themselves as to the proper purpose of the cameras. More than three-quarters of the teachers questioned reported that cameras were being used at school entrances, which is understandable. Worryingly, 10 per cent said that the cameras monitored the school toilets.

Although anyone who has ever been involved in education will know that toilets can be a good place to hang out if you are trying to avoid a lesson, it is very concerning that the privacy of young people is being infringed on in this way. As the Government say, I strongly believe that there is a place for CCTV in our lives; it has an important role to undertake. But the issue of proportionality has to come into it. The same research showed that it was reported in February this year that one school in Coventry had installed 112 CCTV cameras. To my mind, that shows that CCTV use can go over from the reasonable to the unreasonable.

The question that I come to in relation to this amendment is why the cameras are there in schools. For whose safety is it? Is it to provide evidence of breaches of school discipline or to provide for the safety of the pupils? Is it to provide for the safety of the staff? The inclusion of schools and education institutions in general is very important to provide clarity in this respect.

When I first read the Bill, I was very surprised by the very limited reach of the code specified in Clause 33. In my experience as an elected Member, before I became a Member of this House, I came across two very serious cases of abuse of CCTV camera surveillance. One was on the property of the National Assembly for Wales and the second in a hall of residence in a university. The abuse in both cases was the misuse of CCTV cameras to spy into bedrooms—in one case in the hall of residence and in the other case in a neighbouring residential property. The cause of the problem here was insufficient training and supervision of the staff involved, and access to the cameras and recordings being far too freely available. We have in these amendments singled out educational institutions in particular, because this is where young people are particularly and persistently vulnerable.

I was also involved in the production of some legislation in the National Assembly on provision of school transport, which included a requirement for CCTV cameras on school buses. This sparked a considerable debate and deep thought about the use to which the footage could be put and who should have access to it. Was the CCTV camera requirement there to protect children or the drivers? Was it there to encourage good behaviour on the buses? Supposing that a child was accused of shoplifting at a particular time in the afternoon and could prove that he was on the school bus at that time, because of the use of the CCTV footage, would that be a legitimate use of the CCTV footage? That is the kind of complexity that we are moving into.

The issue of which body should be subject to the code was raised by the respondents to the Home Office consultation, who asked for a definition of public and semi-public space. Can the Minister address the issue of how far the Government envisage that this code will be extended to bodies other than those specified at this moment? If the Government adopt the incremental approach which paragraph (k) seems to suggest, how long do they envisage it will be before the impact of the code is fully felt? I beg to move.

17:45

[Lord Phillips of Sudbury]

My Lords, I support this group of amendments, but with a degree of confusion as to just what the Bill provides. If one looks at Clause 29, which introduces the code of practice, there is no reference there at all to relevant authority. There are two references in subsections (3)(f) and (3)(g) simply to “persons” operating a CCTV system. The more my noble friend introduced the group of amendments, the more I wondered why on earth this code is not applicable to all users of CCTV systems, be they public, private or whatever. Why, for example, in a shopping mall with endless numbers of CCTV cameras should they not be subject to the code requirements, just as any of the relevant authorities as defined in Clause 33 are? My noble friend the Minister might like to ask her officials whether Clause 29 was indeed drafted to apply to all those operating CCTV systems, and why Clause 33 itself refers twice to relevant authorities but in subsection (2) simply refers to a

“failure on the part of any person to act in accordance with any provision”,

of the code.

[Lord Tunnicliffe]

My Lords, the dilemma in front of us is basically to do with the application of CCTV, its value and the safeguards related to its value. I have peculiar experience of this, having headed up an organisation which had probably one of the largest CCTV installations in the UK. I have to say it was introduced before anybody thought about any sort of code, and we built up practice. Our experience was that the benefits massively outweighed the disadvantages. Our other experience was that acceptance by the general public simply grew with time. In London, people are used to CCTV on transport systems, in public spaces and so on. We think that the benefits are enormous.

We are not against the general concept of introducing a code, but we have all made it clear that we think the way this code is being introduced is wrong. The right thing to do is to have an inquiry to understand the extent of the problem, to start working up criteria and so on. However, if the Government insist on introducing this code more rapidly than that, we would be against its extension to all publicly funded areas and to schools and colleges. This is not because we are against extension of the code—as has been rightly pointed out, there are many privately owned CCTV cameras that could sensibly fall within a comprehensive code. What we are against is the extension of that code until the right amount of experience has been gained and investigation has taken place. Otherwise, these crucial areas, particularly schools and colleges, where CCTV is so valuable, will be burdened with a bureaucratic nightmare until we achieve a code that gets the right balance of being bureaucratically light while achieving the effective objectives of public engagement and acceptance. Therefore, in this Bill at this time we do not support these amendments.

[Baroness Stowell of Beeston]

My Lords, I shall start by picking up where the noble Lord, Lord Tunnicliffe, left off, and by making the point that there is a lot of support for CCTV in this country. As my noble friend has already made clear today, the Government are certainly not in any way trying to restrict the use of CCTV through the introduction of this Bill. We are trying to introduce a code so that the use of CCTV is clear, and that where it is used the public have clarity in their understanding of its purpose.

I shall address, first, my noble friend’s Amendment 107, which proposes extending the code to all public bodies in receipt of money provided by Parliament. Given the incremental approach that we are adopting, we are not persuaded that the duty to have regard to the code should apply more widely than to local authorities and the police from the outset. All operators of public space CCTV are subject to the requirements of the Data Protection Act. We see local authorities and the police as the operators of publicly owned CCTV systems in public space, and as the bodies who are well placed to set the example for standards of operation. They frequently work in partnership with other CCTV operators and we see their behaviour as a powerful driver for positive change elsewhere.

To place a duty to have regard to the code on every publicly funded body from the outset would be premature. We should see how the code beds in and, drawing on the advice from the Surveillance Camera Commissioner, consider in due course whether the duty should be extended and, if so, to which bodies. Clause 33 contains a provision to enable the duty to have regard to the code of practice to be extended to other bodies by means of secondary legislation, so we do not need to settle this question now. We will not hesitate to make use of this provision if we deem it necessary and beneficial. Any order made to this end will be subject to the affirmative resolution procedure, and so will need to be debated and approved by both Houses.

At this point, I should refer to the question asked by my noble friend Lord Phillips about the period of review of the code. Subject to any further advice that I receive, I refer him to Clause 35, which refers to reports by the commissioner. Subsection (2)(b) makes it clear that the commissioner will be required to report every 12 months. On that basis, I suspect that any advice or proposals that he might want to make about the extension of the code would therefore be covered in his reports.

I turn now to my noble friend’s Amendment 109, which refers explicitly to educational establishments—schools, colleges and universities. I accept that the use of CCTV in schools and colleges is a potentially emotive issue for a variety of reasons. Some of the examples that my noble friend outlined certainly illustrate that point most clearly. As with any other establishment, we would expect any decision to install CCTV in an educational establishment to be very carefully considered, and the reasons for so doing tightly defined. The new code is intended to assist with these considerations. While we are not proposing that schools be covered by the code at the outset, it is there for all organisations that wish to install CCTV to use and be guided by in determining the purpose of that CCTV, precisely as the noble Baroness says. It is very important that, if a school introduces cameras, it should be clear about why it is choosing to do that.

The public consultation that we carried out earlier this year received over 100 responses, which are available on the Home Office website. Analysis of the responses received found that comments on the use of CCTV in schools were minimal. While there were some respondents who argued that the code should be made mandatory for all operators, none put forward a specific case for compliance with the code to be made mandatory for schools. Similarly, in relation to the amendment of my noble friend Lady Randerson regarding higher education institutions, there were no calls in the public consultation relating to universities or further education colleges and there are no specific concerns that we are aware of.

I assure your Lordships that the detail of the code will be developed in consultation with interested parties and, as part of that dialogue, we will consider whether any issues associated with surveillance camera systems within schools or healthcare settings require specific reference within it. When using CCTV on their premises, schools, colleges, universities and indeed all public bodies—including government departments—must adhere to the requirements in the Data Protection Act. Noble Lords will be well aware of the existing powers of the Information Commissioner to enforce compliance through a regulatory action policy.

There are therefore already safeguards in place for the privacy of students and the wider public. We trust the proprietors of schools, colleges and universities and their heads of institution to comply with those requirements, and for schools, where appropriate, to consult with parents on any deployment of CCTV.

I hope that by giving the assurance that we recognise the importance and value of CCTV; by outlining that the introduction of the code is to provide some clarity in terms of its use; and by explaining that there is an option to extend the code beyond the relevant authorities outlined already in the Bill but that we will not do so prematurely, I have addressed all the points that have been raised by noble Lords in the debate today. I hope my noble friend will feel able to withdraw her amendment.

[Baroness Randerson]

I thank my noble friend for that answer. I realise that every organisation concerned is subject to the Data Protection Act, but the point about the code is that one prevents the kind of problems to which I referred; one prevents breaches of the Data Protection Act by encouraging public bodies to follow good practice, behaviour and procedures.

I ask the Minister to give further consideration to the issue of schools and educational institutions. She referred to the lack of response in the consultation on the issues associated with schools, but perhaps the Government may consider that in many people’s minds when they talk about local authorities, they encompass schools as well. However, in the modern world that is less and less so.

It is clear from the legislation that the Government are not including schools at this stage but I would ask them to give further consideration to the matter. I beg leave to withdraw the amendment.

Amendment 107 withdrawn.

Amendments 108 to 110 not moved.

Clause 33 agreed.

[The Deputy Chairman of Committees (Lord Geddes)]

My Lords, before calling Amendment 111, I must point out that there is an error in the Marshalled List—the omission of the vital word “from”. It should read:

“Page 26, line 2, leave out ‘from’ beginning to”,

and so on.

18:00

Clause 34 : Commissioner in relation to code

Amendment 111

Moved by

[Baroness Hamwee]

111: Clause 34, page 26, line 2, leave out beginning to “as” and insert “Her Majesty by Letters Patent shall appoint an independent person”

[Baroness Hamwee]

My Lords, I am grateful for that clarification. Under Clause 34, the Secretary of State is to appoint the Surveillance Camera Commissioner. My amendment proposes that the appointment instead be made by Her Majesty by Letters Patent. The reason for this amendment is that the Information Commissioner, to whom we have referred several times this afternoon and previously in Committee, and who before holding this office was in a previous incarnation the Data Protection Commissioner and before that the Data Protection Registrar, is appointed through the process which I propose here. The roles of the Surveillance Camera Commissioner and the Information Commissioner seem to be complementary; there is a lot of common ground and certainly they have quite a lot of mutual interest. My amendment seeks to understand the distinction in the modes of appointment. Are the Government seeking to create some sort of hierarchy or, briefly, why is there a difference?

Before he had to leave the Committee the Earl of Erroll came over and said that he supported my amendment. Possibly his support is greater than the thrust of my amendment, at any rate at this stage, but I thought I should report that to the Committee. I beg to move.

[Lord Henley]

I am grateful to my noble friend for her amendment and for her explanation of what it is about. I am also grateful that she assured us that she had the support of the noble Earl, Lord Erroll, who I think has some very important hereditary role in Scotland which probably influenced him in his view of insisting that this should be a matter for Her Majesty rather than the Home Secretary.

I will make just a few remarks about the role of the commissioner which I hope satisfy her concerns. It is a role which will be pivotal in promoting first the new code of practice, and in assessing its effectiveness and impact. In particular, the commissioner is charged with encouraging compliance with the code, reviewing how it operates, and providing advice on the code. Precisely how the commissioner decides to fulfil those duties will be a matter for him, but it will involve an impartial and independent assessment of all the issues. Independence is something we want to stress.

As we have already made clear, as did my honourable friend when he debated these matters in another place, our intention is to combine the new role of the commissioner with that of the existing Forensic Science Regulator. The existing regulator, Mr Andrew Rennison, was appointed by the previous Government as the interim CCTV regulator. He therefore already has considerable grounding in this area, and he has established a wide range of contacts with interested parties. That will be helpful in his new role of promoting and monitoring the code of practice.

At the same time his work as the forensic regulator will provide a useful complement, as well as much relevant background, in the area of seeking to improve the consistency of use and standards of performance of CCTV. Improving the evidential value of camera usage and images is also an important area, and one which cuts across both roles.

At the moment—and I will come on to this—I appreciate that sometimes these matters are dealt with by the Home Secretary and sometimes by the Crown. However, I do not see the need to depart from the normal practice, that is that the appointment is made by the relevant Secretary of State, in this case my right honourable friend. As with any other statutory office holder, we would expect the Surveillance Camera Commissioner to discharge his responsibilities independently of ministers and without fear or favour.

As with other public appointments, the appointment process will be overseen by the Public Appointments Commissioner and from April 2012 it will be regulated by the Office of the Commissioner for Public Appointments code of practice. This will be the case whether the appointment is made by my right honourable friend or by Her Majesty on advice from the Government.

The amendment would not actually provide a materially different outcome in terms of independence of the officeholder. I appreciate that my noble friend has drawn a comparison with the Information Commissioner, suggesting that there is some sort of hierarchy between different appointments as to who makes them. However, that office has a somewhat wider remit and plays a key role in regulating the Government itself. The additional assurance provided by the appointment by Her Majesty is therefore justified in that case but I do not think it is warranted here, given the somewhat narrower focus of the Surveillance Camera Commissioner, and would not lead to a different outcome.

I hope that that assurance is sufficient for my noble friend. I assure her that we will want a robust, independent commissioner dealing with surveillance cameras and that the appointment process provided for in the Bill will secure that outcome. Although I appreciate that there are occasions when it is appropriate that Her Majesty should make the appointment on the advice of the Government, there are other occasions when it is just as appropriate that it should be by my right honourable friend the Home Secretary. I hope therefore that my noble friend will feel able to withdraw her amendment.

[Baroness Hamwee]

My Lords, that response is helpful, particularly the comment about the Information Commissioner regulating the activities of the Government. Of course, the Minister will understand that we think that the way the Government use cameras should also be regulated, as in my noble friend’s Amendment 107. I accept that there will not be any difference in reality in the process, except for that last stage. It is important to have had the assurance that there is not a hierarchy in importance or in powers. I was concerned that there should not be, given the potential mutual interest—as I said, it is not quite an overlap—and I think we have had that. I beg leave to withdraw the amendment.

Amendment 111 withdrawn.

Amendment 112 had been retabled as Amendment 112A.

Amendment 112A not moved.

Clause 34 agreed.

Clause 35 agreed.

Amendment 113

Moved by

[Baroness Hamwee]

113: After Clause 35, insert the following new Clause—
“Commissioner’s report on alteration or replacement
As soon as the Commissioner considers it practicable but in any event not later than three years after the date provided by section 35(2)(a)(i)—(a) the Commissioner must prepare a report about the alteration or replacement of the code which shall in particular include reporting on extending the code to operators not initially subject to it;(b) the Secretary of State must lay a copy of the report before Parliament; and(c) the Commissioner must publish the report.”

[Baroness Hamwee]

My Lords, this amendment proposes that the commissioner should, within three years, prepare a report about the extension of the code to other operators. We have already touched on this in referring to Clause 33. My noble friend Lord Phillips, who has been taxing me with notes asking me to justify the drafting of this section, which is not my responsibility, asked under a previous amendment not about the extension of the code but about which operators were subject to it. He was asking why this chapter starts by appearing to be quite general and then becomes more restrictive once we get into the detail of Clause 33. He is nodding; I hope that I am interpreting him correctly.

My understanding of this is that because, under Clause 33(5)(k), more persons can be added to those who come within the definition “relevant authority”, Clause 29 and the succeeding clauses are drafted in that slightly wider way. I share my noble friend’s concern that “relevant authorities” should extend to a wider group of operators than are listed in Clause 33(5)(a) to (j).

A similar question was asked during the Committee stage in the Commons, and the Minister, James Brokenshire, said:

“The report—

this is the regular report to the commissioner—

“will be an instructive and formal means for the commissioner to telegraph clear recommendations about the code, its application and whether it is achieving its intended objectives”.—[Official Report, Commons, Protection of Freedoms Bill Committee, 26/4/11; col. 364.]

My amendment takes the matter wider to those who operate the code.

It occurred to me only during this debate that it will be helpful to have—and I am sorry to be technical, but the noble Lord, Lord Faulks, will probably tell me that I am not accurate in this question—reassurance that the sui generis rule does not apply and that by having a list that is very specific we are not stuck to those organisations and persons who are similar to those listed in paragraphs (a) to (j) of Clause 33(5). Clearly there is concern that a much wider group of persons—private companies do not quite come within this—and all operators of CCTV, those who run shopping malls, for instance, should not be brought within the scope of the code. We know how the concerns have started, but the more we talk about it, some of us feel that there should be a code that is observed by all operators. While I understand that getting experience of the use of the code under one’s belt might be a good thing, I think that we would like to know that the position will be reviewed in fairly short order. I beg to move.

[Lord Phillips of Sudbury]

My Lords, I would just like to add a few points to those made very effectively by my noble friend Lady Hamwee. I regret to ask the Minister some questions, because it always seems churlish to spring technical questions upon a well meaning Minister, but I hope he gets advice from his rear quickly.

First, Clause 34 “Commissioner in relation to code” states that in Clause 34(2)(b) that the commissioner has the function of,

“reviewing the operation of the code”.

I agree with my noble friend Lady Hamwee that that does not, on the normal reading of those words, extend to consideration of the exercise of power to specify new bodies to be caught by the code under Clause 33(5)(k).

Secondly, will the Minister confirm that there is nothing in Clause 35 “Reports by Commissioner” that appears to authorise the commissioner in making reports to consider the point of extension of the code, which I would have thought justifies Amendment 113?

Finally, all those arguments would count for nought if in Clause 33(5)(k) the proper construction of “any person” is to confine “any person” to bodies comparable to “relevant authorities”. My own view is that it does not. In view of the opaqueness of the drafting of this part of the Bill and, as I said earlier, the fact that Clause 29 refers twice to “persons” but not at all to relevant authorities, I feel we need to be very clear of our ground here. In my humble view, there is a lot more concern about the operation of CCTV cameras by private interests than by public ones. I cannot think, for example, that the Sub-Treasurer of the Inner Temple is likely to abuse the CCTV cameras within his or her purview, but I am afraid I can foresee that some private operators might get up to things that are extremely undesirable.

The end of all that is whether the Minister can say to us now that he will take this away, look at it and if necessary bring forward his own amendment at the next stage of the Bill. I hope he might do that. I apologise again for springing this rather nasty group of questions upon him, but I was unprepared for the debate as it has evolved.

18:15

[Lord Henley]

The noble Lord, Lord Phillips, mentions the Sub-Treasurer of the Inner Temple and assures the Committee that he does not think that he would act improperly in any way. I hope he would extend that to the Under Treasurer of the Middle Temple, my own Inn, because I am sure she would act in an equally proper manner. I see my noble friend Lord Faulks, who I think is a bencher of the Middle Temple, nodding in agreement on that matter.

[Lord Phillips of Sudbury]

I give him that assurance from my heart.

[Lord Henley]

I thank the noble Lord for that. I hope I can deal with some of his queries, and I hope I can assure him that I do not believe that the drafting here is opaque in any way whatever.

When we look at Clause 33(5), it is pretty clear that we have all the classes listed in paragraphs (a) to (j), including the Council of the Isles of Scilly, the Common Council of the City of London and, in effect, all local authorities. Then we have paragraph (k), which states,

“any person specified or described by the Secretary of State in an order made by statutory instrument”.

That is as clear as clear could be that it can be extended by the Secretary of State after consultation with the appropriate people who might be affected. Those people could be public, they could be private, or whatever.

[Lord Phillips of Sudbury]

The Minister will have observed that Clause 33(2) states:

“A failure on the part of any person to act in accordance”,

with the code. That does not seem to sit comfortably with the much wider interpretation in the same clause of the same phrase.

[Lord Henley]

No, my Lords, it is very clear. In Clause 1, we are talking about any “relevant authority” and relevant authorities are listed in subsection (5). That could be extended. If it was extended, to use “relevant authority” in subsection (2) would not include paragraph (k) of subsection (5). The noble Lord is making a mountain out of a molehill. As I understand it, it is quite clear. Should it be extended, it would then be:

“A failure on the part of any person to act in accordance with the provision”;

“person” in its legal sense would include paragraphs (a) to (j), but would also include paragraph (k) if my right honourable friend had extended those who are covered by it by using subsection 5(k) so to do.

[Lord Phillips of Sudbury]

I promise that this will be my last intervention, but it is important to get this as right as we can. I am afraid the Minister’s argument does not hold because Clause 33(5) starts by saying:

“In this section ‘relevant authority’ means”,

and that includes any extension under paragraph (k). I put that to him, and I would be grateful if he would review this later.

[Lord Henley]

Obviously, I will take advice from those who are skilled in drafting, which is a skill that I have never learnt and I have no way round it. To me, it is quite clear that there is a relevant authority, and we list the relevant authorities, but “relevant authority” can be extended by subsection 5. Relevant authority is mentioned in subsection (1), but “any person” in subsection (2) would include all those in subsection (5)(a) to (j) and paragraph (k) when it expands the role of paragraphs (a) to (j). I suspect that we will not get very far by arguing this now, but it might be that we could discuss it later. It might be something that I can assure my noble friend that we will look at with the relevant drafting authorities to make sure that we get it right if he thinks that we have got it wrong.

I shall move on to the other questions that my noble friend asked about Clauses 34 and 35 and what the commissioner can do and how he can review the code. My noble friend felt that Clause 34(2)(b) on,

“reviewing the operation of the code”,

and Clause 34(2)(c) on,

“providing advice about the code”,

limit what the commissioner can do. Again, I stress that the commissioner is independent and it will be up to him to decide in the light of what is in statute. He will also have the ability to go beyond that should he so wish. The question that we come back to with the amendment concerns what sort of review we should have. I agree with my noble friend Lady Hamwee that it is quite right that we should keep the code under review, but I believe that the Bill provides adequately for that.

Clause 34 sets out the functions of the commissioner in some detail. They include encouraging compliance with the code and reviewing its operation. The commissioner is also asked to report annually on the exercise of those functions, and those reports will be laid before Parliament. In discharging those functions, we fully expect the commissioner to consider whether the code needs to be revised in any way and, no doubt, to offer advice and include recommendations to that effect in his annual report. We would also expect the commissioner to review from time to time whether the duty to have regard to the code should be extended to other operators, be they public or private, given that the extension of this duty is one of the ways in which he will be able, under Clause 34(2)(a), to encourage compliance with the code. Again, this is something that we want to do. Although the code will initially be binding on the relevant authorities only, we hope that others will look to it as the model by which they act. The commissioner will report annually on his functions so, again, we do not need to wait for up to three years, as suggested by my noble’s friend amendment.

With those assurances and that explanation, and accepting the point that we will certainly look again at what my noble friend Lord Phillips had to say about the drafting—I do not agree with him, but I might be wrong; I frequently am—I hope that my noble friend will feel able to withdraw her amendment.

[Baroness Hamwee]

My Lords, the Minister referred to compliance by relevant authorities and others who might look at how it is working. That takes us straight back to Clause 33(5)(k) and whether the person referred to there is to be construed in the normal meaning of that language. I have been trying to catch the eye of the noble and learned Lord, Lord Scott, to tempt him to enter into this, but he has resisted, which is probably quite right. I see now that he is not going to resist.

[Lord Scott of Foscote]

Everyone who is mentioned in subsection (5) is either an individual or a corporate body and would fall within the meaning of the word “person”.

[Baroness Hamwee]

I think that might assist us. We are concerned that private corporations, if that is a concept that one can have, should be caught within the term “person”. The example that I used was the operator of a shopping mall. However, perhaps it is not fair to continue this debate in public. My noble friend Lord Phillips and I have made our concern very clear, and this debate is a little circular, so at this point the best thing I can do is to beg leave to withdraw the amendment.

Amendment 113 withdrawn.

Clause 36 agreed.

Amendment 114

Moved by

[Lord Rosser]

114: Before Clause 37, insert the following new Clause—
“Independent inquiry into use of investigating powers under RIPA
(1) The Secretary of State must establish an independent inquiry into the use of investigatory powers under the Regulation of Investigatory Powers Act 2000.
(2) The inquiry will examine in particular the use of directed surveillance and possible limits to its use.
(3) The inquiry will examine possible exemptions to the Act relating to the under-age sale of alcohol and tobacco and anti-social behaviour.
(4) Recommendations from that enquiry shall be reported to Parliament.”

[Lord Rosser]

This amendment relates to investigatory powers under the Regulation of Investigatory Powers Act 2000. On reading the Government's impact assessment, one could perhaps be forgiven for being a little puzzled about the need that Clauses 37 and 38 seek to address, because the assessment says:

“The coalition is committed to stop local authority use of RIPA … unless it is for serious crime and approved by a magistrate”.

It goes on:

“This stems from perceptions that local authorities have misused RIPA powers particularly in relation to low level issues”.

Thus we appear to see in this Bill that the Government are happy to spend money on the basis of perception, as their impact assessment states, rather than any proven need—despite their stating that money is in short supply. The cost of judicial approval for local authorities to use powers to gather communications data and undertake direct surveillance is apparently £250,000 a year, according to the Interception of Communications Commissioner. Yet we have a situation where the Government claim that they are acting to address public perception.

In his evidence to the Public Bill Committee as head of the independent Review of Counter-Terrorism and Security Powers, the noble Lord, Lord Macdonald of River Glaven, while supporting the requirement for judicial review, stated:

“The overwhelming preponderance of evidence gathered by the review showed that local authorities were using their powers quite proportionately and in quite important areas of business”.—[Official Report, Commons, Protection of Freedoms Bill Committee, 22/3/11; col. 27.]

The Interception of Communications Commissioner stated in his evidence that judicial review is,

“wholly unnecessary and will cost money”.

He continued that he had,

“audited a very large percentage of the applications over the last six years and there is simply no evidence of abuse, so there is no problem on which to spend £250,000 a year”.—[Official Report, Commons, Protection of Freedoms Bill Committee, 22/3/11; col. 37.]

In the main, these powers are used for investigating matters such as the sale of alcohol and tobacco to minors, antisocial behaviour, trading standards breaches, serious fire safety breaches and such issues. The amendment proposes that the independent inquiry that it provides for should look at exempting the RIPA powers in relation to underage sale of alcohol and tobacco and antisocial behaviour from this Act because they are areas where those powers are most frequently used and where the adverse impact and additional costs under the Bill will be most keenly felt. We are not opposed to the principle of judicial review, since this provides a check on executive power. However, we are opposed to spending money unless it addresses a clearly identified problem, backed up by hard evidence, when in other areas difficult choices are having to be made about cuts to vital services.

Against that background, Amendment 114 places a duty on the Secretary of State to commission an independent inquiry into the use of investigatory powers under RIPA. Amendment 114 does not require an inquiry before the commencement of Clauses 37 and 38. It would not delay implementing this part of the Bill, if the Government are determined to introduce it as soon as possible. It would, though, provide proper hard evidence of the areas, if any, that are in need of regulation—hard evidence which, at the moment, appears to be somewhat lacking. I beg to move.

18:30

[Baroness Miller of Chilthorne Domer]

My Lords, it is very interesting that the Opposition have chosen to table a fairly narrow amendment to RIPA to explore these issues. In fact, the criticism from the very moment that it was conceived, let alone drafted or passed into law, was that it was poorly drafted and had many problems which I shall enumerate more fully under my Amendment 128.

It is interesting that the Opposition have chosen to table such a narrow amendment. Have they ignored all the other constructive suggestions that have been made? They are focusing their attention simply on this one issue when, in fact, as the noble Lord, Lord Rosser, has pointed out, it is probably the area of RIPA with the least problems.

[Lord Henley]

My Lords, I am grateful for that intervention from my noble friend Lady Miller.

The measures in Clauses 37 and 38, together with the changes that we propose to make through secondary legislation, will deliver the coalition commitment to limit local authority use of RIPA—a commitment we made when the coalition came into being following the last election. The Bill also gives effect to the conclusions of the counter-terrorism review which was published in January. That review recommended two changes to the use of RIPA powers by local authorities.

First, these clauses will require that the exercise of RIPA powers by local authorities be subject to prior judicial approval. The second change, which will limit local authority use of directed surveillance to the investigation of offences which carry a maximum six-month sentence, will be implemented through secondary legislation made under RIPA. That will ensure that direct surveillance cannot be used to investigate relatively low-level matters, such as littering, dog fouling and schools enrolment, while still allowing it to be used against large-scale matters such as fly-tipping or waste-tipping, extensive criminal damage and serious or serial benefit fraud cases.

In response to representations received during the review, we have decided to make an exception to the seriousness threshold for offences relating to the underage sales of tobacco and alcohol. The investigation of those offences relies heavily on the use of directed surveillance and so in these circumstances the review concluded that it was appropriate to have a limited carve-out so that trading standards officers could continue to take effective action against businesses which seek to flout the law on age-related sales.

The conclusions of the counter-terrorism review were endorsed by my noble friend Lord Macdonald, who provided independent oversight of the conduct of the review. However, the amendment seeks a rather wider review of RIPA. I will say straightaway that, although the Government agree that it is essential that people’s privacy is protected from any unnecessary or disproportionate access by public bodies discharging their duties, this is precisely why RIPA was introduced, debated and passed by Parliament. And it is precisely why the way it is working is kept under constant review—not just by the Home Office but by the independent commissioners who report to the Prime Minister and publish annual reports which are laid before Parliament.

In bringing forward the current proposals to limit local authority use of RIPA, we are responding to public concern about a specific area in which the law operates. The measures are intended to restore confidence and ensure that any fears of future misuse are unfounded. But there is no well-founded indication that there is a need for much more fundamental reform of RIPA. Indeed, any regulatory regime would need to be built on precisely the same principles and contain the same human rights safeguards as RIPA is built on.

No one should be complacent about how our right to privacy is safeguarded. The measures before us come from one review and were endorsed by a public consultation. We need to get on and deliver them, but I put it to the noble Lord that another review before we have delivered the recommendations of the first would be premature and no doubt expensive—I do not know how many other reviews he will propose during the passage of the Bill. We will continue to monitor how the new arrangements are working in practice and adjust our approach if necessary. The developments will be reported on also by the independent RIPA commissioner, whose published reports, as the noble Lord will be aware, are laid before Parliament each year. We are confident that the measures in the Bill, together with the associated secondary legislation introducing the seriousness threshold, will prevent local authorities using RIPA in a way that undermines public confidence. Therefore, I hope that the noble Lord will feel able withdraw his amendment.

[Lord Rosser]

My Lords, in drawing up the amendment, which the Minister said was quite wide-ranging in relation to RIPA, we were seeking to address in particular that part of the Act relating to local authorities, since the coalition has made it—and the Minister has reaffirmed it—one of its objectives. It is stated in the impact assessment that the provision stems from perceptions that local authorities have misused powers rather than, apparently, hard evidence. Bearing in mind the Interception of Communications Commissioner’s view that expenditure of £250,000 will be incurred on something that is apparently regarded, certainly as far as local authorities’ use of the powers is concerned, as a perception, it did not seem unreasonable to suggest that there should be an investigation to get some hard evidence so that we might all be clear on precisely what problem we were seeking to address.

However, I have taken note of what the Minister has said. We will reflect further on the matter. In the mean time, I beg leave to withdraw the amendment.

Amendment 114 withdrawn.

Clause 37 : Judicial approval for obtaining or disclosing communications data

Amendment 115

Moved by

[Baroness Miller of Chilthorne Domer]

115: Clause 37, page 27, line 8, leave out “relevant”

[Baroness Miller of Chilthorne Domer]

My Lords, the first seven amendments in this group would enable the Committee to examine a little further the existing complicated system for administrative authorisation. Where the Bill refers to judicial authorisation, one imagines that somebody from the judiciary will authorise whichever investigatory power is being used. However, in the section in the Bill to which my amendments apply, the administrative officer and his superior agree that surveillance is necessary, and the initial authorisation remains an administrative decision that does not come into effect until the approval of a magistrate is given. However, the magistrate will not examine why authorisation is being applied for or anything about the individual concerned; it will be just a review to make sure that the process has been reasonable.

The amendments examine whether the Bill will make the system any more transparent and whether it will be any easier to challenge unfair applications through the Investigatory Powers Tribunal. They examine also whether the system will become more efficient or cheaper. I welcome the Government’s desire to bring judicial authorisation more into the system, but I wonder whether it is sufficient.

Amendment 128 is much wider. I heard the Minister reply to the previous amendment to the effect that the misuse of the Act has been sufficiently addressed, but Amendment 128 has been tabled to probe the Committee’s view on the urgency of reviewing the whole RIPA fabric. This is for several reasons. First, since RIPA was conceived back in the late 1990s, technology has moved on enormously and things are able to be done now which were unimaginable then. It has nothing to do with phone hacking and the News of the World issue—which is still illegal—but with technical and storage capacity. In the 11 years since RIPA was passed, both of those areas have changed out of all recognition.

On re-reading that Act, there appears to be an enormous patchwork of different authorisation schemes, of which this is just one example. That does not seem an efficient way to proceed. The Minister referred to the expense of reviewing. There may be an expense in the inefficiency and patchwork of systems, but what concerns me most is that there are sufficient safeguards against unnecessary and disproportionate use of the surveillance powers.

As to the sheer scale of the use of the powers, we have come to accept that their use is necessary for serious crime and terrorism issues. However, since the Bill was passed, there have been some 3 million decisions made under it by public bodies; 20,000 warrants; 4,000 authorisations for intrusive surveillance and 30,000 for directed surveillance—and that does not include the intelligence services because those figures are not made public. So there is an issue with the scale of what is happening.

The Minister may feel that an inquiry will be expensive and he may be correct—obviously it will incur some expense—but there may be savings to be made if we consider whether the kind of umbrella that RIPA provides is adequate for purpose. It seems to be an umbrella that is full of holes, not only in the authorisation process but in its classification of the different kinds of intrusions—for the sake of the Committee’s time I shall not go into them—which are immense. For example, a phone call that is listened to from outside a house and one that is listened to from inside a house with a bug are different kinds of intrusions and carry different authorisations. As far as the public are concerned, that is a complicated regime—it may be necessarily complicated—and it can pose enormous problems in the complaints procedure if an individual has been subject to that intrusion.

If, as a member of the public, you want to complain about unfair investigatory powers, it is obviously extremely difficult. I have mentioned the figure of 3 million. Out of that, 1,100 complaints have been heard by the Investigatory Powers Tribunal, of which only 10 have been upheld. That tends to suggest that there is a problem.

I am sure that many Members of the Committee have seen the thorough Justice report, Freedom from Suspicion: Surveillance Reform for a Digital Age, which lays out the issues in a detailed manner and gives all the references. Given the evidence that is presented in that report alone, Parliament has a duty to hold the kind of inquiry that Amendment 128 seeks. I beg to move.

[The Deputy Chairman of Committees (Lord Haskel)]

Perhaps it will be for the convenience of the Committee if I explain that in an earlier edition of the groupings all the Amendments 115 to 128 were grouped. In a later edition there are two groups: first, Amendments 115 and 120 to 128; and then a second group with Amendments 116, 117, 118, 119 and 122. So there are two groups.

18:45

[Lord Phillips of Sudbury]

My Lords, I support my noble friend on this group of amendments. I was the unfortunate person who was the main spokesman for these Benches on the original Regulation of Investigatory Powers Bill, and what a nightmare it was. Indeed, what a nightmare RIPA 2000 still is. It is one of the paradoxes of human rights law these days that it is for every man and every woman but the way in which it is framed—and, to some extent, I suppose, has to be framed—means that it is almost inaccessible except to a handful of specialist lawyers. This Bill is an exemplification of that on stilts.

A few moments ago, the noble Lord, Lord Tunnicliffe, moved Amendment 114, calling for an independent inquiry into the use of investigative powers, which has some commonality with Amendment 128. Despite what the Minister said, I believe that RIPA is important, and getting more important given the advances in technology in so complex and fast-moving a world. We have the Leveson inquiry at the moment looking into breaches in one corner of this surveillance market. I believe that despite the expense—and it is fair never to ignore the expense and time involved in these investigations, inquiries and reviews—this is a warranted proposal.

The existing RIPA is internally inconsistent. Its implementation is certainly widely inconsistent. I believe that we need to be highly sensitive to the issue of civic trust because in the surveillance society there is a culture that is extremely unhealthy to democracy and in which citizens feel that their lives are not their own. If one wanted one most vivid example of the state of affairs that I am trying to describe, it is the reaction of the public to the Milly Dowler affair, which still reverberates. That was a fair reflection of the degree of sensitivity that exists in relation to intrusive surveillance and so on. Because of the points so well put by my noble friend Lady Miller, I think that despite the cost and the fact that the commissioners make annual reports, at this stage, more than 10 years after the passage of RIPA in 2000, the Government should think hard about standing back from this legislation and the amendments that will be introduced by this Bill and look at RIPA hard and long and carefully, and with wide public consultation that goes beyond the usual suspects and gets to the sort of people who were so frantic about some of the revelations that have been before us in the past year or so and are being rehashed in the Leveson inquiry.

For those reasons, I support this group of amendments and the increase in judicial oversight of the whole apparatus of intrusive, directed and covert surveillance that we have heard about today.

[Lord Selsdon]

My Lords, I shall speak to Amendment 126 and the other amendments. I support my noble friend Lady Miller. This subject is, unfortunately, one of my hobbies. I am totally opposed to people entering other people’s property without permission or court orders and I am totally opposed to this form of surveillance, even if it is called observation. I declare an interest as former secretary of the Parliamentary Space Committee; I am involved in space and privy to certain information about advanced technology that makes me even more nervous.

RIPA was a great idea when it started—like most things with initials that you cannot remember—but, even when it is amended, I will be concerned about public bodies and, in particular, covert activities. However, public bodies can get round the safeguards that are there by accepting evidence gathered by non-public bodies. That leads us to the fear that in these sorts of covert operations a public body, all in good faith, may find that it has an opportunity to obtain from a third party information that may be offered to it, not necessarily by a hacker but by some person who finds that he has something of value that could be sold. The amendment proposed is that one should not be able to use that information in prosecutions.

I will not go too far on this but we know that the listening devices that are around are extremely sophisticated and can be programmed from many miles away. Aerial surveillance is also possible from satellites in real time—not the Google thing of showing a picture of your house from above but information that can be picked up.

The purpose of Amendment 126 is to introduce a safety clause. I think that the Minister may be prepared to accept it. Once amended by the Protection of Freedoms Bill, public bodies will be able to get round the safeguards by accepting evidence gathered by non-public bodies using covert surveillance that could not have been authorised by the public body itself. This may mean that the public body, in good faith, is offered information or materials that could be helpful in pursuing its course by a private sector or non-public body. The question is therefore whether the public body has any responsibility for this and for the information provided. The suggestion here is that if freedoms are to be protected the loophole must be closed and it must not be acceptable for information to be gathered covertly without proper authorisation and used for prosecution. That means that the public body must take responsibility for any information that may be gathered and its name must be linked to it. Thus any information that is gathered that the public body has not itself authorised or been associated with should be excluded from any efforts of prosecution.

We know that many examples of this are being pushed around at present. The amendment is relatively simple; it says that anything that is done in the name of a public body, or is misused in the public body’s name, must be the responsibility of the public body, which should be responsible for making sure that everything is in order.

[Lord Henley]

My Lords, just to make sure that I get things right, I should make it clear that it is my understanding from the intervention from the Deputy Chairman of Committees that we are dealing with Amendments 115 and 120 to 128, but not with those in the name of my noble friend Lord Phillips, which start at Amendment 116, those being a separate group.

[The Deputy Chairman of Committees]

Amendment 122 is in the second group.

[Lord Henley]

I take that correction. I do not know how long we will spend finishing off this amendment, but perhaps this one or the next should be the last one that we deal with today, because I think we have made pretty good progress. We have will have a relatively short list of amendments to discuss for the next day and will have no problem finishing off Committee stage when we return after Christmas.

I am grateful to both my noble friends Lady Miller and Lord Selsdon for setting out their arguments in support of these amendments and I shall briefly deal with them. I start with Amendment 115 and the amendments associated with it—Amendments 120, 121, 123, 125 and 127—which leave out “relevant” or “relevant person”. We are introducing a judicial approval mechanism to restore public confidence in local authorities’ use of covert techniques. Local authorities will no longer be able to self-authorise or to use directed surveillance in trivial cases, thereby further safeguarding personal privacy. Such public concern does not exist for the use of covert techniques in cases of serious crime or national security. In a judicial review it will be for the magistrate to approve the authorisation for local authorities to use such techniques only where he or she believes that use of the technique would be both necessary and proportionate.

Imposing judicial approval on all public authorities, law enforcement and intelligence agencies, which the amendment of my noble friend Lady Miller seeks to do, could seriously impair the operational effectiveness of such organisations. Having to seek a magistrate’s approval may, given the extent to which such techniques are used, result in operational delay, which could have grave consequences. Furthermore, it is wholly inappropriate for the sensitive nature of these cases to be disposed to a local magistrate.

RIPA authorisations for the most sensitive techniques, such as intrusive surveillance and interception, which may be used only by law enforcement and intelligence agencies, are already pre-approved by a surveillance commissioner or the Secretary of State. The Government will continue to keep the use of RIPA under review and respond in the most appropriate way if there is evidence of misuse. If in the future there is a compelling case for extending the requirement for prior judicial authorisation for certain other public authorities, these clauses confer an order-making power to enable this to happen.

On the second part of Amendment 128, my noble friend Lady Miller suggested that there should be a further review by an independent reviewer. I appreciate that the concern behind the amendment is that the Act is now some 10 years old and that the pace of technological development during this time has been unparalleled, a point to which my noble friend Lord Selsdon referred. I agree that how this legislation is performing and keeping pace with these developments is something on which we would naturally all seek assurance.

At its heart, RIPA is human rights legislation; it contains human rights safeguards to ensure that it carries on working as Parliament intended. Those safeguards include the appointment of independent bodies to oversee, inspect and redress wrongs. As the Committee will be aware, there are three independent commissioners—all of whom have held some of the highest judicial offices in the land—to examine various aspects of how RIPA is working and to publish their findings. Their inspection teams visit public authorities using RIPA powers and provide valuable advice on interpreting the law correctly, and surveillance commissioners authorise some of its more invasive techniques. In addition, those commissioners produce annual reports on their findings which are laid before Parliament each year. So we already have an effective mechanism for ongoing scrutiny and reporting the findings to Parliament. The commissioners will continue to inspect local authorities and will report on how the judicial approval provisions are working in practice.

As to the wider question of changing the law to permit intercept material to be used evidentially—which is currently prohibited by Section 17 of RIPA—that is already being independently reviewed by Sir John Chilcot, who is leading a cross-party group of privy counsellors to examine how a model to permit this could work in practice. The Government will bring the subject before Parliament again once the cross-party committee has finished taking evidence. When it does so is a matter over which I have no control, but I look forward to being able to debate these matters in due course.

19:00

I turn finally to Amendment 126 in the name of my noble friend Lord Selsdon. I understand the concerns that he has raised about the perceived lack of regulation of non-government organisations and private individuals conducting covert surveillance. I hope that I can offer some reassurance to my noble friend.

On the narrow point, I think that decisions on the admissibility of covert evidence should properly rest with the court. However, having listened to his concerns, I would be prepared to have a further look at the issue. If my noble friend would be happy not to press his amendment on this occasion, we could have further discussions about it between now and Report—which, as we know from assurances that I gave earlier, is unlikely to be before the end of January—and see whether we might come forward with some suitable change at that stage.

I hope that the assurances and explanations that I have given to my noble friend Lady Miller are sufficient and that she might therefore feel able to withdraw her amendment. If that was the case, and with the agreement of other Members of the Committee, it might then be a suitable point at which to adjourn the Committee and continue with it on another occasion.

[Baroness Miller of Chilthorne Domer]

My Lords, I must congratulate the noble Lord, Lord Selsdon, on his success in having his amendment taken forward to the next stage. Every small move in this direction is very important, because, as my noble friend Lord Phillips of Sudbury said, this is a matter of civic trust. I thank the Minister for his reply. The issue of civic trust comes up because of the inability of current legislation to deal with the scale of interference in areas such as internet use. The intelligence agencies and the police have better systems in place; I have in mind instances where people do not know about the interference, such as in the BT and Phorm case. A natural tension exists: it is the duty of government to consent to intrusion in the interests of security and crime prevention, but it is the duty of Parliament to make sure that those intrusions are proportionate. Although I shall on this occasion withdraw the amendment, I hope that we will return to it. I beg leave to withdraw the amendment.

Amendment 115 withdrawn.

[Lord Henley]

My Lords, with the agreement of the Committee, this might be a convenient moment to adjourn until Thursday at 2 pm.

Committee adjourned at 7.03 pm.

House of Lords

Tuesday 13th December 2011 Lords Chamber

Tuesday, 13 December 2011.

11:00

Prayers—read by the Lord Bishop of Oxford.

Health and Social Care Bill

Tuesday 13th December 2011 Lords Chamber

Committee (12th Day)

11:06

Relevant documents: 19th report from the Delegated Powers Committee, 18th report from the Constitution Committee.

Clause 58 : Monitor

Amendment 260EA

Moved by

[Baroness Thornton]

260EA: Clause 58, page 87, line 9, at end insert—
“(c) is to continue as regulator of NHS Foundation Trusts as set out in Chapter 5 of Part 2 of the National Health Service Act 2006”

[Baroness Thornton]

My Lords, at last we move to Part 3. I hope the House will tolerate a longer speech from me than I normally make. I have made just a series of very short speeches so far on the Bill. There are many amendments in this part in my name and that of my noble friend Lord Beecham. I would like to take this opportunity to explain the rationale behind the suite of amendments that we have put before the Committee today. I thought the Committee might prefer one longish speech rather than 10 short ones, which will almost certainly save time.

Our amendments are largely in this group, which addresses the role and powers of Monitor, and the next two groups, which address Monitor as a licensing body and its accountability. Later today, in groups eight and nine, there are the issues of pricing and the failure regime.

On these Benches, we decided some time ago that this was the heart of the Bill. Over all the debates we have had in the last 11 days, it has become abundantly clear that the reason we have this mammoth Bill, bringing about the expensive and risky reorganisation of our NHS, is to create a regulated market in the NHS. On these Benches, we have always believed that fundamentally, this Bill was conceived and constructed, around Part 3. Even after the pause for reflection and the report from the Future Forum, that remains the case.

Version 1 of the Bill was at least honest in being the embodiment of what Andrew Lansley had promised to do to our NHS back in 2005. He is at one with his colleagues Oliver Letwin and George Osborne. Mr Lansley wants markets and is against a communally owned and publicly run public sector. Like his Conservative colleagues, he believes that competition solves every problem and is a cure-all. Indeed, Mr Lansley’s background in establishing regulated utilities in his five-year preparation as the shadow Health Secretary makes it clear that he wants to treat our healthcare just the same as gas, water and electricity. That was version 1.

That finally collapsed when people including the Liberal Democrats actually read and understood the White Paper and the Bill. I will not trouble your Lordships’ House by picking over the corpses of versions 2 and 3 of the Bill, but we now have version 4, and I suspect that we are still far from finished. This Bill is a mess. It is now a catalogue of compromises, except, it has to be said, the framework that we have on offer in Part 3, which would, over time, allow Mr Lansley’s vision to be fulfilled. He must be hanging on to that for dear life.

We believe that Monitor is being asked to fulfil too many functions and set too many priorities, and that some of these are potentially, if not actually, in conflict with each other. We hope the House will appreciate that, on these Benches, we have done the House a big favour. We have rewritten Part 3 to make it simpler and more coherent. We have taken out the nonsense parts, such as the voting system in Clauses 116 to 121, which as it were bring the X Factor system into the NHS. Why not have phone-in votes for CCG chairs, for example?

We have taken out the convoluted and bureaucratic ideas around levies and risk pooling. After all, that is part of what the NHS is for—to pool the risks. Our advice is to keep it simple. We believe that the attempt to define the rules-based system for the NHS was always doomed. The idea that, like a true regulated market, we can set out the rules in primary legislation and contracts and then let the courts decide everything is just plain daft—unless you are a lawyer, of course. They must be salivating at the business coming their way if this Bill becomes an Act in its current form. Does the presence of excessive legality and constant contracting sound familiar? It should, because essentially that is what happens in the United States healthcare system.

We have, like Monitor, suggested that instead, the principles and rules for co-operation and competition—PRCC—that we put in place when we were in government should be left as the basis for the system. We also suggest that the Co-operation and Competition Panel should retain its role of advising on complaints about any breaches of the rules, which was at one time the Government’s position, and it may still be. For us, a defining characteristic is that the pinnacle of such a system is that there is a Secretary of State who sets the framework through the PRCC.

I would like to dispel the myth that Labour is against reform. In 1997, we came in to rescue the NHS after many years of neglect. On everything worth measuring, the NHS of 2010 was far, far better than in 1997. It is only in 2011 that we have seen it start to go backwards again, as waiting times get longer and access is restricted. Our track record on reform is there. Clearly, we did not get everything right, but we learnt. The current Administration have launched the biggest reorganisation of the NHS in its history, despite the promises that they would not and despite all the evidence that reorganisations set the NHS back two to three years, and despite the costs and risks involved—except, of course, that we are not allowed to know exactly what those risks are.

Labour introduced independent regulation of quality to the NHS. We support the continued role for Monitor with regard to foundation trusts, which we put in place. We accept the idea of extending tough financial regulation over all providers in the NHS through the use of a licensing scheme. But we do not accept the handing over of economic regulation of the NHS to a quango. We wish Monitor to retain its powers to oversee foundation trusts, and, like Sir David Nicholson, we see the value in retaining the possibility of de-authorisation of a foundation trust into a safe haven to permit restructuring and reconfiguration. But more on FTs later.

We have never been against the idea of competition. Indeed, we set out the principles and rules basis on which it could operate. We have never been against using the private sector where this adds necessary capacity or provides expertise not available within the NHS. Our experience, good as well as bad, informs our response to the Bill.

There is a place for competition. It is not, and never should be, the main driving force for reform of the NHS. We are against the promotion of competition for its own sake, as this Bill originally intended. We believe the balance between co-operation and competition is a matter for the Secretary of State to determine, in the best interests of patients, not for a quango to determine in the interests of some ideological bias.

Further along in the consideration of our amendments, we set out the process by which major reconfigurations could be proposed, consulted on and determined. We set out for the first time the idea of a rules-based failure regime. We do not see failure as a desirable feature of a market system; we see it as a failure of planning and commissioning and as something to avoid, not welcome. But if all early intervention efforts are insufficient, then an orderly rules-based administration process is necessary, so we set one out.

In all these areas, we do not oppose development of the NHS or reform. We simply fundamentally disagree with the approach being used by this Administration, which is highly disruptive and expensive and takes focus away from the Nicholson challenge. Along with the Liberal Democrats of old, we oppose the change to a regulated market at the expense of democratic control. These are the wrong reforms at the wrong time and, we add, for the wrong reason. Healthcare is not another utility to be regulated and privatised. Our NHS has as its foundation the twin principles of universality and social solidarity. It is not a candidate for conversion into a fully fledged market. We introduced regulation to give the public some independent reassurance. We introduced external assessments of quality in the NHS. The role of the quality regulator, the CQC, is unchanged by the Bill. We support the CQC, but only if it is properly resourced. We set up NICE, which is acknowledged as a world leader in its field. We set up Monitor and we think it is too early to evaluate its success, as the move to an all-FT system has taken far longer than envisaged and proved more complicated than was assumed—a lesson not yet learnt by this Government.

The job is really only half done. What we do know is that there is no miracle transformation tool. The evidence is that foundation trusts do not progress any faster than non-foundation trusts. There is little, if any, evidence that foundation trusts are more innovative, more risk-taking or more competitive than their non-FT colleagues. It is a mix.

11:15

Given the more powerful role for Monitor, we are proposing two developments to its governance. It should meet in public, like the NCB will do, and we should end once and for all the farce of shared chair/chief executive posts, which is totally against good practice. After the Mid Staffs issues, further changes to governance for regulators are on the cards. None appears to have come out of such an intense and comprehensive investigation with any credibility. The amendments about accountability are in the third group today.

We brought some forms of competition into the NHS, but we never forgot the overriding duty of co-operation. We understand that competition takes many forms. Some services might be amenable to an any-provider model, although we think that it rarely means any provider, but is more like a range of providers. Anyway, for years we have known that such a model can be considered only if five things exist: the service is easily defined; the service is discrete and not interdependent on other services; it is easy to determine the quality of what is provided; there is good quality comparative information accessible to the consumer; and there is good quality information to allow the right price to be set. So in this category, we might find eyes, teeth, pharmacy and perhaps some cold surgery, but vast tracts of the NHS do not and, we believe, never will fit in to this model.

Where these conditions do not apply, there can still be competition in the market, or even for the market, but only with a lot of downside issues to consider. We need to be clear and honest and say that, at least for the foreseeable future, for a whole swathe of services that are not amenable to any form of competition, why waste limited NHS resources on promoting competition in areas where it will not benefit patients, when those resources would be far better spent on direct patient care in a managed system? Rather than some ideologically inspired imposition of competition for its own sake, why not continue with what we started, allowing the Secretary of State to determine the boundaries for competition after due consultation and deliberation. The idea of a choice mandate is propounded by the Future Forum. The Minister might comment on why this particular offering from the Future Forum was not progressed.

We know of good examples where competition did work for patients in the area of heart surgery. Here, the collection and dissemination of good quality information on outcomes shows wide variation leading to competition between peers, but peer support and exchanges around good practices are the key to clinical changes, and so better outcomes. Equally, we know where clinical quality of better patient outcomes was achieved without any competition, though clinical leadership, strategic planning and co-operation. London’s stroke care improvements are the best argument yet for not having a wholly market-driven system.

The other key confuser here is that choice and competition are not the same thing. For the Government, competition is about choice of providers. For the patient, choice is between treatment options. Yet all the drive in terms of information systems is about league tables of organisational performance, not the key priorities for patients. Many argue for an NHS where patients and their carers are fully engaged in their own care. We know from good evidence that this brings better outcomes. The ideas of co-production are developing and featured in the responses to this Bill, but this is not about competition and choice of provider at all. Increasing competition among providers could have the opposite effect of putting barriers in the way of integrated care as an option for the patient. Reform here is not about markets or competition, but about changing clinical attitudes.

Here again we have another major departure from the ideological approach for pushing competition. For the patient, we know that integration around their needs is desired. For us, integration means bringing services to bear in such a way that it eliminates organisational boundaries, like a single care plan. But the Government see integration in terms of supply chains. We have suggested one form of what integration means for patients in an amendment, and others might do better.

The Government bang on about co-operation and competition not being opposites and use examples of how, within a market, competitors may co-operate on developments, for example in Japan. Again, this misses the point that the NHS is not a set of tradable commodities where it is irrelevant who provides the goods. For us, the key is the patient, not the organisations.

These tensions lie at the heart of our fundamental difference with the coalition Government’s approach. Health is not a commodity to be traded, patients are not consumers and choice is not about shopping. Where we might agree is on the need to continue to collect and use good quality outcome data, not just across organisations but across forms of treatment. We might also agree about the concept of contestability. Those who commission services are spending large sums of public money. We need to ensure that they do this wisely, yet we have a national Commissioning Board commissioning £20 billion of treatment with no obvious accountability and performance-managing itself. We argue that commissioners should be required to demonstrate that they periodically review all the services that they commission and make the results publicly accessible. Indeed, they should involve the public—patients as the users of the service—in the reviews. This is very like the route followed by local authorities and many parts of central government. They embraced contestability rather than simply opening every service to competition. For our crucial public services, this has to be a better and more flexible system. As long as we have commissioners who are properly accountable and the information required to deliver this accountability is in the public domain, we can have robust processes for commissioning and we do not need to make them fear legal action if they fail in some duty to promote competition properly.

I now move to the detail of the amendments in this group. Amendments 260EA and 263 specify that Monitor is to continue as the regulator of NHS foundation trusts. Amendment 261 says,

“The main duty of Monitor is to exercise its functions to support the duties of the Secretary of State”,

to promote a comprehensive health service. It also says that Monitor must protect and preserve the interests of users or potential users of the health service and seek improvement in quality and outcomes.

Amendment 262A adds to the other duties on Monitor the requirement to exercise its functions to promote the provision of a health service that,

“is based on the principles of universality and social solidarity”.

Amendment 265 leaves out the subsection stating that Monitor must exercise its functions with a view to preventing anti-competitive behaviour. We believe that the extent to which competition is appropriate is a matter for the Secretary of State, through regulations or a mandate to the board. Amendment 265ZZA would put Monitor under a duty of co-operation that would entail it promoting efficient and effective co-operation between the providers of healthcare services that further the objective of improving quality and reducing inequality of access and outcomes. The Secretary of State shall publish guidance and may issue regulations relating to this duty of co-operation.

Under Amendment 267, Monitor would have to exercise its function with a view to promoting integration of healthcare, health-related and social care services, not simply enabling it. Clause 61 relates to the power to give Monitor functions relating to adult social care. We would like to explore whether this is a good idea. We are undecided, but in the light of Southern Cross, we would like to ask whether this should be done through a specific Act, not through regulations activated at a later date.

Amendments 270B and 274ZZZA seek to simplify the role of Monitor. We would leave out some of the factors that this clause advises Monitor to have regard to. That is covered by Amendments 261 and 265ZZA. The use of resources promoting investment, research, education and training are not the main point to argue against so many other powers.

Amendment 274ZAB avoids conflicts between functions. Monitor must be set up in two separate parts: one to exercise its functions as a regulator of financial trusts; and the other to exercise its function as the licensor of providers of healthcare services. Amendment 274XAA relates to Monitor having no role in determining prices—an issue that we will be discussing later today. Amendment 277A is a new chapter that reinserts the idea of the pre-eminence of co-operation. It keeps the current system, using the principles and rules of co-operation and competition, to specify which services are to be commissioned through specified forms of competition, the Co-operation and Competition Panel to support the delivery to patients and taxpayers of the benefits of co-operation and, where appropriate, of competition, and to advise the Department of Health and Monitor on potential breaches of the PRCC. Clause stand part debates on Clauses 68 to 70 are to debate the functions referred to Monitor concurrently with the OFT and under the Competition Act 1998 and the Enterprise Act 2002. Amendment 277C would add a safeguard that before Monitor takes any actions under Clauses 68 or 69, it must have regard to the regulations made by the Secretary of State, including the PRCC, consult CCGs and the health and well-being boards, and obtain the consent of the Secretary of State.

Amendment 277D would ensure that in relation to procurement, patient choice and competition, the Secretary of State sets the rules, which will be the PRCC. Regulations dictate that procurement exercises can be undertaken only if the administrative cost of doing so is justified by the anticipated improvement in the service and is affordable, given the resources. Regulations require the board and the CCGs to discharge their functions in a way that would promote co-operation, and regulations shall not allow or require the board or CCGs to replace any existing provider that is delivering services via contract in a form approved by the Secretary of State, unless that contract has been lawfully terminated due to a breach by the provider.

Clauses 72 and 73 refer to Monitor on various powers of investigation, declaration and direction related to procurement, patient choice and competition requirements. We argue that these functions can be left to the existing Co-operation and Competition Panel. On Clause 75, we argue that the Enterprise Act 2002 should not apply to mergers involving FTs. The Co-operation and Competition Panel should apply the PRCC, not the Enterprise Act applying competition law.

On Clause 76 stand part, we argue that a review of competition is unnecessary, especially if there are not equivalent powers to review co-operation and integration. We fear that this provides a disproportionate incentive on Monitor to develop competition. Clauses 77 to 79 all apply to competition law and the role of the Competition Commission. We argue for the Co-operation and Competition Panel and the PRCC rules instead. On Amendment 288EA, guidance published by Monitor relating to its enforcement must include information on the regulations issued by the Secretary of State. Amendment 288GA and Clauses 110 to 112 are about keeping the role of Monitor in relation to authorisation and oversight of foundation trusts the same and are very similar to Amendment 288G, tabled by the Liberal Democrats. We argue that there should be no cut-off date or transition period.

I beg to move.

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

My Lords, I thought it might be helpful to the Committee if I intervened relatively briefly at this point to put this part of the Bill into context and explain what we are trying to achieve. Part 3 has been much discussed and, I am afraid to say, much misunderstood. It is, in my view, fundamental to the modernisation of the NHS. It is worth restating why that modernisation is so important.

We need to improve health outcomes and we need to increase productivity in the NHS. Achieving both of these is essential if we are to meet the challenges of caring for an ageing population, managing increased prevalence of chronic disease and funding the rising costs of new drugs and other technologies.

Part 3 helps to enable this by establishing a clear and comprehensive legal framework for sector regulation to protect patients’ interests, based on the principles and values enshrined in the NHS constitution. Monitor’s distinctive role would be to secure value for money in the provision of healthcare services, in the interests of patients. Its overarching statutory duty, which is crystal clear in the Bill, is to protect and promote patients’ interests by promoting economy, efficiency and effectiveness in the provision of services while maintaining or improving quality. The key words there are “protect and promote patients’ interests”. This overarching duty would provide Monitor with a clear and enduring purpose. The duty would be the guiding principle for Monitor’s decisions, for example in resolving any conflicts that may arise in the exercise of its functions. For example, if in future Monitor were to have any doubt about a decision, it would come back to that guiding principle. Equally, it will not be open to Monitor to do anything that infringes that principle.

11:30

The duty would also provide the basis on which the Secretary of State would hold Monitor to account. Our proposals would establish a comprehensive and coherent framework for sector-specific regulation in the NHS, overseen by Monitor. For the first time, this would be applicable to all providers of NHS services, thereby fully protecting patients’ interests.

The NHS already has a competition policy, and I pay credit to the previous Government for making important advances in this area, such as the Co-operation and Competition Panel, which was described by Ben Bradshaw, who was the Minister at the time, as the NHS’s first ever competition policy. So it was, but the previous Administration took piecemeal steps, which left gaps, confusion and ambiguity. The Bill rectifies that. Under the Bill, Monitor would at the same time continue its role as the specific regulator of foundation trusts.

[Baroness Armstrong of Hill Top]

The noble Earl knows that that part of the Bill does that only for a limited period of time. He also knows that many people involved with foundation trusts think that should be a consistent and ongoing role of Monitor. Have the Government reassessed so that that is a more complete and comprehensive approach for Monitor, signalled clearly in the Bill?

[Earl Howe]

What the noble Baroness says it quite right. It would be open to a future Secretary of State to extend the period under which Monitor retained that role. My purpose at the moment is to set out the Government’s position. I am sure we can come on to debate these things, if the noble Baroness will allow, but it is important for the Committee to have the Government’s prospectus in their minds.

The remit of Monitor would be expanded to cover all NHS-funded healthcare providers. This approach ensures that Monitor and everything that it does is governed by a single, coherent legal framework and that all its functions are bound together by a single, overarching statutory duty—the one that I read out. For that reason, I would counsel noble Lords to resist amendments that may seek to achieve similar aims, but do so by retaining a separate legal framework for regulation of foundation trusts.

Many people have sought to portray the new role for Monitor as some sort of mighty club-wielding behemoth, dictating to commissioners how NHS resources should be spent. This is not the case. Monitor’s role, as set out in Part 3, is intended to support and complement the role of commissioners, as set out in Part 2. Our aim is to empower those commissioners—GPs and other clinicians—to take the lead, arranging access to services to meet their patients’ needs and stimulating innovation and improvement. Commissioners will have various tools at their disposal to do this. They will need to decide how to use co-operation, integration and competition to improve quality or efficiency or reduce inequalities.

In that context, the appropriate role for Monitor would be to support commissioners by enabling integration and where competition is used, ensuring that this operates effectively. Monitor’s role is not—I repeat, not—to impose competition from above. Competition is not now and will not be an end in itself.

Our strategy for improving the provision of NHS services is firmly based on the principle of autonomy and accountability for providers. Building on this, we have proposed functions for Monitor that aim to strengthen incentives for providers to improve, rather than simply relying on the ability for Monitor to set and enforce rules. Promoting competition is part of this, but again the context of promoting is quite different from the idea of driving competition through top-down controls. It will not do that, and it would not be effective even if it did.

What has struck me, looking at these amendments, is that, while there are clear differences between some noble Lords and the Government, I also feel that there is a significant consensus emerging. I want to reiterate that the Government are always willing to listen to how the Bill could be improved. I have listened to the points made by the noble Baroness, Lady Thornton, but I have also studied very closely the amendments tabled by other noble Lords, particularly my noble friends Lady Jolly, Lord Clement-Jones, Lady Williams and Lord Marks, as well as the noble Lord, Lord Whitty and the noble Baroness, Lady Murphy.

I am sympathetic to a number of the concerns raised by noble Lords, which we shall hear about. I would like to highlight four at this point. The first is the Secretary of State’s ability to specify matters that Monitor must take into account. I am sympathetic to noble Lords’ concerns that we should clarify the mechanisms by which this can happen. The second is the conflicts between Monitor’s functions. It has always been our intention that Monitor should take responsibility for making appropriate arrangements within its organisation to avoid potential conflicts. However, I will explore this further with Monitor in time to provide greater clarity and reassurance before Report stage. The third area is failures to co-operate. Again, I am sympathetic to noble Lords’ concerns that Monitor should have the ability to address abuses and protect patients’ interests. We believe that the safeguards in the Bill already achieve this aim, but we will look to ensure that Monitor is properly equipped to enforce this. The final issue is reviews by the Competition Commission, where I sympathise with noble Lords’ concerns that the provisions as drafted may not yet fully reflect the revisions to Monitor’s role that were introduced in response to the NHS Future Forum.

That is all that I propose to say for now. I hope that it has been helpful for me to speak early in this debate to give some additional clarity to the Government’s intentions in this vital area of the Bill.

[Lord Clement-Jones]

My Lords, I very much appreciate the opening speeches from both sides on this group of amendments. I particularly recognise that the noble Baroness, Lady Thornton, has put a great deal of care and consideration into the amendments that she has tabled and they represent a huge amount of work, particularly without the benefit of a Bill team. It is also clear from both speeches that now is the moment to start the debate about the application of EU and domestic competition law to the NHS.

The Bill contains a number of measures that could increase competition within the NHS at the expense of collaboration and integration and which, in my view and that of many of my noble friends, increase the risk that UK competition law will apply as if healthcare were a utility like gas or telecoms. Amendment 288G is the first of a number of amendments tabled by me and my noble friends seeking to minimise that risk.

I am not against competition in the NHS—I suspect that very few of us are—but it must be where it is appropriate. It is not appropriate in all circumstances. Public and patient benefit can often be secured in other ways. We have discussed integration of services throughout the Committee as an alternative and as a complement to competition. Having a balance and choosing the appropriate mechanism that is best for patients is what the debate about Monitor’s powers has focused on to date.

I accept that EU competition law has had some application within the health service for some years now. However, along with many others, I do not want to see EU competition law apply universally across the health service so that our commissioners and providers are required to operate a market-based NHS, red in tooth and claw, without being able to choose where it should apply and where it should not. In my view and that of my noble friends, the risk, for reasons that I shall explain, of a number of elements of the Bill being taken together increases the likelihood of NHS services being found by English and EU courts to fall within the scope of UK and EU competition law. These include, first, potential deregulation of FTs from 1 April 2016, in terms of Monitor no longer having the power to set special conditions under Clause 109 for foundation trusts. That is what Amendment 288G is designed to address. The stand part debates for Clauses 110 to 112, which I support, are also relevant.

Secondly, there are so many new areas where the Competition Commission is deployed. There is the role where Monitor has given notice to include a special condition in a licence in determining whether the matters subject to the proposed condition are potentially contrary to the public interest and whether the special condition provides a remedy. That is Clause 99. There is also its role in reviewing the development of competition in the NHS in the provision of healthcare and the exercise by Monitor of its functions in relation to the provision of healthcare services. That is Clause 76. Its role where there are objections in setting the method of setting prices for the national tariff by Monitor is in Clauses 118 onwards. Finally, there is oversight of foundation trust mergers as a result of the application Part 3 of the Enterprise Act.

Thirdly, after the potential deregulation of foundation trusts and the role of the Competition Commission, there is the lifting of the private patient income cap for foundation hospitals, in Clauses 161 and 162, which opens the way for some foundation trusts to derive the majority of their income from private patients. In that context, I am very pleased to see Amendment 299ZA, tabled by the noble Earl.

If EU competition law were to apply in an unrestrained manner across the NHS, private sector companies that bid unsuccessfully for NHS contracts could make a European competition complaint and challenge commissioning decisions in the courts, and/or the status of foundation hospitals, undermining the mainstream of the NHS in the delivery of services such as intensive care units, A&E, emergency cover, teaching, training and research. The number of such complaints across the EU has increased over recent years.

It was, of course, to minimise the risk of the unrestrained application of EU competition rules that the rules of co-operation and competition and the Co-operation and Competition Panel were devised in 2008. But this Bill, on the face of it, goes much further in encouraging competition. There is a view that the incorporation of those rules in statute is yet another reason to believe that the NHS is at risk in this way.

The applicability of domestic and European competition law to an NHS body, whether commissioner or provider, essentially turns on whether it is an undertaking for the purposes of competition law. Only a grievance between undertakings and abuses committed by dominant undertakings are within the scope of the Competition Act 1998 and Articles 101 and 102 of the Treaty on the Functioning of the European Union. There is, in fact, no definition of the term, “undertaking”, in domestic or European legislation, so the scope of the term has been developed and considered through case law of the domestic and European courts.

I do not propose to give your Lordships a legal lecture—I do not believe I would be able to—but briefly, there are two cases in particular that are of some importance. The question of whether an NHS trust is an undertaking for the purposes competition law was considered by the Competition Appeals Tribunal in the case of BetterCare Group Ltd in 2002. BetterCare was a UK provider of residential and nursing home care, which complained to the OFT that the North and West Belfast Health and Social Services Trust, acting as a purchaser of nursing and residential care home services, was abusing its dominant market position in Belfast. The OFT rejected the complaint on the basis that the trust was not an undertaking for the purposes of competition law. On appeal of the OFT’s decision by BetterCare, the Competition Appeals Tribunal determined that the trust was acting as an undertaking both in the purchasing of services from BetterCare and in the direct provision of elderly care by its own statutory home. This was for various reasons, but of particular importance in the current context, is that in providing care through its own homes, the trust was also a participant in a market for residential care, alongside independent providers, and the trust was in a position to generate the effects that the competition rules seek to prevent.

In FENIN, a case brought by an association of companies involved in the marketing of medical goods used in Spanish hospitals, the European Court of First Instance in 2003 upheld a decision by the European Commission rejecting a complaint alleging abuse of a dominant position by 26 bodies or organisations, including three Ministries of the Spanish Government, which run the Spanish national health system. The Commission had rejected the complaint on the grounds that these bodies were not acting as undertakings in their dealings with suppliers. The Court of First Instance considered that where an organisation purchased goods not for the purpose of offering goods and services as part of an economic activity but in order to use them in the context of a different activity, such as one of a purely social nature, it does not act as an undertaking simply because it is a purchaser of those goods.

11:45

The complainants appealed the decision to the European Court of Justice, which, in 2006, dismissed the appeal, confirming the view of the Commission and the CFI that a purchasing activity is subject to competition law only if it is undertaken for an economic purpose, such as the supply of goods or services on a market rather than for a purely social purpose. The Commission’s argument, summarised in paragraph 24 of the ECJ judgment and accepted by the court, makes the point that it is the act of placing goods or services on a given market that characterises the concept of economic activity, not purchasing the activity as such.

By the same token, it is generally established that an entity is unlikely to be an undertaking if services are provided on a universal basis on the principle of solidarity—that is, they are funded by the state. However, as the NHS European office itself states, European Court decisions are case-specific. There is uncertainty about how they apply generally.

So it is my contention, precisely in the light of these cases, that if there is no regulation of foundation trusts by Monitor, no special licensing for foundation trusts after 2016, constant involvement of the Competition Commission and no cap on PPI of any kind, foundation trusts will risk falling within the definition of an undertaking for the purposes of domestic and European competition law. NHS trusts may well be acting as an undertaking when carrying out specific functions of a commercial nature.

At the end of the day, the question is whether there is a market for particular healthcare services. There is already a market for private patient services, which is being emphasised and expanded by the provisions of this Bill. Many of us are worried about the future for NHS providers rather than the application of EU competition law to commissioners. We are worried that our local NHS hospital, particularly if it is in London, where already the major trusts compete for private patients, will be chipped away at by private competitors. Markets could be created in a number of different areas of healthcare that it delivers. There is a danger that a hospital trust would increasingly be treated as an undertaking under European competition law across the range of its services, so that unless it competed effectively in those markets, it would no longer be viable as a local NHS facility.

It might be said that this is certainly not the case currently. Only elective surgery is really part of a market. But there is nothing precautionary in the Bill. There is nothing to prevent such a market being created or arising in the future. What is to prevent a future Government deliberately creating a market? Perhaps my noble friend the Minister can tell us. Why have nursing homes, which deliver nursing and social care paid for by public money, become subject to competition law? It is because the previous Government deliberately set out to create a market. The King’s Fund, in an excellent document of November this year, entitled Economic Regulation in Health Care: what can we learn from other regulators?, states:

“The market in health services is heterogeneous. The challenge facing the regulator will be to determine when competition is ‘appropriate’. In health care, as in other sectors, there are some services that are natural monopolies and others where competition may bring benefits. There is almost no evidence to guide this at present, although there are some ideas about how far different sectors in health care lend themselves to competition.

Monitor will need to develop a nuanced approach, balancing its proactive intervention powers to remedy market failures and its concurrent powers with the competition authorities”.

This is very laudable, but all this assumes that Monitor will be able to pick and choose what rules of co-operation and competition to apply. This Bill could open up the NHS to competition in a new and radical way in the future, even if not now. There seems to be little or nothing to prevent that taking place.

I have seen the department’s response to the counsel’s opinion by 38 Degrees, which raises the European competition issue by reference to a number of issues in the Bill that overlap with those that I have raised, and in some cases go beyond them. This does not essentially argue the case, but it simply makes assertions in response. Simple assertions will not suffice. The Department of Health needs to produce independent counsel’s opinion to back up its assertions that the risks have been properly assessed in respect of commissioning and that the contents of the Bill, particularly those areas that I have outlined, do not increase the risk of EU competition law applying, or that it intends to mitigate them by specific amendments. Failing that, on these Benches we will be seeking major changes to the Bill, and I look forward to the reply of my noble friend the Minister.

[Lord Owen]

My Lords, I hope I will not be spending too much time on the excellent argument that we have heard from the noble Lord, who is a lawyer. I agree with everything that he has said, except that I want to draw attention to the absence of detail that, if we do not move now, we will confront when we face regulations on competitive markets and on the whole question of a qualified person.

Let me first say to the Minister that it should be very clear that there is no consensus whatever on this aspect of the Bill. You cannot be aware of the arguments among general practitioners, among surgeons and physicians and within the nursing and midwifery profession and still believe that there is consensus on this question of competition. There is very considerable concern. As to his assertion that all this was fundamental to the modernisation of the NHS, if this is not changed it will be fundamental to the destruction of the NHS.

Let us start with the first issue. We have evidence— like evidence-based medicine—about what unbridled competition does to a national health service. It has been referred to earlier in the debate. I recommend noble Lords to look at the question raised in the article by Colin Pritchard in the Journal of the Royal Society of Medicine this year, comparing health service competition policies in the USA, the UK and 17 western countries between 1979 and 2005. The conclusion is:

“In cost-effective terms, i.e. economic input versus clinical output, the USA healthcare system was one of the least cost-effective in reducing mortality rates whereas the UK was one of the most cost-effective over the period”.

This is not a health service that deserves to be turned upside down and it does not deserve to be exposed to the American healthcare system. I have had 17 years as a non-executive on the board of one of the biggest American healthcare companies, Abbott Laboratories. Many aspects of American medical scientific research are the finest in the world. Many aspects of medical and surgical care in certain specialised hospitals in the United States are undoubtedly the best in the world. There is considerable excellence, but if you look at the system overall there is a deplorable decay in quality of care in some parts of the United States, which would make a third world developed country ashamed. I am not prepared to be borne along by some vague talk of consensus on this Bill. The Bill is hated in many aspects, particularly this aspect, in the National Health Service. The BMA has said that it should be withdrawn and has calculated that it would be less disruptive to withdraw it now than for it to continue.

Let me take up some other aspects. I shall speak to the Amendments 278AA, 278BB and 278BC in my name. Amendment 278BB would insert,

“shall not commission services through competitive markets through a competition-based mechanism”.

“Competitive markets” is a term of art. It has meaning in the world of competition. The requirement to manage competitive markets arises from supra-national legislation, with a detailed regime that must be applied, specified in EU law and reflected in national law. That is an obligation to reflect the EU regime unless some clawback of sovereignty is made.

That is the situation, and it applies right across the board. Mr David Bennett, who is to be the chairman of Monitor, wrote in an article in the Times in February:

“We, in the UK, have done this in other sectors before. We did it in gas, we did it in power, we did it in telecoms … We’ve done it in rail, we’ve done it in water, so there’s actually 20 years of experience in taking monopolistic, monolithic markets and providers and exposing them to economic regulation”.

First of all, I do not concede that the National Health Service is a monopolistic, monolithic market. It is a very interesting fact, which is frequently forgotten, that the GP is an independent contractor, and has been since 1948. Many of the debates in this Chamber focused on this issue. My father was a doctor before the National Health Service. He charged patients because he had to. He hated doing so. But he was adamant that he was not going to go into a National Health Service—which he wanted and which he voted for in 1945—if he had to give up his independent contractor basis. He may have been wrong or he may have been right, but it is a massive difference in how you describe the NHS when you think of these independent contractors who have been there from the start.

There are many other aspects of the hospital basis of the National Health Service, which took on in 1948 the spirit and commitment of voluntary hospitals up and down the country. Their assets were frankly seized by the state, but fortunately a lot of their moral underpinnings and fundamental values were not. It has been one of the triumphs of the National Health Service that it has been able to take some of that voluntary spirit and keep it within the National Health Service. Why was it that for decades, hospital doctors, surgeons and physicians worked very long hours uncomplainingly? What absurdity it is that that has been taken away from them by EU regulations and we have successive Governments who all agree that it is ridiculous nonsense, but they can do nothing about it. We are about to do the same to the whole National Health Service on this EU point. This is not a minor point.

The noble Earl knows that I respect him very greatly as a parliamentarian. He has shown it day after day in the patient way in which he has examined the debates in this House, many of which have not been controversial, but have been informative and intelligent and could make some addition to this Bill. But I am afraid that on the fundamentals he speaks for a department that shows at every serious part of examination of the Bill that it is not prepared to provide us with the true facts. We had this debate about risk assessment. Let me come to the issue about competition. In 2006, a Labour Government commissioned a major study on competition and the effects on the EU. It is a scandal that I have been trying for months through Freedom of Information to get hold of this document so that we would have it before this debate.

I have been obstructed at every turn by the Department of Health. Do not tell me that it wants the facts out here so that we can discuss them and know about this issue. As the noble Lord states, as an experienced lawyer, this is an area of very great complexity and yet we are not allowed to see this study, which we have paid for. It is not the possession of the Government—it was not even commissioned by this Government—but we are not allowed to see it. What is the Freedom of Information Act about? Are you afraid of the facts? Is there something that we cannot be trusted with? We are about to legislate on a very important area, which does have an impact on the EU, and we are deprived of one of the existing studies. So, all of us have had to go around and try to get expertise in this area and it is not easy to do so.

The judgment I get from lawyer after lawyer is that the term “competitive markets” has meaning and substance in the EU. Unless we provide what I call a “French railway” clause, we will be forced by EU legislation. I come back to my earlier quotation that we have done this before in the railway system. Well, the EU has done it on our railway system but it has not done it on the French railway system. The French railway system operates on the basis of a Government who have decided that they are going to be outside EU competition law. I do not know quite how they have done it. I have had a very considerable search through the statute law of the French railway system—it has tested my French language to breaking point—but, with advice from others far more expert than me, I have put together in Amendment 278BC what I call the equivalent of a “French railway” clause. It is not good enough, of that I am quite sure, but I want the Government to focus on this issue. My wording is,

“shall operate in such a way that NHS activities remain wholly within section 1.3b of the General Agreement on Trade and Services, and within the services covered by the Limitations to the Horizontal Commitments contained in the ‘Trade in Services Conditional Offer from the EC and its Member States’ issued from Brussels on 29 April 2003”.

It is quite true that the NHS has not yet come under the full provisions of the European competition and procurement policy. Let us be clear about procurement policy; it is an extremely important aspect of this whole issue. The reason it has not been done is that, despite what a lot of people seem to think, Brussels is not always endlessly trying to pick fights. It knows that we have a National Health Service which is hugely popular and much cherished by the British people and it has not, until recently, even contemplated coming in on the NHS.

I have to admit to a story. During the 1975 referendum I was the Minister for Health and my overall boss was the Secretary of State for Health and Social Security, Barbara Castle. During the referendum she made a speech saying that the NHS was threatened by the Common Market. I walked into her room and said: “Barbara, if you make another speech like that I will make a speech which will oppose every aspect of what you said and the press will say the Health department is totally divided. It will do neither us nor the NHS any good.” She listened very patiently and carefully and never made another speech, but I have to admit I was clearly wrong. The way the EU has evolved in this regard is potentially a threat to the NHS—I must say I am very surprised—but will be only if the Government decide to make it so. It will only be if we do not provide some form of “French railway” clause to ensure that this does not happen to the NHS.

I do not believe that this is actually even a party political issue. We have heard many different voices about the National Health Service in the debates here and, although I disagree with some aspects of what people think is the right way for the NHS to go, I do not detect a great wish to challenge the fundamentals. It is very clear to me, however, that if we set this Bill in motion we will find that that will happen, not because people necessarily want it to happen but because it has to happen. This is why I do not think it is sufficiently understood what this Bill will do.

“Any willing provider” or, as it is now, “any qualified provider”, sounds like a sensible thing. Why was it that the then Secretary of State, Andy Burnham, in possession of the opinion about the EU and its threat to competition policy, changed “any qualified provider” to say that the National Health Service would be the main provider? I believe that if we put that into the Bill, that alone would be our “French railway” clause, as “any qualified provider” and competitive marketing go together. We should preferably deal with both. This is a fundamental question which we must not disregard.

On studying the Bill, there is practically nothing in it about what the regulations are going to contain. We know that there will be regulations, and I do not dissent from the view that that might be a reasonable way of doing things. However, until this matter is resolved in the body of the Bill, we dare not let this issue go off to regulations. I hope that this House, on this issue at least, will be prepared to vote down the present wording. The Bill does not deserve to be submitted to the country and signed by the Queen with this provision unchanged and unchecked.

I feel strongly about the question. I believe that there is a solution, but I think that it is very hard to even begin to find that solution if the Government persist in refusing to let us see the document. I have not seen it. It may be that the document will strengthen their arguments. It may be that it will expose some of our fears as unjustified. But I urge the Minister, whom we respect, to go back to his Secretary of State and say that this document must be published in early January. They may be forced to do so. Judging from the freedom of information documents coming back to me, there is a belief that they ought to ensure that this is published.

At one stage, people did not even know which year it was. It was thought to be about 2007. Now we have at least established that the year was 2006, which is one of the reasons that I had to put in another submission. I do not think that the Government will be taken seriously when we go on to Report if we have not had that document published in time for us to examine it fully and to get other legal advice. Certainly I, for one, would consider it to be an utter disgrace if we go on to Report and vote on this whole issue of competition if the document has not been published.

[Lord Newton of Braintree]

My Lords, I rise first to express my regrets to the House that, ironically for reasons connected to an NHS commitment, I shall not be able to be present for a lot of our proceedings later on.

Secondly, and related to that commitment, I should declare my interest as chair of the Suffolk Mental Health Partnership NHS Trust Board.

Thirdly, I do not seek, nor am I qualified, to follow the three speeches that have preceded mine: I refer to the detail into which the noble Baroness, Lady Thornton, went, the important legal points of my noble friend Lord Clement-Jones, and the many of the points which the noble Lord, Lord Owen, discussed. I have a good deal of sympathy with many but not all of the points that each of them made and I hope that they will be carefully addressed by the Minister when he comes to wind up. My purpose, however, is rather more limited and pragmatic.

I say to my noble friend the Minister that I would not reject out of hand the interpretation and explanation of context that he gave in the early part of this debate. I think that there are questions that still need to be answered, as has been made clear, but I am prone to give him the benefit of the doubt on the general approach that he outlined.

I particularly welcome—it is very important, given the uncertainties that we all face about the import of this Bill, underlined by the noble Lord, Lord Owen—that my noble friend gave some clear indications of areas where he thought clarification was possible and where he would give serious consideration to some of these amendments. In the light of that, I would be disinclined to try to shoot him down today, but I would not be disinclined to shoot him down—or try to shoot him down, at any rate— if we do not see some changes and improvements related to these concerns before the Report stage.

I would like to make a few pragmatic points. First, we ought to acknowledge that what is in this Bill about Monitor is a lot better than what was the previous legal situation about Monitor, where the Secretary of State had no power to intervene at all. I will come back in a different way in a moment to what Monitor took into account, but we should recognise that there are already some signs—and this relates to my experience—that Monitor has got some of the message that is emerging from this debate. I refer back to my own personal interests and experience. I have been chair of two trusts, which have been through the Monitor process. The first of them—the Royal Brompton and Harefield—did happily become a foundation trust after I had become time expired as its chair. The second one—the one I chair at the moment—was in the process of trying to become a foundation trust at the time. Indeed, I was told when I was recruited for it that my task was to get it to be a foundation trust. For reasons I will not go into, that did not prove possible and we went down a different route. My observation—it is related to my comment just now about Monitor—is that in the intervening period there had been a sharp shift in Monitor’s attitude. When I first embarked on this, there was a clear feeling—Bill Moyes, the previous chairman would not thank me for saying this—that all that mattered was the money. Bill Moyes would have denied that, but I can only tell you that that is what it felt like. Then came Mid-Staffs and the whole situation changed, as I judge it, for the better. Patient safety and quality and all those issues began to be as important, if not more important, than the financial ones—not that the financial ones are unimportant.

At any rate, I come back to the story and the plus point for Monitor. Once we had decided at SMHP that foundation trust status of our own did not look likely, we decided that the best bet was merger with the neighbouring trust, Norfolk and Waveney, because East Anglia is a coherent whole, with all sorts of synergy and the rest of it—I will not go into the arguments. So we set about getting together with them as a joint venture. The rhetoric was merger: the legality was acquisition. They were an FT and we were not— I will come back to that point in a moment as well. I have no way of describing to the House just how difficult that proved and how many obstacles were planted in the way by the process.

We were advised that acquisition was simpler than merger, which is one of the reasons we went for it. I can only say that if the Minister wants to get the many remaining trusts that are not FTs into FT status through mergers, he is going to need to make sure that it can be done more easily than was the case in the one of which I have experience. If acquisitions are easy, mergers must be a nightmare.

12:15

We originally wanted to merge last April. We have not yet merged and are now due to merge at the turn of the year, the Secretary of State willing-but I believe he has signed the orders. That is very nearly nine months later than we intended. It has been attended by all sorts of certainty, uncertainties and difficulties for morale and the service. Why? Not because it was not supported by the PCT, the SHA, the department, the two county councils, everybody, but because the Co-operation and Competition Panel issued an adverse report in the early part of the year which threw the whole process back by at last six months and, in my view, was adverse to the interests of patients. That is a tendentious view; they probably would not agree but that is my view. The good point for Monitor, backing up my earlier point, is that almost exactly two months ago Monitor came to a decision, taking account of all the factors, including the opposition of the Co-operation and Competition Panel, and it overruled the panel on the basis that the interests of patients suggested that the merger was sensible and right and should go through. That validates my suggestion that there has already been some learning.

I now come back to my other general points against the background of that experience. The most important point is that we need to be as sure as we can that patient quality and safety is given the real priority it deserves, whatever the detail of this legislation may say. That is nowhere more important than in mental health, where it is so easy to disrupt the care pathway that is now the basic way of approaching the treatment of mentally ill people. I know from my own experience that if you have different bits of care being provided in different ways by different packets of service, there is the risk of disaster if they do not all know what is going on. You need an integrated care pathway to deal successfully with these problems. So, while I have no problem in principle about competition and even less so about choice, I think it is important that where there is any doubt about which factor is going to be paramount, it has to be patient safety and quality not competition that wins the day. I hope that is what I will be hearing in the course of my noble friend’s wind-up. If not, I, along with others, will not hesitate to want to come back to this matter on Report.

[Baroness Meacher]

My Lords, I rise to speak in support of Amendment 260EA which, as I understand it, seeks to maintain the essentials of the role of Monitor as set out in the 2006 Act. I support the extending of Monitor’s roles beyond those of foundation trusts. However, in response to the argument of the noble Earl, Lord Howe, that we need to change the functions of Monitor in order to achieve cost-effectiveness, improvements in quality and productivity in the years ahead, I would argue that with Monitor as it stands, together with the National Institute for Health and Clinical Excellence and the CQC—a great improvement on its predecessor—we have all the tools we need in the kitbag in order to improve our productivity, quality and cost-effectiveness.

I want to focus on one issue which I believe to be the greatest threat presented by these reforms to the improved quality and cost-effectiveness of the health service. There are two powerful reasons for avoiding the reorganisation of Monitor. The first is that if it ain’t broke don’t fix it. Monitor has been, in my experience, an extremely successful organisation, with one exception to which I will return. The second is that the main new ingredient is, indeed, the promotion of competition that has been addressed so effectively by other noble Lords. Although this will not be based on price, I have absolutely no doubt that it will drive financially driven decision-making.

I want to touch on these two points. Monitor is not broke, as it were. Having been on the receiving end of Monitor’s demanding regime for accreditation as a foundation trust service, I can vouch for the fact that Monitor has been the engine behind the transformation of inefficient organisations, run by boards with weak non-executive directors—who therefore offered very little professional challenge to the executive directors—weak financial systems and weak financial management. That is what we had, and that is what other trusts have had, prior to undergoing the rigorous process driven by Monitor to become foundation trusts. In my case, as chairman, I had no alternative but to get rid of my chief executive officer—no easy task but somehow this process enabled that to happen—and, indeed, to get rid of my non-executive directors. It was as simple as that. The same process continues to take place all over the country. I know this because others tell me. My belief is that we owe to Monitor, more than any other organisation with the possible exception of NICE, the fact that the NHS is now one of the most cost-effective health systems in the world, as the noble Lord, Lord Owen, has said very clearly. We should be proud of that.

At this stage I ought to mention Mid-Staffs, because this is, indeed, the one failure to which people refer. As I understand it, the problem was that Monitor at that stage had no information about quality, and the Healthcare Commission, which at that stage was responsible for quality inspection, did not pass data to Monitor. All those problems have been resolved, and they needed to be, because without the quality information, Monitor was ill-equipped to do the job it had to do.

I come now to my second point, which is about the promotion of money-based competition. I want to emphasise “money-based”, because I support competition, but it must be based on the quality of services to patients. The promotion of money-based competition and private sector provision of health services will be a detrimental and costly experiment. We have only to look to other countries, as the noble Lord, Lord Owen, has said, to realise that this is nothing short of a disastrous route forward. I refer to page 19 of the Department of Health’s document Protecting and Promoting Patients’ Interests: The Role of Sector Regulation. It states:

“Regulation and competition will always play an important role”.

I know that the word “competition” here means money-based competition: not price-based, but financially based or commercially based. It goes on to say that Monitor will,

“provide a fair playing field for all, regardless of ownership”.

I understand that the existing foundation trusts will remain as they are as long as they remain solvent. The document refers to patients wanting more choice. As we know, we can get any answer we want from surveys, as long as we ask the right questions. No patient would want more choice if they were aware of the costs and the appalling consequences of the dominance of the money motive in a commercial system. Patients want choice within the systems that we currently have.

I will not focus on the US, because we know that with health costs soaring towards 20 per cent of GDP and 30 million people excluded from remotely satisfactory health care, this cannot be a model to follow. However, Germany is held up as a good example of a health system which has worked with more competition in the system for a long time. I will start with an anecdote. A German orthopaedic surgeon we met on holiday a few years ago happily referred to the fact that he and his colleagues regularly undertake unnecessary operations if they are short of work. What was remarkable was that he seemed completely unembarrassed that this should be the case and that he should admit such a terrible thing to somebody who is used to working in a country with a national health service. It seemed completely normal; it clearly is.

I want to make available to your Lordships the more considered experience of one of the German consultants, Professor Priebe, who worked as a clinician in Germany for 17 years before emigrating—utterly disgusted with the German system—to the UK to work in the National Health Service. He gave me his comments and pleaded with me to make them available to the Government, because he is so alarmed at the thought that he escaped the German system to come over here only to be followed by something rather similar. I will try and draw on his comments as quickly as I reasonably can.

In Germany, the contractual agreement between commissioners and provider organisations define the funding arrangements. Clinical decisions are then strongly influenced by financial incentives. Computer-based algorithms have been developed to guide doctors on what diagnostic interventions and medical treatments patients should receive in order to maximise the income for the provider organisations. These algorithms consider the characteristics of the given patient as well as the characteristics of the broad category of patients with that particular diagnosis in order that the doctor achieves the,

“most profitable average treatment costs across a diagnostic group of patients”.

Is that really what we want in our country?

In Germany, evidence-based medicine and the interest of patients are much less important. In the UK in recent years, the emphasis has been more and more on evidence-based medicine; that is based, of course, on the professional work of NICE, which I have already referred to. If the drive towards competition threatens this ethos, Britain will lose something extremely precious. Competition not only reduce the flexibility needed to provide individualised effective care, but also requires ever-increasing documentation. Ministers often refer to the bureaucracy of the National Health Service, but if they had the experiences of the bureaucracies of other systems, they might be slightly less critical.

This documentation is supposed to ensure that clinicians can demonstrate that these income-generating interventions have indeed been provided. Commissioners mistrust the providers and require more controls and ever more documentation as well. This waste and inefficiency inevitably drives up costs.

Financial incentives and competition encourage commissioners to accept less costly patients. The providers are inclined to do the same. Here is another major fault in the system. As a result, patients with severe and chronic disorders become disadvantaged. It is no accident that mental health services are relatively well funded in this country, when compared to these competition-based systems, though I should emphasise that even in the UK, mental health remains the Cinderella of the health service.

Financial incentives also lead to the prescription of useless treatments—my anecdote makes the point—and the over-provision of services. Apparently, this is widely known across the German system. The providers then argue for the funding for all these unnecessary operations and superfluous services.

Competition and fragmentation of local service systems create the need for more referrals and associated paperwork and further increased costs. There are multitudes of downsides from these financially driven systems. Our consultant concludes that,

“most of these downsides of a more market orientated system appear to be intrinsically linked to the promotion of competition in health care and to having a system based on independently negotiated contracts rather than one controlled by agencies that are directly accountable to the public”.

In this country, we know from other sectors that markets do not work. The name Jarvis will mean something. Jarvis was, of course, the private maintenance company for the rail companies. Jarvis was found negligent following various rail disasters and, of course, Jarvis no longer exists.

Do we really want to generate these risks of negligence in the health sector? Surely not. I realise that at this point in time, the plan is not to go all the way down the rail route, but the direction of travel is extremely clear and I have no doubt that that is where we shall arrive unless there are safeguards within this Bill to prevent it. Some may point to the apparent savings achieved by fundholder GP practices. The evaluators apparently found, however, that GPs bumped up their prescription costs immediately before becoming fundholders by going to special drugs only to return to generic prescribing once they became GP fundholders.

12:30

These are the sorts of games that people play when driven by financial incentives. The OECD makes clear in its recent report that the evidence simply is not there that markets work in the health field. To briefly mention the US, they have extraordinarily low bed occupancy compared with the UK. Why? Because they need lots of beds to be available in order to deal with competition. It is not clear how many patients are actually going to come to them at any point in time, so there is excess supply driven into the system.

In conclusion, the NHS already has very strong competition, but of an entirely healthy variety. I strongly support this. We need competition. We like it as human beings. At the East London NHS Foundation Trust, we pore over the benchmarking information from Monitor and the CQC—I was doing so yesterday, as it happens. We are very concerned about how we are doing and the quality of our services relative to our competitors around London.

I am not against competition but I am against financial competition. I appeal to the Minister, even at this very late stage, to do all that he can to preserve the public service ethos and the healthy competition that we already have, and to avoid at all costs the deeply unpleasant results of replacing competition based upon the best possible care of patients with the money motive.

[Lord Rea]

My Lords, I would like to make a very few remarks on competition versus co-operation from a clinical rather than a legal position, as I am baffled by the complex legality of the amendments on Monitor.

As the noble Earl knows, like many others I have always had concerns about the wisdom of introducing market competition into healthcare. Co-operation and collaboration between providers should always be the norm for the benefit of patients and, as the noble Baroness, Lady Meacher, has just said, it is much less costly. However, it is good to know that competition is now to be on quality and not on price. This removes, theoretically at least, the race to the bottom which has been shown to result in worse outcomes in a number of studies, particularly, as other noble Lords have pointed out, in the United States.

Recently there have been three studies in the UK on competition in healthcare, of which that by Zack Cooper and colleagues at the LSE, looking at hospital data covering 400,000 admissions from 2003 to 2008, is the largest and the best known. They claim to show that competition on quality can improve the outcome for patients with a myocardial infarction or coronary thrombosis. Although carefully conducted, and allowing for many variables, the paper has been criticised by statisticians for the elementary but common scientific mistake of equating correlation with causation.

The mortality rate certainly did fall in the hospitals deemed to have been involved in choice and competition. They were deemed to be such because they were close to other comparable hospitals, mostly in urban areas. The researchers were unable to measure competition as such, which of course is a weakness of the study. The mortality rates in these hospitals were compared to those in hospitals outside these areas with more scattered populations who were likely to have less choice and to use only one hospital. However, differences in the mortality rate could have been due to a number of clinical and diagnostic factors, unconnected to competition, which applied more to the urban than the provincial hospitals. For instance, the urban areas were more likely to contain teaching hospitals, which often lead on the introduction of new treatments.

Another report deemed to show that competition is beneficial was commissioned by the Royal College of Surgeons. It showed that outcomes for elective surgery at independent sector treatment centres were better than those for similar procedures carried out in National Health Service hospitals that also offered emergency care. This is not surprising, for several reasons. The patients at the ISTCs were younger and in better general health; they came from more affluent areas; and they were less likely to have co-morbidities. Therefore, the surgeons at the ISTCs had a more straightforward task and by concentrating on a few surgical procedures may have become more skilled in that limited area.

There is nothing to stop National Health Service hospitals setting up dedicated wards and teams to concentrate on routine operations, with doctors working in those sections being protected from being diverted to treat more urgent or seriously ill emergency cases. A number of National Health Service hospitals have done this quite successfully, providing treatments at a lower cost than those commissioned from the private sector. Two years ago ISTCs received some 11 per cent more remuneration than the National Health Service for doing the same work. Of course I am aware that the National Health Service sometimes needs the private sector to clear a backlog. However, this should be temporary, if only for economic reasons. As many other noble Lords said, competition is welcome and necessary within the National Health Service but should be between hospitals, clinicians and other providers vying to be judged the best. In most cases there is only a temporary need to use commercial, competitive providers. I hope that these general remarks have helped the debate.

[Lord Whitty]

My Lords, I will intervene only briefly because most of the points on competition were made very eloquently, in particular by the noble Lords, Lord Clement-Jones and Lord Owen. My amendments would rather more crudely delete references to anti-competitive behaviour. One thing I will draw to the Committee's attention is that the terminology maximises the chances of this going wrong. The earlier version of the Bill referred to “promoting competition”—in other words, encouraging more providers—which was a relatively benign intervention if one believes that that is the way to go. By referring to “preventing anti-competitive behaviour” we are turning Monitor from being an accreditor and promoter of more providers to being the policeman of the nascent market. That will put it in a very vulnerable position.

All competition and sector regulators that have this duty are inevitably faced with appeals, complaints and other interventions by unsuccessful providers or potential providers, which go through a quasi-legal process with the regulator. The Bill provides that if that is not acceptable, the issue may go to the competition authorities, which rely on the general principles of competition and also—as the noble Lord, Lord Owen, eloquently underlined—of procurement law. Therefore, in almost every case of commissioning the allocation of the contract will be opened to appeal on the grounds that it overrides competition. However, as noble Lords said, there are hundreds of thousands of situations where collaboration and integration, vertically and horizontally, and even mergers between providers, would be in the interests of patients. The Minister said that clearly in all cases the interests of patients were the most important issue. Indeed, the very useful document describing Monitor’s role states that the regulations would help ensure that competition is not applied inappropriately, and only ever in the interests of patients. Well, that is what we would all wish to see. I certainly would not wish to deny Monitor the ability to encourage competition, but if there is an appeal against a particular award by a particular commissioning body, Monitor and the higher courts have to be in a position of judging whether or not the award was in the interests of patients. That seems a severe restriction on the ability of Monitor to provide its general services because it will be engaged in all these cases of complaint and appeal.

There are things that would fit in with the Government’s overall philosophy— which in this area I do not happen to share—but that would not open the door to such a multitude of appeals and to the wider application, referred to by other noble Lords, of both general EU and UK competition and procurement law, which would tie large parts of the National Health Service up in knots.

[Lord Ribeiro]

My Lords, Amendment 278BA in my name will appear later this afternoon under Clause 71. In view of the discussion so far, however, I think it appropriate that I make my comments now.

This is a probing amendment on which I hope the Minister will be able to provide some clarification. The amendment seeks to address the maintenance of quality standards across all qualified providers, be they NHS, private or the voluntary sector, in three key areas. We have heard mention already today about “any qualified provider” and this is the area on I wish to spend some time. One of the current issues with private sector contracts is that when serious complications arise, requiring intensive care facilities, the patients invariably end up in the NHS. Continuation of care is essential in all areas but it is particularly important in the area of surgery. The experience of the independent sector treatment centres in the NHS, mentioned by the noble Lord, Lord Rea, and others, has not always been a happy one for the medical profession. If the noble Lord, Lord Warner, who has championed their introduction, was here he would have taken some comfort from the recent report that the noble Lord, Lord Rea, referred to.

When I was president of the Royal College of Surgeons I actually instituted a national audit to compare outcomes of care between the NHS treatment centres and the NHS. The Patient Outcomes in Surgery audit was launched in 2007 by the Royal College of Surgeons and the London School of Hygiene and Tropical Medicine. I said at the time:

“This Audit will provide solid evidence as to whether patient outcomes differ between the ISTCs and the NHS. It is imperative that patients receive a sustained, safe and quality service, which is consistent”—

and that is the point, consistent—

“across surgical providers”.

The outcome of the audit, published this October, analysed four operations: hip and knee replacements, hernia and varicose vein surgery across both provider types. It found that the outcomes from the ISTCs were equal to or generally better than the NHS where both elective and emergency patients were treated. Again, the noble Lord, Lord Rea, made the point that the NHS deals with emergency patients as well. The report highlighted the fact that the patients treated in these centres were younger, fitter, healthier and less likely to have co-morbidities than their NHS counterparts, making them a lower risk for complications.

Jan vanderMeulen, professor of clinical epidemiology at the London School of Hygiene and Tropical Medicine, points out:

“Independent sector treatment centres treat only non-emergency cases. The separation of elective surgical care from emergency services is likely to have a positive impact on the quality of care, irrespective of whether the elective surgery is carried out by a private company or the NHS”.

This is something that I believe passionately: the exercise of the ISTCs has demonstrated that if we separate functionally elective from emergency care, we will improve the quality of care for patients, irrespective of whether that is done in the private sector or within the NHS.

There is a downside, however, and this was pointed out by Professor Norman Williams, current president of the Royal College of Surgeons, when he warned,

“we need to guard against any drift that could destabilise hospitals. Sicker patients have needs that only a comprehensive hospital can provide”.

There is a danger that if you move a lot of care over to ISTCs and so on you may destabilise the acute services in the NHS.

12:45

Any qualified provider offering a surgical service must adhere to and abide by the same standards as NHS providers. We called for a level playing field in 2007 with respect to ISTCs and it is interesting to note that the noble Lord, Lord Hunt of Kings Heath, who is not in his seat, said in a speech to the NHS Confederation in March 2007:

“We want an even playing field between the NHS and the independent sector. Patients, wherever they are treated, should be assured that the regulation is consistent”.

I would echo the words of the noble Lord and ask the Minister to reassure us that there will be a level playing field, not the inequalities which led the Health Select Committee to report on 13 July 2006 that the first wave of ISTCs cost 11 per cent more on average than the equivalent NHS cost and that some ISTCs delivered only 50 per cent of the cases they were contracted to treat. I believe the tariff would address this but I seek assurances none the less. We wish to see the end of cherry-picking and spot-purchasing and a return to a level playing field for all providers. This Bill will help to cement the role of the private sector in surgery but there needs to be regulation by Monitor to ensure that private providers deal with their own complications and do not become a burden on the NHS. The provisions that have been put in place, such as the requirement to treat patients within 30 days of discharge, are a way forward but do not complete the picture.

The second area relates to the NHS Outcomes Framework 2011-12 which aims to provide a national-level overview of how well the NHS is performing and to act as a catalyst for driving quality improvement and outcome measurements, some of which I have already referred to in relation to the Patient Outcomes in Surgery audit. Quality standards set by NICE will drive the initiative and must be met by all providers, including the private sector and any qualified providers. This is what I assumed the “qualified” part meant. Originally we talked about any “willing” provider and we now refer to “qualified”. As I said, the use of indicators such as the emergency readmission within 28 days of discharge, while an important first step, does not capture non-acute complications like failed hip or knee replacement operations which will require revision surgery. Monitor must have the ability to ensure that all qualified providers adhere to the NHS outcomes framework and this amendment would make that possible. If all qualified providers are required to strive for the goals set out in the outcomes framework, the health of the nation will be improved and this will undoubtedly meet one of the ultimate goals of this Bill.

We discussed education and training earlier so I will not go into that in detail. However, it is important to point out that the first wave of ISTCs was contracted without any need to include education and training. Efforts were made to introduce education and training in the second wave of ISTC contracts but I have no evidence that this actually took place. In the private sector this was not an issue when private beds were within the NHS. Junior doctors used to work in private hospitals providing night cover and receiving some training during the day. These arrangements have more or less ceased and there is no structure for formal training in private hospitals, unlike the structures in some hospitals in the United States. As more and more procedures are done in the private sector—currently an estimated 7 per cent of all elective referrals—trainees are losing the valuable opportunity to observe the many different types of procedures and surgery in hospitals. Monitor must be given the power to correct what has been a training deficit by requiring all providers to have a contractual commitment to education and training and to deliver the standards and outcomes agreed and published by the profession. The royal medical colleges stand ready to undertake the quality assurance of training which, in the case of surgery, can only be done by those who have front-line experience in the speciality in question

The Prime Minister’s speech last Monday introducing a strategy for UK life sciences highlighted once again the importance and value of translational research and the need to get innovation to the bedside as quickly as possible. The £180 million catalyst fund will help to move medical innovation closer to patients and my amendment would allow Monitor to regulate to encourage all providers to engage and participate in research.

The need for equity between the private sector providers and the NHS is pressing. There needs to be a mechanism in place to ensure that any qualified provider, irrespective of the sector, is held to account using the same standards in regards to professional guidelines, education and training, research and the NHS outcomes framework. Amendment 278BA seeks to address this issue and foster debate among noble Lords. I very much hope that the Minister will address some of these points in his response.

[Baroness Cumberlege]

My Lords, I have listened very carefully to the debate. I think that it has been one of the best that we have had. I pay tribute to those who have taken part, and especially to the Opposition, for introducing it so fully.

I, too, have been connected with the health service since 1948. Like the father of my noble friend Lord Owen, my father was a GP. This resonates with what the noble Lord was saying about paying for services. My brother is a consultant and I work daily with the NHS—rather, I wish that it was daily. I run my own business, and, sadly, it is not quite daily. However, I want to declare that I run Cumberlege Connections, and that we do not provide any patient services to the NHS. We provide training for doctors, nurses and those working in the service.

Reading the evidence that has come forward from the King’s Fund, from the Nuffield Trust and from other bodies, nearly all of them have said that the NHS needs to improve. Looking at the research, I think that is absolutely true. We have to look forward: the NHS is facing enormous challenges. Our population is changing; it is getting more diverse, as well as growing older. The NHS needs to innovate and adapt to meet the new expectations of patients.

I have had treatment over the past two years in hospitals and have been very interested in how care was given. However, patients have had to sit in out-patient departments, queuing as my mother used to queue just after the war, when there was rationing. Sir Muir Gray, a very respected member of the medical profession, has said that the out-patient department is a relic of the 19th century. So we have to change. I think of banking—perhaps that is not a very good example at the moment. However, at one time we used to have to queue to get our money at a counter. Then the banks introduced a hole in the wall. I remember Barclays saying, “Our customers are much too important to have to go to the impersonal ‘hole in the wall’; we are going to give them personal service at the counter”. No—the public wanted cash quickly, and they went to the hole in the wall. Now we can do our banking in our sitting rooms. The world is changing so fast, and the NHS cannot be stuck in aspic. We really must move on.

I am, therefore, very interested in the debate and the question of choice. One of your Lordships said the NHS was not a shopping spree, or something like that. However, there is a huge amount of competition within the NHS. Would-be doctors compete for medical schools, for a start. Actual doctors compete for the very best jobs in the NHS. NHS hospitals compete with private practice for consultants’ time and compete with non-healthcare employers to retain nurses. GPs have been partly competing for NHS patients since 1948; so have hospitals since 1991. Companies compete to provide the NHS with new medicines and diagnostics. NHS researchers compete for grants. The NHS competes with schools, prisons and the Armed Forces for public funding. So competition in the NHS is both long-standing and inevitable. It involves not a yes/no ideological choice, but pragmatic and nuanced judgments about how, not whether, to make use of it. Competition gives NHS patients choice. The phrase, “I want a good local hospital” is a familiar refrain, just like the desire for good local schools and shops. Yet the very fact of choice and its implicit challenge, as we have seen in the previous Government’s introduction of independent sector treatment centres, actually shakes up the NHS providers. It is the grit in the oyster that helps to create a better service with higher standards.

Looking at choice and Protecting and Promoting Patients’ Interests, which has been produced by the Department of Health on the role of sector regulation, it was interesting that 81 per cent of respondents wanted more choice in where they are treated; 79 per cent wanted more choice in how they are treated; 75 per cent wanted a choice of hospital consultant in charge of their care; and 75 per cent of respondents wanted a choice of which hospital consultant is in charge of their children’s care. Women and older people, in particular, want to see more patient choice in the NHS. Nine out of 10 people over the age of 55 want to have a greater say in how and where they are treated. So we know that people want more choice, and that choice can go beyond the NHS and into the independent sector; we have got good examples of where that is happening successfully.

It is important that we go with the Government on expanding the opportunities for people to choose the care that they want and where they want it, but we know that if it is going to work well we need a robust economic regulator. That is absolutely essential. That regulator needs to support plurality of provision for NHS patients. In the Bill, we see that Monitor will ensure that tendering to provide services to NHS patients is not unfairly rigged—that is really important; that cost does not take precedence over quality, as has already been said; that the tariff is set independently of politicians in Whitehall, and we do want a very independent regulator; that essential NHS services of patients are protected; and that patient choice is unrestricted without destabilising the NHS. That is what we should be aiming for.

I am grateful to my noble friend for clarifying some of these issues in his opening speech. We have seen problems. We have seen spot-purchasing; that has got to go. We have seen cherry-picking; that has got to go. We have seen a race to the bottom on price; that has got to go.

There is huge merit in the Bill. I see the creation of an independent sector regulator as one of the great benefits in the Bill, which will facilitate the development of a forward-looking NHS that can undertake efficient investment and support sustainable growth. It is right that the Government should set the framework—that is what we are proposing in the Bill—and it is right that the Government should retain oversight of Monitor as it does of other sector regulators.

I had a very interesting conversation with the regulator for the railways. It is interesting how she is managing that business. Many of us will know Anna Walker, who used to be the chief executive of the Healthcare Commission, and have seen her go from one regulator into another, and how she is managing that. There are some good parallels that we can learn from. Looking at telecoms, there was no intention that BT should remain a monopoly, or that it should go. It is still with us, but it gave other people choice, working through a good regulator.

I am very much in favour of what has been proposed. It moves the health service into this century, because a lot of it is still in the last. It will offer patients and the public a far better service than we have now.

13:00

[Baroness Armstrong of Hill Top]

My Lords, I want to ask the Minister questions, although the debate tempts me into other things. I will start with the other things.

I found the debate fascinating. I have also found some of the re-writing of history fascinating. The previous Government introduced competition, and I am very proud of what the previous Government did in rescuing the health service, as my noble friend on the Front Bench said. The reality is that when we introduced ISTCs there was no pricing in the National Health Service. There were no tariffs. Nobody knew what it cost. The amount of money that the private sector charged was substantially reduced because we put a charge on it, but we had to do something to create the market. I have been extremely frustrated by the Minister saying, again and again, that we introduced preference for the private sector. We were taking the very first steps to introduce architecture which could allow the comparison that he now makes in order to get to a level playing field. However, there was nothing there that would have allowed the previous Government to introduce the architecture of a level playing field from the beginning. I remember discussions at the time with organisations such as Bupa which were really concerned that we were bringing down the amount that the NHS would pay them per patient once we introduced tariffs and pricing.

That was a significant development. It then allowed other developments to take place. Yes, it has allowed the Government to take a comprehensive look at all of this, although, as we have been reminded on occasion, the Government did not need ideologically to say that they had to completely open things up. The Government have admitted that 90 per cent of what they wanted to do could have been done without this legislation. I now suspect that the Government wish that they had never embarked on this in the way that they have done. It has actually meant that most people out there think that, following the pause, there will be no competition. Some of them will be surprised by the debate that we have been having today and, indeed, the debate that we had a couple of weeks ago.

The introduction of foundation trusts was very significant and a real revolution. It said that you had to take control in your own area and be responsible for how you were organising hospital services. That principle is very important. Given the changes that the Government are making in allowing the Secretary of State to intervene in the way that the noble Lord, Lord Newton, described earlier, can the Minister assure me that that will not mean that the Government will be tempted to, for example, raid the successful FTs to ensure that they cover up with sticking plaster those which are not succeeding and therefore not take the difficult decisions?

We are having the debate while, outside, there have been significant reports from the King’s Fund and comments from my noble friend Lord Darzi about the challenges in London. Those challenges will demand that the Government recognise that you cannot have comprehensive healthcare that works effectively, let alone efficiently, on every street corner. There will have to be places that specialise in hips and knees. The noble Lord, Lord Ribeiro, talked of the efficiency of ISTCs. Although it is within an NHS hospital, there is what is essentially an ISTC in Epsom. The hospital, from what I read, may be having problems generally, but its unit that just does hips and knees is now the most efficient in Europe, if not the world. It has done incredible things to make it so, such as buying a taxi firm so that it can ensure that it gets people there and so does not lose any slots. That, of course, helps with efficiency.

We are going to face very different challenges and the Government have to be careful that they do not introduce architecture that institutionalises the superiority of hospitals. One of my concerns about our discussion is that sometimes we reinforce the centrality of hospitals in the modern healthcare system when we should not. We ought to be embedding the centrality of the patient pathway, which is much more about the patient’s experience before they go to hospital and after they leave hospital than the period—I hope it will be shorter and shorter—that they are actually in hospital. That is where competition will play an increasingly important part. There has to be some sort of regulation of other providers but it has to be done in a way that does not reinforce hospitals. This has been the experience of Monitor to date, so is it going to be most effective to have it regulating other bits of the architecture? There needs to be regulation of the private sector and of the voluntary sector that are providing pieces of patient care. How do we do that in a way that does not reinforce hospital care?

I have been fascinated by today’s discussion of the European Union and whether the NHS will be subject to the competition law. I remember very well, as Housing and Regeneration Minister, trying to negotiate with Mario Monti, who simply did not understand that we would frequently want to give support from the public sector, but to have that matched from the private sector. That was seen as anti-competitive and a real problem. I do not want the NHS to get involved in that architecture. I would love the Minister to comment on what his colleague Simon Burns said in the Commons. Mr Burns agreed that the application of EU competition law was inevitable but also desirable. Does the noble Earl concur with his friend in the Commons?

I have also been fascinated by the discussion around how competition is to be measured and the fact that we are now going to measure competition on quality as well as price. Ideologically I support that absolutely, but I am not sure how you do it, and I want to know how the Minister intends that to happen. What is it that will be measured so that, at a local level, proper decisions that are not contestable in court are made around the wording currently in the Bill? We all want to get there but the reality is that it is very difficult to find an objective measure that will be clear about the quality of patient care. We have a long way to go in terms of getting an architecture that will deliver the health service that the majority of people want to see where the patient is at the centre of every decision. I have been impressed with the foundation trust board that I have joined in Durham and Darlington. The businessmen on the board are saying that if you get patient care right, the financial decisions will become much easier and more straightforward. I believe that but we have to be able to get there. The real problem is that the Government have got so many things confused that people out there do not see it as simple. They see it as a confused and muddled agenda that has objectives which do not look for a patient pathway that is clear and open to the patient, with the patient getting a hold of how they can be more in control of that pathway. That is where we all want to get to. I am just not sure that the Government have got us there.

[Lord Ribeiro]

Does the noble Baroness agree with me about the pricing of ISTCs? As a surgeon I had a perfectly good idea of the cost of operations in the private sector because I did private work. I also had a reasonable idea of how much it cost in the NHS. One of the principal reasons why the Labour Government introduced ISTCs was to act as the grit in the oyster to challenge the NHS to reduce its costs and to improve the quality of its care. The issue was not just that the Government did not know what the actual price was going to be.

[Baroness Armstrong of Hill Top]

It certainly was not. I do not believe that the previous Government ever acted just on price, despite what the Minister keeps alleging. The noble Lord might have known what the price was but the price in his hospital was very different from the price in another hospital. One of the problems was that there was massive inconsistency across the health service, and that was being addressed. The Government were also challenging everyone involved in healthcare to be honest about what they were doing and to put patients at the centre, making sure that they got treated more quickly—a very important issue for us and our commitment to the public—and as fairly and as well as possible. We were able to get more consistency by driving through a price mechanism.

[Lord Walton of Detchant]

Is it not the case that procedures can be more easily and more cheaply carried out in the private sector in many instances than in the National Health Service because the costs in the National Health Service must take into account all the other responsibilities of the NHS, including responsibilities for education and training and many other things in which the private sector is not at present involved?

13:15

[Earl Howe]

My Lords, I thank all noble Lords who have contributed to what has been a first-class debate. While I will not repeat what I said earlier, the value of this summing up will be in me responding to some of the specific questions and points that have been raised by noble Lords.

The debate has demonstrated broad agreement, if I am not putting words into noble Lords’ mouths—no doubt they will tell me if I am—that competition, when used appropriately, has an important role to play in realising what we all want to see in the NHS. It should be a means of improving the quality of care and productivity in the health service, and of improving patient choice, including choice of treatment. I would like to believe, from what noble Lords have said, that there is no disagreement about that as a general principle. It is consistent with the policies of the previous Government, reflected in published statements on behalf of all the main political parties over the years.

A further area of potential consensus appears to be on the merits of sector-specific regulation that is applicable to both commissioners and providers, with the starting point being the existing principles and rules for co-operation and competition in the NHS, as the noble Baroness, Lady Thornton, made clear.

Speeches from several noble Lords demonstrated the concern that competition law should never be applied to the NHS. The noble Lord, Lord Owen, in particular, expressed that view very forcibly. However, that is not in the gift of the Bill. The Bill provides for Monitor to consider cases of potential breaches of the Competition Act 1998, to undertake market studies and to determine where and when matters should be referred to the Competition Commission for investigation under the Enterprise Act 2002. Establishing concurrent powers for Monitor would not extend the scope of competition law or its applicability to the NHS.

[Baroness Thornton]

If that is the case, why do 20 clauses in this part of the Bill refer explicitly to the Competition Commission and the panoply of competition law? Should they not be there?

[Earl Howe]

They are there because this is the first time that any Government have attempted to bring together under one umbrella the disparate parts of our existing system for regulating and controlling competition. As I said earlier, we have that system in skeletal form, but there are lots of gaps and inconsistencies. By bringing them under one umbrella, as this Bill does—I am afraid that it inevitably occupies a goodly number of clauses—we will have a coherent system of regulation for the future.

Establishing concurrent powers for Monitor would not extend the scope of competition law or its applicability to the NHS; that is an important point for noble Lords to appreciate. Why have a sector-specific regulator? For me, the reason is that, instead of such matters being reserved for the Office of Fair Trading, Monitor will be able to lead on these issues in its capacity as a regulator with statutory duties to protect and promote patients’ interests and to enable integration, and as a body with much greater knowledge and expertise of healthcare compared with the Office of Fair Trading. That would include, for example, where arrangements such as clinical networks, which may restrict competition, deliver overriding benefits to patients. Just because there is no competition, that does not mean that the behaviour in question is anti-competitive.

That view was forcibly brought out by the NHS Future Forum. As I have said, competition is just one of the tools available to the commissioner in securing access and improving services, and it will be the commissioner, not Monitor, who will decide where and how to use it. That is not new. The use of competition—for example, through competitive tendering—is already well established in the NHS. A range of providers—NHS, voluntary, and independent—are contributing to improving services for patients.

Of course I understand the passion with which the noble Lord, Lord Owen, spoke; my concern is that his amendments would remove from the Bill a protection for patients in relation to the actions of commissioners. That is very important; if the noble Lord’s amendments were accepted we would have commissioners taking decisions that were not overseen or checked in any way, which would be very dangerous. It would also be a backwards step from the existing principles and rules that apply to primary care trusts and that were introduced by the previous Government. The noble Lord, Lord Owen, said very interestingly that according to his research the French railway system is not subject to EU competition law. I defer to his knowledge of French railway legislation but, as is made clear in the OFT’s recent guidance, the issue of whether competition law applies requires an analysis of the activity in question. To insert a clause into the Bill just to say that EU competition law shall not apply to the NHS would not achieve that aim. EU competition law is a fact, so we have to ensure that the system that we put in place protects patients against breaches of the law and that when breaches do occur they are remedied effectively.

[Lord Owen]

What about the issue of letting the House have the information that was produced for the previous Government before they came forward with their proposals? Is he prepared at least to look at that question, which is currently before the Information Commissioner?

[Earl Howe]

I shall indeed look very willingly at that question and I am grateful to the noble Lord for raising it. Although I might not appear to be at times, I am very keen to be as open as possible about as much as possible. Whatever I can do to facilitate this I will, although it is not a matter that I have been directly involved in.

[Lord Davies of Stamford]

Can I take the Minister back to the all-important matter of Monitor? I think he said this morning that he recognised that there were potential conflicts of interest in Monitor’s role. Monitor will continue to have its role of oversight over foundation trusts until 2016. The Minister has said today that that can be continued beyond 2016. Monitor will now be given responsibility for competition policy: in other words, for all the supply side, whether private sector, independent, or foundation trust. Is there not a conflict with Monitor having this responsibility for foundation trusts and then being responsible for the oversight of the rules of competition and the supply side? Monitor will also be responsible for oversight on the other side: the commissioning and customer side. Is this not an intensely problematic situation, and will the Minister say how he intends to resolve these issues?

[Earl Howe]

My Lords, the noble Lord, not for the first time, is ahead of me. It is no accident that we have a group of amendments that deals with potential conflicts and how these are to be resolved. It might be better, if the noble Lord agrees, to wait an hour or two until we reach those amendments.

My noble friend Lord Newton indicated from his own personal experience that mergers, when they occur, are far too bureaucratic. I fully agree with him. The Department of Health, the Co-operation Competition Panel and, if it involves a foundation trust, Monitor, all currently play a role and may have conflicting views which lead to uncertainty and delay. Our proposals would create a simpler and much more streamlined process for the NHS.

My noble friend indicated his strong view that safety and quality—not competition—should be paramount. I am sure it will not have escaped his notice that improving quality is what these reforms are meant to be about. We have been clear that patients’ interests, especially their safety and the quality of the services they receive, have to be paramount. That is why Monitor’s overriding purpose is to protect and promote patients’ interests. It is why the board will have a duty to improve quality, why the CQC will underpin quality; and why competition will be used only as a means to improve quality. Where there are better ways to improve quality—and there may be—they will be used instead.

My noble friend Lord Clement-Jones, in his extremely interesting and—I do not mean to sound patronising—well-informed speech, took us through some of the intricacies of competition law. Although he did not say this, there has been a suggestion from a number of quarters that we are in a knowledge-free zone when we look at competition laws applied to the NHS. In one sense that is true because there is no case law that can guide us, but in another sense it is not true.

We can say many things with confidence. The point of competition law is to protect people from self-serving abuses like collusion or abuse of market power by restricting access to services. These self-serving abuses that harm patients are already prohibited in the NHS by the principles and rules for co-operation and competition, as introduced by the previous Government. This is not something new introduced by the Bill. Competition law applies to foundation trusts only in so far as they are acting as an undertaking, as my noble friend indicated—in other words, only where they are providing goods and services within a competitive market. Given the lack of directly applicable case law to NHS providers, there is some uncertainty about where that line is drawn.

A body can be an undertaking for some activities and not others. That is very clearly laid out in the OFT’s recent guidance, Public Bodies and Competition Law. For example, the foundation trust might be an undertaking for elective surgery, if it were provided in a competitive market, but it would be very unlikely to be an undertaking when providing NHS services in the absence of competition and while under a licensed obligation to maintain service continuity, which it could well be if Monitor chose to build that into its licence. In so far as foundation trusts may in the future be found to have abused their market power, what would then follow? It is important to understand what the consequences would be. In that situation, Monitor—

[Baroness Thornton]

Before the noble Earl moves on, I would like to be completely clear. Is the Minister saying that Monitor will decide which parts of the NHS are subject to competition law—and not the Secretary of State?

[Earl Howe]

My Lords, competition law potentially applies to the provision of services throughout the NHS. Monitor is there to protect patients from breaches of competition law, as it perceives them to be. The noble Baroness is right that it will not be the Secretary of State who makes those judgments. We are charging Monitor with that duty as a sector-specific regulator. I hope I have answered the noble Baroness’s question; if I have not, I am very happy to write to her on that.

In a situation where a foundation trust was found to have abused its market power, Monitor or the OFT would have the power to remedy the breach and impose proportionate sanctions, which might be a fine, or it might be to set aside a collusive agreement or to apply to the courts for a director disqualification. The effect would be to ensure that the anti-competitive conduct and the associated harm were addressed. That can be only a good thing. It is in the interests of patients, and it prevents the whole thing escalating further. The noble Lord, Lord Rea, indicated his doubts that there was any evidence that competition really did drive up quality. If he will allow me, rather than taking up time now, I will write to him, because there is quite a deal of evidence to indicate that it does drive up quality.

On reflecting upon the question that the noble Baroness, Lady Thornton, asked a moment ago, Monitor will not decide whether competition law applies; Monitor will apply the law as it exists. In the end, only the courts will decide the question that she put—certainly not the Secretary of State.

[Baroness Thornton]

In a way, that goes back to my original question: will the Secretary of State no longer decide, for example, that accident and emergency will be exempt from competition law? Will Monitor decide? Could the noble Earl please be patient with me and give me an example of what will be exempt and what will not be exempt, and who takes that decision? Is he saying that Monitor takes that decision and that if Monitor gets it wrong, the matter goes to the courts?

[Earl Howe]

Monitor would ask itself: is the arrangement we are looking at for, let us say, an A&E department that had no competition for miles around, anti-competitive? The answer might well be no, it is not. As I said earlier, the very fact that there is no competition to a service does not mean that it is anti-competitive. Monitor will make a judgment on whether the service is operating in the interests of patients. However, I think that we are getting into an area where it would be beneficial to have a letter from me setting out exactly how the law is applied and by whom.

[Lord Clement-Jones]

I apologise for interrupting the noble Earl. However, to guide the letter, I want to point out that one of the key things is economic activity by the foundation trust concerned. Whether it is engaging in economic activity will, to some degree, be predicated by the behaviour of the decision of the NHS Commissioning Board and the CCGs on whether it is appropriate that there should be a market in particular services from the provider. That gets another actor, or actors, into the equation. This is one of the matters that concerns many of us, because it means that it will be possible in the future, even where no competition currently exists, for competition to be introduced and therefore for Monitor effectively, legally, to have to treat foundation trusts as undertakings.

[Earl Howe]

My noble friend speaks with great expertise. It would be helpful if I could cover that point when I write, as he suggests.

The noble Baroness has indicated that it would be better to retain the Co-operation and Competition Panel as a separate body. I am very clear that the noble Lord, Lord Carter, and his team have done an excellent job within the Co-operation and Competition Panel since it began its work in 2009. The panel has published important reports on NHS consultants and patient choice; their specific investigations have resulted in direct benefits to patients, such as improved access to primary care in the Kingston-upon-Thames area—that is one that I know of. However, I would not advocate retaining the Co-operation and Competition Panel as a separate organisation, because that would result, in my view, in unnecessary fragmentation and, indeed, duplication. The arrangement we have at the moment has resulted in undue delays and duplication of resources, as the decision-makers have inevitably sought to review the panel’s investigations before taking any action. My noble friend Lord Newton highlighted that issue once again. I have examples in my brief which replicate his experience. Those delays caused unnecessary uncertainty for the NHS organisations involved and their patients. I emphasise again that our proposals would address this by integrating the advisory role of the Co-operation and Competition Panel as a distinct identity within Monitor.

The noble Baroness, Lady Meacher, spoke of the searing experience of Mid Staffs. Of course, we all recognise that the problems of Mid Staffs must be looked into carefully. That is going on at the moment and I am not able to say too much for obvious reasons. But the problems at Mid Staffs, as she will be aware, predated its becoming a foundation trust. After authorisation, its governors were new and fairly inexperienced. Learning from what happened, I am confident in saying that quality now plays a critical role in the authorisation process for new foundation trusts. The governance of foundation trusts in which they are accountable to representatives of the public and staff should help organisations to listen and act on feedback. The events at Mid Staffs demonstrated the importance of having strong, transparent and accountable governance arrangements for the safe and effective operation of the trust. The changes we are making should provide greater accountability to the public and staff and increased transparency so that they can better challenge and scrutinise the delivery of local healthcare provision.

My noble friend Lord Clement-Jones asked what would stop Ministers creating new markets. I hope noble Lords will agree that it must surely be right for doctors and health professionals to want to do the best for their patients. Under this Bill, it would be for commissioners to decide if, when and how to use competition as a means to an end in improving services for patients. The Secretary of State would not have the power to direct commissioners on these matters and the Bill expressly prohibits the Secretary of State exercising his powers to make regulations on commissioning or in setting a mandate to increase market shares for private providers. My noble friend Lord Clement-Jones cited the BetterCare and FENIN cases as an example of how NHS commissioners might act as undertakings. As we have previously made clear, the Government’s view is that the NHS Commissioning Board and CCGs will not be undertakings. Unlike in the BetterCare case, neither the board nor the CCGs will be able to provide services. They will only be responsible for commissioning services for the NHS, which will not be an economic activity for the purposes of competition law.

[Lord Clement-Jones]

My Lords, I apologise. I expressly said that the concerns were not surrounding commissioning but around provision.

[Earl Howe]

That is helpful. My noble friend and I are clearly in agreement. I apologise if I imputed any different views to him.

The noble Baroness, Lady Armstrong, indicated that she felt that the oversight powers for foundation trusts should be retained. As the regulator of all providers of NHS-funded services, Monitor will continue regulating foundation trusts under this Bill. These would be enduring functions, not transitional. I hope the noble Baroness is reassured by that. What would be transitional, however, is Monitor’s power to remove foundation trust boards and board members. That is what Clauses 109 to 112 provide for until 2016, although the Secretary of State would be able to extend the transition period by order, as I indicated earlier, if he or she considered it necessary.

My noble friend Lord Ribeiro sought assurances that all providers will work on a level playing field. I am happy to assure him that all providers will indeed be required to meet the same quality standards for the same procedures. Before being qualified, providers will be required to demonstrate that they can meet those quality standards and Monitor will set fair prices for all providers. Competition, as I have said on previous occasions, will be on quality and not on price. If my noble friend will allow, I shall write to him in some detail with answers to his specific questions, which of course were extremely pertinent. I will copy the letter to all noble Lords who have spoken in this debate.

The noble Baroness, Lady Armstrong, also said that the Secretary of State should not raid the budgets of successful foundation trusts. I can assure her that this Bill would not enable the Secretary of State to direct individual foundation trusts or to raid foundation trust budgets, which she has rightly cautioned against. She said that there was a need to ensure that the new system should allow care to be shifted out of hospital. I share her view on that. It is essential that the new system enables more care to be shifted out of hospital into people’s homes and communities. This will require strong commissioning, and that is a key point made by the King’s Fund.

[Lord Hunt of Kings Heath]

My Lords, I declare my interest as chair of a foundation trust. It is quite simple for commissioners to be instructed to top-slice, say, 2 per cent of their budget and for the commissioning process to be used to divert money from some foundation trusts to others. What the Minister ignores in his construct of the Bill is the actual practice that is happening in the system at the moment.

[Earl Howe]

The Bill takes us away from what is happening at the moment. That is the point.

[Lord Hunt of Kings Heath]

My Lords, I do not see how the noble Earl can get away from that. We have recently seen that the Secretary of State, having said that he will not intervene, has made three interventions, twice in relation to PCT behaviour and once in relation to the quality outcomes, and in the last debate the noble Earl said that he would continue to use that mandate in future. It seems to me that we will continue to see these kinds of central interventions. It is as if we were in parallel universes. In one, we have the Bill and the theory. In the other, we have the practical management of the health service. Which is it to be?

[Earl Howe]

Once again, the word “micromanagement” springs to mind. We want to get away from the Secretary of State micromanaging the health service. On the other hand, we think it is perfectly right and proper for the Secretary of State, on behalf of voters, patients and Parliament, to set broad objectives for the NHS, such as the NHS outcomes framework. That document has been very well thought out by clinicians led by Sir Bruce Keogh in the department and has, I believe, commanded universal approval. Surely this is the territory that the Secretary of State should be on: to drive up the quality of care and the performance of the NHS, but not to micromanage.

I recognise that there are fundamental fears that this Bill would increase the role of competition in the NHS and take us down the road to privatisation. I need to be clear that it is not the intention of this Bill, and I do not believe that it is the effect of this Bill, to privatise the NHS. The Bill reaffirms that the NHS will always be there for everyone who needs it, funded from general taxation and free at the point of use. Extending choice and increasing competition is not about privatisation. We want patients to be able to choose to receive their care from the highest-quality providers. Competition in services, where it is introduced, should only be introduced when commissioners genuinely and for good reasons believe that it will benefit patients and the quality of their care. Should we allow this to happen without any check that it is happening legally and properly? Our answer is no; it needs to be overseen fairly and apolitically by a sector-specific regulator with the interests of patients as its core duty.

As with other parts of the Bill, I am more than willing to enter into discussion with noble Lords on Part 3, and I have already indicated that I am sympathetic to some of the key concerns which these amendments raise. With that in mind, I hope that we can move on and debate different issues arising from this part of the Bill and that noble Lords will feel content for the time being not to press the amendments.

[Lord Clement-Jones]

The noble Earl said himself that we are clearly in slightly—very—uncharted territory here, and referred of course to the OFT guidance. It is largely a re-run of the 2004 OFT guidance. It is slightly clearer because the case law is slightly more developed, but not a great deal more. We are in the area of assessing risk in terms of the application of EU competition law, domestic competition law and so on. Therefore, in these circumstances, we need the best advice. As I said earlier in my remarks, it is not so much a matter of the department asserting that such-and-such is the case but of having the benefit of some outside, independent legal advice—not that I am promoting the barrister’s profession, being a solicitor. Somebody well versed in competition law should be asked to advise on the risks that I set out at some length earlier today, otherwise we will struggle on with assertion and counter-assertion.

[Earl Howe]

My Lords, my noble friend’s speech earlier in the debate will repay careful study. I intend to be one of those studying it and will certainly take his proposals forward.

13:45

[Baroness Thornton]

My Lords, this has been an absolutely brilliant debate and very helpful to everybody in the Committee; I hope that that includes the Government. I start where the Minister left off about intentions—it is not the Government’s intention to introduce competition red in tooth and claw. However, the Minister must by now have realised that that is not what people understand by what is actually in the Bill and how it might be applied. That is the dilemma that faces the Committee and the Government. We on these Benches will certainly take up the offer that the noble Earl made in his opening statement, which was extremely useful, of discussing how to improve and change this part of the Bill. We would like to be part of that process. There is definitely work to be done on that.

I will briefly sum up our position on this debate. I have a series of questions for the Minister and I am very happy for him to write to me about them. We are not convinced as yet by the idea that having a quango as an economic regulator is the only way to bring a clear and comprehensive legal framework into the Bill. The purpose of Monitor in the Bill is to develop competition, which is why we have the Bill. We believe, and this debate shows us, that the contents of this part of the Bill in fact open the door and invite in the issues that were raised, for instance, by the noble Lord, Lord Clement-Jones. If competition is not at the heart of the Bill, why do we need all that detail? The noble Lord, Lord Clement-Jones, made a very helpful intervention and a useful analysis. I, for one, will be rereading his speech about EU competition law.

I ask that the noble Lord, Lord Clement-Jones, and his colleagues look at our Amendment 262A, which would add a third subsection to Clause 59(1). The proposed paragraph (c) says the provision of health services should be,

“based on the principles of universality and social solidarity”.

We were not making a particularly left-wing statement with that. We were actually lifting it out of European law, which our advice tells us is one of the ways in which you keep at bay the procurement processes of European law. I strongly ask the noble Lord, Lord Clement-Jones, to look at that; I would be interested to hear his comments.

One part of the debate that I have been disturbed about was that raised by the noble Lord, Lord Owen. He also has a freedom of information request in for information that would help to inform the discussions of this House. We know that we have had our debates about the lack of access to the risk register to help us in our deliberations. Indeed, my honourable friends in another place asked if they could also have access to the legal opinions that the department had got on this part of the Bill, and were refused access to that, too. We have all had to find our lawyers to advise us about competition law. We are now all a lot better informed than we were several months ago. The noble Lord, Lord Owen, was right when he said there is no consensus about this; indeed he was right when he said that parts of this Bill are feared and hated. The Minister needs to understand that there is a lot of fear out there, about this part of the Bill in particular. The noble Lord was expressing very grave concerns.

The noble Lord, Lord Newton, made a threat to the Government about patient safety and quality being the order of the day and said that he will be returning to this on Report. He will probably have more effect than the rest of us put together in his interjection on this matter. We will be behind him if he does so, which may not do his reputation any good at all.

The noble Baroness, Lady Meacher, made a very thoughtful speech, her most important point being that we already have the tools to make the system work. There is no need to put in an economic regulator and the competition regime that this Bill suggests, because the tools are already there. That is very important.

I say to my noble friend Lord Whitty that there is absolutely nothing wrong with a bit of slash and burn to make the point about this part of the Bill. In effect my noble friend was at one with the noble Lord, Lord Clement-Jones.

The message from the noble Baroness, Lady Cumberlege, is that the NHS needs to improve. Yes, we would all agree with that and every health system in the world needs to change and improve. I would, however, refer the noble Baroness to my speech, which embraced change, embraced development and even embraced the use of managed competition. Where we part company is that the way to improve the NHS is not to treat it as a utility or a supermarket; we do not think the evidence is there to prove that. In fact, there is a lot of evidence to suggest that we should be very wary of the introduction of market forces as a way to improve our health service.

My noble friend Lady Armstrong made the important point that we agree with the Minister that there is a case for the use of competition in its place. The challenge before us is how we ensure that this Bill delivers that without threatening the whole fabric of our health service.

[Baroness Cumberlege]

Is the noble Baroness aware of Gaynor et al and the work they have done? I quote again from Protecting and Promoting Patients’ Interests: the Role of Sector Regulation, a research study in 2010:

“We find that the effect of competition is to save lives without raising costs. Patients discharged from hospitals located in markets where competition was more feasible were less likely to die, had shorter length of stay and were treated at the same cost”.

[Baroness Thornton]

All I would say in answer to the noble Baroness is that there is no known health service in the world that shows competition improves health outcomes. I challenge the noble Baroness to send me the information that shows that is the case.

[Baroness Cumberlege]

The noble Baroness should look at this document and at the research which is stated in it.

[Baroness Thornton]

We are talking about the whole system, not a small part of it. We can share our intelligence outside the Chamber; the noble Baroness makes a good point but there is no evidence that says this is the way to improve our national health system.

[Lord Reid of Cardowan]

Perhaps I can be helpful. The noble Baroness referred to a study of the competition element, which was introduced into the British health system by the previous Government, as far as I am aware. That was carefully circumscribed competition. It did not amount to more than 10 per cent. It was based on the insistence that competition be fair in terms of quality, standards and price; it excluded emergency; and it applied only to elective operations. The difference here is not whether competition is beneficial where appropriate. The real question is: where is it appropriate? That is the distinction between the two comments.

[Baroness Thornton]

My noble friend comes to my assistance in a very appropriate fashion and puts it much better than I did.

Finally, the question that we need to answer is: does the Bill increase the likely interference of competition law in the National Health Service? Does the Bill transfer power from the Secretary of State to Monitor, and is that a good thing? That is why I was pressing the Minister about who takes the decision about where competition law applies.

The Minister said at the outset that Part 3 is misunderstood. He is absolutely right. If the Government really want to put beyond doubt the issue of competition law and its place in the delivery of our National Health Service, we have to simplify, clarify and delete parts of Part 3 of the Bill. We have to take the NHS out of the danger zone of EU procurement law and competition law. That is the challenge that lies before the House when we return to consider this at a later stage in the Bill.

[Earl Howe]

My Lords, before the noble Baroness sits down, does she accept that European procurement law already applies? I do not think there is any dispute about that. I hope she will welcome my offer to write to cover issues relating to competition law, including giving my view on my noble friend’s suggestion of having an independent legal view. I have not taken a view about that at the moment, but I will gladly consider it.

[Baroness Thornton]

I accept both the invitation and comments that the Minister has made about procurement law. I refer him back to my comment about opening the door wide and inviting in the lawyers. I beg leave to withdraw the amendment.

Amendment 260EA withdrawn.

[Baroness Rawlings]

My Lords, before we move to the next group of amendments, it may be for the convenience of the House if I remind noble Lords that we will interrupt the debate on this group at a convenient moment shortly before 2.30 pm. The House will then resume and, if necessary, adjourn before we take Oral Questions at 2.30 pm.

Amendment 260EB

Moved by

[Baroness Thornton]

260EB: Clause 58, page 87, line 9, at end insert—
“(d) is to take on the further duties as set out in this Act in relation to authorising through licensing any person who provides health care services for the purposes of the NHS as set out in Chapter 3 of this Act.”

[Baroness Thornton]

My Lords, I promise that this will be a very much shorter speech. We now turn to the second group, which concerns Monitor’s function as a licensing provider—a part of the suite of amendments that we have put down about reconfiguring Monitor.

The Bill extends the concept of financial regulation to non-financial trusts, and we can see the logic in this. For consistency, however, we argue that all providers of services to the NHS—not just foundation trusts—should have to meet requirements around their financial position and have this subject to oversight, as well as the obvious fit and proper test that they would have to go through.

We can see the argument for a robust evaluation, for example, of capital structures, which certainly would have been helpful in the case of Southern Cross. The regulator should be allowed to make authorisation subject to this kind of probity test—something like a fit and proper persons test. For us, the key aspects of the licensing regime should be determined by the Secretary of State, not by the regulator. The job of the regulator in our view is to operate the system, not to define it. I would invite the Minister to say whether he agrees with that analysis.

With foundation trusts we set out that Monitor shall use the licence to ensure that information flows to the regulator to enable it to have effective oversight and to intervene if necessary. The licence has to extend this to other sorts of providers which may be reluctant to supply information or submit to the idea of intervention. They may claim commercial confidentiality. The Bill resolves this problem, as far as we can see, by simply having no oversight—in other words, the “nothing to do with us, guv” approach to regulation. We believe that the public would not accept this. The Mid Staffs example, where Monitor came into much criticism, or the Southern Cross example might be instructive here.

[Baroness Murphy]

I am sorry to interrupt. The situation at Mid Staffs arose following the approval of the Department of Health and the Healthcare Commission. It was passed to Monitor as a fit and proper hospital. The scandal emerged only three weeks after it was approved by Monitor.

14:00

[Baroness Thornton]

The point I am making concerns what we need to do for the future. What happened in Mid Staffs has some bearing on that and I said “instructive”.

The tests that we are suggesting should be applied to any organisation wishing to supply clinical services to the NHS around probity and can be enforced through contracts and licensing. Meeting the conditions without trying to argue commercial confidentiality is now the price of doing business with the NHS, in our view.

Finally we have reservations about the interaction between the licensing regime and the use of standard contracts. Why have both as enforcements? What would be appropriate for each? What is the role of Monitor as regards the contracts? What happens to disputes between providers and commissioners? Do they all go to court? What is the role for Monitor in the resolution of disputes? We have accepted that if you have a licensing system then you have to build a bureaucracy to support it, moving from a top-down management bureaucracy to a regulatory bureaucracy. To keep this to a minimum while remaining effective is not simple, as the CQC is finding. But the system set up in the Bill is very complicated and our amendments seek to simplify it. The nature of the operation as to whether it should be a light-touch risk-based approach or continuous direct inspection is another issue which has plagued the CQC and will have to be resolved by the new Monitor. That is a question we need to put on the table.

I now turn to our amendments. In Amendment 260EB Monitor is to take on duties in relation to authorising through licensing any person who provides healthcare services for the purposes of the NHS. Amendment 279A is to remove any potential ambiguity and stress that providers of primary medical services for the purposes of the NHS must hold a licence. Clause 82 stand part is to facilitate a discussion about who can be exempt from the requirement for health service providers to be licensed and who makes those decisions. In Amendment 282A, since this a strong power granted to Monitor to revoke a licence, we add qualifications that in the case of a foundation trust Monitor must consult the Secretary of State, and the Secretary of State may veto any revocation if it is deemed not to be in patients’ or taxpayers’ interests. In Amendment 282B the Secretary of State, not Monitor, should determine the principles or framework behind the licensing conditions and Monitor must then have regard to these. Amendment 283 specifies that the standard conditions included in each licence must set out various minimum standards such as for governance arrangements, meeting in public, employment conditions, co-operation with local-authority overview and scrutiny functions. Amendment 283A contains the issue of there being no need to have different standard conditions for different descriptions of licences.

Amendments 286ZA, 287ZA and 287ZB set limits on Monitor’s functions to set and modify the licence conditions, simplifying its role. Amendment 287BA leaves out the roles of Monitor relating to licence conditions, price and charging. Amendment 287F requires licence holders to be fully subject to the overview and scrutiny functions of local authorities. In Amendment 288ZB Monitor has the power to modify the standard conditions applicable to all licences, and in doing so there should be no need for a vote among providers but consultation and consent from the Secretary of State is required. In Clauses 99 and 100 stand part we raise the issue of minimising the bureaucracy surrounding licensing. In Clause 101 stand part we argue that the requirements for fair eligibility and transparency in selection should be covered under the PRCC. This is a probing amendment designed to strengthen the clause instead of deleting it on Report. We think that that should be a matter for discussion. Amendment 288DZA regards Monitor’s power to impose discretionary requirements, including fines, on providers and licence holders if they fail to provide required documents or information, which can only occur with the consent of the Secretary of State. Any fine must be held by the local CCG for reinvestment in services in that area. Amendment 288DA states that if any provider is in breach of a licence Monitor may take action against them, including the imposition of fines, but only with the consent of the Secretary of State. I beg to move.

[Baroness Williams of Crosby]

I would like to address just one of the amendments in this group, which is in my name and that of my noble friend Lord Marks of Henley-on-Thames. Unfortunately my noble friend has been taken ill and is unable to be here. He extends his profound apologies to the Committee.

This amendment is significant in strengthening the general approach towards competition under Section 3 of the Bill, by making it quite plain that the requirements that have to be met, which we will come to in Part 4, must also apply to licence holders. I am in a slight difficulty, as my noble friend Lord Howe will appreciate, as the Government have tabled amendments on aspects of foundations trusts which will arise at a later stage in the Bill, particularly under Clause 161, which are related to the amendment to which I am now speaking. I will therefore do my best to navigate around Clause 161 in so far as I can. However, I may have to make limited reference to it in order to make clear what my own amendment is about. My own amendment is essentially one that would support, and indeed further improve, the proposals put forward in this particular amendment. They should therefore be read together with Clause 161 and Amendments 299ZA and 299AZA in the name of the Government.

We want to make two requirements as a fundamental part of the requirements that licence holders have to meet. We appreciate that, in many ways, the licence-holding requirements are fundamental to the way in which the Bill operates, because it must be the case that providers are brought within the general structure of the Bill itself. Our amendment makes two particular points about that. The first is that the revenue from private patients, as a percentage of the licence holder’s total revenue, must be kept below 50 per cent. Secondly, and at least as importantly, the number of private patients in a foundation trust hospital must also be kept below that proportion.

The main point of this amendment—I think that it is an important one—is again to establish that we are looking at foundation trusts that are part of the provision under the NHS and that a minority of both income and patient numbers would be required for any provision made. We hope, as I think the noble Baroness said, that this set of requirements continues well beyond 2016 as part of the structure of the relationship of foundations trusts to the health services, and that this is therefore not standing alone but a crucial part of the whole strategy.

If the noble Lord, Lord Owen, were in his place, I would say that if this is not the rail track of the French railways, it is at least the rolling stock, and we need both to have an effective railway service. However, I wanted to say one other thing. The first part of the amendment tabled this morning by the noble Earl, Lord Howe, goes a very long way. We will talk about this in more detail later so I shall only sketch it out now, given the time. I think that the first part of the amendment, with regard to income—and indeed the requirement that income must exceed the costs of providing that income, and that it must be used for the purposes of patients within the health services—is a very full and useful advance. It is very close to the phrasing of the 2006 Act, which is a point that I am sure will come across to the noble Baroness, Lady Thornton, and her colleagues, but with the additional wording that makes it, if anything, even stronger.

The noble Earl, Lord Howe, will know from discussions which I and my colleagues have had with him that we would want to see this supplemented, if possible, by a reference to the proportion of patients in foundation trust hospitals. Quite broadly, that is something the public can understand, whereas references to quite complicated percentages of income, although equally important—if not more so—are perhaps less transparent and less apparent.

I will not pursue further the new amendments beyond welcoming them, but I want to advance this particular, although limited, amendment as thoroughly as I can, as I think it would ensure that licence holders were held to the same kind of requirements that we are imposing upon Monitor, the national Commissioning Board and the CCGs. It must be the case that this should be a common approach across the front.

[Lord Clement-Jones]

My Lords, I shall be brief. I wish to speak to Amendments 281A and 288ZA, to support my noble friend on Amendment 287EA and to speak to Amendment 287A.

Amendments 281A and 288ZA deal with what are clearly major decisions that will be made by Monitor. The first is the exemption from licensing, which requires notice to be given, and the second deals similarly with the particular standard licence conditions that may be modified. Currently the Bill provides for 28 days’ notice to be given, but these are major issues, and although this is a probing amendment, I hope that the Minister will be able to give a good explanation as to why this period should be so short. Obviously one does not want to have undue delays, but there are quite a number of stakeholders who are bound to be involved in this and it does look rather like a rushed job. So this amendment provides for 90 days to be the standard term for notice to be given.

I move on to Amendment 287A. This amendment simply permits—indeed, requires—the insertion of a standard condition in the licence that the licence holder should,

“abide by the seven general principles of public life set out in the First Report of the Committee on Standards in Public Life”—

the so-called Nolan principles—and requires,

“the declaration of any financial interest the licence holder may have in a commissioning decision by a clinical commissioning group”.

Nowadays that is increasingly standard. I will not prolong the debate, as we have already had considerable discussion in the course of this Bill about conflicts of interest and the need for transparency in these circumstances. However, I would have thought that licence holders, who essentially will be providers across the whole service, should be under a heavy duty of transparency in order to ensure that they do not have a conflict of interest.

Coming to Amendment 287EA, my noble friend Lady Williams has eloquently set out the issues. What is really required in these circumstances is for the Minister to rebut the presumption that we not only need a provision about the actual total revenue, but also about the number of patients actually treated by a provider. This provision is a belt and braces against the provisions of EU competition law. It is extremely well drafted. I take no credit at all for that, it is my noble friend Lord Marks at work here. We will be discussing the Minister’s very welcome amendment later, but it does not contain the second limb of this particular amendment. It would be useful if the Minister could address this in due course, whether under this group or in the later group, as I recognise the difficulty that my noble friend Lady Williams has also recognised, that this is not grouped with Amendment 299A and probably should be.

14:15

[Baroness Finlay of Llandaff]

My Lords, I have amendments in this group and in light of the previous debate I do not want to repeat anything, except that the Minister stressed the importance of driving up quality and these amendments relate to what should be incorporated in a licence that Monitor gives a provider. Amendment 282ZB is replaced by Amendment 282ZC, which is about being a good employer. If you are going to drive up quality you have to make sure that your staff have education and training and understand research. However, it goes right the way through from every provider at every level, right up to specialist training. It is important that the education and training needs of those who are in the higher professional training bands are also accounted for. Monitor will have to work closely with Health Education England to provide an oversight of the numbers of education and training places available.

The background to this amendment is very compatible with Amendment 278BA tabled in the name of the noble Lord, Lord Ribeiro, who is not in his place but has already spoken to it. The amendment should not have any great implications on the levy and I note that the Government are already committed to undertaking extensive work to establish an appropriate NHS training levy. I suggest, however, that supervision and training of all staff at all levels is essential and I hope the Minister can confirm that licensing will go further than simply, as it states on the face of the Bill at the moment, having regard to education and training.

In Clause 93, Monitor is required to publish draft standards conditions for the licence requirement and Amendment 285ZA, in my name and that of my noble friend Lady Hollins, requires somebody to state what primary medical services are to do. If Monitor is not to do it, I respectfully ask the Minister who is. What is to be their availability? How will they work with pre- and post-hospital care? A reappraisal and revalidation will look at clinical standards but there are real difficulties if more goes out into the community. Who is going to see patients with complex conditions at home, how are the deficits in out-of-hours care to be driven up and who is responsible for what? It also requires a duty of collaboration, because if you do less in the hospital sector you need to increase your collaboration, not decrease it.

We have already debated the importance of staff being involved at local and national level to work for the benefit of the wider NHS. As background to this amendment, may I give a short example of why integration between primary and secondary care and social care is absolutely essential? Take a child who the nursery, perhaps, reports is behaving oddly. The general practitioner refers the child to paediatrics, they consult their developmental colleagues—speech and language therapists and psychologists—and an overall conclusion is that this child is neglected but also has some pathology, such as glue ear and delayed speech. The child comes from a home in which there are no books and no one is talking to him or her. For the GP and all other services to link there must be integrating care; that is why it is stressed in the context of this amendment.

The last amendment in this group in my name is Amendment 287AA, which relates to indemnity. Currently foundation trusts carry vicarious liability for clinical care provided by their staff and therefore need to cover claims arising from this work. The trust can seek a source of indemnity from providers other than the NHS Litigation Authority but does not have to and does not have to publish whether or not it does.

The Medical Defence Union has already questioned the indemnity of any qualified provider with the Department of Health and had a response outlining that the NHS standard contract requires providers to have indemnity with a specific requirement set by local commissioners. The levels would vary according to the circumstances of different providers. But that response misses the point. I am not suggesting that the Bill should set the level of indemnity, but we should ensure that all providers of care to NHS patients have indemnity in place so that patients do not go uncompensated. The indemnity should be adequate and appropriate and this cannot be done under separate rules or regulations. The concern is that if a contractor goes out of business for whatever reason and does not have appropriate ongoing indemnity, there will be no course of redress for patients who have been harmed by that individual contractor.

There is a real prospect that patients who are severely or negligently damaged by an individual who does not carry adequate indemnity would then be completely unable to gain compensation because the way that the Bill is written does not require there to be adequate indemnity for the service provided. The long-term nature of clinical indemnity claims means that the level of indemnity must be adequate to provide compensation, sometimes many years into the future when a claim is settled or because sometimes the harm done does not emerge for some years. An indemnity, therefore, has to be in place when a provider is no longer in existence.

I will not elaborate any further on this because it is a discussion I would be interested in having with the Minister outside the Chamber and I am aware that we are time-restricted for this group of amendments, but I hope that the Minister will be able to consider the importance of indemnity for those providers that contracts are placed with and even for those they may sub-contract to.

House resumed.

14:22

Sitting suspended.

Police: Officer Numbers

Tuesday 13th December 2011 Lords Chamber

Question

14:30

Asked By

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government how many police officers are currently employed by police forces in England and Wales and how many were employed in May 2010.

[The Minister of State, Home Office (Lord Henley)]

My Lords, police personnel data are collected on a financial year cycle. Published statistics show that there were 139,110 full-time equivalent police officers in England and Wales as at 31 March 2011. This compares with 143,734 as at March 2010.

[Lord Hunt of Kings Heath]

My Lords, I am grateful to the noble Lord. He will be aware that police authority grants for the next financial year show a £700 million cut in real terms, which is part of the 20 per cent cut front-loaded over a four-year period. How can the Government continue to claim that these cuts are not having an impact on front-line policing when the latest statistics show a worrying rise in crime? What does the noble Lord have to say about that?

[Lord Henley]

My Lords, first, I remind the noble Lord that we have a deficit and that must be tackled by seeking better value for money from every public service. That includes the police. There is no need for the noble Lord to make signs of that sort.

I accept that there has been a decline in police numbers, but there is no need to get fixated on this. At the same time, we have seen over the period that I mentioned—March 2010 to March 2011—a decline in recorded crime of 4 per cent.

[Lord Mackenzie of Framwellgate]

My Lords, will the Minister tell us the cost of appointing police and crime commissioners and how many front-line officers that would represent?

[Lord Henley]

My Lords, I have always accepted that there is a cost to appointing police and crime commissioners, but we believe they will bring accountability. Accountability will be good for that service, and we will get even better value for money.

[Lord Howarth of Newport]

Does the noble Lord think it is good value for money if the crime rate is going up?

[Lord Henley]

I have just quoted the figures relating to the period that I cited in the original Answer, which showed that recorded crime is going down.

[Lord Hamilton of Epsom]

What progress is my noble friend making with cutting down on the amount of bureaucracy that the police have to get involved in—form filling and so forth—rather than getting out on the streets and deterring crime?

[Lord Henley]

I am very grateful to my noble friend for raising the question of bureaucracy. That is what my right honourable friend the Home Secretary has done in announcing a package of policies that will cut police red tape, saving some 3.3 million police hours per year. That is the equivalent of some 1,500 police posts.

[Lord Jopling]

My Lords, will the noble Lord answer yes to my question as to whether he will look at the pathetically low number of not only police officers but all emergency service workers who have been vaccinated against things such as smallpox and anthrax when the Olympic Games next year will clearly give us a dangerous situation so far as potential biological attacks are concerned?

[Lord Henley]

I hope I will be able to answer yes to my noble friend in due course. I will have to look at those figures, but I am unsighted on them at the moment. If my noble friend is prepared to accept it, I will write to him in due course.

[Lord West of Spithead]

My Lords, when I asked the noble Lord’s predecessor but one about the retiring of more senior police officers and how this would have an adverse impact on people such as the terrorism support officers, I was told that a central register would be kept of how many were going, so that it did not have a disproportionate effect if they were taken from each police area. Where do we stand on that now? Has it had a disproportionate effect or are we managing to keep a balance across all the police areas?

[Lord Henley]

My Lords, again, I am somewhat embarrassed in that I cannot answer the noble Lord’s precise question. I will certainly look at that, but I have not been made aware of any problems in that area. If I have not been made aware of them, I suspect that there is not a problem in that field. If I am wrong, of course I will let the noble Lord know.

[Lord Laming]

My Lords, the Minister will recognise that police forces across the country have been very successful in developing specialist child protection teams. In the current financial situation, some of these teams are extremely vulnerable. Can the noble Lord assure the House that he will use his good offices to protect these highly specialised and very important teams?

[Lord Henley]

The noble Lord is right to draw attention to the specialist work done by individual police forces. It is obviously a matter for each individual police force and the police authority to decide on the appropriate priorities. Certainly within the Home Office, we would want to encourage them to continue with that work.

[Baroness Hamwee]

My Lords, I apologise to the House for missing the start of the Question. I had forgotten that Prayers were earlier today.

Police officers tend to retire at a relatively early age. For their own satisfaction, as well as thinking of the public purse, can the Minister say anything about continuing to make use of their expertise and experience, which is the product of both years and public investment?

[Lord Henley]

My Lords, obviously the training of an individual policeman is a very expensive process. We want to get maximum use of all policemen for as long as possible. Your Lordships will have noticed that some of the policemen who operate around this House tend to be at the older end of the spectrum. We are grateful for their expertise in providing protection for this House. Perhaps, as my noble friend Lord McNally implies from a sedentary position, they all look rather young to us. However, we do want to get as much use as possible out of all those policemen who have trained at such considerable public expense.

[Lord Geddes]

Can my noble friend advise how long the delay is in the present climate for an officer passing all the hurdles and being promoted to sergeant? How long does that person have to wait before he achieves that rank?

[Lord Henley]

My Lords, I am facing a lot of difficult and technical questions, which I have to say I cannot answer in the manner in which I would want. I am grateful to my noble friend for putting that question, but I will have to write to him with an answer.

[Lord Dholakia]

My Lords, there has been considerable effort made to recruit police officers from the black and ethnic minority communities. Can my noble friend indicate whether there has been any problem in retaining such officers and any reasons for that?

[Lord Henley]

My Lords, as my noble friend has made clear, considerable efforts have been made to increase the diversity of the police force. All police forces have made considerable gains there. I am not aware of any problems of retention, but if my noble friend has any evidence of that, I would be grateful to hear from him. That would then obviously be a matter that we would have to address.

Adoption

Tuesday 13th December 2011 Lords Chamber

Question

14:36

Asked By

[Baroness King of Bow]

To ask Her Majesty’s Government what measures they are taking to speed up the adoption process.

[The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)]

My Lords, the Munro review and the Family Justice Review will help us to build the capacity of the social work profession and speed up the family justice system. The Government have appointed Martin Narey as ministerial adviser and established a ministerial advisory group. We have issued revised statutory guidance on adoption. To improve transparency, we have also published data on the performance of local authorities. We are committed to speeding up the adoption process, and will take further steps, as necessary, to do so.

[Baroness King of Bow]

I welcome the Government’s efforts to improve the life chances of our most vulnerable children, but does the Minister share my concern that adoption of children with more complex needs—often older children, those who have suffered abuse or neglect—is often delayed because the Government will not provide funding for post-adoption services? Instead, we say to adopters, “You pick up the pieces. You look after a difficult child no one else will take and you pay for their specialist medical health requirements”. Will the Government and the Minister review that funding policy so that we give our most vulnerable children the chance of a loving home?

[Lord Hill of Oareford]

I agree with the noble Baroness about the importance of trying to address the problem of how one finds places for older children. In particular, there are a number of groups—disabled children, sibling groups and older children—which, as the noble Baroness will know much better than me, suffer from those problems. I will certainly relay the points that she has made to my honourable friend Mr Loughton. I know that he is delighted that the noble Baroness has kindly agreed to serve on the ministerial advisory group. He is very grateful, and I am sure that he will pursue those points with her as part of that.

[Baroness Benjamin]

My Lords, at Barnardo’s, of which I am vice-president, we have found that children who are adopted are more likely to have entered care because of abuse and neglect; 72 per cent of children who were adopted enter care for this reason. Because of the damage that they have endured, they need access to age-appropriate emotional and mental health services. Can my noble friend the Minister tell the House what steps the Government are taking to improve the capacity of the care system to support children and young people who have suffered neglect and abuse?

[Lord Hill of Oareford]

Again, I think that this is an important point. Across the piece, we are trying to take a number of different measures to address some of these issues, whether it is speeding up the adoption process, trying to raise the quality of the social work workforce or working with charities and other voluntary organisations such as Barnardo’s. There are a number of ways in which we have to work. The Government have made a priority of tackling this problem and we will continue to come forward with proposals as to how we might best achieve that.

[Lord Turnberg]

My Lords, a two-and-a-half-year average delay in the adoption of a child at this very vulnerable age is devastating for that child and may have disastrous consequences. Although some delay may be necessary in order to make a proper assessment of the suitability of adoptive parents, can anything be done to reduce the rather long delays in the judicial processes? Can we also do something about removing the unhelpful barriers to white parents adopting black children? There is a rather large number of black children who are hanging around waiting and we should not be putting up barriers.

[Lord Hill of Oareford]

The noble Lord is absolutely right that black children have particular problems in finding adoptive parents and that the results for them, in terms of finding adoptive parents, are far worse. Their chances are half as good as they are for other children, and that is clearly a problem. We have sought to make it clear that the colour of someone’s skin should not be a bar to them adopting. If one can find parents where all sorts of things all fit into place that might be better for the child, but the most important thing is a loving parent. In terms of delays in the court process, the Family Justice Review looked at that and has come up with recommendations that we should aim to spend no more than six months on the court side of the process. That would address the problem that the noble Lord has rightly identified.

[Lord Elystan-Morgan]

My Lords, desirable though it is that a Government should prudently plan and estimate the number of appropriate adoptions in England and Wales in a year, and appropriate though it be that every effort should be made to ensure that there is an available stock of would-be adopters, does the Minister nevertheless agree that adoption is an order of the court of such crucial importance that it should only be made in the light of the specific facts of that particular case, bearing in mind the interests of the child and taking into account the whole of its life?

[Lord Hill of Oareford]

The noble Lord is exactly right: one wants to adopt a balanced approach to adoption. The fact is that the number of children being adopted has unfortunately been falling. Of around 3,000 children in care under the age of one last year, only 60 were placed in adoption. There are things that we ought to do to redress the balance, but the noble Lord’s underlying point is clearly important.

[Baroness Hughes of Stretford]

My Lords, the Government’s proposals will remove legal aid entirely from some 35,000 families a year who are in court for one reason or another concerning their children. Are the Government not concerned that without legal representation there will be severe delays in the hearing of these care cases, including children for whom the plan is adoption, adding further to the delay for these children?

[Lord Hill of Oareford]

My Lords, CAFCASS has an extremely important role to play in giving support through the legal process to the families and the children who are going through this process, and that support through CAFCASS remains in place.

[Baroness O'Loan]

My Lords, does the Minister have any information about the consequences in terms of the number of children adopted following the closure of children’s adoption agencies consequential to the sexual orientation regulations?

[Lord Hill of Oareford]

My Lords, I am aware of the number of Catholic adoption agencies that have had to reorganise to carry on performing their important role. I would be the first to recognise that the Catholic adoption agencies, in particular where disabled children are concerned, have a very proud and long record. However, very few of them have had to reconstitute themselves to comply with those regulations—I believe it is actually only one. I know that there were concerns about that, and I am glad to say that the vast majority have managed to accommodate the regulations and to carry on with the important services that they provide.

Health: Cancer

Tuesday 13th December 2011 Lords Chamber

Question

14:45

Asked By

[Baroness Royall of Blaisdon]

To ask Her Majesty’s Government what action they will take in response to the findings of Professor Colin Pritchard’s study published recently in the British Journal of Cancer.

[Baroness Northover]

My Lords, this study concerns mortality. We have a good track record on reducing cancer mortality. However, because mortality rates are linked to incidence rates, mortality on its own is not a useful measurement of NHS performance. Survival rates are much more effective as they show how good the NHS is at diagnosing and treating people with cancer. We know that our cancer survival rates lag behind the best performing countries, and our ambition is to improve survival rates and save 5,000 additional lives per year by 2014-15.

[Baroness Royall of Blaisdon]

My Lords, I recognise what the noble Baroness says about survival rates, but does she agree that the report demonstrates that in the past 10 years cancer services in the UK have improved dramatically? While England and Wales spend less on health than most other countries—9.3 per cent of GDP compared with 10.7 per cent in Germany and 15 per cent in the USA—they achieved the biggest overall annual fall in cancer deaths, and cancer deaths are important to people in this country as well as cancer survival rates.

[Baroness Northover]

The noble Baroness is right; there has been that decline. Of course mortality is extremely important, but you have to look at incidence, survival and mortality together. She will also be aware that much of that decrease in mortality is because of the decrease in men smoking. Men took up smoking in larger numbers than did women. The numbers of men smoking started to decline in the 1950s, and that has had an effect on the decline in the number of cancer deaths.

[Lord Aberdare]

My Lords, pancreatic cancer is one of the deadliest cancers, accounting for about 5 per cent of all cancer deaths. A recent report by Pancreatic Cancer UK found that survival rates for pancreatic cancer patients in the UK—only 3 per cent are expected to live for five years or more—are worse than in most comparable countries and have not improved in 40 years. What assurances can the Minister give that the NHS will continue to work to improve results in all forms of cancer and that pancreatic cancer sufferers will not just be written off as a lost cause?

[Baroness Northover]

Pancreatic cancer is an extremely difficult cancer to diagnose. As the noble Lord knows, when it is picked up it is often very advanced and survival rates are very poor indeed. The Government are well aware of the problems here. My honourable friend Paul Burstow in the other place is meeting Pancreatic Cancer UK shortly. I hope that the noble Lord will feed into that. If he has an association with that organisation, can he put his questions to it so that they can be fed to Paul Burstow, or alternatively to me?

[Baroness Gardner of Parkes]

My Lords, is it not a fact that the great improvement in cancer treatment is due to early detection? It is important to keep people trained in that, particularly for the rare cancers that I am always talking about. Do the Government not feel that we owe a great deal to the cancer and research charities that are continuing to do very useful work in alerting people to the need for early detection?

[Baroness Northover]

My noble friend is absolutely right. We owe a huge amount to the organisations in the United Kingdom, not least Cancer Research UK, which is a major player internationally. She is also right about early diagnosis. That is how you start to bring deaths down; you make sure that you diagnose early enough so that you can intervene in a way that is going to be much more effective. Noble Lords might like to know that there will be a first ever national cancer campaign on bowel cancer to flag up the symptoms to people in the hope that they seek diagnosis at a much earlier stage, because if it is caught early it is completely curable.

[Lord Winston]

My Lords, the complex paper by Professor Pritchard also looks at the costs of delivering cancer care. One of the points made very clearly in that paper is that the cost of drugs delivered under the NHS is considerably less. We pay far less for the excellent results that we get than Germany, Spain, Italy and France do—as much as 40 per cent less, in some cases. Given that, and given that independent assessments of the health service show that the British health service has some of the best value for money in the world, why did the Prime Minister say that we cannot go on as we are and introduce the current Health and Social Care Bill?

[Baroness Northover]

I fully agree that the National Health Service is very cost-effective and that it has been an extraordinary service. However, we have many challenges coming down the track, as the noble Lord will be acutely aware—not least our ageing population, which needs to be supported, particularly at home and in the community where appropriate, and not immediately taken into hospitals, where interventionist care may not be in the best interests of those patients. Therefore it is extremely important that there is more clinical judgment on the best interests of each patient and how these things are organised, and that they are not simply driven forward by the way in which provision is organised at the moment, which is very much focused on secondary institutions.

[Lord Sharkey]

My Lords, the biggest cause of cancer deaths in the country is still lung cancer. It kills more people every year than breast cancer and prostate cancer combined, yet lung cancer attracts only 5 per cent of cancer research funding. The Minister has said that this is unsatisfactory and thinks that it is largely due to the lack of first-class research proposals. Does the Minister agree with me that we should not let this situation continue, with the biggest killer getting the least research? Will the Minister consider urgently sponsoring a meeting of all interested parties to see how we might intervene to generate many more fundable first-class cancer research proposals?

[Baroness Northover]

My noble friend raised this with my other noble friend Lord Howe, who has taken a slight break in the health Bill at the moment. I was struck by his answer, which was on the paucity of cancer research funding for lung cancer. I therefore have more information for my noble friend, which is that the amount spent on lung cancer between 2006 and 2010 in fact doubled in comparison with a 28 per cent increase for overall cancer research spending. The National Institute for Health Research, for example, is currently hosting 62 studies on lung cancer that are being set up or are just beginning to recruit patients. I hope, therefore, that my noble friend will be encouraged that there appears to be a shift. However, if my noble friend would like to write to my other noble friend the Minister with detail about the meeting that he would like, the Minister would be delighted to receive that letter.

Loan Companies: Interest Rates

Tuesday 13th December 2011 Lords Chamber

Question

14:53

Asked By

[Lord Mitchell]

To ask Her Majesty’s Government whether they plan to take action to cap the interest rate charged by finance companies offering payday loans.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, there are real concerns about these loans, but capping interest rates is not necessarily the solution as it could reduce access to licensed credit and force some consumers into the arms of illegal loan sharks. We have commissioned research to look at the impact of capping the total cost of credit that these lenders can charge. We are having discussions with the industry on ensuring that existing codes of practice contain real enhanced consumer protections to address concerns that blight this market.

[Lord Mitchell]

I thank the Minister for that reply. Some 3.5 million people in this country use payday loans. Yesterday I decided to become one of them. I applied for a loan for £300 over a 21-day period. I went on a very friendly website and filled out all the forms very quickly. It told me that if I clicked the button, I would have £300 in my bank account in 15 minutes. I had to repay, in three weeks, the sum of £369, which is an annualised interest rate of 4,200 per cent. I did not click the website. Will the Minister say whether the Government plan to regulate this industry? There are a lot of very desperate, vulnerable and gullible people out there, and I think that they need help.

[Baroness Wilcox]

I thank the noble Lord for his personal intervention on this question. No doubt consumers should not be swayed by promises that they will have the money in their banks in minutes. This may well be true, but before taking out one of these loans they should stop and think. Most people handle payday loans very well—we are rather good at handling credit in this country—but at the moment we are going through tough times and more people are borrowing fast, quickly and just for a couple of days. Of course, we all know that APR is annualised up and therefore most people pay about £50 or £60 for the couple of days that they need the money. Without doubt, there are concerns around payday loans such as rolling over old loans into new, businesses using continuous-payment authority to take money out of people’s bank accounts when they are not expecting it and a real lack of transparency about how these loans work, as the noble Lord has just shown. We have started discussions with the industry on ensuring that its existing codes are working and being enforced, and we are now looking at the total cost of credit. Bristol University’s Personal Finance Research Centre is to carry out research to identify the impact on consumers and businesses of introducing a cap on the total cost of credit, as referred to by the noble Lord.

[Baroness Oppenheim-Barnes]

My Lords, does my noble friend agree that the most important part about any new code is that it makes it absolutely clear to the borrower from the start how much the loan is going to cost and what other consequences might arise from late payment?

[Baroness Wilcox]

My noble friend was not only the Minister for Consumer Affairs but the chairman of the National Consumer Council for some years, so if she speaks on this subject we know that she speaks with authority. She is absolutely right; to be an informed consumer is the most important gift that we can give to people when they make purchases or take out a loan. We have started discussions with the industry to check that people are giving out the right information, and in April next year we will move free advice to the Money Advice Service, which will be co-ordinating debt advice across the country.

[Baroness O'Loan]

My Lords, in light of the reductions in welfare benefits coming down the road, are there any plans to address the critical period of debt and introduce effective regulations that will require advertisements in the windows of these money shops to say exactly what a loan will cost? For example, if you borrow £100 for a month it will cost you £X. That sort of information would immediately alert people to the risks that they are running. We cannot afford to wait for commissions of inquiry and academic research about something that, as the noble Baroness has said, is a long-standing problem.

[Baroness Wilcox]

The Office of Fair Trading is always vigilant and always has its eyes on this to make sure that the information is out there. That is a particularly good piece of advice, however. I will see whether this is being done and, if not, what we can do to take it forward.

[Baroness Royall of Blaisdon]

My Lords, I agree with the noble Baroness when she says that we need informed consumers, but will she agree that for a Government to say that people should stop and think before they take these loans demonstrates that someone is out of touch? These people are desperate and poor and they have nowhere else to go, which is why they need good regulation and assistance.

[Baroness Wilcox]

After six years as chairman of the National Consumer Council and seven years as the president of the Trading Standards Institute, I am sorry if I gave the impression that I take it casually that people should get into trouble in this way. I apologise if that is the impression that I gave. There is no doubt that the biggest worry in all this is that capping, or any other similar action that we take, will lead to the poorest and most vulnerable people having to go to illegal moneylenders, where the punishment if they do not pay is not always visible. All the time that they can borrow money legally—no matter how high the interest, no matter how wrong the way in which they are borrowing it is—we can at least be there to help them out of the trouble they get into.

Devolution (Time) Bill [HL]

Tuesday 13th December 2011 Lords Chamber

Third Reading

15:00

Bill passed and sent to the Commons.

Health and Social Care Bill

Tuesday 13th December 2011 Lords Chamber

Committee (12th Day) (Continued)

15:00

Clause 58 : Monitor

Debate on Amendment 260EB resumed.

[Baroness Murphy]

My Lords—

[Baroness Anelay of St Johns]

My Lords, I appreciate that this procedure is not common, but it is not novel. The noble Baroness, Lady Murphy, is seeking to contribute to the continued debate. May I suggest that Peers who are attempting to leave should do so by the other door, and preferably not by that door—I say to the noble Lord, Lord Borrie—so that she can stand and be heard by the House?

[Baroness Murphy]

Thank you very much indeed. I just want to comment briefly on the amendments on licensing. Some of them are asking quite a lot of the licensing procedure, but there may be other mechanisms that achieve what they want to achieve. I am sympathetic to people’s desire to add these conditions, but I think that it is important to see the licensing arrangements as part of the system, in conjunction with registration with the CQC. It enables Monitor to approve the compliance arrangements to achieve good governance and the information requirements needed to monitor that the organisations are delivering the right standard of care.

The threat of licence revocation enables Monitor to pick up at an early stage the problems of quality and finance which other people have spoken about. Obviously the providers will be very concerned to hold on to their licence, which seems to be a very powerful and potent tying-in of organisations to the ethos and objectives of the NHS. We must be very careful not to regard the licensing process as something within which to impose too many conditions, but as a basic framework that ties the licensees into the system. That is particularly important when organisations start to go wrong. We will discuss later how they are rescued from those predicaments. However, it seems to me that this creates a basic level playing field, and that it would be a mistake to use that process to do much more than tie everyone into the basic system. It sort of replaces the old authorisation process on compliance and quality that was operated by old Monitor, but it is a way of going forward as new organisations come into the NHS as providers of NHS services. I just wanted to add those comments because I think that these amendments might be adding a bit too much to the responsibilities of the licensee.

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

My Lords, licence conditions will be the mechanism through which Monitor will be able to prevent potentially anti-competitive behaviour and enable service integration, where this is what commissioners want. Monitor would also use licence conditions to collect the information it would need to set prices, and to help identify at an early stage—at an early stage—if a provider was at risk of financial distress. If that was the case, it could work with the provider to address potential problems, as well as supporting commissioners to ensure continuity of services. I completely understand the concerns in that area.

First, I think that I need to make clear that all providers of NHS healthcare services will be subject to the requirement to hold a licence. This includes providers of primary medical services, which is the question posed in Amendment 279A. Furthermore, where a provider is providing services that carry a requirement to be registered with the Care Quality Commission, that registration will be a prerequisite to being granted a licence by Monitor. We all want to see close operational links between Monitor and the CQC. The Bill emphasises this by placing duties of co-operation on both organisations, not just in matters such as information sharing, but also in the development of the joint application mechanism for providers seeking registration from both bodies.

We are also clear that regulation must be proportionate, and impose the minimum of additional burdens on those being regulated, while still safeguarding the interests of patients and the public. To that end, the Bill makes provision for the Secretary of State to make regulations establishing an exemptions regime, so that licensing can be targeted towards those parts of the health service where there is the greatest need for regulation. While we are clear that there must be an exemptions regime, we also recognise the importance of making sure that we get the scope of it right. To that end, we are already committed to consulting fully next year on our proposals for the exemptions regulations. Noble Lords may also be aware that the Delegated Powers and Regulatory Reform Committee of your Lordships’ House has recommended that the first set of exemption regulations should be subject to the affirmative resolution procedure. We agree, and both Houses will have the opportunity to debate them before they come into force.

The Bill provides for Monitor to attach conditions to licences. While the Bill sets a framework for the scope of those conditions in Clauses 95 to 97, we are clear that it will be for Monitor itself to develop the detail as the sector regulator. The intention is that the conditions will support Monitor in exercising its functions and that Monitor will be best placed to know how they should be framed to achieve that. Therefore, including large numbers of mandatory conditions on the face of the Bill, as some noble Lords have suggested in certain amendments—for example, Amendments 283, 285ZA and 287A—would undermine the Monitor’s independence, which we do not think is desirable if it is to be a robust and vigorous sector regulator.

Nevertheless, I would like to reassure the Committee that there will be proper oversight of Monitor’s proposals for conditions. My right honourable friend the Secretary of State will have the power to veto the first set of licence conditions. We are clear that Monitor must be able to operate freely and autonomously within the legislative framework established by the Bill. We have built in reasonable checks and balances through requirements for key products, such as the licensing criteria and conditions, to be subject to approval by the Secretary of State. Although I understand entirely the reasoning behind amendments tabled by noble Lords which would increase the level of the Secretary of State’s involvement in provider regulation—for example, Amendments 281A, 282A and 282B—regrettably, I feel that these go a step too far in limiting Monitor’s independence.

The noble Baroness, Lady Thornton, asked me quite a number of questions to which I feel I should write in response. In particular, however, she asked whether Monitor will have the role of resolving disputes and whether all disputes would go to court. The answer to both of those questions is no. The NHS standard contract already provides for contractual disputes to be resolved through arbitration and this will not change. Licence holders have to agree special conditions or modifications to conditions. If the provider disagrees and Monitor then wants to proceed, it must refer the matter to the Competition Commission for consideration.

My noble friend Lord Clement-Jones spoke to Amendment 281A. I want just to comment briefly on that. The amendment would increase the minimum length of notice period during which representations could be made following publication of a notice of proposed exemptions. I am grateful to my noble friend for that. The Bill is clear that the notice period should be not less than 28 days. It could therefore be much more than that, and our expectation in most cases is that it will be. But there will be times when the Secretary of State needs to act quickly, so being locked into a notice period of not less than 90 days could be detrimental to a particular provider or group of providers.

My noble friend Lady Williams spoke to two amendments, Amendments 287EA and 287EB, where the purpose is to ensure that licence conditions on providers of NHS services restrict the income they can earn from private patients and the number of private patients they treat, as well as that funds provided for NHS care are not used to subsidise private treatment offered by foundation trusts, with various conditions attached. I understand my noble friend’s concern about this. However, the amendments would be impractical, and in particular for licence holders who are not NHS bodies they would be highly undesirable. Foundation trusts’ principal purpose—we will come to this in a later group of amendments, when we discuss the private patient income cap—is to provide goods and services for the NHS in England. It means that they must earn most of their income, over 50 per cent, from NHS services. We are tabling a government amendment to make it clear that the majority of every foundation trust’s income will continue to be from NHS service provision. Foundation trusts must comply with their principal purpose or they will be breaking the law. They could be at risk of successful legal challenge if they fail to meet their principal purpose. We are tabling a second government amendment to require foundation trusts to show in their annual reports how income earned from private activities has impacted on the provision of NHS services. Using NHS income to subsidise private patient work would lead to foundation trusts breaching the NHS constitution. The Government also gave a commitment that foundation trusts will have to produce separate accounts for their NHS and private-funded work.

Finally, I want to mention briefly the amendments that will fall to me to move in relation to licensing: Amendments 280A, 281B, 284A to 284C, 285A, 286B, 287C and 287D, and 288A to 288F. These are without exception minor tidying-up amendments to improve the drafting or clarify meaning, and I hope that the Committee will accept them when they are moved. I hope, too, that the Committee feels reassured by my explanation of how we envisage licensing to operate and that the noble Baroness will be able to withdraw her amendment.

[Baroness Finlay of Llandaff]

My Lords, can the Minister provide clarification on the questions I asked? First, who is going to define what is expected of primary care services in terms of how they are integrated? If that does not form part of their licensing, who will define the minimum standard across the country? Secondly, in Amendment 282ZC I set out that:

“A criterion for a person or organisation to be granted a licence must be that that person or organisation demonstrates a commitment to education, training and research”.

I would be grateful if the Minister could explain the situation when someone may well be good enough to provide clinical services but shows absolutely no commitment to any aspect of education and training, even for the development of their own staff, or to any of the research developments that might be happening in their field. I would include in this physiotherapy and occupational therapy assistance, such as people putting appliances into homes and those providing supportive care-assistance services in health, but not the secondary and tertiary-care specialised services which are covered very adequately by all the criteria from the royal colleges. It is about the minimum standard.

My third question relates to indemnity: do the Government feel that it is acceptable for a provider to be licensed without having to demonstrate that it has adequate indemnity?

15:15

[Earl Howe]

My Lords, I apologise to the noble Baroness if I skirted over the considerable number of questions she asked, and if it would be helpful to her I will write her a letter on all of them. Perhaps I may cover two at this point. As regards her Amendment 282ZC, our expectation is that Monitor’s licensing criteria will be light-touch and broadly drawn, to encompass a wide range of providers. The amendment she has tabled does not lend itself to that approach. Much as I understand the importance of this particular issue, requiring any and every licence applicant to meet a definition of,

“commitment to education, training and research”,

that Monitor has developed does not fit with the principles of proportionate and targeted regulation. But I will write to her with further reasoning on that.

As regards the noble Baroness’s Amendment 282ZB, which is about indemnity, if she will forgive me, again I think that I will have to write to her.

[Lord Clement-Jones]

I have another amendment on which the Minister might find a lacuna—Amendment 287A, which deals with the Nolan principles.

[Earl Howe]

Will my noble friend allow me to write to him on that?

[Lord Clement-Jones]

I assumed that he would make that undertaking.

[Baroness Thornton]

I am glad that the noble Lord, Lord Clement-Jones, asked that, because I was waiting to hear what the answer would be. I look forward to the noble Earl’s response. I fear that the noble Earl will be spending the whole of the weekend writing letters to all of us about these matters.

I am not going to say very much about this. This has been a divided debate, but many of the questions asked have been similar. The noble Baroness, Lady Williams, was quite right to raise the issue of requirements. She and her noble friend Lord Clement-Jones were right to raise the issue of transparency, which is very important here.

I am not sure that we on these Benches would agree that the checks and balances are the right ones. At this stage, we will wait for the letters from the noble Earl. I will also read his remarks again in Hansard. We may return to discuss this matter again. I beg leave to withdraw the amendment.

Amendment 260EB withdrawn.

Clause 58 agreed.

Schedule 8 : Monitor

Amendment 260EC

Moved by

[Baroness Thornton]

260EC: Schedule 8, page 361, line 15, at end insert—
“( ) The chair and the chief executive must be separate roles, and cannot be held by the same person.”

[Baroness Thornton]

We turn now to the very important matter of Monitor and accountability. I see that many noble Lords have amendments in this group, many of them echoing each other. The reason for that is that, given the powerful role that Monitor is to have—whether it will have this role under the regime proposed by the Minister or the alternative architecture proposed by myself earlier today—we think that accountability is very important indeed.

We propose two improvements to Monitor’s governance. We believe that its functions should be exercised in the public interest and therefore that it should meet in public, as the NHS Commissioning Board will. We should also no longer have a combined chair and chief executive post. I hardly need say to the House that this arrangement is totally against established good practice in the public or private sector. I rest that issue there and look forward to the noble Earl’s response.

When foundation trusts were set up, the idea was that they could earn freedoms from traditional NHS management and also bring an element of democratic accountability and community ownership. It must be said that much of this has not materialised. Some foundation trusts up north have made an effort to engage locally with the people they serve. Some have adopted a business model rather than a community ownership model. I am sure that all noble Lords are members of their foundation trusts—I hope that they are and that they take part when asked to do so. The target to push up membership numbers in the trusts seems to have been forgotten.

Being successful in becoming a foundation trust shows that a fairly high barrier was overcome but that represents only the position at one point in time. As with the share market, things can go up or down. Some big-name foundation trusts have had their bad patches. A few, surprising names have been at the edge of intervention. If you compare the list of foundation trusts flagged as being in difficulty by Monitor with the list of ratings from Dr Foster or, in its time, the ratings from the Healthcare Commission, there seems to be no pattern at all. Indeed, a double-excellent foundation trust came close to de-authorisation.

Every large, complex organisation can get into trouble. Past success is no guarantee of future performance nor is it necessarily even a good predictor. That is why we argue that the oversight of foundation trusts by Monitor should continue and its intervention powers should remain. We have long argued for shifting the balance of power and we fully support the idea of earned autonomy with the regulator as an independent judge. But if it is earned it can also be taken back. We shall see what transpires when one foundation trust is obviously unable to present a viable business plan. What will happen to its future?

Monitor has to continue in the role we gave it as the authoriser of foundation trusts as they earn their limited independence. In recent times, it toned down the role it took as the promoter of foundation trusts and as a trade body as a step too far. We argue that Monitor as a regulator should be neutral not a cheerleader. We can accept the principle that it is wrong to favour any type of organisation for arbitrary or political reasons, as is set out in the operating framework. We do not accept the convoluted and ultimately meaningless formulation contained in the Bill. Monitor should retain its intervention powers. We accept the case for autonomy and community ownership but in the final analysis we see foundation trusts as still part of the NHS and so, in the end, subject to the powers of the Secretary of State.

We accept that the governors should be a strong element in foundation trust governance but, as the Bill accepts, they need support and development in that role. Most foundation trusts will say that governor effectiveness takes at least five years but governors, no matter how effective under normal circumstances, may be completely ineffective in times of overwhelming crisis. It is then that the Secretary of State must have the power to intervene to ensure the overall functioning of the NHS and to protect the interests of patients and their communities. A major change here is that the Bill extends the concept of financial regulation to non-foundation trust providers—that is, the private sector. As I have said before, we can see the logic in that.

I am going to skip ahead and do what I said earlier in the Bill: you do every other page of your brief and see whether anybody notices. We have already had a lot of debates about these issues.

Finally, we come to reservations about the interaction between the licensing regime and the use of standard contracts. Actually, we have also discussed that so I will not ask those questions again. We have recently seen missives from the Department of Health and from Monitor exploring the ideas around regulation. It is slightly amazing that these are all coming out now, as helpful as they may be. The general idea, as we have said before about the Bill, is that you should consult on the legislation, allow Parliament its scrutiny role and then implement it. However, as we know, the Bill exhibits the principle of reverse engineering. When its progress was paused to allow consultation, the Government continued to roll out the implementation and the Bill is catching up with that now. We scrutinise the Bill alongside its implementation and the secondary legislation is written up in the form of documents coming out of the Department of Health.

I turn to our amendments in this group. Amendment 260EC provides that the chair and chief executive of Monitor cannot be the same person, Amendment 260GA provides that Monitor must meet in public and Amendment 267D would apply the mandate to Monitor. We think that Amendment 267D might be improved on and might even be better located in Clause 20 on the mandate itself, but the point of it is to raise the idea that the Secretary of State may be given a greater power of direction of Monitor and ultimately boost its accountability. I beg to move.

[Lord Clement-Jones]

My Lords, I would like to continue the train of thought started by the noble Baroness, Lady Thornton, about the specifics relating to Monitor. I shall speak to Amendments 260F, 260G, 260H, 269A, 294BA, 294BB and 294BC.

First, I may not have got Amendments 260F and 260G, relating to the first chief executive of Monitor, completely right, because Monitor is already in existence, but in principle the chief executive of Monitor should surely be appointed by the Secretary of State in the same way in which the chairman and chief executive of the national Commissioning Board are. As we go through this debate, it will become increasingly obvious that Monitor’s role is as important as that of the NHS Commissioning Board, so I would have thought that having an appointments system on all fours with the board would be imperative. Then again, we come to the question of the provision of information to the Secretary of State. Amendment 260H mirrors the powers possessed by the Secretary of State in relation to the NHS Commissioning Board. It seems sensible that that should be in place as well.

Harking back to our debate on competition and the application of EU competition law, we come on to a rather different issue. This is an interesting place for these amendments to be put. In Clause 118 it is the Competition Commission that deals with the determination of methods of setting prices under the national tariff if there is a disagreement—the Competition Commission has that referred to it by Monitor. For all the reasons that we explored in the debate on the first set of amendments today, it is inappropriate, in my view and in the view of many others, for the Competition Commission to be so heavily involved in matters relating to the NHS. Substituting the Secretary of State for the commission seems to be sensible.

The objection is sometimes raised that we need an independent body in order to set the method. That is a fair point but it is an objection to the Secretary of State doing this entirely on his own, whereas an independent panel appointed by the Secretary of State could do the job equally well. That would ensure that there was some arm’s-length relationship with the Secretary of State in these circumstances. It is quite unnecessary for the Competition Commission to do what is going to be an extremely unfamiliar job for it in assessing the methodology of setting the national tariff—far better that others who will become familiar with it should undertake that task as advisers, consultants or whatever to the Secretary of State. All these amendments make good sense.

15:30

I move finally to Amendment 269A. The regulations under Clause 61 are very important. The noble Baroness, Lady Thornton, referred to them in her first speech today. Understandably there is considerable debate and discussion about whether it is desirable for Monitor to exercise functions in relation to adult social care. However, we are not being asked at this stage to make a decision about it. If we were being asked to decide whether Monitor should exercise those functions, it is important that we have the debate in this House, indeed in both Houses. That is why this amendment sets out that it should be decided by the affirmative procedure, which would be an entirely proper way of dealing with it and would be on the Floor of this House. In all these cases they seem to be tightening-up provisions that recognise the importance of certain regulations and of Monitor and that the role of the Competition Commission throughout this Bill is inappropriate.

[Lord Warner]

I thought there was going to be an intervention from my left. I was not going to intervene in the debate on this group. I am sorry if I missed something by missing the debate on the first group of amendments. I have some concerns about the dual role of Monitor as the arbiter of foundation trust status and the raft of new duties that it will undertake as an economic regulator. Let me make it clear that I have no problem whatever with the role of Monitor as the economic regulator and the functions that go with that. However, I want to share with the Minister and the House some of the previous Government’s thinking on whether Monitor could combine being the economic regulator and the arbiter on the passage to foundation trust status. The situation, if anything, is more difficult now. We finally concluded that we could not make Monitor the economic regulator until we were much, much further along the path of completing the job of trusts becoming foundation trusts because there were potential conflicts of interests, which we will come to later.

I raise this issue at this point because there are accountability issues here as well. I can see the very strong arguments—and I have every sympathy with the Government on this—for setting up an economic regulator and the Secretary of State not dipping in and out of those functions. If you are going to have a regulator, let it be independent and leave it to get on with the job. I am very comfortable with that. My concern is that we are already going to be loading a very large number of functions on to this economic regulator, and to expect it to carry on, even with Chinese walls, as the arbiter on foundation trust status is a big ask, given that most of the promising candidates for foundation trust status have already jumped over the bar and we are getting down to the ones that have been finding it rather difficult to jump over the bar. That could be because the Government have set themselves the target of 2016. We set ourselves targets of 2008 and 2012, and quite a lot of trusts have still got nowhere near jumping over the bar, so I certainly would not bet the farm on them all having cleared the hurdles by 2016.

Monitor, in its role as the arbiter on foundation trusts, needs to keep a very close eye on those that have cleared the bar and to intervene when it needs to. The Secretary of State is actually embroiled in that process. The cases have to be cleared by the Department of Health and the Secretary of State before they go on to Monitor. That is a long-established process. The Secretary of State is going to become involved to some extent if trusts lose their foundation trust status; they go back into the pool in a sense.

We are now dealing with a situation that is much more difficult financially and much more challenging than it was under the previous Government. We are trying to get Monitor to do an even more difficult job with the most difficult trusts in an extremely difficult climate and to take on the job of being an economic regulator. There are real issues about whether that can be done and about separating out the areas where the Secretary of State has a legitimate role. It is legitimate for the Secretary of State to have a presence in the build-up to a foundation trust application and when a trust loses that status. However, that set of issues is separate from the accountability issue when Monitor performs the role of an economic regulator. Will the Minister share with us some thinking about how those separate functions will be handled in the real world that we will face over the next three to five years?

[Baroness Williams of Crosby]

My Lords, I wish to address my Amendments 274AA, 274C, 274D and 274E in this group. I shall speak as briefly as I can. I share many of the concerns expressed by the noble Lord, Lord Warner, on whether we are overloading Monitor with too many requirements to make judgments, to intervene and to be responsible to enable any single body to function, however brilliantly led it might be.

This amendment is about the conflict of goals on the part of Monitor. I believe that it is a very important amendment, although it looks modest enough. The Bill states that if Monitor has a conflict of objectives—or, more clearly, a conflict of duties—that will in essence be resolved by the head of Monitor making a statement about the nature of that conflict and the ways in which it could be resolved and then turning it back to the perpetrators to solve the problem as best they can. Those conflicts are substantial. We should make it clear that they are fundamental to the whole argument that we have been having, including in the brilliant previous debate because, first and foremost, the general and primary objective of Monitor is supposed to be the promotion of patient health and patient care. That is fundamental. We heard in the very eloquent speech of the noble Baroness, Lady Meacher, how she thinks Monitor has changed its philosophy of life within the NHS and has become much more concerned with patient care and patient protection than with the pursuit of competition primarily for its own sake. That is a very important step forward in our understanding of the Bill.

However, it still leaves open the possibility of a conflict arising between the duties of Monitor. I have just mentioned the first of those duties—the care and concern about patients who are dependent on the health service. The second duty continues to be a concern with anti-competitive policy, and the third is concerned with integration and collaboration, about which there has been a great deal of discussion and many amendments in this House. The Bill gives us very little guidance on any conflict over which of those duties should be given priority over the others. It says that a conflict of duties or a conflict between responsibilities is to be resolved in this rather heavy-handed way of a statement being made about the nature of the conflict and how it might be resolved, which is then distributed to all those concerned. However, there is no resolution of the conflict. It remains part of what one might describe as an ongoing negotiation that some day might resolve itself in one direction or another. It has interesting parallels with yesterday’s events. However, Amendment 274E sets out very clearly that we believe that ultimately conflict should be resolved by the Secretary of State. We accept all the intervening proposals in the Bill at present—that statements should be made, that the conflict should be defined, and that it should then be passed on to those involved to try to find a solution. If, at the end of the day, no solution is found, it is absolutely crucial, in our view, that this becomes the responsibility of the Secretary of State as the ultimate goal of any accountability or responsibility within the service itself.

In this House I think we have got much closer to recognising how significant this final duty over a range of issues is. The Secretary of State is open to accountability to Parliament and to the general public, the people of England, so we say in Amendment 274E that if no solution can be found, there should ultimately be a reference back to the Secretary of State, who then has to make this ultimate decision. We have deliberately framed it to say that he is the ultimate decider, not one of those deciders on the way, although Monitor certainly has a role in resolving the conflict.

Since the future health service will in part be defined by what is seen to be the most significant of those duties, I think the Minister and most of us in this House believe that that central duty has to be responsibility to the patient and to the care and protection of the patient. I urge us to give this very serious consideration, because it is part of the pyramid that was set out in the brilliant speeches in an earlier debate by the noble Baroness, Lady Thornton, by my noble friend Lord Clement-Jones, and by my noble friend Lord Newton of Braintree, who has now had to leave us. I therefore propose the amendment in that spirit. It puts into a microcosm the concept of where the most responsible and urgent duties on Monitor lie.

[Earl Howe]

My Lords, I think that this has been a very useful debate. The Bill provides a more autonomous NHS, and it does so in order to deliver high-quality services and value for money. Monitor, as sector regulator, would establish clear standards and rules to protect patients’ interests in the provision of NHS services. Monitor would be required to lay its annual report and accounts before Parliament and have the accounts audited by the Comptroller and Auditor-General. It would also need to comply with other rules and guidance that cover central government public bodies, including the seven general principles of public life, the Treasury’s guidance document, Managing Public Money, and rules on corporate governance. Monitor would also have to respond in writing to parliamentary committees and any advice from HealthWatch England. The Secretary of State would oversee Monitor’s performance of its functions to ensure that those functions were performed well. The Secretary of State would not have control over Monitor’s day-to-day decisions, but would hold Monitor to account for discharging its duties. That point is extremely relevant in the context of a number of amendments in this group. The Secretary of State would appoint the chair of Monitor and other non-executive directors and would have to give consent to the appointment of the chief executive. I hope that point answers Amendments 260F and 260G.

Baroness Thornton: We are yet again in the territory of Monitor setting its own rules and implementing them, and of the Secretary of State’s role. The Minister has just said that the Secretary of State will, as it were, monitor Monitor. Can he please describe to us how exactly he will do that?

15:45

[Earl Howe]

My Lords, I will come on to that in a moment. The Secretary of State would also have specific powers of veto; for example, over the first set of licence conditions and, in individual cases, of provider unsustainability, where he considered that Monitor was failing in its functions to support commissioners in securing continuity of services. In addition, he would be able to request information from Monitor regarding the exercise of its functions as and when he considered it necessary. I hope that this therefore allays the concerns of noble Lords who put their names to Amendment 260H.

However, Monitor needs to be free from day-to-day political and other inappropriate interference in order for it to be able to act in the best interests of patients. In order to maintain the integrity of its relationship with the Secretary of State, Monitor must be able to take independent decisions on the exercise of its functions, such as calculating prices, setting and enforcing licence conditions and resolving conflicts of interests. Making such decisions subject to approval would be inconsistent with this approach, and would conflate responsibilities. In particular, it would undermine the Secretary of State’s ability to hold Monitor to account. There would also be significant risk of decisions being politicised inappropriately. By contrast, independence in such decisions would increase transparency and help ensure that providers were treated fairly.

I understand the motives of noble Lords who added their names to Amendments 274AA, 274C, 274D and 247E, relating to the Secretary of State’s involvement in resolving conflicts of interest. The Government agree that where they occur, conflicts must be resolved, but giving the Secretary of State a role in decision-making would undermine his ability to hold Monitor to account. The Secretary of State would be obliged to keep under review Monitor’s performance in discharging its duties. He would be able to direct Monitor, where it had failed or was at risk of failing significantly, to carry out its functions. In extremis, he could arrange for a third party to perform those functions or perform functions himself. I hope that those points answer the question of the noble Baroness, Lady Thornton.

The Bill also ensures transparency and fairness, through requirements on Monitor to consult widely when discharging functions and appeal mechanisms for the major decisions it makes. Here, I am addressing Amendments 294BA, 294BB, 294BC. In this way, our proposals strike a balance between maintaining sufficient independence and ensuring that the Secretary of State has sufficient ability to hold Monitor to account for the performance of its functions. I believe there is consensus that we need to ensure that this balance is correct.

My noble friend Lord Clement-Jones asked why it should be the Competition Commission that decides on challenges to Monitor’s proposals on licence modifications, pricing methodologies or whatever. I am grateful to him for that question. It is fundamental to our proposals that Monitor would be an independent regulator and that the appropriate role for the Secretary of State is to oversee Monitor’s performance against its duties, and to intervene where he considered that Monitor was significantly failing in any of its functions. However, it is vital that the legislation provides appropriate checks and balances on Monitor without undermining its day-to-day independence from political control. That is why we proposed that Monitor must consult on the licence conditions that it proposes to impose on providers and on its draft methodology for pricing. Providers and, in the case of pricing, providers and commissioners should be able to object to Monitor’s proposals, and where a sufficient percentage objected, there should be a mechanism for independent and impartial adjudication. That is the role we propose for the Competition Commission. It would act as adjudicator on disputed licence modifications and on disputes over the pricing methodology. The basis for this adjudication would be Monitor’s overarching duty to protect and promote patients’ interests.

[Baroness Thornton]

Did the Government consider any bodies other than the Competition Commission as being appropriate to fulfil this role? If so, which were they and why were they not thought to be appropriate? This is a rather heavy-duty form of monitoring Monitor.

[Baroness Williams of Crosby]

I am puzzled by why the Government do not see the Competition Commission’s overseeing of this area of Monitor’s responsibilities as not being neutral. Would not a body such as the Office of Fair Trading be more appropriate? It has a reputation not only of being more neutral but of having shown in the past particular sensitivity and understanding of health as a service provided to the people of England.

[Earl Howe]

I think it is a question of specialist expertise. I do not regard it as heavy-handed to have the Competition Commission acting in this role—which, we hope, would not be a role that it would need to perform with any regularity. It is an established body. It would apply a public interest test rather than a competition test, which is important. One has to question whether the Office of Fair Trading is the right body. I will of course reflect on my noble friend's suggestion, but we believe that the Competition Commission is a good fit in this sense. If the Secretary of State were to play the role of adjudicator, that would be very detrimental. The result would effectively be the politicisation of Monitor's decisions. As I said earlier, that in itself would undermine the Secretary of State's role in holding Monitor to account for the outcomes that it achieves.

The noble Lord, Lord Warner, referred to conflicts in the role of Monitor in overseeing foundation trusts. We are quite open about the fact that there is a risk of conflict of interest here. That is why it is essential that the Bill sets out a robust way for conflicts to be resolved. In a later debate, we can discuss that at greater length. I listened with interest to the speech of my noble friend Lady Williams, and I will of course reflect further on everything she said, as I always do. I think I have covered the main issues raised by the amendments in this group.

[Baroness Thornton]

I think that almost the first sentence I uttered in this debate was: will Monitor meet in public; and what do the Government intend to do about joint chairmanship and chief executiveship? If the Minister answered those questions, I did not hear him and I apologise.

[Earl Howe]

The answer is yes.

[Lord Clement-Jones]

The Minister said that he thought that the amendments tabled by my noble friend Lady Williams—Amendment 274AB, et cetera—would undermine the role of the Secretary of State and his ability to call Monitor to account. That seems a very far-fetched way to describe an attitude to conflict-resolution. The Secretary of State, particularly under Amendment 274E, is asked to resolve conflict. This is an addition. There is no other way, as far as I can see, of resolving conflict. A key issue, which has also been raised by the noble Lord, Lord Warner, in this debate, has been the multiplicity of roles of Monitor. Therefore, there is a strong need to resolve such conflicts.

I ask the Minister to consider further whether that is really detracting from the Secretary of State's ability to monitor Monitor—in the words of the noble Baroness. We need a mechanism to resolve conflict. Faute de mieux, this seems to be the best one.

[Earl Howe]

My Lords, I hear what my noble friend says, but the fact is that the amendments he refers to would reduce Monitor’s independence from political interference. We are clear that we do not want political interference in Monitor’s activities. The intent of the amendment is clearly to give the Secretary of State increased accountability for the decisions around Monitor's functions. We believe that Monitor will be an effective regulator and able to deal with conflicts of interest. Clause 63 requires Monitor to resolve conflicts between its functions. If a failure to resolve conflicts between functions was significant, then the Secretary of State already has the power to intervene under Clause 67. Therefore, there is an intervention mechanism but we suggest that it should be triggered only in the circumstances to which I have referred.

[Lord Walton of Detchant]

Will the Minister say whether, if Monitor is to meet in public, it will have reserve powers to allow it to go in camera if for any reason it may be required to consider highly sensitive personal information, which ought to preserve confidentiality in respect to the individuals concerned? It is crucial that such a power should be available to it.

[Earl Howe]

The answer is yes, although we do not expect that Monitor would ever have occasion to see named patient records.

[Baroness Thornton]

My Lords, I think this has been an extremely useful debate. I can see why this Government may not trust their Secretary of State to hold Monitor to account. However, I am concerned about the idea that because we—and I do not just mean Members on this side of the House—are anxious that accountability rests in the right place in the Bill, that must therefore translate into political influence or micromanaging. I do not think that is at all the case here. Therefore, we do have an issue still to explore regarding the accountability of Monitor.

I also think we need to explore whether the Competition Commission is the right place for a public interest test to rest. The noble Baroness, Lady Williams, may have made a useful suggestion about which other bodies could possibly undertake that function. Again, we find that this quango is determining its own rules and then implementing them. That is not a satisfactory situation. However, I did take hope from the fact the Minister said yes to the question of whether the chair and chief executive of Monitor would not continue to be the same person, and that Monitor should meet in public. Is the Minister accepting Amendments 260EC and 260GA, or is that the statement of principle with a government amendment coming forward at a later stage or, indeed, a letter from the Minister, clarifying the issue? Otherwise, I beg leave to withdraw the amendment.

[Earl Howe]

I was accepting that particular principle, but I will follow it up in writing.

Amendment 260EC withdrawn.

Amendments 260F to 260H not moved.

Schedule 8 agreed.

Clause 59 : General duties

Amendment 261 not moved.

Amendments 261A and 261B had been withdrawn from the Marshalled List.

Amendments 262 to 264 not moved.

Amendment 264A had been withdrawn from the Marshalled List.

Amendments 265 to 265A not moved.

Amendment 265B had been withdrawn from the Marshalled List.

Amendment 265C not moved.

16:00

Amendment 266

Moved by

[Lord Warner]

266: Clause 59, page 87, line 21, at end insert “and in discharging this duty will conduct and publish within one year of Royal Assent a review of the anti-competitive barriers that restrict NHS patients from benefiting from new or existing organisations providing new or extended NHS services that defined quality standards, together with their proposals for removing these barriers”

[Lord Warner]

My Lords, this amendment is in my name and that of the noble Lord, Lord Patel. I begin by briefly making clear my position on competition, which underpins this amendment. I am sorry that I had to miss the discussion on the first group of amendments. However, my position on competition is no different from what it was when I was the NHS reform Minister in the Blair Government, but it is somewhat different from that of the current Front Bench, as will become clear.

I start from a position of being opposed to monopolies, whether they are in the public or private sectors, and I consider that such research evidence as is available—such as that by Dr Zack Cooper at the LSE—supports the view that competition—

[Baroness Murphy]

I apologise. I think that the group we should be addressing begins with an amendment in my name. Unfortunately, I withdrew that amendment last week but it has continued to appear in the Marshalled List, for which I apologise. I believe that we should be moving on to the next amendment in that group.

[The Deputy Chairman of Committees (Viscount Ullswater)]

Perhaps I may clarify matters for the Committee. The group that we are now discussing begins with Amendment 265ZA, tabled by the noble Baroness, Lady Finlay, but which she did not move. However, the amendments in the group following that one were called in their place.

[Lord Clement-Jones]

My Lords, we seem to have skipped a whole group, but for what purpose? I was planning to move Amendment 267ZF. Has there been some discussion between the usual channels?

[The Deputy Chairman of Committees]

We are on the group beginning with Amendment 265ZA, which was not moved. The next two amendments in the group were also not moved. I then called Amendment 266, tabled by the noble Lord, Lord Warner, which he is now addressing.

[Lord Clement-Jones]

My Lords, I think that that is inadvertent. We seem to have missed a whole group of amendments.

[Baroness Thornton]

Perhaps I may help. I think that the thing to do is to deal with this group of amendments and the noble Lord can then move his amendment. We will then take the group of amendments that we should have been taking out of turn. Am I right in that? I think that that is the best thing to do.

[Lord Clement-Jones]

I am grateful to the noble Baroness.

[Lord Warner]

Is the Committee happy for me to continue? I consider that research evidence as is available, such as that carried out by Dr Zack Cooper at the LSE, shows the benefits of competition and supports the view that competition, when used sensibly, improves services for patients and can indeed save lives. It is perfectly possible to support both competition and integration; they are not mutually incompatible. I shall not pursue the evidence base for my views today. However, I should like to clarify briefly the circumstances in which we should be supporting the use of competition in the NHS in the best interests of patients and why it is important to tackle barriers to entry to the NHS market. It is important to recognise that we already have an NHS market in which many NHS providers do indeed compete for patients against other NHS providers. The Bill does not suddenly inject competition into the NHS but merely tries to impose some better rules and a system for regulating that competition.

There are basically three sets of circumstances in which competition could—not should—be used. The first is that, as a matter of principle, all NHS providers should be subject to market testing periodically. The second is when there is clear provider failure and it seems sensible to test the market to establish the best set of arrangements for replacing the failed incumbent. The third is where there is a set of circumstances when the NHS itself—the commissioners in practice—wish to change significantly the way in which services are provided and it is not apparent that the current incumbents can adjust quickly to the patient’s needs. The first set of circumstances has often caused a great deal of angst in the discussion of competition. I certainly do not start from that position. I believe that it is the second and third areas that I have described where we need to examine whether there are real barriers to entry by new providers, irrespective of whether those providers come from elsewhere in the NHS—from the private sector, social enterprise or the voluntary organisations.

Amendment 266 is concerned to establish much more clearly than now what the barriers to NHS market entry are. We know from the work of the collaboration and competition panel that primary care trusts have behaved in anti-competitive ways and have frustrated the best interests of patients. We know from the experience of the East Surrey nurses when they tried to set up a social enterprise how frustrated they were at changing themselves from NHS employees into a social enterprise so that they could compete for NHS business. We know that across the voluntary sector, voluntary organisations have been frustrated over their attempts to compete for NHS services over a long period of time. We also know that many private providers of services find the tendering processes for providing NHS services prolonged and excessively expensive and that they are too often frustrated by shifting political opinions about the desirability of competition.

I could go on with examples of the way in which the NHS has effectively shut the door to new entrants. Some of the most recent examples are the ways in which many primary care trusts divested themselves of their provider services without any proper system of market testing when it was clear that many of those services were extremely inefficient. We need to take the NHS out of its comfort zone in a future where it faces a huge set of demographic and financial challenges. Keeping it in the NHS family is no longer acceptable or in the public interest. We need an independent, authoritative and robust analysis of the barriers to entry to the NHS market so that we can consider what action should be taken to remove those barriers. Amendment 266 proposes that Monitor does this within a year of Royal Assent. I believe that Monitor would welcome being given this assignment but I would be more than willing to consider alternatives if the Government thought, for example, that the Office of Fair Trading was a more appropriate organisation to do the job. It is important that we get this job done as speedily as possible. I also support Amendments 278 and 287 to which the noble Lord, Lord Patel, will be speaking and to which I have added my name.

[Baroness Williams of Crosby]

My Lords, I am very grateful that Amendment 265C has somehow managed to escape from the tsunami of amendments so that I can bring it to the Committee’s attention very briefly. It is again an amendment that seeks to make sure that when competition is allowed or encouraged—the noble Lord, Lord Warner, has spoken on these lines himself—it should be because it clearly improves the quality of health and the quality of provision within society as a whole. The purpose of Amendment 265C is to make it clear that competition is welcome when it improves the quality of the service; it narrows inequalities; it ensures, in particular, that there should be a better outcome as a result of that competition; and it is, therefore, a relatively qualifying condition to permitting competition to flourish.

We have heard a number of very well informed speeches in the House, not least from the noble Baroness, Lady Meacher, to the effect that in some situations competition can clearly encourage innovation, can improve new approaches and can help in providing the NHS a way forward to deal with the huge problems that we all recognise exist. However, in large part we are also very worried about the idea of competition as the ruling principle of the health services in this country, and we heard a very moving set of evidence from the noble Lord, Lord Owen, and the noble Baroness, Lady Thornton, about the devastation that unrestrained competition can exercise on a health service.

However, having spent 10 years of my life in the United States, I absolutely corroborate that. I know far too many people, one or two of whom are National Health Service refugees to this country, of outstanding talent, who are not in a category where they can afford the huge prices that are charged for complex and chronic conditions in the United States. How do we achieve this difficult balance so as to have competition that improves the quality of the health service but does not bring about the devastation of a great many human beings because they simply cannot afford the cost of complex operations or looking after the chronically ill? The situation of the chronically ill in the United States is pathetic in very many cases.

Therefore, this amendment and several others in this group would enable us to walk this delicate line in a way that permits competition, but competition that is in the interests of the patients of the health service and not competition that could devastate the health service itself.

[Lord Clement-Jones]

My Lords, I wish to speak to Amendment 287B. In his speech at the outset of today’s debate, the Minister said that there were four areas where he was considering amendments to Part 3, which deals with Monitor. If memory serves, he said there were areas where the Bill had not been completely amended to conform to the Future Forum report. This is a particular example of that.

Clause 96, the supplementary conditions, says it is possible for Monitor to include conditions that require,

“the licence holder to do, or not to do, specified things or things of a specified description … within such period as may be specified in order to prevent anti-competitive behaviour in the provision of health care services for the purposes of the NHS”.

Of course, that mirrors the duties of Monitor as set out in Clause 59, which says:

“Monitor must exercise its functions with a view to preventing anti-competitive behaviour”—

so far, so good. However, Monitor also has a duty to,

“exercise its functions with a view to enabling health care services provided for the purposes of the NHS to be provided in an integrated way where it considers that this would”

improve quality and so on. There is no mirror of that particular duty in the supplementary conditions in Clause 96, which is why this amendment adds the following wording:

“or for the purposes of encouraging the integration of services in the interest of people who use such services”.

A number of other examples are the subjects of amendments as well and will no doubt come up in the course of the Bill. It seems to me that the equal and opposite to the anti-competitive duty of Monitor, which is enshrined in the ability to set conditions and so on, is not mirrored in the integration of services, and this is an extremely good example of that. I very much hope that the Minister will be able to indicate that it is simply an oversight and it should be included in the Bill.

16:15

[Baroness Murphy]

My Lords, I wanted to come in on this matter of anti-competitive practices and the role of Monitor in it. I apologise to the Committee if some of these matters have already been covered, but I was unable to be here this morning. However, this seems like an opportunity to speak, as we are discussing Monitor’s role in anti-competitive practice.

I am concerned that we have not yet talked about the quite serious anti-competitive practice that exists in the NHS today, and how damaging it is. As we know, the independent co-operation and competition panel has highlighted a range of tactics that are very common at the moment in the NHS and which go seriously against patients’ interests. We have not sufficiently considered these when we are looking at competition. We tend to think of competition in relation to the independent sector versus the NHS in approaching the provision of services, but in fact it is this anti-competitive practice within the NHS which is so damaging. An example of this is the protection of certain local services against providers for elective operations, and so on.

I can think of an example in my own backyard, at Barts and The London—and this is a very real case. For years and years Barts used the mainstream orthopaedic services to provide local podiatry services, at a very high cost and very anti-competitively against the local community services, which had very skilled podiatrists who were able to do foot operations very cheaply and simply with a much smaller waiting list. Those sorts of anti-competitive practices are rife throughout the NHS, and are against patients’ best interests. It is utterly crucial that this role to reduce as much anti-competitive practice as possible should be watched by Monitor, but we want it to be co-ordinated with its role on integration—there is absolutely no reason why the two things cannot go side by side.

I am sure that we will come on to mergers and acquisitions, but the recent protection of patients and the public—for example, against the merger of two mental health trusts, Norfolk and Waveney, and Suffolk—seems to me to be extremely good judgment about what is likely to be in patients’ best interests. We should remember these matters of anti-competitive practice that are, as I say, rife in the NHS, and we really need to do quite a lot to stamp them out. I hope that the role of Monitor in working on these practices in patients’ best interests will be strongly supported.

[Baroness Finlay of Llandaff]

My Lords, the noble Lord, Lord Warner, was most helpful in setting out the criteria with which one would want to look at competition, and emphasising the importance of competition. But there is another area of competition, which is the one that really drives up quality of care: the inherent competitiveness of different clinicians and different clinical services, their desire to have better clinical outcomes than others, and the pressure that they will put on themselves within their own team to achieve better clinical outcomes.

I apologise to the House if I contributed in any way to the confusion over the numbering of the amendments as they have arisen. I would like to address the ones that come after Amendment 266, which will be Amendments 268B and 267C. Amendment 267C was tabled because of the large number of patients with complex clinical conditions.

It is very easy, when we are thinking about tariffs and services, to look almost at discrete nuggets of care, diagnosis and so on. Indeed, Monitor has a requirement in the Bill to seek appropriate advice to effectively discharge its functions in,

“the prevention, diagnosis or treatment of illness, or … the protection or improvement of public health”.

The amendment related to the management of a wide range of complex conditions has been tabled because in complex conditions many situations overlap and cannot be discretely targeted together, nor can they necessarily be unpacked one from another because of their impact on each other. That requires integration of clinical services.

[Baroness Northover]

The noble Baroness might be aware that Amendment 267C has leapfrogged from the group with Amendment 264 to the group after this. She may wish to address that amendment when we come to that group.

[Baroness Finlay of Llandaff]

I thank the noble Baroness. I am most grateful. That message had not reached me, although I may be a little deaf. I shall simply confine my remarks to the amendment in this group about Monitor reporting annually to the Secretary of State on how it discharges its duty to promote integration. I do not think that the comments that I made previously are annulled. They are relevant because, unless we have integrated services—however much they may be seen to be in competition with each other over different aspects—and attempt to have a seamless provision of care, at the end of the day it will be the patients who fall through the gaps.

Earlier today, we heard a lot about Monitor being light touch, not having a series of minimum criteria and being able to use its discretion in how it grants licences of all sorts. But I have a concern that there has to be a means by which the way in which Monitor functions is transparent and available to public scrutiny. That is why I have suggested that an annual report to the Secretary of State would allow such scrutiny to occur, particularly as regards promoting integration.

[Lord Beecham]

My Lords, in the first instance, I shall speak to Amendments 267ZDA and 269 in the names of my noble friend Lady Thornton and myself. Amendment 267ZDA refers to the need for integration. Indeed, there are a series of amendments on integration, with which I will try to deal as a group. Amendment 267ZDA gives an interpretation of integration which would,

“mean that health-related and social care services are provided in such a manner that individuals will experience services … as being independent of organisational barriers”—

which I suppose is the very definition of integration—and which offers patients,

“the most appropriate involvement in their care choices … which reduce … the need for separate assessments; and … which result in a care plan for the individual which covers all aspects of their care”.

Surely that aspiration would be shared by the Committee and widely within both the health and social care professions. It would seem to make sense to incorporate it in the Bill. However, Amendment 269 simply makes clear that it is unnecessary for a provision in the Bill to repeat a definition of anti-competitive behaviour since that already exists in existing legislation, although that is not a hugely important point.

In relation to other amendments in terms of integration, we certainly support Amendment 268B, which would provide the duty for Monitor to report annually as to how it has promoted integration. Amendment 274B seeks a requirement to publish a statement if conflicts between its functions arise which are likely to have a significant impact on integration of services. Amendments 278 and 278B impose requirements on the national Commissioning Board and clinical commissioning groups to extend the right of patients to make choices in respect of the integration of healthcare and to ensure the integration of services where that is in the public interest. Again, the aim is to drive the integration agenda. Then, as an overarching provision, Monitor would have under Amendment 278C the power to investigate whether the Commissioning Board and clinical commissioning groups are complying with those requirements. All of these seem to be perfectly sensible amendments to provide the right structure and one which Monitor could effectively supervise.

Still on the integration agenda, there are later amendments—Amendments 286A, 287 and 287B—which impact on integration. Amendment 286A allows a modification of Monitor’s powers to encourage integration, if that is in the interest of patients, as it usually will be, presumably. The amendments provide for modifications to licence conditions—again in the interest of integrated healthcare—to ensure that standing conditions of licences include requirements relating to or encouraging the integration of healthcare services. All that makes a sensible package to drive an important part of the underlying concept of the Bill and the too-long-deferred integration of services.

The other amendments in this group essentially relate to the issues of collaboration or competition. Here, it is slightly unfortunate that the noble Baroness, Lady Finlay—I am sorry, the noble Baroness, Lady Hollins—did not move Amendment 265ZA, which stresses that Monitor must exercise its functions with a view to promoting collaboration and preventing competitive behaviour. I think that is the other side of the coin that the noble Baroness, Lady Murphy, put on the table previously when she was complaining, perhaps rightly, about anti-competitive practices within the NHS. A more positive way of looking at that agenda is to say that NHS bodies should collaborate on the provision of services, rather than take a negative stance. That is, I suppose, a necessary fallback position, but the prime objective must be to ensure collaboration within and across health service provision and—having regard to what has just been indicated in relation to integration—with social services as well. That is probably the right approach.

Other amendments in this group relating to competition raise some other issues. For example, under Amendment 265C, there is a suggestion that Monitor’s duty to prevent anti-competitive behaviour should be qualified by requiring it to aim to improve the quality of services and outcomes and the efficacy of provision and reduce inequalities. These are listed separately; I take it that all of them—rather than any alternative—are intended to be part of Monitor’s duty. If the Minister were minded to accept the thrust of that argument, he would do so in that sense.

Again, there is the provision under Amendment 266, tabled by my noble friend Lord Warner, for Monitor to conduct and publish a review of anti-competitive barriers and their impacts within a year of Royal Assent. There may well be some sense in that, particularly in regard to the way in which he moved the amendment. There are similar duties on Monitor to look at impact assessments under Amendment 275. Government Amendment 278D, to be moved by the Minister later, refers to non-disclosure of the “business interests” of parties. Does that extend to the interests of, say, trusts or voluntary sector providers? Does “business” relate to their activities or would it be confined to commercial providers? It seems to me that it would be invidious if only one part of the provider sector had the protection of confidentiality; it should be applicable to all or none. There is of course no issue with the amendment that requires individual circumstances not to be subject to disclosure.

I have a question about Amendment 278J, which requires the Competition Commission to review the “occurrence” rather than the “development” of competition in the provision of healthcare services. It is not clear to me what the significance of the word “occurrence” is. This is not a government amendment and I do not know whether those who originally tabled it want to clarify the position. I understand the amendment if it requires the Competition Commission to review the impact of competition in the provision of healthcare services, but I do not know how the occurrence of competition would be reviewed. It does not actually make much sense to use the word in this context.

The thrust of most of these amendments makes sense and sets out a sensible role for Monitor. In what would have been the next group but for the leapfrogging, we will come on to look at the issue of conflicts, and I am sure that there will be some further discussion about that. However, I hope that the Minister will feel able broadly to support the amendments in this group and recognise that they should contribute to meeting the shared objectives that have emerged from today’s debate.

16:30

[Lord Whitty]

My Lords, I apologise for not being here at the beginning of the consideration of this group because for once the Committee is making faster progress than I thought, but I have tabled two amendments that relate back to the issue of anti-competitive behaviour, so I will be following on from my remarks about the first of the amendments today. I seek greater clarity from the Minister. Given that Monitor has responsibility for preventing anti-competitive behaviour—in other words, not just the encouragement of competition but also the policing of it—what happens when someone complains to Monitor? In effect, Monitor has been given the same powers as the OFT and other economic regulators in other sectors and, as my noble friend Lord Beecham has just said, is subject to some oversight by the Competition Commission, which has duties in this respect.

Let me give two examples of what in other sectors would be seen as anti-competitive behaviour. One is where two providers in an area get together to divvy up what they know the commissioning body wants and provide a package that is acceptable to the commissioning group. A third provider would like to get in on the action. It is probably qualified, so that is not a hurdle. If that provider then complains to Monitor, is Monitor able to say, “This may appear to be a bit anti-competitive, but actually it is in the interests of patients”? I assume, from all the Minister has said and from what is set out in the document about the role of Monitor, that it means it can say that. But is that the end of the story? Can there be an appeal against Monitor to the courts or, if it is systematic, to the Competition Commission review role?

There is also the opposite scenario: competition laws relate to monopsony and oligopsony as well as to monopoly and oligopoly, so if a number of commissioning groups get together and decide that they will buy collectively from particular providing groups but not from others, is that also grounds for appeal to Monitor? If Monitor nevertheless decides that that is in the interests of patients, is there a further recourse? I was worried earlier today that there might be further recourse and that, despite all the assurances that have been given, Monitor is not actually the final regulator on what is in the patients’ interests, because it is supposed to act in accordance with or reflect the general rules, including EU rules, on competition and procurement.

This situation is going to arise because, with the Government’s encouragement, there will be more providers than those which get commissioned. A failed or disappointed provider must know how the system is supposed to work so that Monitor can look at it and be judged on it. With other economic regulators there is a form of appeal in this respect, to the Competition Commission. It is not used very frequently, but when we are trying to bed in a new system it may well be used more frequently by disappointed and failed competitors. If that is not to happen, it has to be clear in this Bill—and if not in this Bill then by ministerial decree and in regulations—that once Monitor decides something is in the interest of patients that is the end of the story. Otherwise, I cannot see the system working without constant appeals and second guessing.

[Lord Walton of Detchant]

My Lords, I shall be brief in speaking to these amendments. I wholly agree with the principle outlined by the noble Lord, Lord Warner. There are many circumstances in which competition, properly controlled, will benefit the National Health Service and will benefit our community. But, like the noble Baroness, Lady Williams, I too, having worked in the United States, would be deeply concerned if competition were allowed to run riot. Years ago, I saw the affect of this. For instance, in the Massachusetts General Hospital, where I worked many years ago, the president of the hospital told me that they were required to debate and negotiate with no fewer than 47 different insurance companies in order to obtain coverage for the patients whom they treated.

Yet in the United States you still find, in certain communities, perfectly acceptable patterns of community care which are in many ways excellent, not least the Kaiser Permanente plan in California. I also visited an excellent clinic and associated hospital providing a substantial range of primary, secondary and tertiary care to a very wide community in Marshfield, Wisconsin. The Marshfield clinic serves a very large community in that state. All the people in the community pay an annual subscription in return for which they get a full range of primary, secondary and tertiary care of a very high standard. There are islands of excellence.

So far as competition in this country is concerned, I have always believed that the cap imposed upon foundation trusts in relation to private patients was unfair. It was imposed at a particular moment in time and based upon income derived by those individual trusts in a preceding period, and was grossly uneven. I have always favoured a partnership between the public and private sectors. In such hospitals and foundation trusts I believe there is a great advantage to allowing them to have more income from private patient beds: it not only generates income for the National Health Service, it also persuades many consultants to become geographically whole-time, looking after their public and private patients in the same hospital and not having to spend time, as many have in the past, travelling to private hospitals.

I believe in competition and in the public-private mix. But in pursuing that type of programme, it is absolutely crucial that Monitor has the authority to prevent any foundation trust from overstepping the mark and increasing its private provision to the extent that it will harm the services that it gives to NHS patients. I would love to have an assurance from the Minister that Monitor will be able to fulfil the function of controlling excesses which could damage the National Health Service if private provision went too far.

[Lord Patel]

My Lords, briefly, we are getting a bit confused between the amendment of the noble Lord, Lord Warner, which I support and is about anti-competitive behaviour, and people talking against competition. The amendment is quite clear. It asks Monitor, within a year, to identify barriers to quality care that are anti-competitive. The noble Baroness, Lady Murphy, gave one example and there are others, such as optometry services, which can, if given the opportunity to expand, not only provide good diagnostic services but also treat some minor ailments that do not need referral to hospital. Our amendment is about anti-competitive behaviour. It is not about competition.

[Earl Howe]

My Lords, there are some extremely helpful amendments in this group. Indeed, there has been a great deal of valuable debate both inside and outside the Chamber on the roles of competition and integration in the health service. I am grateful for much of what the noble Lord, Lord Warner, said in his introductory speech.

The Government have been clear that both competition and integration can be important tools for commissioners to drive up the quality of services for patients. We have also been clear that it will be for commissioners to decide where and how these tools should be used—not Monitor. There will be no “one size fits all” or a model prescribed by government.

To help ensure that both competition and integration are effective, Part 3 of the Bill seeks to establish appropriate powers for Monitor. Where there is competition, Monitor will have powers to ensure that it operates effectively in the interests of patients and to safeguard against anti-competitive conduct that can work against those interests. The Future Forum concluded that Monitor, as a sector-specific regulator with knowledge and expertise in health services, would be best placed to achieve this. Let me remind the Committee that this is if there is competition. In some circumstances, I freely concede that commissioners may decide that the best way to achieve high-quality services for patients is not to have competition.

On Amendment 265C, I hope that noble Lords will agree that it is the right approach to require Monitor’s focus to be on considering the interests of patients. That will allow Monitor the scope to take account of a broad range of factors. This approach also provides continuity with the requirements of the existing system rules, the Principles and Rules for Co-operation and Competition, which we have committed to retaining and giving a firmer statutory underpinning through Monitor’s sectoral powers. Those powers are the setting and enforcement of licence conditions for providers and the overseeing of commissioning regulations set by the Secretary of State. Along with the concurrent powers to apply the Competition Act with the Office of Fair Trading, they will provide necessary safeguards to ensure that the interests of patients are protected.

To pick up on the sorts of circumstances cited by the noble Lord, Lord Whitty, that would include, for example, safeguarding against providers exchanging information to agree lower levels of service quality than they would otherwise supply if they were in competition; or a commissioner removing a well performing provider from the choices available to patients, or seeking to direct patient referrals to one provider and not another on non-clinical grounds.

However, it is not the case that every arrangement in the provision of healthcare that had the effect of restricting competition would necessarily be anti-competitive. I made that point in one of our earlier debates. I look particularly in the direction of the noble Lord, Lord Whitty, in saying that Monitor’s core duty means that patients’ interests will always come first. For example, in some cases limiting competition by concentrating specialist services in regional centres or in providing services through a clinical network may deliver overriding benefits to patients and would not, therefore, be anti-competitive. Similarly, where an integrated service raises competition concerns, and equally where services offering more choice and control raise concerns over integration, Monitor will always come back to its core duty—to ask itself the question, “What is it that benefits patients the most?”.

16:45

The Government appreciate the clear consensus for further integration and more joined-up services. Integrated care pathways can enable increased collaboration between hospitals and clinicians, between public and independent sector services and between health and social care providers. The Bill seeks to encourage and enable that. In addition to powers relating to competition, Monitor has an overarching duty to enable integration where this would improve services or reduce inequalities for patients.

Monitor will have a range of functions at its disposal to achieve this—for example, supporting the NHS Commissioning Board in identifying and spreading good practice in the development of reimbursement systems. Here I am particularly addressing Amendments 286A, 287 and 287B. Monitor would also be able to use its licensing conditions to enable integration, subject to the making of regulations provided for in Clause 95(2)(h)—for example, to reflect principle 4 of the existing Principles and Rules for Co-operation and Competition and require providers to exchange information with commissioners and other providers to ensure that the patient experience is of a seamless health service, regardless of organisational boundaries.

I am also sympathetic to the intention of Amendment 274B as I agree that it is important that Monitor is transparent in managing conflicts effectively, including where there may be decisions to take on matters of integration. However, I believe that the requirements already set out in the Bill are comprehensive. This is because resolving a conflict that has a significant impact on the integration of services would also have a significant impact on patients or persons who provide healthcare services.

I turn to the specific issues on the reviews that the Bill proposes are undertaken by the Competition Commission of competition in the provision of NHS services and the exercise of Monitor’s functions. I have listened carefully to the various arguments and concerns that have been put forward about this proposal and, as I have intimated previously, I will reflect further on the points that have been made on these reviews, with a view to bringing forward proposals on Report.

I turn to Amendment 266, which is where we began. I do not take exception to the idea put forward by the noble Lord, Lord Warner, at least in principle, but Monitor would have the power to carry out the kind of review that the noble Lord suggests that it should. I am not sure that it would be helpful to compel it to use its resources in exactly the way that he proposes. The particular issue here is the timing. It might be helpful for any such review to be later, once the reformed system is more established.

Amendment 267ZDA provides a definition of integration, referring to services being independent of organisational barriers. I am sympathetic to what it is trying to achieve but I am not sure that the proposed definition, which focuses largely on structures and processes, fully captures integration seen from the point of view of the patients. We see integration as a means of improving patient outcomes rather than—to return to an earlier theme—an end in itself. We do not want to be prescriptive about how commissioners decide to integrate services.

Amendment 269, which the noble Lord also proposed, would remove the provision that Monitor should exercise its functions with a view to preventing anti-competitive behaviour in the provision of NHS services. It is important that Monitor plays this role to protect patients’ interests against collusion and so on. However, if these amendments were accepted, Monitor would still have its concurrent powers with the OFT but would not be required to use its other functions, such as licensing, to tackle abuses or distortions, and that would be retrograde.

The noble Baroness, Lady Finlay, in her Amendment 268B also brought us to the subject of integration. Monitor will enable integration, as I have already said. It will be for commissioners to drive that. Monitor would have to publish an annual report on how it had discharged its functions and Schedule 8 gives the Secretary of State the power to ask Monitor for specific reports. This could include how Monitor was discharging its duty to enable integration.

Amendment 267ZDA again is one that I am sympathetic to but I come back to the criticism that I made earlier that it is rather structure and process orientated. While I am with the noble Lord in spirit perhaps he would like to think again about how that amendment might be worded. He asked me about confidentiality and business interests in the government amendments—these would indeed apply to all providers whatever their sector and whether an individual or an organisation.

The noble Lord, Lord Whitty, asked whether an aggrieved provider could appeal beyond Monitor. The answer is no. What the noble Lord has described would be an issue of procurement and not competition law. Commissioners, as long as they work within guidance and regulations, can decide when, how and if to use competition, including whether to restrict the number of providers to maintain service quality and sustainability.

Finally, I turn to the amendments that it falls to me to speak to in this group. Both of them are minor and technical; their purpose is to tidy up the Bill and I hope that they will be agreed when moved.

[Lord Warner]

I want to briefly respond to what the noble Earl said about Amendment 266, particularly in the light of the points that the noble Baroness, Lady Murphy, made about a good deal of anti-competitive behaviour being already quite well entrenched in the NHS. Simply waiting longer to get it even more entrenched before Monitor has a go at the issue of the barriers for new entrants to the NHS market simply gives the signal to the NHS that it can go on as it has been going on. It seems to me that it is important to give a signal that there is a new show in town and that the issue of the barriers to entry, particularly in the light of the report by the Co-operation and Competition Panel, are going to be addressed. I am not sure that waiting longer for the new systems to settle down is going to be in the best interest of the NHS or Monitor and I wonder if he might think a bit more about this and perhaps we could have a further discussion.

[Earl Howe]

My Lords, the noble Lord makes a telling point. I took on board entirely what the noble Baroness, Lady Murphy, said in her contribution. I will of course reflect further in the light of what the noble Lord has just said.

[Lord Warner]

I beg your pardon. I am rather dozy this afternoon on this group of amendments. I beg leave to withdraw the amendment.

Amendment 266 withdrawn.

Amendment 266A had been withdrawn from the Marshalled List.

Amendment 267 not moved.

Amendments 267ZA to 267ZD had been withdrawn from the Marshalled List.

Amendment 267ZDA not moved.

Amendment 267ZDB

Moved by

[Baroness Finlay of Llandaff]

267ZDB: Clause 59, page 88, line 6, at end insert—
“(c) local authorities carry out their duties in providing social care for children in their area, and to the smooth transfer of their caring responsibility when a child moves into adult social care services.”

[Baroness Finlay of Llandaff]

My Lords, this group of amendments concerns children, particularly their social care. We have laid these amendments because we could find nothing in the Bill that mentions this. Children’s services will be commissioned potentially by six different groups. The Commissioning Board at national and at sub-national level, particularly through health visitors, will be responsible for the public health of children under five—until 2015 when that will transfer to local authorities—and also for primary care. That is often the first point of contact for problems in children which require a great deal of social care intervention integrated with healthcare provision. Public Health England is responsible for public health campaigns and health protection. The clinical commissioning groups will again be involved potentially at two levels; supra-locally and locally. The sixth area is the local authorities with the healthy child programmes for those aged five to 18, school nurses and child health for the nought to five year-olds after 2015, which is when the health visitors transfer.

However, all these different aspects of healthcare interrelate very closely with children’s social care. There are concerns over accountability, how the services will keep track of complex provision and who will be responsible for children’s health and welfare, particularly as regards obese children and those who have been bereaved. There is concern about children’s reaction to grief and the impact that this has on social behaviours, and how the public health services which deal with the prevention of childhood obesity can be evaluated and held to account.

Health visitors are the eyes and ears of the child aspects of primary care. However, there is concern about how they will relate to the primary care and accident and emergency sectors and social workers when they transfer to local authorities. How will the information on the at-risk register be transferred and how will access to primary care records be speeded up? Will the IT systems be compatible to enable effective information transfer between child and adult services, particularly when children who have multiple social problems reach an age when they will be transferred to adult services? There is particular concern about children with severe learning difficulties and developmental delays who require a great deal of social care input. They cannot be their own advocates and are extremely dependent on others. Therefore, it is important that the relevant information is successfully transferred. We know from previous tragic child abuse cases that information which has to be moved from one sector to another often gets lost, drops through the gaps and children suffer as a result.

There must be a smooth transition from one carer to another, particularly where children’s and adult social services are provided by different providers. It is important that adult social services should be satisfied that the children’s social services have done their job properly and thoroughly because, if they have not, the patient will suffer and adult social services may be faced with an unfair cost incurred as a result of a deficiency in the services provided by the children’s social services.

Our amendments do not propose a radical solution to the problem. We are fairly confident that the Government will not accept them as they will not want further major complications in what is already a very complicated Bill. They are simply designed to provide that at some time in the future Monitor will be given the power to check that all providers of children’s social care are doing their job properly, and that when they transfer a child to adult social care there is a smooth and sensitive transfer of responsibility and a complete transfer of information so that there are no gaps through which these children can fall.

We look forward to hearing what the Government’s solution is to this problem. We rather hope that the Minister might offer us some discussions outside the Committee to try to address some of the real problems that arise when children, including those aged nought to five, transfer from children’s services into adult services, given the gaps in information provision which can occur at the transition point. I beg to move.

17:00

[Lord Beecham]

My Lords, it saddens me to say that 41 years ago I became opposition spokesman on the Newcastle City Council health committee. Within two years, we had the Seebohm report and a change of structure, leading to the creation of a social services committee that embraced both children’s and adult social care and replaced two committees—the old health committee and the old children’s committee. That seemed to me then and, frankly, it seems to me now to have been the right approach, because I do not think that you can sensibly divide children’s and adults’ social services. We do not have that system now. My personal view—which is not necessarily the view of the Opposition—is that it may be time to look again at that division. To an extent, the group of amendments that the noble Baroness has spoken to seeks to secure that objective.

As a consequence of the way in which amendments are ordered, the actual order of the amendments in this group is not quite logical. I suppose one should start with Amendment 269B, which would give Monitor functions relating to children’s social care services. Earlier, we touched on the possibility of Monitor having a role in respect of adult care services. Presumably, one would look at both services coming under their auspices, or neither, rather than keeping a division. Amendment 269B sets out the basic role for Monitor in this context. I note that proposed new subsection (2) would include within the functions,

“inspection of, and reporting on, the potential impact of children’s social care services in a particular area on the potential need for adult social care in that area”.

I am tempted to say “and vice versa”, because so often problems of parents and adults impinge on the needs of the children, and that would make perhaps a more rational disposition of functions.

The other two amendments in this group are, in effect, consequential, and sensibly would require local authorities to ensure a smooth transfer and, as Amendment 270AA puts it, “a careful handover” for children moving into adult social care. All of those seem to me very sensible suggestions. Nevertheless, it is probably better to look at the whole context of where social services fall within the remit of the Bill.

I imagine that there will have been some discussions between this department and the Department for Education, although the way in which Whitehall and, for that matter, local government tend to work, it is not necessarily the case that the relevant organisations come together to discuss these issues. It may be, therefore, that the Minister would wish to consult colleagues in other departments before giving a measured response. Perhaps this matter might be best brought back at Report, because it raises significant issues. As I have indicated, I have felt for some time that the division of responsibilities at the moment is not terribly sensible, with children’s social services being, arguably, at best a sort of fifth wheel on an education coach. At the very least, that matter ought to be re-examined. Perhaps it is too late in the day for it to be part of this Bill, but at some point, I think, this issue certainly needs to be referred to. I congratulate the noble Baroness and the noble Lord, Lord Northbourne, on having put down this amendment, which gives us an opportunity at least to ventilate concerns about this issue.

[Earl Howe]

My Lords, I understand and well appreciate the concern of the noble Baroness to ensure a high standard of children’s social care services and, in particular, a smooth transfer for young people moving from children’s to adult social care services. I would, of course, be very happy to speak to her and indeed the noble Lord, Lord Northbourne, about this issue away from the Committee, if they consider that to be an appropriate way forward.

On the specific amendments that we are looking at, I really do not think that Monitor is the right organisation to ensure that local authorities are carrying out their responsibilities on these issues, or to act as a regulator of children’s social care services. I am confident that existing arrangements for the regulation and inspection of children’s social care are sufficient and robust. Joint working is important and I hope that the noble Baroness will be reassured that the relevant inspectorates are already working together to improve the arrangements for joint inspection, which will address the very important issue of child to adult transition that she has raised.

Children’s social care is regulated and inspected by Her Majesty’s Chief Inspector of Education, Children’s Services and Skills—Ofsted. Its inspection remit covers all local authority social services functions relating to children—that means services for children in need, safeguarding children, children in care and care leavers, as well as adoption and adoption support services. Local authority adoption and fostering functions must be inspected by Ofsted at a minimum of every three years. Ofsted can of course make unannounced inspections.

We are already working to improve these arrangements. Ofsted consulted over the summer on local authority child protection inspection arrangements that will be more child-centred and less bureaucratic. This new type of inspection will begin in May next year. In addition, all relevant inspectorates have agreed in principle to Professor Eileen Munro’s ideal model of joint inspection, which looks at the contribution all services make towards protecting children. Noble Lords may recall that Professor Munro last year conducted a thorough review of child protection arrangements for the Government. The Care Quality Commission is one of the inspectorates working with Ofsted to establish what those services will look like and when they will begin.

For children with special educational needs and disabilities, the recent Green Paper proposes a new education, health and care plan, covering support from birth to 25. The new plan will include a much clearer focus on the long-term outcomes for children and young people including independent living and employment. This should improve outcomes for young people with special educational needs and disabilities as they make the transition from school into employment or training.

I hope that the noble Baroness will appreciate that work in this area is ongoing. I sympathise with the tenor of all she said, but if she is content to wait for a discussion following these Committee proceedings, I hope that she will, in the mean time, withdraw the amendment.

[Baroness Finlay of Llandaff]

I am grateful to the noble Earl for his response. It is those transitional points that we have been particularly concerned about. I will discuss this with the noble Lord, Lord Northbourne, and it would be helpful for us to have a short meeting. We are grateful for the fullness of the response from the Minister. I beg leave to withdraw the amendment.

Amendment 267ZDB withdrawn.

Amendment 267ZE had been withdrawn from the Marshalled List.

Amendment 267ZF

Moved by

[Lord Clement-Jones]

267ZF: Clause 59, page 88, line 10, at end insert “and Monitor must obtain advice from Healthwatch England for enabling if effectively to discharge that function”

[Lord Clement-Jones]

My Lords, I am sure that this was well worth waiting for, but it could be the mouse that roared. We are back to other aspects of Clause 59 on the general duties of Monitor. This amendment and Amendment 267ZB simply aim to ensure that to discharge its functions Monitor has input from HealthWatch England. That is all about patient and public involvement. It seems to me and to my noble friends that Monitor should definitely insert such input into its deliberations. I cannot find in the rest of the Bill any other such duty on HealthWatch England, which after all will have an extraordinarily important role. Many noble Lords have welcomed the new enhanced role for patient and public involvement. I remember the demise of community health councils and the hard-fought debate that took place in about 2004—I cannot remember exactly when—and I very much welcome the new enhanced role for HealthWatch England. However, Monitor will need to be informed by it and I very much hope that the Government will take this on board. I beg to move.

[Baroness Murphy]

I realise that I have another amendment in this group, and I would have saved the Committee a great deal of disquiet over the numbers if I had spoken to this one in the first place, so my apologies all round. This group of amendments is about how Monitor discharges its functions and what it takes into account. Mine is a probing amendment on whether we have the objectives for Monitor and their number right. Experience from other sectors suggests that if too many policy priorities are set, the regulator can become confused about its primary objectives, which can reduce its effectiveness. I wonder whether we have the clarity of Monitor’s objectives right.

Monitor will find itself in the position of other regulators in having to devise policies, particularly on the tariff, to meet a wide range of objectives over and above its primary duties. The experience of Ofgem, in particular, suggests that the risk might grow over time as the Government seek solutions for new problems as and when they arise. Setting too many policy priorities carries the risk of confusing the regulator about its primary objectives. That might be inevitable, given the complexity of healthcare policy-making, but it means that the accountability of the regulator in discharging those various functions is critical.

For other major economic regulators, the Government have committed themselves to updating the objectives only once in a Parliament and ensuring that objectives are outcome-focused. Monitor's objectives, unusually, will be set in primary legislation. I wonder whether they would be better in secondary guidance, together with a clear process for agreeing changes with the Department of Health, to protect the regulator from political whim. Nevertheless, it has a number of primary duties in Clause 59. In Clause 62 it has to have regard to a number of other matters. Monitor might find it difficult to demonstrate that they are all taken into account when decisions are made, possibly making it open to legal challenge. I wonder whether it is possible to reduce the number of duties.

I have included just one or two as exemplars simply because I think that they duplicate existing duties. In Clause 62(b),

“the desirability of securing continuous improvement in the quality of health care services for the purpose of the NHS”,

which is crucial, duplicates a primary duty in Clause 59(1)(b), so I think it could be removed. Clause 62(c), on,

“the desirability of securing continuous improvement in the efficiency with which health care services are provided for the purposes of the NHS”,

duplicates a duty under Clause 59(1)(a). Surely that could be removed. These are minor, tidying amendments, but if we can clarify for Monitor what its objectives should be, that would be a help to the regulator.

[Baroness Finlay of Llandaff]

My Lords, I half spoke previously to the need for Monitor to have regard to complex clinical conditions. I return to that and build on the comments that have just been made, particularly in relation to tariffs.

We are already beginning to see a degree of fragmentation through systems such as “choose and book”. We heard on a previous day in Committee about the problems for patients with various complex conditions, who have to be sent back to their general practitioner to be able to access a different discipline in secondary care and how their care then becomes fragmented. If you are going to provide good integrated care and improve clinical outcomes, you need all the different systems of the patient to be addressed simultaneously—the psychological and welfare areas as well as the different physiological systems that might be affected by a range of pathologies.

I remind the House that it is much easier when people are not terribly ill. When they do become terribly ill, more and more systems fail and become involved: cardiac complications, overwhelming infection, renal failure and potential dialysis might all be involved, and if there has also been trauma with orthopaedics there might be a lot of complex psychological conditions relating to whatever has happened to the person. They all need to come together around that patient. The patient cannot be parcelled off from one service to another or people be brought in sequentially like small aliquots of opinion.

17:15

Therefore, in setting the tariff and establishing the way in which services are looked at and licensed, the point of the amendment is to make sure that the multiple complexity that arises, and that is very common in patients who are seen in high-dependency intensive care or even in the sick patients who are brought into accident and emergency, is taken into account and that the tariff does not oversimplify, and therefore inadvertently narrow down, the services available to the patient and result in worse, not better, clinical outcomes. Earlier today the Minister was very clear that the point of the Bill is to improve the quality of patient outcomes, to improve the efficiency and productivity of services and to provide better value for money, as well as to drive up the outcomes for patients. That is why we felt it was important that this was considered.

[Lord Warner]

My Lords, I apologise that my enthusiasm for Amendment 274ZZB caused me to speak to it partially in an earlier group. The amendment in my name and that of the noble Baroness, Lady Pitkeathley, was put down because we regard it as a probing amendment to the end of Clause 62 that relates to matters that Monitor must have regard to in the exercise of its functions. Its purpose is to raise the issue of the financial stability and governance of adult social care providers in the light of the Southern Cross experience, and to seek the views of the Government on how they propose to use the new regulatory system in the Bill to protect the vulnerable users of adult social care services from providers whose financial structures are fundamentally unstable.

Let me say at the outset that I thought that the Department of Health managed quite well the difficult situation that Southern Cross presented. Few, if any, elderly people had their care seriously disrupted. 20/20 hindsight is a wonderful thing in public policy post-mortems. The truth is that across the political spectrum few were alert to the dangers of overleveraged providers of adult social care. However, we are now alert to the dangers of creative financing arrangements in this area, particularly those instituted by boards of management that do not hang around to face the consequences of their action but simply take the money and run.

It is clear that the way in which care providers are financed and their governance wraparound are matters for rigorous inquiry before they are allowed to contract for the provision of services to vulnerable people. In the case of adult social care, this relates not simply to elderly people whose adult social care is funded by the state but to self-payers. Most of these service providers have a mix of state and self-funders in their homes, with many of the self-funders in effect subsidising the state-funded residents in today’s inadequately funded, state-financed, adult social care. That inadequate funding is itself going to cause some providers to withdraw from the market, and others to merge. It will also distort future investment decisions by those who wish to enter this market, because they will favour investments that concentrate on self-funders.

We face a period of turbulence and uncertainty in the adult social care provider market that makes the detailed working of the regulatory system even more important. That is particularly the case with the positive flood of findings of unsatisfactory care of elderly people in the NHS and adult social care environments. The question of how providers are financed and governed is an integral part of ensuring stable and quality care environments for vulnerable groups. A bright light needs to be shone on these areas in a new regulatory system. Can the Minister say how the Government are going to proceed on this issue and what role Monitor should play? Do the Government intend to move quickly to bring adult social care into Monitor’s remit, or do they see some other approach being pursued? I recognise the heavy burden that is already being placed on Monitor and the range of things that it now has to do. However, I think that the Committee needs to know whether and when this will be transferred to Monitor or whether other mechanisms will be used. The purpose of this amendment is to find out the Government’s intentions.

[Lord Walton of Detchant]

My Lords, I support the amendment proposed by my noble friend Lady Finlay because this is an extremely important matter. When I was a consultant working as a neurologist in the NHS, if I had a patient who, for instance, had a peripheral neuropathy and turned out to be diabetic, I had no problem in referring him to a colleague within the same hospital for the care of his diabetes or to a colleague in the ophthalmology department for the care of his eyes. I am horrified to discover that in the recent past such individuals have been told to go back to their GP for yet another referral to a different consultant. This is an extraordinary situation. Can the Minister assure us that something in the Bill will stop this kind of nonsense occurring?

[Baroness Pitkeathley]

My Lords, I speak in support of Amendment 274ZZB in my name and that of the noble Lord, Lord Warner. In the debate on Wednesday last, the noble Lord, Lord Warner, referred to health and social care as being in a symbiotic relationship. That is supposed to be recognised in the title of the Bill, but in fact we have had very few debates about that relationship, other than the fact that everybody says that integration is important and that patients do not understand why such integration has always proved so difficult. We agree that, as patients’ needs are comprehensive—especially patients with long-term conditions—we need comprehensiveness in addressing those needs.

The other thing that we always agree about is that, to meet the Nicholson challenge, services have to be reconfigured so that more services are provided in the home and in the community, instead of in expensive hospitals. Today’s King’s Fund report reminds us of the difficulties that many London hospitals are currently facing, yet reconfiguration is still resisted, not least sometimes by MPs, who should know better.

Another thing on which there is usually agreement is that as social care is just as important to patients and their families as healthcare, it should be given the same status as healthcare. We may agree about that, yet social care plainly does not have that status, despite the commitment to care services of the Minister, his officials at the Department of Health and indeed the noble Earl himself. This amendment seeks to ensure that, no matter who the provider is, the provision of adult social care services is on a sound financial footing and with corporate governance that ensures proper oversight. That is surely necessary beyond question, given the recent Southern Cross debacle to which my noble friend has referred, with the prospect of more such disasters.

As we know, health and social care have always been organised and funded by different groups—one centrally and the other by local authorities. However, as my noble friend reminded the Committee in a debate last week, the majority of the money spent on adult social care by local authorities is in fact funded centrally and passed to local authorities, which commission the services. This amount of money is not sufficient, especially in view of the fact that rising demand has been well established, most recently by the Dilnot commission. It seems that the only way to get more money into the system in these hard times is, first, by showing that money spent on social care will save money in the long term and, secondly, by ensuring that the money is effectively, efficiently and safely spent. Involving Monitor in the way suggested in this probing amendment would go a long way to enabling us to do this better. I can do no better than quote from the noble Baroness, Lady Barker, when she said in our debate last Wednesday:

“The biggest single thing that will make the Bill work or not work is whether everyone in the NHS sees it as their responsibility to understand and work with social care”.—[Official Report, 7/12/11; col. 759.]

Placing this responsibility on Monitor or otherwise advising the Committee how that responsibility will be exercised would be very important in helping us to achieve that aim.

[Lord Nickson]

My Lords, I am afraid that I was not present at Second Reading but I am moved to support this amendment on a personal basis as my wife is in long-term social care in Scotland. It was a Southern Cross home that has now been taken over by Healthcare One. It would have been a comfort to me had I known that an organisation such as Monitor was supervising the very unhappy situation in Southern Cross, but I have to say that the communications from the local authority concerned in Scotland both with me and Southern Cross as it was in its death throes were absolutely first class in attempting to reassure and keep us in touch with what was happening. I am equally glad to say that all the information and everything coming now from Healthcare One is very reassuring and makes one full of confidence. It would have been reassuring had something like Monitor been in the background looking at this sort of situation well in advance. I support the amendment.

[Lord Beecham]

My Lords, I am happy to endorse all the amendments in this group, with the exception of Amendment 270. I particularly endorse Amendment 274ZZB tabled by my noble friend Lord Warner. He is 100 per cent right in this context. I have to say in confidence to the Committee that I do not always entirely agree with my noble friend, but he is exactly on the right lines today. The situation to which he referred clearly causes great concern. We heard from the noble Lord, Lord Nickson, that fortunately matters turned out reasonably well in his case and that of his wife, but who is to say that that would always be the case? I hope that the Minister will feel able to take on board the suggestion made by my noble friend Lord Warner. As he said, it is a probing amendment but it is one that I hope will lead to an outcome that will guarantee that problems of the kind generated and disclosed in the Southern Cross affair will not arise again so that those in residential care and their carers and families will have greater confidence in the system—a confidence that must have been shaken by events in recent months.

[Baroness Northover]

My Lords, this is the group of amendments that we almost came to earlier this afternoon. I hope that noble Lords who thought that their issues would be in that last group have now gathered them together, as they are back in this group. The amendments cover a number of issues, including patient and public involvement in Monitor’s work and the advice that it should take. The Government are clear that Monitor should involve patients and the public in its decisions and get appropriate clinical advice to enable it to carry out its functions. That is why in another place we introduced Clause 59(7), which creates a duty on patient and public involvement, and Clause 59(8), which creates a duty to obtain clinical advice. For Monitor to carry out effective patient involvement, it will almost certainly need help from people or organisations with expertise. Here I address in particular Amendment 267A, and Amendment 267B in the name of my noble friend Lord Clement-Jones and others.

However, setting this out in the Bill could constrain Monitor’s flexibility to decide how and when it sought such help. We do not want to create bureaucratic and potentially costly arrangements that would require Monitor to take such advice even when it was unnecessary. I hope that, over time, Monitor will develop expertise in how best to involve patients and the public in its decisions, reducing its dependence on professional advice in this area.

17:30

I understand the concern of my noble friend Lord Clement-Jones and others that HealthWatch should have a role here, and I reassure the House that it will. Clause 178 enables HealthWatch to give Monitor advice and provides that Monitor must respond in writing to any such advice. HealthWatch would be able to advise on Monitor’s arrangements to secure appropriate patient and public involvement. However, there would be no need for HealthWatch to give such advice if it was satisfied with what Monitor was doing. We are clear that Monitor must be transparent and accountable in the way that it involves patients and the public. I reassure the noble Lord, Lord Kennedy of Southwark, and others, that the requirement in paragraph 21 of Schedule 8 for Monitor to prepare an annual report on how it has exercised its functions includes its duties under Clause 59(7).

The noble Baroness, Lady Finlay, spoke twice to Amendment 267C, which indeed concerns an extremely important issue and deserves to be spoken to twice. This is about the need for Monitor to take advice from people or organisations with experience and expertise in,

“the management of a wide range of complex clinical conditions”,

as well as in the management of other conditions. She and the noble Lord, Lord Walton, emphasise that the system must be patient-centred—that is the goal of the Government—and, where appropriate, integrated. I assure them that if Monitor did not take advice as appropriate from such people or organisations, it would fall short of its statutory duties. However, as with people or organisations with expertise in patient involvement, including this in the Bill could constrain Monitor’s flexibility to decide how and when it was appropriate to seek such help; for example, it would clearly need to seek such advice in setting prices for the treatment of the kind of complex conditions that noble Lords have made reference to, in order to do that in an effective way.

Amendment 270 is in the name of the noble Baroness, Lady Murphy, who of course has considerable knowledge and experience of how Monitor works, having recently completed four years as a member of its board. We are very grateful to her for contributing her knowledge and expertise to today’s debate. We very much agree that Monitor’s responsibilities must be clear, consistent and not excessive. Monitor has only one objective, which is:

“to protect and promote the interests of people who use health care services by promoting provision of health care services which … is economic, efficient and effective, and … maintains or improves the quality of the services”.

That is the overarching responsibility. Clause 62(b) and (c), which her amendment addresses, ensure that Monitor would not inadvertently impede the Secretary of State or the NHS Commissioning Board in carrying out their duties with a view to improving quality. However, although the Government believe that these various provisions are needed in Clause 62, we have sympathy with the points the noble Baroness has made about the need for clarity on Monitor’s priorities, and will give this issue further thought.

I will say something briefly in response to the very important points raised by the noble Lord, Lord Warner, the noble Baroness, Lady Pitkeathley, and others, in Amendment 274ZZB. The Government are concerned to ensure that appropriate measures are in place to ensure those who are reliant on care services are properly protected from the adverse consequences of provider failure. I thank the noble Lord, Lord Warner, for what he said about how Southern Cross was handled, and I am glad that other noble Lords’ experiences echo that. In October, we published a discussion document on the issue of market oversight in social care. Until we have considered the responses to this and the range of options, it would be premature to make isolated changes to the provision in this area, although I commend noble Lords for flagging up this very important issue.

Finally, I would like to address government Amendment 270A—

[Lord Warner]

Perhaps I could ask the noble Baroness to go a little further. Does she envisage that after this consultation, the Government are going to require primary legislation to take effective action in this area, or are the Government confident that there are sufficient powers to enable them to deal with that, either by guidance or secondary legislation?

[Baroness Northover]

Perhaps the noble Lord is seeking for me to pre-empt what will emerge from the discussion document that I mentioned. It is extremely important that this is considered fully and carefully. Therefore, it would be inappropriate for me to pre-empt the conclusions of that—tempting though it might be.

[Lord Warner]

Perhaps I could pursue this a little further. Is the Minister saying that the current legislation is insufficient and therefore the Government are consulting on what strengthening might be needed? Surely it is possible that this great and glorious machine, the Department of Health and its lawyers, can tell Ministers whether the current legislation is adequate to deal with this issue.

[Baroness Northover]

The noble Lord himself mentioned that things did not work out quite as badly as one might have expected. I know that my honourable friend Paul Burstow was working night and day to make sure that that was the case. However, I will resist the noble Lord’s invitation to pre-empt the conclusions of those who are far more expert than I am on this matter.

[Lord Warner]

I asked a very straightforward question. I am quite happy to pursue this through a Written Question. I just want to know whether the Government consider that the current primary legislation is adequate to deal with this particular issue. That seems to me a yes or no answer, but if the noble Baroness would prefer me to put down a Written Question, I am quite happy to do so.

[Baroness Northover]

I seem to have been inspired. We do not need primary legislation, it seems, we need regulations subject to the affirmative procedure. However, we are consulting on the best approach to using these. I am sure that that informs the noble Lord far better than my earlier answer, but I return to the point that it is extremely important that we get this right, because we certainly do not want to find ourselves in a situation where things are not as well protected as they were in this last instance.

I will now briefly address government Amendment 270A, which is a minor and technical amendment that makes clear that Monitor is concerned with services provided for the purposes of the NHS. On that basis, I hope that noble Lords will be happy to support it and content to withdraw their own amendments.

[Lord Clement-Jones]

My Lords, this is a slightly disparate group of amendments so I will certainly not try to respond on any other amendments apart from my own.

I am grateful to my noble friend the Minister for signposting where patient and public involvement come in, in Clause 59(7) and Clause 178, and her explanation that my amendment would “constrain Monitor’s flexibility”. I am always interested in the kinds of response that the department is able to come up with in these circumstances. After all, HealthWatch and the local healthwatch organisations are the creatures of this Bill and of the department, so it seems somewhat extraordinary that these are not specifically mentioned in Clause 59(7). I understand that in broad terms Monitor has the duty to,

“secure that people who use healthcare services, and other members of the public, are involved to an appropriate degree”—

that is a useful word as well—

“in decisions that Monitor makes about the exercise of its functions”.

However, of course, “appropriate” is determined by Monitor. It is not an objective test in those circumstances.

[Baroness Northover]

I am sorry to interrupt my noble friend, but perhaps I did not make it clear enough that Clause 178 of the Bill allows HealthWatch England to give Monitor advice and provides that Monitor must respond to that.

[Lord Clement-Jones]

Yes, my Lords, absolutely. I read that with great interest following my noble friend’s speech. However, of course it is still liable to be one-way traffic in terms of healthcare, HealthWatch being the demandeur, rather than being asked by Monitor to provide its advice at the very early stage. So it is not always possible for HealthWatch to know what is in train within the bowels of Monitor, if I may say so, and it will be up to HealthWatch to be extremely nimble in order to divine what is happening within the councils of Monitor, if I may put it that way.

I therefore take the Minister’s reply to be a rather less than whole-hearted endorsement of the role of HealthWatch. That may not be the right interpretation, but it seems a bit strange to be a bit mealy mouthed about HealthWatch when it is actually being created by this Bill. However, I will wait as matters unfold. No doubt we will get to Clause 178 in due course, and I look forward to it. In the mean time, I beg leave to withdraw my amendment.

Amendment 267ZF withdrawn.

Amendments 267A to 268 not moved.

Amendment 268ZA had been withdrawn from the Marshalled List.

Amendments 268A and 268B not moved.

Clause 59 agreed.

Clause 60 : General duties: supplementary

Amendment 269 not moved.

Clause 60 agreed.

Clause 61 : Power to give Monitor functions relating to adult social care services

Amendment 269A not moved.

Clause 61 agreed.

Amendment 269B not moved.

Clause 62 : Matters to have regard to in exercise of functions

Amendment 270 not moved.

Amendment 270A

Moved by

[Earl Howe]

270A: Clause 62, page 89, line 26, after “services” insert “provided”

Amendment 270A agreed.

Amendments 270AA and 270B not moved.

Amendment 271 to 274 had been withdrawn from the Marshalled List.

Amendments 274ZZZA to 274ZZB not moved.

Clause 62, as amended, agreed.

17:45

Clause 63 : Conflicts between functions

Amendment 274ZA

Moved by

[Lord Clement-Jones]

274ZA: Clause 63, page 90, line 16, at end insert “with a paramount duty towards the safety of people who use health care services”

[Lord Clement-Jones]

My Lords, Monitor has a range of duties which could potentially conflict with each other. Of course, we have discussed that previously, and it is recognised in Clause 63 of the Bill.

In specialised care, it is sometimes desirable to limit the number of providers to ensure that patient volumes are sufficient to support clinical expertise and high quality, safe services, an approach which was promoted by the Bristol inquiry and enshrined in the Carter report on specialised commissioning in 2006. This is entirely consistent with Monitor’s main duty under Clause 59(1), to

“protect and promote the interests of people who use health care services by promoting provision of health care services which is economic, efficient and effective, and maintains or improves the quality of the services”.

However, in terms of one of Monitor’s duties under Clause 59(3), to prevent anti-competitive behaviour, this could potentially be described as a restriction of competition. It is therefore important, I believe, to get a clear understanding that Monitor’s paramount duty should be towards the safety of patients, or, to put this another way, towards their welfare. In other words, it is legitimate for competition to be restricted in the NHS where it is in the interests of patient safety.

This amendment is designed to seek clarification that Monitor’s role in preventing anti-competitive behaviour will not debar the designation of providers of specialised services. I beg to move.

[Baroness Finlay of Llandaff]

My Lords, I have an amendment in this group which really builds on the amendment already spoken to comprehensively and efficiently by the noble Lord, Lord Clement-Jones—that is, to not impose a burden on providers in the process.

One of the difficulties in any type of regulation or inspection is that it is very easy for those who are doing the inspection to require more and more data from a provider to support whatever they view as their outcome and their inspection processes. There is a real danger in here that sometimes the regulatory processes can develop a life of their own, and, quite inadvertently, become a burden on providers. We have already seen that occur with some of the current inspection processes in place, which seem to have collected an inordinate amount of data sometimes, but have missed out on real deficits in care.

It is a paramount duty towards the safety of people who use healthcare services, and built into that of course will be good clinical outcomes, because bad clinical outcomes will be unsafe in the process. However, it is also a suggestion—and this is therefore a probing amendment—that the regulatory burden on the providers must not be excessive. They must be able to deliver patient care without diverting resources away from it in order to meet requirements from a regulator.

[Lord Davies of Stamford]

My Lords, I find it not entirely surprising that a number of us this afternoon have found it difficult to know at exactly what point we should be making the contribution that we wanted to make, because of course there is an immense overlap between the themes that all the clauses we have been reviewing today have brought forward.

All those clauses, and most of the amendments to them, necessarily derive from a single decision by the Government. This was the decision that they wanted to distance the Secretary of State from the operations of the health service and superimpose a set of bureaucracies and regulators that would in future take on the responsibility that the Secretary of State has had until now. That was a decision that has had, and will have, a lot of consequences.

Three consequences in particular are very unfortunate. The first is that there will inevitably be a lack of transparency. You may impose on Monitor the obligation to produce the annual report and occasional statements on the decisions it takes, and impose on clinical commissioning boards, foundation trusts and other bodies within the NHS an obligation to try to relate to the local public and have meetings and report to them and so on. However, you will never get the degree of close oversight that you can get in Parliament when the important decisions are taken by the Secretary of State in Parliament, where they are subject to a weekly or, when necessary, daily scrutiny. That does not apply to the functional decisions, which I will come to in a moment. That is the first inevitable cost of this proposal by the Government.

The second consequence is the cost to democracy. People will no longer feel that the health service is being delivered by their democracy, or is part of their democracy. It will increasingly be delivered by relatively remote and autonomous bureaucracies which will no doubt be staffed by the most high-minded people—a sort of platonic mandarinate who will certainly deliver the best they can for the human beings in their care. However, that is a very different concept from the democratically driven concept of the National Health Service on which a lot of us were brought up and which was, of course, the vision of Beveridge and Bevan.

The third consequence, to which I turn in specific detail, relates directly to the clause and amendments before us. Many contradictions and conflicts of interest will be created in the organisations and bureaucracy that take over the Secretary of State’s role. Until now the Secretary of State has been responsible for taking those decisions that are properly political decisions in the true sense of the word. They involve priorities, value judgments, trade-offs and strategic decisions for the future, which have properly been decisions of the Secretary of State up to now. Many of them will now be taken by someone else, particularly Monitor, which will take over from the Secretary of State the job of making sure that the whole system works. I have no doubt that the Government hope that that will work out well, but I repeat that I think that the effort, the initiative, is misconceived.

Two types of conflict will inevitably be structurally hardwired into Monitor. There will be the functional conflicts to which I have already referred. Monitor has specific, specialised responsibility for licensing and overseeing foundation trusts and making sure that problems are ironed out. That is one particular sector on the provider side of the equation. It now has a whole lot of responsibility for everyone else on the provider side and for the supplier side. There are some inherent conflicts.

There are also philosophical conflicts. Monitor is being given very many criteria. Clause 59 sets out what probably most of us would write if we were asked to write the most important targets of the health service on the back of an envelope. However, there is no attempt to establish a hierarchy and there will be conflicts between them the whole time. In the short term at least there could be serious conflicts between increases in efficiency, for example in access and improvement in care, and in all the other virtuous objectives set out in that clause.

The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Finlay, have brought forward their own solution. They say, “Well, let us take one criteria, make that the overriding criteria and then Monitor won’t have a conflict any more”. That is how I understand the logic of what they propose. Perhaps I may disagree for a moment with the noble Baroness, Lady Finlay. It is not right to say that she builds on the suggestion made by the noble Lord, Lord Clement-Jones, because her proposal comes under different criteria. The noble Lord thinks that the safety of the patient is the most important thing, and the noble Baroness thinks that it is not to place too great a burden on providers. Both are admirable considerations, but by definition they cannot both be the overriding determining consideration where there is otherwise a conflict between desirable objectives. That will occur the whole time. These two amendments highlight the problem created by the way that the Government have decided to approach the future of healthcare in this country.

I turn now to the Government’s answer to the problem that I have set out. It is quite extraordinary. Clause 63(2) states:

“Monitor must act so as to secure that there is not, and could not reasonably be regarded as being, a conflict between”,

its responsibilities, which in this case are foundation trusts, and the rest. How can Monitor possibly act as if there is not conflict if there is a conflict? You cannot just pretend that there is not conflict and think that that means that the conflict has disappeared. That does not work at all. The same thing applies to subsection (3), which states:

“Monitor must ignore the functions it has under sections 109 and 111 when exercising … its functions under Chapter 2 … and Chapter 4”.

What exactly does that mean? It cannot be ignored. Of course, Clause 109 is about when a foundation trust runs into difficulty. When that happens the Government cannot wish away the fact that the foundation trust has a difficulty; they have a responsibility to resolve it. Perhaps they mean that there will be a department looking after the foundation trust’s problems but that it will not be allowed to speak to the departments with the general responsibility that Monitor exercises across the rest of the health service.

If that is what the Government are saying, perhaps they should say it explicitly. But if they are going to set up two separate departments which will not be allowed to talk to each other—there is a kind of negative synergy in an organisation having two functions of that sort—why not have two separate organisations? What is the logic for having Monitor at all if it will have to operate in this extraordinary way? I have intervened because the Government need to tell us clearly, before we agree Clause 63 and accept this Bill into the legislation of this country, exactly how they propose to grapple with the serious problems that their decision has created. I do not think that we will accept in this House that their decisions can simply be wished or thought away.

[Baroness Williams of Crosby]

My Lords, I can address my Amendment 274ZB very quickly. I have to admit that it arises from a fog of misunderstanding. Frankly, I do not know what this subsection means. Under Clause 63(3), there can be a Monitor intervention in a situation where Sections 109 and 111, which address themselves to various aspects of foundation trusts, can be completely waived without any regard to the fact that they are looking at competition and pricing as regards profoundly sensitive subjects. I wish that I could say that I know what it means but I do not. Instead I have put down an amendment which simply proposes leaving out that subsection. If the Minister can enlighten me, perhaps I will put it back in again. At the moment, I simply do not know what I would be putting in or out. I apologise to the House for such absurd and detailed ignorance, to which I confess with great humility. But I hope that the Minister will be able to enlighten me because so far no one else has been able to do so.

[Lord Beecham]

My Lords, at Second Reading I made a jocular reference to Monitor, recalling that it is also the name of a carnivorous reptile. Having regard to the range of duties and responsibilities that the Bill seeks to impose on Monitor and the number of organisations with which it will have to work—ranging from the Competition Commission, the Office of Fair Trading, the national Commissioning Board, clinical commissioning groups to foundation trusts—carnivorous seems to be the wrong word. Omnivorous would appear to be a better term for the job which the Government seek to give to this unaccountable body.

We certainly accept the need for an organisation—Monitor is no doubt the appropriate one—to be responsible for the rigorous financial regulation of all providers to the National Health Service. We approve the concept of a licensing scheme. Where we part company from the Government is that we do not accept that the handing over of economic regulation of the whole of the health service to an unaccountable quango—it is unaccountable—is the right course of action. We think that oversight of the whole system should remain vested in the Secretary of State, as opposed to the detailed regulation of individual parts of that system. Therefore, we think that there are two distinct roles.

We are particularly reluctant to envisage the wider scope that the Bill seeks to confer on Monitor in the light of what its chairman, the noble Lord, Lord Owen, who is not now in his place, reminded us this morning. He was at pains to make it clear that there is an analogy between the health service and the utilities. He cited the railways, gas, water and electricity. The whole nation of course resounds with rejoicing from the users of the railways, and gas, electricity and water, who are thrilled with the services that they obtain and the prices that they have to pay. That, apparently, is the model which recommends itself to the chairman of Monitor.

Much has been said in some thoughtful, forceful and frankly brilliant expositions today by the noble Lords, Lord Clement-Jones and Lord Owen, the noble Baroness, Lady Meacher, and other noble Lords about the need to have a discrete function of dealing with the foundation trusts and the rest of Monitor’s responsibilities. Some of that is encompassed within amendments, such as Amendment 274ZB, that are before us this evening. That seems to be right: in particular, if the fears of the noble Lord, Lord Owen, about the position of foundation trusts in relation to European competition law are to be realised, then it is all the more necessary for a continuing role for Monitor in relation to foundation trusts. We certainly see this not merely as a transitional provision, but one for the longer term.

There is a job for Monitor to do, but there is a clear risk of conflict for the organisation in the terms that the Bill now provides. They may be so conflicted as to require the attentions of the noble Lord, Lord Alderdice, if they have to resolve these potential conflicts of interest, and that would not be in anybody’s interest. The Government really should think again about what they expect of Monitor and how it is to be rendered accountable, because there is clearly a widely shared view in the Committee and the House generally that the present prescription is simply not adequate for the purposes that the Government wish to see carried out.

18:00

[Earl Howe]

My Lords, Clause 63 sets out several provisions detailing how Monitor should deal with potential conflicts in relation to its general duties, and conflicts with regard to its functions. It would be helpful to cover each of these in turn. The noble Lord, Lord Davies of Stamford, will not be surprised to learn that I did not agree with much of what he said. We should not find it surprising, because it is not uncommon for bodies to have potential conflicts of interest. What matters is how they are dealt with, and the Bill sets out a robust framework for Monitor to operate effectively. In theory, there is a possibility that Monitor’s general duties, as set out in Clauses 59 and 62, might conflict—if, for example, the most economic, efficient and effective provision did not deliver fair access because that access was limited to certain days and times or locations. If a conflict did arise, we are clear that it would need to be resolved effectively.

In order to be a successful independent regulator, Monitor would need to be able to resolve any conflicts that may arise. It would be closest to these conflicts, and it would be best able to weigh up the potential risks and benefits. Balancing competing priorities is just a reality of life, and resolving such conflicts is a key function that all public bodies need to carry out. When considering how to resolve conflicts, we believe that Monitor should do so in the manner it considers best, in line with its overarching duty to protect and promote patients’ interests. I am not going to call patients “consumers”, but in response to the noble Lord, Lord Beecham, who has tempted me, it was Alan Milburn who said in 2004, when he was Secretary of State for Health:

“In the business world success today depends on being flexible enough to innovate and responsive enough to meet consumer demands. Public services have to apply the same lessons”.

I do not want to press that analogy too far, but we all know what we are talking about when we talk of patients as consumers who require the same kind of care in terms of centring priorities on their interests.

I want to reassure the Committee that when resolving any conflict, Monitor would have to take into account the need to maintain the safety of the people who use healthcare services. Indeed, Monitor would be able to take this and a range of other issues into account when resolving any conflict between its duties. However, Amendment 274ZA would go further. Its impact would be that, in resolving any conflicts between its general duties, Monitor would always act with a view to maximising safety—potentially at the expense of its other duties. This would be inappropriate: it could cut across the role of the CQC, not to mention potentially undermine the role of commissioners and the independence of clinicians. It could also undermine individual patient choice. I can elaborate on that if noble Lords would like me to.

Similarly, while I sympathise with the desire to ensure that providers do not face unnecessary burdens, there may be occasions where a conflict solution that imposes the least burden on providers is not the most effective. Amendment 274ZAA, in the name of the noble Baroness, Lady Finlay, would impose resolutions that prioritised the least burden on providers over all other considerations. I think that is a mistaken way to go. We believe that Monitor should be free to decide how best to resolve conflicts between its duties, and therefore I would encourage the noble Lords who tabled these amendments to withdraw them. Nevertheless, I will consider—as I indicated earlier—whether it would be appropriate for the Bill to rationalise within Clause 62 matters to which Monitor must have regard. This would help Monitor decide how to resolve any conflicts. Therefore, I hope noble Lords will appreciate that I am not impervious to their suggestions on this clause.

Let me turn now to potential conflicts between Monitor’s functions. For clarity, Monitor’s functions include those it has as sector regulator, which are: ensuring continued access to NHS services; setting and regulating prices; preventing anti-competitive behaviour and licensing providers of NHS services. In the short term, Monitor would also continue with specific oversight functions over foundation trusts. As with Monitor’s duties, we need to ensure that any conflict between these functions is resolved effectively. Clause 63(2) requires Monitor to make arrangements to avoid potential conflicts of interest between its specific functions as foundation trust regulator and its broader functions as sector regulator, which are provided for in this Bill. I think we are all clear that we need to have appropriate arrangements within Monitor to mitigate and manage potential conflicts of interest between its functions. The Bill does not prescribe exactly what arrangements Monitor should make for this; it gives Monitor flexibility to determine the most effective arrangements, but we would expect that this would necessarily involve some separation of decision-making. This may need to be underpinned by informational separation and other working arrangements at operational level.

[Lord Beecham]

Would such proposals by Monitor have to be approved by the Secretary of State or would it be left entirely to Monitor to decide without reference to the Secretary of State?

[Earl Howe]

My Lords, I think we will rely on Monitor to make its own arrangements and, as the Committee will appreciate, there are limits to how far it is sensible to prescribe in legislation what the arrangements should be. Nevertheless, picking up the noble Lord’s prompt, I am sympathetic to the concerns that have been raised in this general area and I undertake to discuss the matter further with Monitor.

To create legal certainty, Clause 63(3) clarifies Monitor’s arrangements to resolve conflicts further, so when preventing anti-competitive behaviour and setting and regulating prices, Monitor must ignore its transitional regulatory functions relating to foundation trusts. I hope that addresses Amendment 274ZB, tabled in the name of my noble friend Lady Williams. The meaning of this provision—

[Lord Davies of Stamford]

My Lords, the noble Earl keeps on referring to Monitor’s responsibilities towards foundation trusts as being transitional, but I recall that earlier today he accepted that in fact they would possibly continue beyond 2016, which is five years away. It hardly seems possible that he should be saying that at one moment and then at the next using the argument that since these responsibilities are only transitional, the conflict of interest will rapidly resolve itself.

[Earl Howe]

I refer the noble Lord to the remarks I made earlier. The provisions are partly transitional and partly not. It depends on which functions we are looking at.

I come back to the point I was making on the amendment tabled in the name of my noble friend. This provision says that in preventing anti-competitive behaviour that is against patients’ interests or in setting prices, Monitor must ignore the transitional functions it has as the regulator of foundation trusts. If the subsection were left out as the amendment proposes—although I know that it is only a probing amendment—when undertaking its anti-competitive behaviour or pricing functions, Monitor could also consider its transitional intervention powers. That could result in Monitor treating struggling foundation trusts preferentially by, for example, not subjecting them to its anti-competitive powers. I hope that that is helpful to my noble friend.

My noble friend Lord Clement-Jones spoke about the designation of specialist centres and expressed his view that that should not conflict with the prohibitions on anti-competitive behaviour and that, in essence, patients’ interests have to be paramount. I am with him on this and I would like to reassure him that patients’ interests would be the paramount consideration for Monitor in resolving conflicts that arise in the exercise of its functions in this way. Monitor need not take issue with decisions to designate specialist centres where this would improve quality and protect patient safety, even if it reduced competition.

I hope that those remarks are helpful and that my noble friend will feel content to withdraw his amendment.

[Lord Clement-Jones]

My Lords, I thank my noble friend for that reply, which I have found very helpful. It was robust in one sense and has set out a robust framework in another. Although I was also interested in what the noble Lord, Lord Davies, had to say, in that it would tie us all in knots, I think that the Minister’s exposition was clear in that it has set out a suitable conflict framework. Although I cannot speak for my noble friend Lady Williams, I thought that the Minister explained the necessity for Clause 63(3) very well. His reassurance on the aspect of patients’ interests was extremely helpful as well, although of course it does not mean that the spectre of EU competition law does not still haunt us somewhat and that it will continue to be the subject of discussion, perhaps outside this Chamber. After all, that could override everything else if we are not careful.

I took considerable comfort from the Minister’s undertaking to review Clause 62 as well, because that is quite a shopping list. If it could be clarified, that would be helpful. His general undertaking to the Committee on the conflict area was also very helpful. In the circumstances, I am happy to withdraw my amendment.

[Baroness Finlay of Llandaff]

My Lords, I want to make a brief comment in response to the Minister’s reply to my amendment in the group, Amendment 274ZAA. He said that he was minded to rationalise the items in Clause 63 and therefore I feel that I must put in a formal plea that research, education and training should not be deleted from the list in the process of rationalisation. Having said that, I shall not press my amendment.

Amendment 274ZA withdrawn.

Amendments 274ZAA to 274E not moved.

Clause 63 agreed.

Clause 64 agreed.

Clause 65 : Duty to carry out impact assessments

Amendment 275 not moved.

Clause 65 agreed.

Clause 66 : Information

Amendment 276 not moved.

Clause 66 agreed.

Clause 67 : Failure to perform functions

Amendment 277

Tabled by

[Lord Clement-Jones]

277: Clause 67, page 93, line 20, leave out subsection (3)

[Lord Clement-Jones]

My Lords, we have gone on rather far. Amendment 276 has not been moved, but that amendment marked the beginning of a group which includes two amendments of mine. In that case, I shall move them when we come to them.

Amendment 277 not moved.

Clause 67 agreed.

Amendment 277A not moved.

18:15

Amendment 277B

Moved by

[Baroness Thornton]

277B: Before Clause 68, insert the following new Clause—
“Duty as to continuous improvement
(1) Regulations must provide that commissioners have a duty to make arrangements to secure continuous improvement in the way in which their functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
(2) Such continuous improvement is to involve—
(a) consideration of costs,(b) making the most of money spent, and(c) making sure that services meet the needs of patients, communities and the priorities agreed in any Health and Wellbeing Strategy.(3) For the purpose of deciding how to fulfill the duty, commissioners must consult the relevant Health and Wellbeing Boards, patients and public, as provided in the regulations.
(4) Commissioners must conduct reviews of the services commissioned in accordance with the regulations, and publish the results.
(5) In conducting a review a commissioner—
(a) shall aim to improve the way in which its commissioning of services is exercised, having regard to a combination of economy, efficiency and effectiveness, and(b) shall have regard to any guidance issued by the Secretary of State under this section. (6) Regulations may specify matters which commissioners must include in a review of a service under this section, and in particular may require a commissioner—
(a) to consider whether the current providers of the service were meeting all reasonable requirements;(b) to consider the extent to which competition for the provision of the service may or may not be appropriate;(c) to consider its objectives in relation to commissioning the service;(d) to assess its performance as regards the commissioning of the current provider;(e) to consider the outcome of consultation with relevant persons and bodies as specified in the regulations.(7) Regulations may specify the circumstances for use of tenders as a result of a service review in order to sustain continuous improvement.
(8) These regulations may include—
(a) single tender actions,(b) restricted tenders,(c) open market tenders.”

[Baroness Thornton]

My Lords, we have yet again leapt to a larger group, and I know that the noble Lord, Lord Clement-Jones, will get his turn, although possibly not until after dinner. We have moved on to a large group of amendments that concern pricing and the setting of tariffs. Many other noble Lords have tabled amendments in this group, as indeed has the Minister. I do not intend to make a long speech, but I will address the issue of pricing.

On reading the Bill you would think that having a tariff in the sense of a complete list of NHS services with all the prices and currencies set out was just around the corner, but I suggest that that is a bit of a myth. Even well developed healthcare systems that are much more market-orientated than our NHS are still a long way from such a state; we are years or perhaps decades away from that condition. For a start, for many services there are no data—not just bad or incomplete data, but none. Getting the datasets defined, collecting the data, then making the analysis, road-testing and rollout will take time. The Minister might like to tell us just how large the team in the Department of Health working on this task is, because I have to say that I heard that it is small and getting smaller as the cuts bite. But, of course, there is always KPMG or McKinsey to step in. Apart from anything else, it seems that this Bill is intent on creating a lot of jobs for lawyers and now, we see, for accountants too.

We are in the midst of a major argument about how relevant different types of currency and tariff might be, with some suggesting that returning to block payments might be better, in the interest of integration, stability and cohesion. This has been stamped on by the operating framework but that does not mean that it will not happen. Using choice and the right financial incentives to drive change in the system is the new orthodoxy. Some are trying to find out how different currencies, uses of penalties and fines and even bonus payments can reward good outcomes and deter bad. This has now extended to how to incentivise integration. These are all problems for which we would like to have answers. We are years away from a system where all these levers are available in the way that the Bill likes to suggest that they are.

In mentioning the framework, we should point out that the re-emergence of price competition shows the need for some communication between the chief executive and the Secretary of State.

Who, then, sets the prices? The arguments are well balanced. My noble friend Lord Warner argues in his book that it should be the national Commissioning Board. He is not in his place at the moment, but I have read his book. However, the national Commissioning Board is in the ludicrous position of also being the commissioner of local services. Monitor may also be compromised, as it is aligned to providers. So we return to the role of the Secretary of State. In any event it must surely be for the Secretary of State to determine the strategic approach, namely the global uplift or reduction. Our priorities for a system as determined by the Secretary of State also need translating so that the incentives are aligned to the desired outcomes, something the NHS has not always been good at. If the Secretary of State determines the approach within the strategy, then we may need genuine independent input into the detailed work of pricing and tariff. At the very least, a full list of the proposed tariffs should be published along with all the data and the analysis, so that the big brains of people at organisations like the King’s Fund and the Nuffield Foundation can tell everyone what is wrong.

Widespread consultation before any major change is a good idea, as is road testing changes before inflicting them and all the suffering of the unintended consequences that may arise. In the end, we think that the Secretary of State must make the strategic decisions in this crucial part of the economic architecture. It cannot be handed over to a quango.

The details of the amendments in my name and the name of my noble friend are as follows. Amendment 277B would insert a new clause which would place a duty on commissioners as to the continuous improvement in terms of cost, value for money and the needs of patients. It would also encourage co-operation with health and well-being boards, patients and the public. It would allow the Secretary of State to issue guidance, via regulations, including in relation to whether,

“competition for the provision of a service may or may not be appropriate”,

and in relation to,

“the circumstances for use of tenders as a result of a service review”.

Noble Lords who were here this morning—which now seems like a long time ago—may remember that, when I explained the overall purpose of our amendments to reconfigure Part 3 of the Bill, the setting of prices was part of that.

Amendments 288J and 289 are about setting a national tariff: they would make it a matter of policy for the Secretary of State, and not a matter for Monitor. Amendment 291B would ensure that regulations relating to the national tariff must state how the prices and methods were determined and how any proposed changes to the national tariff,

“will be subject to proper evaluation and testing” ,

as well as dealing with evidence of consultation between the Secretary of State and Monitor. As the national tariff should not vary in relation to different descriptions of provider, Amendment 292ZC would deal with that issue and the issue of a preferred provider. Monitor should also have no powers over commissioners—in this instance, in relation to the tariff—as commissioners are regulated by the board. We oppose the question that Clauses 116 to 121 stand part of the Bill, because we believe that the Secretary of State should set the national tariff: if the Secretary of State were to set the national tariff, then those clauses would be unnecessary. Once more, as you can see, we are reducing the size of this part through our amendments.

Amendment 294LA would insert a provision that regulations must be laid to issue “guidance on the circumstances” in which there can be local modification of prices. That decision should not be for commissioners and the providers of healthcare services alone. Amendment 294LB would provide that any local modifications of prices would occur with the approval of both Monitor and the board. Amendment 294LC also concerns local modifications of prices: it would ensure that if they were approved, Monitor would have to notify the relevant health and well-being boards. Amendment 294MA deals with situations in which a provider fails to reach an agreement with a commissioner about local variation of prices: in such circumstances it would allow Monitor to authorise such changes only,

“with the consent of the Board”.

Amendment 294MB would ensure that no modification of prices could happen,

“without the consent of the Secretary of State”.

In the area of the setting of prices we are perfectly happy to acknowledge that this may not be a perfect set of amendments. But we think that the very important matter of who sets the prices, and where the accountabilities lie, needs to be discussed. I beg to move.

[Lord Butler of Brockwell]

My Lords, I shall speak to Amendments 288H and 291A, in my name and the names of the noble Lords, Lord Newton of Braintree and Lord Turnberg. The amendments are related. Like other amendments in this group, they relate to the tariff—that is, the remuneration which a healthcare provider receives for a healthcare service. The amendments to which I am speaking are designed to facilitate the introduction of new treatments made possible by the development of new technology. When an innovative treatment requires a new procedure code or an updated healthcare resource group classification, a new code can take up to three years to be implemented and a new healthcare research group can take up to six years to develop. Meanwhile, NHS trusts cannot be remunerated for potentially useful and cost-effective improvements made possible by new technology.

In Germany, an intermediate step has been developed, under which providers can apply for an on-top payment while a new code is being developed. This is known in Germany as the NUB system, although I hope that noble Lords will not ask me to say what NUB stands for. These amendments provide for a similar “innovation tariff” to be provided in the United Kingdom, to allow for providers to be remunerated for an innovative procedure on a temporary basis while a new procedure code or healthcare research group is being developed.

These amendments are in line with the Government’s Strategy for UK Life Sciences, which was published last week, but are not already covered by it. I hope therefore that the Minister will give sympathetic consideration to the introduction of arrangements of this sort to facilitate the introduction of health improvements made possible by new technology.

[Baroness Gould of Potternewton]

My Lords, I shall speak to Amendment 292A. As it stands, Clause 114(11) will have a negative effect on the provision of sexual and reproductive health services. This arises from the transfer of sexual health commissioning, along with public health, to local authorities.

Clause 114 requires Monitor to publish “the national tariff”, but an amendment put down by the Government in the other place inserted subsection (11), which specifically exempts public health services from the national tariff. As sexual health services are set to be a public health responsibility, it will mean that genito-urinary medicine and sexual and reproductive health services will be excluded.

Sexual health professionals are deeply concerned by the impact that the absence of a national tariff may have on the provision of sexual health services. There are a number of providers of sexual and reproductive health services in the community and many are funded by a payment-by-results tariff system, commissioned by PCTs. The Bill as it is now drafted makes it very unclear how those services can expect to be commissioned by local authorities. Without a national tariff, the expectation at best would be to have a local tariff implemented, based on a national tariff. At worst, providers will return to a system of block contracts.

18:30

The removal of the national tariff is particularly frustrating as it is happening in spite of the fact that services have for some time had a national tariff, and that extensive work has recently gone into developing integrated currencies and tariffs for GUM and sexual reproductive health by the London sexual health programme on behalf of the London PCTs. This work not only represents good value for commissioners but also encourages best practice and good public health interventions. It is likely that without a mandated national tariff, sexual and reproductive healthcare providers will return to a system of block contracts, which will threaten the open access nature of sexual health and contraceptive services, and potentially restrict those able to attend services according to their age and place of residence. The disadvantage of block contracts was identified by the department in its response to the HIV Select Committee report.

Patients often require or choose sexual health services away from where they reside, which a tariff system could accommodate by money following the patient. Money following the patient in turn improves quality and patient choice. A national tariff will help equal out payments so that they can reflect the level of service provided and type of treatment given. That reflects the aspirations set out in the White Paper, which said that:

“Money will follow the patient through transparent, comprehensive and stable payment systems across the NHS to promote high quality care, drive efficiency, and support patient choice”.

Block contracts will simply guarantee providers an income and not incentivise innovation. A large proportion of sexual health service delivery focuses on the prevention of sexual ill health, be it STI or chlamydia screening, whereas block contracts will not encourage providers to develop effective health promotion because they will not be specifically reimbursed to do so. Further, the tariff will support the drive to integrate sexual health services and will protect high-quality community services in the same manner as for other NHS services. Any qualified provider will be introduced to community services from April 2012 and, in order to prevent price competition, will be restricted to services with national or locally set tariff prices.

In his letter responding to points raised on this issue at Second Reading, the Minister stated that the Government were aware that some areas of the country are exploring the use of tariffs for commissioning sexual health services based on clinical pathways of care—which are being tested by the Department of Health—and that the results will be published. However, my impression of that work is that currently it is based around a national tariff, not local ones. The response goes on to say that local government will be able to consider the use of tariffs as part of efforts to deliver high-quality sexual health services. The clause works against that assumption. The only way that high-quality sexual health services can be provided and protected is by there being a national tariff in GUM and sexual reproductive health services. If local authorities decided to commission sexual health services under block contract, they would undermine incentives to increase and improve on screening, testing and treatment.

I appreciate that aspects of public health may not require a national tariff, but in this instance one size does not fit all. Not to have a national tariff for sexual health will have a dramatic effect on the ability to provide the current level of service. I put down this probing amendment in the hope that the Minister might rethink the decision to include the clause and consider replacing it with one that provides flexibility in the determinant of the tariff. His reply will determine if I come back to this issue on Report.

[Lord Clement-Jones]

My Lords, I will speak to Amendment 292ZA, the question that Clauses 119 and 120 stand part, and Amendment 294M. I shall principally speak to Amendment 292ZA, which is designed to make sure that the national tariff recognises the varying costs associated with people who have experienced homelessness or have complex needs in respect of the full range of healthcare services.

The Bill commits Monitor to publishing a national tariff for services which are or may be provided for the purposes of the NHS. Within this, the Bill makes provision for this tariff to be varied to reflect certain circumstances in which it is provided. However, homeless charities believe that the Bill needs to go further and make provision for tariffs to be varied to reflect the level of complexity and disadvantage experienced by certain patient groups. People who have complex health needs can cost more to treat. Unless the tariff structure reflects this, there is a real danger that services will not wish to treat those patients for whom health outcomes can be harder to achieve—such as homeless people.

Why should this not be reflected in the Bill? There is evidence that health services can already be reluctant to work with homeless people because of the higher costs of treating them. Unless the higher costs of treating some patient groups are taken into account, there is a real danger that the new tariff system may discriminate against homeless people and others with complex needs. In the long term, this will also incur a far higher cost to the NHS and other public services. Failure to treat disadvantaged patients at a primary care level can result in higher rates of hospital admissions, greater demands on acute care and the wider costs of ongoing poor health such as worklessness.

Homeless people have some of the poorest health in our communities. People experiencing acute disadvantage can have complex health needs. As the Department of Health’s Inclusion Health report stated, in order to meet the complex health needs of socially excluded groups, we need,

“a sophisticated, coordinated and flexible response from services. The costs of failure are great not only to the individual life chances of socially excluded clients, but also to the taxpayer, services and the communities who pick up the pieces”.

Unfortunately, many mainstream services do not offer this and as a result are not accessible to disadvantaged patient groups.

Currently, some specialist homeless or vulnerable person’s health services have negotiated their own tariff system so that they are not unduly penalised for treating complex patients. However, this can be difficult to negotiate and such services are not widespread. Unless there is provision for this and the new tariff system takes the wider factors that affect disadvantaged patients into account, services may be disincentivised from treating them. This will lead to poorer health outcomes and make it harder for the NHS to achieve a reduction in health inequalities.

My amendment builds on the commitment to improve the health of the poorest the fastest. The intention to reduce health inequalities through the reform of the NHS has been embedded in the reform process from the first White Paper in 2010. It was revisited by the NHS Future Forum, which flagged up a number of concerns about incentives against cherry-picking at the expense of more complex and expensive patients. In their response, the Government said that services,

“will be covered by a system of prices that accurately reflect clinical complexity”.

My amendment would help to achieve that.

Amendment 292ZB is simply designed to make sure that when Monitor sets prices, and consults on whether to vary prices, it takes into account its duty to promote integration. That is the reason for the reference to Section 13M of the National Health Service Act 2006 and clinical commissioning groups’ duties under Section 14Y of that Act.

On the question that Clauses 119 and 120 stand part, these were referred to in my speech at the beginning of the day—that now seems a long way away. This relates to the reference to the Competition Commission under Clauses 119 and 120. This is also to do with the reference to the method of reaching a price under the national tariff. The Minister dealt earlier with the issue of why an independent body had been chosen for that purpose but it could equally well be the OFT, which I believe would be less provocative and probably more apposite. That was certainly the view of my noble friend Lady Williams when she spoke to her amendment, and I very much hope that the Minister and the department will revisit that issue and see whether it is possible for the OFT to be the body that actually looks at the method of setting tariffs in those circumstances where there is disagreement. That would be a lot less provocative and less liable to introduce EU competition law, along with all the other matters that are involved.

I do not currently have Amendment 294M to hand, sadly, but no doubt I will shortly if I keep talking for slightly longer. It ensures that all providers licensed under chapter 3 and operating in relevant clinical commissioning groups are paid the same price for the provision of services. This is designed entirely to make sure that there is a level playing field within clinical commissioning groups’ areas. I hope that it is the intention in the setting of national tariffs that they will be uniform and there will be no difference in tariff paid by one provider versus another within the same CCG area. With that, I think that I have completed all the amendments that I intended to speak to.

[Baroness Finlay of Llandaff]

My Lords, I am tempted to say, “Follow that”; I certainly cannot. The reason why my Amendment 294BZA in this group is a probing amendment is that the wording in Clause 117(1)(a) talks about the,

“differences in the costs incurred in providing health care services for the purposes of the NHS to persons of different descriptions”.

It seemed to be extremely elegant and important to have in the Bill a recognition of the wide variation in both physiology and pathology that different people will present with and that that should determine the tariff itself, not simply be part of the consultation.

I hope that the Minister will be able to provide some assurance that findings from the consultation may indeed provide the range. Is it correct that additional support to secure continued access to services could come through commissioners and providers or, if they cannot reach agreement, for providers alone to be able to apply to Monitor for a modification of the price determined in accordance with the national tariff? Is it correct that Monitor would have the ability to approve and/or set the level of the modification under certain circumstances, using a methodology agreed between Monitor and the NHS Commissioning Board, if a provider could not, at the tariff price, cover its cost with an efficient service? One of the difficulties that keep emerging as we discuss tariffs is the complexity of applying them in the enormously wide variety of clinical situations that will be dealt with across the whole of the health services.

18:45

[Lord Davies of Stamford]

My Lords, I shall speak to—I had better read this out; I cannot possibly remember it—Amendment 294AZB in my name. This is a probing amendment, intended to smoke out the Government’s real feelings about price competition in the health service market. There have been some conflicting signals on this, as we all know, with the general expectation that the Government intended to introduce a greater measure of price competition, and then a spectacular U-turn earlier this year, which the Government said was not a U-turn because they never intended to introduce price competition anyway. A whole lot of clauses were introduced into the Bill that had the effect of banning price competition in the NHS.

I was assured by the Minister only yesterday that the Government’s true thinking on this is best set out in the document Protecting and Promoting Patients’ Interests, and I am grateful to his officials for giving me a copy. I shall quote what it says on this subject in paragraph 35 under the heading “No price competition”, which sounds very decisive:

“We have strengthened the Bill to ensure that where a national or local tariff is in place, providers and commissioners cannot undercut this”.

That seems to be straightforward, coherent and, as I shall argue, completely wrong. Paragraph 36 says:

“Where competitive tendering is undertaken for services not covered by the tariff, bids would be evaluated in terms of best value (i.e. awarding contracts to those bidders who provide the best balance of quality and cost”.

That seems to be incoherent and complete rubbish. Once you introduce the idea of a balance of quality and cost, you are into price competition. Every time you buy a car, you compare the quality and price of the cars on the market and come to a balance between quality and cost. Every time you go for a coffee and you choose between Costa and—what is the other one?—Starbucks, you are striking a balance between quality and cost. That is clearly incoherent and the result of very sloppy thinking.

Let us assume that that is just bad exposition or bad thinking on the part of the Government, and their real conviction is represented by the first quotation—they do not believe in price competition at all. Why is that a mistake? For two reasons: first, it involves a considerable potential loss of money from public funds. Surely if you can save money with no detriment to the purposes of the health service or the interests of patients, it should be the obligation of the Government to do that.

The second reason is a little more complicated: if you deny price competition a role in the system at all, you are denying the use of the mechanism for price determination. Competition is the only way in which you can really make sure that you understand how prices are put together. If you have a tariff that does not involve any price competition, you are basically into a form of cost-plus price determination, and anyone who knows anything about this—I know a little, having been Minister for Defence Procurement; sometimes we have to use cost-based pricing because there is no competition in the product that we need to acquire—knows that if you produce prices on that basis, you find that you can never exert any downward pressure on the prices that your suppliers are quoting to you. They will put in whatever they think is necessary for that activity and whatever costs they think they ought to put in. They will use the technique that they traditionally prefer to use for producing the goods or services that you are buying. You will never be able to second-guess that or look beyond it. It is an extraordinarily wasteful system of procurement and it is completely wrong.

We should have a commonsensical agreement that we should use price competition wherever we can where it does not do damage to other desirable objectives, particularly the objective of patient outcomes. I have endeavoured to produce an amendment—it is a purely probing amendment; I am sure that it is technically deficient, and I do not intend to take it any further in its present form—that establishes one way of doing that. It says that when commissioners wish to use price competition and they find that they get an offer of a price that is more favourable than the tariff price, they should be allowed to take it, subject to checking with Monitor to ensure that there is no damage to other purposes of the health service, to the interests of patients or to the structure and capacity of the health service. In health, there are often good reasons why you might not want to take the nearest offer, and I shall come to a couple of those in a moment, but, where there are no such reasons, surely the onus should be that you should take that offer and save the public money.

There are reasons why in health it may not always be sensible or in the interests of the health service or of patients to take the lowest offer, and I entirely accept that that may often arise. One is in the case where you are making a strategic investment in a new capability. We have had examples that have struck me in the course of these debates—for example, the new stroke systems in London and cardiac systems that cover London. I do not come from London but I believe that they have been a great success. That has consisted of ensuring that a quasi-monopoly has been given to perhaps half a dozen units that contain the best expertise and the best equipment that can be brought together for these purposes. That has been found to be the best solution for maximising patient outcomes or, to put it rather more straightforwardly, actually saving people’s lives, which is clearly the priority. I totally accept that there may be decisions of that kind that need to be taken irrespective of cost. Indeed, I welcome that they should be taken irrespective of cost and I have provided in this amendment a mechanism for making clear that when that happens and there are arguments of that kind they can prevail and it can be quite clear and quite transparent why the decision has been taken.

The second reason is also rather specific to healthcare, although not exclusively so. One of the features of the economics of healthcare is that it has a very high operational gearing; in other words, a very high ratio of fixed costs to total costs. In any sector of the market where that prevails there is obviously a great temptation for people to bid opportunistically when they have spare capacity at a price that represents a return over their variable costs and some contribution to fixed costs though not necessarily a very great one. You may get some very cheap offers coming in from people who happen to have spare capacity at a particular moment. It may be dangerous to take those offers rather than ones from other suppliers, such as traditional NHS suppliers which are more expensive, because if you do that you will put those NHS suppliers out of business. By definition, if people are bidding at a price below their full costs but over their variable costs then they will not always be providing it on that basis. They will certainly not be investing in new capability or sustaining capability on that basis. One has to be very careful about predatory pricing in the health service. I totally recognise that, and it would be a very good reason for saying, “We do not want to take this particular offer because if we do we shall put out of business capacity we need over the long term that can only be sustained long term at a higher price”.

I am very open and sensitive to the reasons for not taking the lowest price in many individual cases, but it seems to me that the Government have got this thing completely the wrong way round. The default option should be to take the cheapest price. We should be saving money. We should be exerting downward pressure on cost. We should be encouraging people to come up with new, cheaper and more efficient ways of doing things consistent with the quality that we require. It goes without saying that quality should be absolute and should be determined for every diagnostic related group, every service and health service procedure. For each of these we should have a clearly defined specification of quality and we should not go below that for reasons of price. Where we can get that quality cheaper and we do not do structural damage to the service it seems to me completely crazy not to go in that direction. I am sorry that the Government carried out the U-turn in February and I hope they may now turn back again.

[Lord Warner]

My Lords, I have some sympathy with some of the remarks made by my noble friend Lord Davies of Stamford in the sense that a blanket ban on price competition seems rather misguided in the situation the NHS faces. To give one example, under the last Government the price we paid for spot purchasing from the private sector when there were peaks of demand in the NHS was often much cheaper than had previously been the case and could, on occasion, be below a tariff price for some of the services. That was in the interests of the NHS and patients. A blanket ban does not seem to me to be the most sensible way forward.

I want to speak to Amendment 291C which should have been in this group. Assiduous readers of the groupings list will see that there are two commas after Amendment 291B. Between those two commas should have been Amendment 291C and the Whips’ Office has confirmed to me that was indeed the intention, so I wish to speak to the missing amendment and I also wish to speak to Amendments 294AA and 294BA which were included in the list.

Amendment 291C adds to Clause 141 some principles that should be applied to the construction of the national tariff. We have already had one debate about the tariff and how the national Commissioning Board might be encouraged to move the tariff away from its dependence on pricing episodes of care, which tend to favour acute hospitals, to a greater emphasis on periods of care that are more appropriate to the high volume of NHS patients with long-term conditions. I withdrew my earlier amendments on this issue but discussed the issue much further with outside interests and experts to see whether there was anything we could usefully do to further this particular cause. I think the Minister was not unsympathetic to some of the ideas in the earlier amendment.

These discussions have persuaded me that there is widespread support for trying to move the tariff currencies and pricing in the direction of periods of care but also a belief that this will take quite a long time and it involves a good deal of new data collection and analysis. In the mean time, people seemed to be saying that there was some merit in being clear about what should be the underpinning key principles for developing the national tariff in the future. I have had a shot at encapsulating these key principles—drawing very much on work by the NHS Confederation and I am extremely grateful for the help and advice it gave me—so that principles of this kind could be placed in the Bill to guide those who will be taking forward the difficult but important work of shaping the national tariff. I hope the Minister will be able to agree that we should try to have some guiding principles on the tariff in the Bill even if he does not like my particular wording because this is an important issue. We need to use this legislation to try to shape an important piece of work that will stretch over quite a few years to develop a new national tariff.

Amendments 294AA and 294BAA are technical amendments that reflect concerns expressed to my noble friend Lord Darzi and me by representatives of specialist medical interests about the current wording in Clause 116 on consultation on proposals for the national tariff and Clause 128 on the responses to those consultations. Amendment 294AA is intended to ensure that the relevant specialist groups are consulted on proposals for the tariff. It does not seek to specify the particular groups—that would be left to Monitor in the light of what the particular proposals were, affecting particular specialties. The amendment simply seeks to require that specialist clinical groups are consulted when tariff proposals are made so that they are involved and can bring to bear their expertise on the tariff-setting processes that can be involved with particular quite highly specialised sets of services. Amendment 294BAA merely seeks to ensure that when there are objections to a tariff proposal, assessing the weight of opinion for or against should be restricted to specialist licence holders undertaking work of comparable complexity. This is really to ensure that any objections are raised by the people undertaking work of a similar complexity defined in the original proposals for tariffs. I know that specialist opinion will be much reassured if the Minister could look favourably on these two amendments.

19:00

[Baroness Murphy]

My Lords, I would like to make a few remarks about tariff and price setting and echo the words of the noble Lord, Lord Warner, who reminded us that there are two equally important mechanisms: tariff development, which is the responsibility of the national Commissioning Board; and price setting, which is the responsibility of Monitor. It is critical that Monitor retains the responsibility to set prices. That enables it to uphold its responsibilities for sustainability and balance the interests of commissioners and providers in the patients’ best interest. Independence in price setting is utterly critical. We have seen previously that not having independence from the executive arm in the NHS has been a disadvantage in getting the right prices which reflect the complexity of the issue concerned. I take the point made by the noble Baroness, Lady Thornton, that the development of tariffs is a very complex matter. It is work in progress but the work never stops. That has been the case in all countries that have developed tariffs and will be for the foreseeable future. We need flexibility when designing tariffs.

I say to the noble Lord, Lord Davies, that we have seen how catastrophic simple price competition has been internationally in driving down quality of service. Indeed, we have seen that in this country, too. Price competition was not helpful. In order to drive down prices and get better value, you need to start designing the tariff around best practice. This was mentioned by the noble Lord, Lord Warner. You need to design a pathway of care based on what should ideally happen to a patient, deliver the clinical pathway, cost that out and get the best practice in place. If that amounts to less than the set price, which it often does, that is the way that you can start to drive down costs while improving quality. A tremendous amount of superb work has been done in a group of mental health trusts looking at best practice tariffs for episodes of care. If we can get that work ongoing in a group of people who are dedicated to designing better tariffs, we will be able to improve price competition by designing the tariff correctly while not striving to be competitive on price alone.

[Lord Davies of Stamford]

I am very grateful to the noble Baroness for giving way. I made clear in my remarks that I believe one should start by specifying quality—that would include her point about best practice—and then allow the market to bid against that. Where potential suppliers, whether NHS or otherwise, can come in below the existing price—call it the tariff price or what you will—that will be a spur to everybody else to consider whether they can deliver that quality—I stress “that quality”—better, more effectively and more cheaply. That mechanism will be totally absent in the National Health Service if the Bill is not changed in the way that I have suggested or something equivalent.

[Baroness Murphy]

I take the noble Lord’s point. I think it is possible to introduce the mechanisms that he would like to see through the existing mechanisms in the Bill on tariff design. Those mechanisms would also address the points made by the noble Lord, Lord Butler, about the need to develop an additional payment for certain kinds of innovation tariff. The possibilities for designing tariffs are wide. We do not need to be rigid about this. I do not know how much needs to be written on the face of the Bill. It seems to me that we need to get that separate in our minds from the actual price setting which is more the role of the independent regulator, having got the design of the tariff correct. Therefore, I would like to see Monitor retain its role as a price setting regulator but I wholeheartedly agree that a lot of creative work needs to be done on the tariff to get it right for integrated care packages and proper best practice design.

[Baroness Hollins]

My Lords, I would like to add to what my noble friend Lady Murphy has said by commenting on a couple of amendments in this group which concern the need for the tariff to be able to reflect and adapt to the requirements of people with complex needs. I am thinking particularly about people with learning disabilities who may need additional time to be devoted to them because of their conceptual or communication difficulties, or other disabled people who may require reasonable adjustments to be made in order for them to use a service. I think also of people with mental health problems using hospital services such as maternity services. The provision of maternity care is hugely complicated by the presence of people with an enduring mental illness. The need for the tariff accurately to reflect and encompass these needs poses quite a challenge.

[Baroness Tonge]

My Lords, I rise to ask a question rather than to make comments. I am rather confused about how tariffs work. I am thinking particularly of sexual and reproductive health services. Therefore, I support Amendment 292A tabled by the noble Baroness, Lady Gould.

Sexual and reproductive health services are currently provided by general practitioners and clinics directly commissioned by primary care trusts. They can be family planning clinics, youth counselling clinics or genitourinary medicine clinics. Under the new system, GPs will presumably carry on providing sexual and reproductive health services and abortion counselling services, although I am unclear exactly how they will be remunerated in the future. Those GP services are very variable. Some GPs provide a superb service while others provide a very bad one. Some do not provide certain services at all so it is common for patients to go to clinics in their area which have been provided by the primary care trust.

Under the new health service, local authorities will commission and provide sexual and reproductive health services and abortion counselling services as well as HIV prevention services, but not the treatment, although I do not want to go into that now. They will be responsible for those sexual and reproductive health services. However, I am puzzled by the following matter. Currently, if a patient does not like their GP or finds that the GP does not provide the service they want, they can go to a local clinic. However, because of political or religious arguments within a local authority it may have made those services a very low priority, or perhaps does not provide them at all. It seems to me that there is nothing to compel local authorities to provide certain public health services. If a patient cannot get the relevant services from a GP or does not like them, and cannot go a local clinic because one is not available, can they go to a clinic in another local authority where they are not resident? This could be a problem for many patients all over the country, particularly young people who tend to go to different areas for their services where perhaps they are not known or the doctor does not know them. So I am very concerned.

Could the Minister please say how these services will be affected if no national tariff is set on public health services? How do we know that local authorities will not only provide services for sexual and reproductive health but accept people from other local authorities for treatment? It is a very important question for many people in this country.

[Earl Howe]

My Lords, I think that this debate has clearly demonstrated the importance of having a robust pricing system in the NHS. At a minimum, it must deliver sustainable reimbursement for efficient providers and promote value for taxpayers’ money. In addition, it must support the role of commissioners in securing continuous improvement for patients by strengthening incentives for providers to improve quality and efficiency.

Perhaps I could address one aspect of the opening speech made by the noble Baroness, Lady Thornton. She spoke rather disparagingly, I thought, about the Secretary of State palming issues off on to quangos. Listening to the noble Baroness, the Committee may get the impression that it is this Government who have created quangos for the first time. I make no apology for being part of a Government who believe that arm’s-length bodies can play a very valuable role in public services, especially when given the autonomy to deliver those services free of political micromanagement. The Government also believe that the number of such bodies has grown over recent years to an unsustainable level, and that is why the Bill abolishes a large number of them. So I gently urge the noble Baroness to stop complaining quite so much about quangos and remind herself that she was part of a Government who created a very large array of such bodies.

I begin by addressing the amendment tabled by the noble Baroness which proposes a delegated power for the Secretary of State to make regulations on commissioners regarding a duty as to continuous improvement. I am sure that we all agree with much of the apparent intention behind this amendment, first, that commissioners should act with a view to securing continuous improvement in the provision of services in terms of both quality and efficiency, and indeed in reducing inequalities; that is fundamental to their role. The second intention is that there is a role for regulations in ensuring that commissioning processes operate as means to this end; in other words, that tools such as service reviews, procurement and competition are used transparently and effectively to secure continuous improvement in the provision of services in the interests of patients. Our proposal is that such regulations would be made under Clause 71. They could be updated from time to time, subject to parliamentary resolution. While we would not disagree with some of the suggestions proposed under Amendment 277B—which, I recognise, has been carefully crafted—it may be a bit too detailed for the face of the Bill. In any event, we would want to consult publicly on these matters before putting firm proposals before Parliament.

The role of the pricing system is to underpin and enable continuous improvement—for example, by strengthening incentives for providers to adopt best-practice models of care, in line with commissioning priorities. The noble Baroness, Lady Murphy, was quite right in all that she said on that point. Furthermore, the payment by results programme, introduced by the previous Government, has gone a long way to strengthening pricing within the NHS. It has ensured that reimbursement better reflects the volume and complexity of patients treated, and it has helped to reduce transaction costs. However, a number of problems have been identified with this system over the last few years, including by the previous Administration. These problems have not yet been fully addressed, and we want to do so.

The problems are as follows. The methodology for setting prices is not transparent for either commissioners or providers. That makes the system unpredictable, and there is evidence of significant variations in the tariff from year to year. That undermines investment and innovation.

19:15

The scope of services covered by the tariff has not been increased in line with the published timetables. That has made commissioning decisions more difficult due to lack of understanding about potential costs. For example, it has made shifting care from hospital to community settings more difficult.

The quality of data used to set the tariff is unacceptably weak. There is a three-year time lag, and costs are based entirely on averages. The previous Government promised to improve the quality of data through sampling providers. Had they been re-elected, I am sure that they would have pursued that, but in fact they did not deliver on that commitment.

Finally, prices can be inaccurate, and sometimes they do not reflect the best variations in complexity. That results in perverse incentives for cherry-picking and risks underfunding treatment for complex patients.

It might be helpful if I explain to the Committee how the Bill seeks to improve on this system. Monitor, with its understanding of provider costs and structures, and the NHS Commissioning Board, with its understanding of patient needs and clinical best practice, are well placed to deliver a more effective pricing system; that is the vision. Prices would continue to be regulated through a national tariff, building on and improving the system of payment by results. We want this system to reflect best practice and extend the scope of the tariff where it is in the interests of patients.

Prices would be based on a published methodology, which would be subject to consultation and independently reviewed by the Competition Commission. Where services were not covered under the national tariff, there would be rules to govern these prices locally. The national tariff would be a fixed price, with any competition based on quality and choice, not price. I will come to the points raised by the noble Lord, Lord Davies, in a moment. There must, however, be provision to vary the tariff in defined circumstances. These flexibilities would not allow price competition, but would prevent cherry-picking, allow innovation, and secure continued access of essential NHS services. Put simply, these flexibilities would only be allowed where the effect is to improve the efficiency or quality of the services provided for the benefit of patients and the taxpayer. I hope that that is helpful.

I will now address some of the amendments in more detail. The noble Lord, Lord Butler, took us to the heart of the very important issue of innovation. I entirely agree with him that innovation is vital, and we expect Monitor and the Commissioning Board to incentivise innovation through the tariff—providing it was in the patients’ best interests, as I have indicated. We recognise that, in some cases, innovative ideas, technologies, systems and processes have often taken an unnecessarily long time to become common practice across the whole of the NHS. I reassure the noble Lord that the national tariff would not act as a disincentive to innovation but would, in conjunction with other initiatives—such as those announced by the Prime Minister in his life sciences speech last week—look to create an environment where innovation in the NHS is commonplace.

The NHS Commissioning Board may also set out rules that allow commissioners and providers to agree to vary the way a service is specified in the national tariff, and subsequently the way the service is priced. This would prevent the tariff being a straitjacket—which, I think, is the fear of some noble Lords—so that it would support innovative service specification with an appropriate price. These variations would be published so that other providers could see what innovations were possible and what price they could receive for delivering such services. I hope that it is instructive for the noble Lord to note that Clause 117 explicitly establishes a requirement for Monitor and the NHS Commissioning Board to increase the scope of the tariff in the way that I have been describing.

The noble Baroness, Lady Gould, took us to the subject of sexual health. I thank her very much for setting out her concerns so eloquently. Public health is indeed an area that deserves our consideration, and I am sure that the noble Baroness would agree that we discussed this subject at some length in previous debates. However, let me be clear that the purpose of the national tariff is to facilitate the fair reimbursement to providers for NHS services only. It would be inappropriate for Monitor and the NHS Commissioning Board to impose public health tariffs on local authorities. I see no reason why Monitor and the NHS Commissioning Board could not provide expert advice to Public Health England or local authorities on implementing a current tariff or—

[Baroness Gould of Potternewton]

The difference between sexual health and most of public health is that sexual health provision crosses local government boundaries, otherwise you will restrict any form of open access, which is absolutely essential in providing proper and effective treatment and care for people who need sexual health services. That has to be taken into account. Identifying sexual health provision just in terms of local government areas will make all the work that has been carried out over the past few years to provide better services disappear rapidly.

[Earl Howe]

My Lords, I appreciate those points and I was coming to some words of comfort for the noble Baroness. Not only could Monitor provide technical advice to Public Health England, provided that that was resourced and managed through the framework agreements and the memorandum of understanding between the two organisations, which would be a given, but Public Health England and local authorities could develop their own tariff, if that is what they wanted to do. I understand the noble Baroness’s concern about the underfunding of sexual health services and that the mandate may not set out enough on that score. Her amendment is clearly a way of ensuring that public health services—particularly this type of service—have an agreed cost attached to them that cannot be varied by local authorities, unless they adhere to the rules around variation. I understand all that. However, what the noble Baroness proposes would significantly increase the remit of Monitor and the NHS Commissioning Board and cut across the roles of local authorities and Public Health England. I will, of course, reflect on what she said, but there are probably mechanisms to deliver the kinds of objectives that she is aiming for.

Also on the subject of sexual health services, my noble friend Lady Tonge made some important points. I completely agree with the importance of the issue she raised. It would probably be best if she allowed me to write to her in response.

My noble friend Lord Clement-Jones proposed in his Amendment 292ZA that Monitor should include variations to prices for individuals who experience disadvantage or who have complex needs. While I am sympathetic to his intention, this is already provided for in the broad provisions in Clauses 114(4) and 117(1). In addition, the inclusion of “must” rather than “may” would not provide Monitor with flexibility on when to specify variations and rules.

I move on to the amendment of the noble Lord, Lord Davies of Stamford, who argued the case for competition on price, and I listened with interest to what he had to say. Let me explain what we are seeking to achieve. Overall, we want a system of fixed prices, set locally or nationally, that would ensure that competition was based on quality and patient choice, not on price. Only in specific circumstances could the prices determined by the tariff be varied. These flexibilities would not allow price competition but would rather, as I have indicated, prevent cherry-picking, allow innovation and secure continued access to services. Put simply, the flexibilities would be allowed only where the effect was to improve the efficiency or quality of services provided.

The Government made amendments to the Bill in another place to make clear that the tariff would not be a maximum price. That is vital to avoid perverse incentives for providers to cut costs at the expense of quality. That is entirely different from the competitive tendering scenario to which the noble Lord, Lord Davies, referred. In that scenario, whereby services would be outside the tariff, it is quite reasonable to evaluate bids in terms of best value, not the cheapest price. Guidance published by the previous Government made that clear. I think that we are closer together than perhaps the noble Lord appreciates, but I am grateful to him for what he said. However, he will know that it was the firm view of the NHS Future Forum that competition should be based essentially on quality rather than on price alone. There is of course a danger that we have a race to the bottom if we go too far down that road.

My noble friend Lord Clement-Jones in his Amendment 294M made some telling points. While I am sympathetic to some of them, I can reassure him that agreements for local modification of tariff prices under Clause 122 are intended not to introduce price competition but to sustain the provision of essential services. For example, a local modification may be necessary to sustain provision of A&E or maternity services in a less populated area. It would be inappropriate to remunerate all providers of an essential service at a modified tariff rate without assessing their circumstances on an individual basis.

The noble Baroness, Lady Finlay, in her Amendment 294BZA proposed that it be explicit that Monitor, in establishing the national tariff, have regard to differences in costs of patients incurred by providers and differences between services provided. Clause 116 makes clear that when developing the draft tariff for consultation, both the NHS Commissioning Board and Monitor should have regard to the differences in costs of patients incurred by providers and differences between services provided. However, that amendment raises a valid point around whether Monitor should have regard to these differences when publishing, as well as when drawing up, the national tariff. I can tell the noble Baroness that this issue will be given consideration to determine whether further clarity is necessary in this area.

I now return to Amendment 292ZA, tabled by my noble friend Lord Clement-Jones. He raised the issue of cherry-picking, which we define as something that occurs when providers undertake only the more simple interventions for less complex patients but are paid an inflated price, based on higher average costs. I hope that my noble friend would agree with that definition. Under the proposals in the Bill, Monitor would ensure that the price paid to providers was accurate and reflective of the services delivered. A comprehensive tariff with more reflective prices will prevent cherry-picking. In particular, Monitor and the board would need to consider among other factors the impact of variations in the range of services provided by different providers and the differing needs of the patients treated. My noble friend again asked why the Competition Commission should be used, and again my answer is similar to the one I gave him earlier. The commission is an expert independent body with experience in considering matters such as this—unlike the OFT.

I now turn to Amendment 294AA, tabled by the noble Lord, Lord Warner. It would duplicate what is already stated in this clause, whereby Monitor must send a notice to other persons as it considers appropriate, which may include other clinical groups. Clause 59(8) makes explicit that Monitor must obtain appropriate clinical advice to enable it effectively to discharge its functions. Clause 116(1)(c) provides that Monitor must notify other appropriate persons of the proposed national tariff, which may include other clinical groups. Monitor must publish its consultation containing the draft tariff.

As regards Amendment 294BA, the share of supply percentage that triggers a reference to the Competition Commission will be considered in secondary legislation and agreed through the affirmative resolution procedure. The share of supply percentage would ensure that providers of a service made up of only a few providers would still be able to object to a proposed national tariff and therefore trigger a reference for independent adjudication.

19:30

Finally, on Amendment 291C. I listened with great interest to the noble Lord and am grateful to him raising the point. I agree that the principles of the tariff are extremely important. I am not sure that this is an issue to write into the Bill. I respectfully direct the noble Lord to paragraph 65 of our document Protecting and Promoting Patients’ Interests, which details a set of guiding principles about how Monitor and the board could collaborate to develop the tariff.

I hope that I have covered most if not all the points that have been raised and that, with that explanation, the noble Baroness will feel able to withdraw her amendment.

[Baroness Thornton]

My Lords, I do not want to stand between noble Lords and their dinner—and indeed, on this side of the House, yet more defrosting. I would like to be able to say that the Minister had given us some comfort in this debate, as he has in one or two of the others, but I am not sure that that is the case.

I did not moan about a quango. I have mentioned only two quangos today, but they are rather large and important ones. One of them will have a budget of £20 billion, and the whole House has agreed that it is concerned that accountability to the Secretary of State for those quangos is right. We have not quite settled that and have returned to that issue consistently, almost every day throughout discussion on the Bill, but that probably now needs to be left until the new year.

I support my noble friend Lady Gould and the noble Baroness, Lady Tonge. The funding of sexual health services is one of those cases which will have potentially disastrous unintended consequences—in more ways than one, if one may put it that way. My noble friend is right to raise that, and we will support her fully if she decides that she wants to take it to the next stage of the Bill.

As ever, my noble friend Lord Davies gave an original flavour to the debate and raised some important and pertinent questions. I will read more carefully the Minister's answers. Ditto to my noble friend Lord Warner, whose amendments are very important. What underlaid what my noble friend Lord Warner and the noble Lord, Lord Clement-James, said, was that this is not a quick job. This will take a long time and it is important that we get it right. We are not convinced that the national Commissioning Board and Monitor together will not create a very bureaucratic, slow way to set the tariff. We are not convinced that that is the way forward. We need to consider an independent voice and some other way to do that. We will probably continue that discussion at another time, and I beg leave to withdraw the amendment.

Amendment 227B withdrawn.

Clauses 68 and 69 agreed.

Clause 70: Competition functions: supplementary

Amendment 277C not moved.

Clause 70 agreed.

House resumed. Committee to begin again not before 8.35 pm.

Transport for London Bill [HL]

Tuesday 13th December 2011 Lords Chamber

Second Reading

19:35

Moved by

[Baroness Grey-Thompson]

That the Bill be read a second time.

[Baroness Grey-Thompson]

My Lords, I have an interest to declare in that I am a paid board member of Transport for London, or TfL, which is a public body constituted under the Greater London Authority Act 1999.

This is a Private Bill that was promoted by Transport for London, deposited on 26 November 2010 and ordered to commence in the House of Lords. The Bill was read for the first time on 24 January 2011. Its purpose is to provide Transport for London with a broader set of financial and disposal powers to meet its business needs more flexibly and to allow it to deliver better value for money for the farepaying and taxpaying public.

Specifically, Clause 4 will remove the requirement for the Secretary of State’s consent to the disposal of surplus land from Section 163 of the GLA Act, as that consent imposes an unnecessary restriction on TfL, given that the Mayor of London is required to provide an opinion in advance of sale that the land to be sold is surplus to the requirements of TfL in conducting its functions. Clause 4 will reduce uncertainty for TfL when selling land, while maintaining the Mayor's opinion’s statutory safeguard that the land to be sold is surplus to requirements.

One petition was deposited against the Bill by the West London Line Group. The petition primarily concerns Clause 4. TfL has entered a dialogue, having met the petitioners' representative, and is hopeful of reaching an agreed position with the petitioner, rather than an opposed Bill Committee being required.

At present, TfL and TfL subsidiaries are not permitted by law to grant security, such as a mortgage, over their assets and revenue streams. That reduces TfL's capacity to finance projects and functions at the best available interest rate or at the lowest risk. That extra cost or risk is ultimately borne by farepayers and taxpayers through higher costs or greater risks on TfL.

Clause 5 will allow TfL subsidiaries to borrow and charge against assets and revenue streams. This will provide TfL with cheaper finance for its projects and more flexibility in how it borrows. Under secured borrowing, TfL subsidiaries can achieve lower interest rates than can be attained through the Public Works Loan Board or issuing bonds—two of the significant debt financing options for TfL now. TfL subsidiaries can also borrow for a discrete purpose, and the security can be structured so that a creditor has recourse only against the subsidiary borrowing, but no recourse against TfL and other TfL subsidiaries. That can better protect the farepaying and taxpaying public from liability for TfL debts.

Clause 5 also allows TfL to purchase subsidiary companies with secured debt. TfL would not be required to restructure secured debt once Clause 5 is operating, as was the case with the purchase of Tube Lines Ltd and Tube Lines (Finance) plc. Had this been operating at the time of those acquisitions, it would have spared TfL significant costs at the time of purchase—ultimately borne by farepayers and taxpayers. Importantly, existing TfL creditor rights are reserved in full by the Bill. Also, TfL subsidiary borrowing under Clause 5 will be subject to existing borrowing limits set by the Secretary of State as applied to TfL, operating as an effective limit on the new power.

Clause 6 will allow TfL to form or join others in forming limited partnerships. TfL would like to be able to use a partnership structure to seek third-party investors in its property estate and to manage secondary income generated from that investment. Pension funds are identified as likely investors who often prefer limited partnerships to other legal structures in which to invest. A partnership structure can better attract long-term investors to property development, because partnerships are tax-transparent.

There is very limited tax benefit to TfL from using a limited partnership vehicle, as Clause 6 provides that a TfL subsidiary company will bear the incidence of the tax liability generated by the partnership, as a subsidiary company is not exempt from income, corporation or capital gains tax. The exemption to that relates to stamp duty, where TfL will be subject only to a proportionate share, should any charges relating to stamp duty arise.

At present, TfL is limited to exercising its functions only through a company limited by shares. Clause 7 expands the list of legal structures through which TfL functions can be undertaken to include a company limited by guarantee, a limited liability partnership or a limited partnership. This will allow TfL to conduct its functions more flexibly and better enable TfL to seek third party investors in its property estate.

Clause 8 amends TfL’s hedging powers and responds to changes in the way that financial institutions hedge risk away from specific commodity trading to trading by indices. It also expressly permits TfL to hedge risks that impact the rate of contributions that TfL is required to make to the TfL pension fund, including for membership longevity. It also responds to the evolution of the financial markets.

In summary, the Bill will assist TfL in seeking the most cost-effective borrowing. It also allows TfL to mitigate the risk that applies to its pension contribution liabilities through improving the hedging power. The Bill will assist TfL to maximise income from and investment in its assets and allow TfL to deliver better value for money for fare payers and taxpayers. I beg to move.

19:41

[Lord Berkeley]

My Lords, I welcome the Bill. I think that TfL generally, since its creation, has been a success under both its mayors, and it has certainly improved the general transport in London. Therefore, I congratulate the noble Baroness on achieving a Second Reading for it, which is often quite difficult in this House. I have one concern about Clause 4, which I have already informed the noble Baroness about. Whereas most of the Bill is to do with the financial issues for TfL, which is very useful, TfL has managed to slip in a little clause about selling off land, which one might suggest is necessary to help finance some of the new projects. There is nothing wrong with that.

However, my concern is that TfL needs to take a long-term view on the land that it holds and might need in the future. Experience to date is that it is very difficult to forecast with any certainty what land transport, and in particular railways, might need in the future. One recalls Dr Beeching’s slashing of lines—closing them down over the years because everyone was going to go by car, and how wonderful that was going to be. Now, of course, everyone is struggling to reopen lines. There was a very welcome announcement last week in the autumn Statement about reopening the Oxford to Cambridge line. The problem is that it goes from Oxford as far as Bedford and no further, because the land was sold off for building probably 20 years ago, and there is a problem—somewhere near Bedford, I think—where the line should have gone across a boating lake. Whatever one thought of Dr Beeching, no one thought that there would be such a demand for new rail transport in the future.

I had an issue about 15 years ago with the then British Rail Property Board, encouraged by the Department of Transport, over a freight terminal. I declare an interest as chairman of the Rail Freight Group. There was a lovely piece of land in Battersea that was ideal for building a concrete batching plant. All the materials could come in by rail and then be distributed locally as concrete to the local buildings. However, there was a competition between the concrete company and Battersea dogs home to have this piece of land because the dogs needed more land for exercise. I made the point to anyone who would listen that dogs do not need to be rail-connected, whereas it is quite useful for concrete work to be rail-connected. No one thought it was particularly funny and Battersea dogs home won, probably with lots of extra traffic on the road.

My message is that it is very difficult to forecast what bits of land might be needed for what in the future. We can talk about station extensions, but we know that no one wants to build extra stations or extra platforms because the services work fine at the moment, except when one suddenly discovers that one cannot lengthen the platforms any more or that one needs to lengthen them or put an extra platform in because of the demand. Then one needs land. Extra land might be needed for the maintenance of new bits of rolling stock or small rail freight terminals around London. The problem is that once these bits of land are sold off, it is almost impossible to get them back again at any reasonable price. Compulsory purchase is a very long and tortuous thing and no one likes doing it. Basically, one is always told, “Can’t you go somewhere else?”.

I suppose I do not trust anyone to have a long-term policy to hold on to land. That comment applies to what remains of the British Rail Property Board before it gets subsumed into the Department for Transport, to the department itself, and to Transport for London. They all do it with the best of intentions, but my issue with Clause 4 is that whether one trusts everyone or no one, it is useful not to have the beneficiary of a sale being the organisation that organises the sale. In this case, the beneficiary is clearly TfL.

I would like to see some wording in the clause—and I am very happy to discuss it with the noble Baroness and Ministers in the future—that retains the requirement to get permission from the Department for Transport, which presumably would not have an interest in the land, for such a sale. I would feel comforted that as much protection as possible had been given to these pieces of land, which are necessarily near railways. If they are miles from a railway line, it probably does not matter very much, unless one is going to talk about river transport, and I have not looked at the land holdings for that. That is the kind of wording that I would like in Clause 4, and I look forward to discussing it with the noble Baroness in the next few days.

19:47

[Baroness Kramer]

My Lords, I am not sure whether it is an interest because it is a former one, but I am a former member of the board of Transport for London and have an ongoing interest in transport within London which, like most Members of the House, I use extensively. I rise not in opposition to the Bill but to raise issues and questions that could use exploring. The noble Lord, Lord Berkeley, has raised one of the central issues of the Bill, which is whether an outsider—someone other than Transport for London—should be engaged in the authorisation of the sell-off of operational land, particularly if it has implications for overland railway in contrast to simply the tube, bus and tram services that we most often associate with TfL itself.

In the spirit of the Localism Bill, as well as prudent practice, I would rather see the Greater London Assembly, which has an expert transport scrutiny committee, taking on that kind of responsibility rather than the Secretary of State. Understanding the implications of changing the use of land in London requires a real awareness of the intricacies and complexities of the city. I think that the Secretary of State, sitting up at that distant central government level, has relatively little understanding of the detailed dynamics of London. It is within the Greater London Assembly that that range of experience is present in people who understand what may be housing issues, dealing with waste management, transport issues, the whole range of elements that impact on decisions about land use in London. That would be the more appropriate body.

As the Greater London Assembly is not under the control of the mayor, which is evident from the institutional structures, it can provide independent scrutiny just as effectively, if not more effectively, than the Secretary of State. I raise that as a significant element. Transport for London is, after all, the transport arrangement for one particular city and it is certainly not a national transport arrangement, so detaching the Secretary of State from such an entity has a great deal of logic to it in the spirit of the Localism Bill, which we have recently taken through this House.

I raise one other set of issues—again, not in opposition. There is interesting language in the Bill on the securitisation of revenue streams from assets. I understand from earlier discussions—I have a letter here from Transport for London that goes into a little detail on it—that the concept behind this is that Transport for London owns property that it happens to rent out, as it sometimes does when it holds property for a period of time but which it believes it will need at some point in the future for a transport project. Alternatively, it has land that is used for parking, perhaps on a temporary basis, and again that land is set aside for some future transport purpose but can generate revenue in the mean time, or it may just have parking land because that is the only way it feels it can safeguard parking that is necessary for various transport facilities. Those revenues could be securitised as a mechanism for creating efficient borrowing. To me, that makes eminent sense.

It seems to me that this language also covers quite comfortably the notion of securitising the fare box. Revenues from the fare box seem to fall within the definitions in the Bill, and I support that. It is an important step forward in providing Transport for London and London itself with the mechanism that is needed to continue building our infrastructure. However, I should be interested in understanding whether that is the perception of Transport for London or indeed the perception of the Government. If so, that makes the Bill increasingly interesting.

None of the other issues covered here, such as the ability to do sensible kinds of hedging or to form partnerships with somewhat more flexibility in the current environment, seems at all controversial. However, I should be interested in hearing comment and response on the issues that I have raised.

19:52

[Lord Davies of Oldham]

My Lords, I congratulate the noble Baroness on her introduction to the Bill. In a lucid contribution she made clear that which for some of us may have been a little opaque and she resolved many of the anxieties that we might have had.

It will be recognised in the House that Transport for London is a greatly envied transport authority. Many other transport authorities in the country would wish to have the existing powers of Transport for London, let alone the minor additions produced by the Bill. Of course, you cannot discuss bus services in our cities and in our countryside without recognising the advantages that Transport for London has had, and continues to have, in providing such services. It goes without saying that I would be even warmer in my thoughts about Transport for London if it were under a different political direction from the one that it enjoys at present. Nevertheless, the point still holds that it is an authority which we hold in high regard.

In passing, I indicate my regret at the role that TfL might have been able to play, if the financial arrangements had been arrived at differently, in guaranteeing that rolling stock for Crossrail would be provided by a company in Britain. However, it apparently lost that battle in the Department for Transport, so the decision is much more likely to follow the regretted Thameslink decision—namely, the company that may well win the contract will be an external company with the carriages and rolling stock being made elsewhere.

However, that is not really germane to the Bill. What is germane to the Bill, and I am very grateful to the noble Lord and the noble Baroness who have spoken thus far, is the critical issue of the disposal of assets. I was at a meeting only the other day with the Enfield authority, which I have always held in high regard—I certainly did when I was a Member of Parliament for the area. The Enfield authority has ambitious schemes to improve transport links in the area. Crucially, rail links are determined by the very thing that my noble friend Lord Berkeley identified—namely, that land held by the railway has been sustained and there is therefore capacity for putting down additional tracks to improve a service when that would not have been the case if the land had been sold. Therefore, we have a real interest in the land held by this public authority, and I hope that reassurances can be given on how such decisions are to be made.

One dimension that has not been mentioned thus far in the debate is that any sale of urban land has an impact on neighbours. It has an impact on the people who may already be using the land as tenants of TfL but it also has an impact on those immediately adjoining the land. I accept that it is difficult to put this within the framework of legislation but I hope it is recognised that TfL has obligations as a public authority to engage in proper consultation locally when the disposal of significant pieces of land occurs.

However, in broad terms we very much welcome this measure and I congratulate the noble Baroness once again on having introduced it so ably.

19:57

[Earl Attlee]

My Lords, I congratulate the noble Baroness, Lady Grey-Thompson, on moving her Bill so expertly, and I am grateful for the contributions of other noble Lords. I shall resist the temptation provided by the noble Lord, Lord Davies of Oldham, to discuss rolling stock purchases.

I do not oppose this Second Reading. However, I should make it clear that the Government also have some reservations about the powers in the Bill as presently drafted. Officials from the Department for Transport are currently in discussion with Transport for London on these provisions and I look forward to a more detailed examination of them in Committee.

[Lord Berkeley]

As the Bill was, as I understand it, introduced about a year ago, have these discussions been going on continuously for a year? They are taking an awfully long time if that is the case.

[Earl Attlee]

My Lords, Transport for London is responsible for progressing the Bill. I am just giving some comments on behalf of the Government.

On the subject of the disposal of land and Clause 4 of the draft Bill, which has been one of the principal subjects of this debate, the Government are clear that the protection of strategically important assets must remain a priority. Furthermore, it would appear reasonable for the arrangements in London to parallel those on the national rail network, where there are restrictions analogous to those currently placed on Transport for London. I should also point out that Transport for London already has the power, without prior consent, to lease operational land for less than 50 years and to dispose of land that has not been operational for five years or more. I understand that Transport for London is looking further at this option and I look forward to its revised proposals.

20:00

[Baroness Grey-Thompson]

My Lords, I thank all the noble Lords who have taken part in the debate this evening on what I think everyone will agree is a very technical Bill. It appears that Clause 4 has raised the most interest.

In response to the Minister, TfL is in discussion with the Department for Transport on the drafting of Clause 4. It recognises that the protection of strategically important railway assets must remain a priority. I understand what the Minister said about the scope of the existing Section 163 to dispose of operational land, and I confirm that TfL is looking further at this option and will be in touch with the department in due course to take this forward.

I understand the concern raised by the noble Lord, Lord Berkeley, on the long-term view that must be taken on the protection of land. TfL wrote to the noble Lord on 20 April 2011, and I reiterate what was said in that letter. TfL is now persuaded of the merit of retaining the requirement for the Secretary of State’s consent in circumstances where Network Rail or the British residuary board is an adjacent landowner or has land in close proximity to the land to be disposed of. TfL is liaising with the Government about Clause 4 to resolve their concerns. I hope that that goes some way to easing the noble Lord’s doubts over the disposal of land, but I would welcome continued discussion on this matter.

The noble Baroness, Lady Kramer, raised the issue of independent scrutiny and Clause 4. I thank her for mentioning the letter that TfL wrote to her. TfL does not feel that it would be appropriate to move to a consent mechanism which is entirely different from the Secretary of State’s consent if it were retained in certain cases. The noble Baroness also mentioned securities. TfL currently has no plans to securitise revenue generated by the Tube. Instead, TfL may use the power to grant security to raise finance from assets generating a secondary revenue scheme, such as car parks and property with a rental income.

TfL subsidiaries may grant security over both physical assets and revenue streams under Clause 5. However, TfL has no plans to do this over key infrastructure such as the Tube. TfL’s expectation is that the power to grant security may be used on car parks or property with a rental income, such as office space and new infrastructure that generate specific income. The noble Baroness also raised the issue of limited partnerships. TfL would like to form limited partnerships so that it can utilise a partnership structure to manage secondary income generated from its property estate; to better attract long-term investors to property development on non-operational land, because partnerships are tax transparent, which can be attractive to particular investors; and to better attract pension funds to invest in these developments as likely sources of investment. I am very glad that the noble Baroness mentioned the pension fund. If members of the TfL pension fund live longer than the actuarial estimate then TfL will have a prospective liability that is not currently accounted for. Hedging that potential risk is one way that TfL can offset that liability if eventuated.

Once again I thank all noble Lords who have taken part in the debate this evening. I have taken all the points on board, and no doubt all the Bill’s provisions will be closely considered in Committee.

Bill read a second time.

20:04

Sitting suspended.

Health and Social Care Bill

Tuesday 13th December 2011 Lords Chamber

Committee (12th Day) (Continued)

20:35

Clause 71 : Requirements as to procurement, patient choice and competition

Amendments 277D to 278BC not moved.

Clause 71 agreed.

Clause 72 : Requirements under section 71: investigations, declarations and directions

Amendment 278C not moved.

Debate on whether Clause 72 should stand part of the Bill.

[Lord Owen]

My Lords, I wish to draw attention to Clause 72(1)(b), which refers to,

“a power to investigate on its own initiative whether the National Health Service Commissioning Board or a clinical commissioning group has failed to comply with a requirement imposed by virtue of section 71(1)(c)”—

which we discussed earlier, the provision to,

“not engage in anti-competitive behaviour which is against the interests of people who use such services”.

I had understood that the decision not to have competition as one of the main functions of Monitor was a considered political decision, but the more one looks at Clause 71(1)(c), and now at Clause 72(1)(b), the more one realises that this has been got round, effectively, by ensuring that anti-competitiveness becomes a prime responsibility of Monitor.

There are a number of objections to this. The noble Lord, Lord Whitty, put his finger on it, that a good regulator does not also become a policeman in an anti sense to the people he is trying to regulate. There is a deep question as to whether you really want a situation where Monitor can be set against the National Health Service Commissioning Board and the commissioning groups. I am very doubtful that this is a sensible power to give to Monitor.

I know it is regulating the whole group, but if you look at the way Monitor is approaching its tasks, time and again it is going to be reliant on good will and an atmosphere of trust between Monitor, the NHS Commissioning Board and the commissioning groups, and now there is this question of anti-competitiveness. It is not as if nobody else is going to be looking at anti-competitive behaviour of the National Health Service Commissioning Board. The private sector wants to go into this whole area and will be looking very carefully at whether or not it is being given an even playing field. It will be taking, and threatening to take, the Commissioning Board to law—I am not even raising the issue of EU legislation, but just under British legislation.

I do not think it is fair to argue that there is unlimited freedom for the National Health Service Commissioning Board or the commissioning groups to operate in this area, particularly the board. You are really setting yourself up for a very difficult situation. Also, to do it “on its own initiative”—does that mean Monitor would not consult the board or a clinical commissioning group but just suddenly involve itself in an investigation? I would be grateful if the Minister could give some indication of how he sees this in practice.

Will some guidance be given not to develop an adversarial relationship? It is very easy for animosities to start coming in to this area. As I say, it is not as if it is free from legal challenge. Their actions can be challenged. However, for another NHS body to be able to question the judgment of the Commissioning Board that in this particular case it is best not to put something out to competitive tender, or to make a judgment when it has been done because somebody feels that it is anti-competitive, is a really dangerous power. In the wrong circumstances, where Monitor might be chaired by somebody who is getting into a bad relationship with the NHS Commissioning Board chairman, something not totally unknown in these areas, this is a tool which could be used in a destructive and adversarial fashion.

It would be very helpful, for future occasions, to hear from the Minister as to how he thinks this would actually work out in real life.

[Earl Howe]

The noble Lord, Lord Owen, has caught me napping, so to speak, because I was not expecting that intervention. I would be very happy to write to him to set it out, if he will allow.

Clause 72 agreed.

Clause 73 agreed.

Schedule 9 : Requirements under section 71: undertakings

Amendment 278D

Moved by

[Earl Howe]

278D: Schedule 9, page 368, line 12, leave out from “contains” to the end of line 14 and insert “information which it is satisfied is—
(a) commercial information the disclosure of which would, or might, significantly harm the legitimate business interests of the person to whom it relates;(b) information relating to the private affairs of an individual the disclosure of which would, or might, significantly harm that person’s interests.”

Amendment 278D agreed.

Schedule 9, as amended, agreed.

Clause 74 : Guidance

Amendments 278E and 278F not moved.

Clause 74 agreed.

Clause 75 : Mergers involving NHS foundation trusts

Amendment 278G

Moved by

[Lord Clement-Jones]

278G: Clause 75, page 98, line 25, at end insert—
“( ) The cases referred to in subsections (2) and (3) shall be (in so far they would not otherwise be) “relevant merger situations” for the purposes of Part 3 of the Enterprise Act 2002.”

[Lord Clement-Jones]

My Lords, I shall speak also to Amendment 278H. This is somewhat of a continuation of the debate that we had at the very beginning of the day, and comes back again to the application of EU competition law. However, it also has merit as an amendment which has its own rationale quite apart from avoiding the full rigour of EU competition law.

Under Part 3 of the Enterprise Act, which Clause 75 of the Bill applies to NHS foundation trusts, mergers are normally looked at by the OFT and the Competition Commission. They consider whether the merger would result in anticompetitive outcomes, governed by Sections 35 and 36 of the Act. However, the Secretary of State can intervene under Section 42 of the Act, where he considers that there is one or more relevant public interest consideration specified under Section 58 of the Act. Such considerations are then taken into account in deciding whether the merger should go ahead, even if there are no anticompetitive outcomes.

20:45

At the moment, the specified public interest considerations are, broadly, national security; free and accurate news presentation; media plurality and other media issues, which of course have been quite a hot topic of late; and, finally, the stability of the UK financial system. Financial stability was added in 2008 as a result of the banking crisis. It was inserted to avoid competition being the sole relevant issue to prompt intervention in bank mergers.

Competition in the NHS takes place in the context of high complexity, high levels of need and very serious consequences for failure for patients dependent on services if greater turbulence or churn in service providers results. Therefore, it is appropriate to add an additional public interest consideration to reflect these special circumstances. If protection of the public’s money was deemed justification for additional public health intervention, protection of their health service warrants at least the same level of safeguard. This amendment seeks to ensure that competition is not the sole issue where health body mergers, including those involving NHS foundation trusts, are concerned, but that a new public interest consideration—the promotion of a comprehensive health service in England—can be taken into account by the Secretary of State when a merger is proposed.

Amendment 278G seeks to ensure that anticipated mergers, as well as completed mergers, involving NHS foundation trusts are subject to the provisions of Part 3 of the Enterprise Act 2002 in the same way as for other enterprises. Section 42 of the Act, “Intervention by Secretary of State in certain public interest cases”, will apply to such mergers.

I tabled these amendments as the lesser of two evils. They are intended to mitigate the effects of EU competition law. They are also designed to make sure that foundation trust mergers are not subject to the full rigour of domestic competition law. There was a debate in the other place, which I think we are now allowed to call the House of Commons, on what was then Clause 71, as to whether the OFT or the Competition Commission should have any jurisdiction over mergers of foundation trusts. My honourable friend Mr Burstow explained that the OFT would have discretion not to review mergers where patient benefits outweighed any adverse effects on competition. But that is not explicit.

My honourable friend went on to provide an explanation of the impact of the clause for mergers involving NHS foundation trusts. The clause means that we would have a single regime for merger control which would avoid duplication of resources between Monitor and the OFT. It would also address the current situation whereby the Co-operation and Competition Panel formally assesses all mergers involving acute or foundation trusts where the turnover of the combined entity is more than £70 million.

None of that seems to be enshrined in the Bill. I do not know whether guidance is provided but this seems to be something that requires a considerable act of faith on the part of those looking at these prospective merger proposals. I very much hope that the Minister can give greater clarity than was provided in the House of Commons on this matter. In due course, I hope that the advice that he receives or commissions will also deal with the question as to whether it is safe to have provisions such as this applying directly the provisions of the Enterprise Act are going to be safe for the purposes of EU competition law application. I beg to move.

[Lord Owen]

My Lords, I gave notice that I would raise this matter under whether the clause should stand part of the Bill but it is easier and more convenient to do it on this occasion. It is extremely important that this amendment is given serious study by the Government. I hope that either they will produce their own amendment or that the noble Lord, Lord Clement-Jones, will push this on Report to a vote.

Not to have such a provision is ridiculous, particularly in view of what we heard earlier from the noble Lord, Lord Newton, about how long it is taking to conduct mergers between trust hospitals in other areas. It is an ingenious way of doing it. I was trying to work out a way in which it could be done and rather failed. The wording that the noble Lord has come up with is very sensible and I hope that the Government will give it a fair wind. It is all part of the policy of trying to curb this uninhibited competition in every aspect of this Bill.

[Baroness Greengross]

My Lords, I was recently privileged to be the lead commissioner for the Equality and Human Rights Commission on an inquiry, looking at the human rights of older people in their own homes in need of care and support. This inquiry was a very large one with a lot of evidence, involving 500,000 people in total in this country. We found that half of the people were very happy with the care they received. The other half—250,000 people—were rightly not happy with what had happened. There were awful instances of people being abandoned for 10 or 12 hours, having no social interaction or opportunity to talk or chat. They were left without care for many hours. These are very bad instances of poor care and I really believe that had the staff of the 250,000 people been trained properly in what the tool of human rights can achieve—and if their managers had understood that—a whole lot of these instances of very poor care would not have taken place.

My amendment is designed to ensure some clarity on the application of the Human Rights Act to domiciliary care services commissioned from private and third-sector organisations. This amendment would clarify that providing these services is a public function within the meaning of Section 6(3)(b) of the Human Rights Act 1998. It would bring domiciliary care in line with residential care; similarly, this amendment would confirm that health care services commissioned from private and third-sector organisations fall within the scope of the Human Rights Act. It would clarify the extent of the public sector equality duty because the definition of public function under the Human Rights Act also determines the definition of public function under Section 150(5) of the Equality Act 2010 for the purposes of the public sector equality duty. My amendment also uses wording which is consistent with Schedule 1 to the Health and Social Care Act 2008.

In 2008, Parliament introduced amendments to the Health and Social Care Bill—now the Act—to overturn previous case law and ensure that private and third-sector care homes were defined as carrying out a public function. We were delighted that that applied and that they therefore came under the scope of the Human Rights Act. This received cross-party support and was the result of a long campaign by the EHRC and also the Joint Committee on Human Rights. The campaign aimed to ensure that organisations receiving public money were subject to proper regulation.

We also know that a similar problem is likely to be the case in healthcare if the care is commissioned by the health service to private or third-sector organisations. It is very important to make this clear because the fact that private and third-sector providers operate at the moment outside the scope of the Human Rights Act undermines, or threatens to undermine, the pioneering work of the Department of Health itself in promoting its Dignity in Care campaign. Further, the Health Service Ombudsman has recently documented 10 investigations into NHS care. All of that demonstrates that we need clarity in order to get this right and make sure that people are protected. We must be certain that people are not subjected to breaches of human rights which no one can do much about in the present situation.

I have cut short what I was going to say because it is late, but I do want to say that support for this amendment will clarify beyond doubt the fact that a person commissioned to provide home-based social care or healthcare is, in providing that sort of service, performing a public function within the meaning of the Human Rights Act and the Equality Act. I hope that the Minister will find it possible to support the amendment.

[Lord Low of Dalston]

My Lords, I have added my name to Amendment 295G, to which my noble friend Lady Greengross has just spoken, and I strongly support it. As she made clear, it would put an extremely important point beyond doubt. I want briefly to underline three key points.

First, it would remove a major ambiguity about the scope of human rights legislation in relation to health and social care, and with it persisting doubt about the rights of those in receipt of health and social care services. Despite the then Government’s intention that responsibility under the Human Rights Act should follow the outsourcing of state functions, it was generally understood—this was confirmed in the case of YL against Birmingham City Council—that the Human Rights Act covered only residential care provided by local authorities. Private and voluntary organisations that provided care home services under a contract with a local authority were not considered to be performing public functions under the Human Rights Act because there was only a contractual relationship between the parties, and so were not covered. This loophole, as my noble friend Lady Greengross has explained, was closed by Section 145 of the Health and Social Care Act 2008, but only for residential care services. It did not apply to contracted-out social care services provided in people’s homes. The purpose of the amendment is therefore to clarify that the Human Rights Act extends to services provided in people’s homes when provided under contract to a public authority and would remove all ambiguity as to whether the Human Rights Act applies to such services when commissioned from private and voluntary organisations.

As my noble friend has explained, a similar issue arises in relation to health services, especially given the significant increase in the commissioning of NHS services from private and voluntary providers envisaged by the present Bill. Amendment 295G would also place beyond doubt that private and voluntary providers of healthcare services fall within the scope of the Human Rights Act and the public sector equality duty, putting them on a similar footing to providers of residential social care. The amendment would therefore make it clear that those who receive publicly funded health and home care services provided by the private and voluntary sector are guaranteed the same levels of protection and rights to redress as those who receive services provided directly by the state, placing them on the same statutory footing as those who receive residential care services commissioned from the private and voluntary sector.

This is not just a matter of academic importance—the removal of a minor technical anomaly. Quite apart from the fact that it puts beyond doubt that a significant swathe of health and social care provision is within the scope of the Human Rights Act, local authority provision of home care services has been on a downward trend for the past couple of decades, with the result that the state now directly provides only 16 per cent of publicly funded services. This means that 84 per cent of such services are provided by the private and voluntary sector. This figure was less than 5 per cent in 1993. Indeed, the proportion of care delivered by the private and voluntary sector has gone up from 56 per cent to 84 per cent in the last 10 years. This means that the possibility that people in receipt of health and social care services may be deprived of the protection of the Human Rights Act has moved from being an issue at the margins of the field of health and social care to being one of central—indeed, dominating—importance.

21:00

A second reason why this is an issue of overriding importance is that we now know that significant numbers of people are the victims of human rights violations on a daily basis. A seemingly endless sequence of reports—from the Health Service Ombudsman, the Care Quality Commission, the Patients Association and the Equality and Human Rights Commission—shows that the rights of older and disabled people in health and social care settings are regularly ignored or wilfully abused. According to the British Institute of Human Rights, these reports reveal how some of the most vulnerable people in our society are treated in inhuman and degrading ways, with neglect and carelessness, and how they experience,

“Lack of privacy, dignity and confidentiality”,

are left without access to food and water, and are bullied and patronised. These incidents are not simply isolated or exceptional cases.

I welcome the statement in the Explanatory Notes to the Bill that contracted-out healthcare services are covered by the Human Rights Act, and the Minister’s assurances in this regard would be equally welcome. But these do not have the force of law. Moreover, the Equality and Human Rights Commission does not believe that case law supports this view. Nor should we have to rely on an elderly or disabled service user having to incur the hazard and expense of going to court to vindicate their rights for us to clarify the law. At all events, it is not the same as having it in black and white in the Bill, so I very much hope that the Minister will respond sympathetically to this important amendment.

[Baroness Williams of Crosby]

My Lords, I strongly support the two very powerful and convincing speeches by the noble Baroness, Lady Greengross, and the noble Lord, Lord Low.

I add only a couple of points. First, it is extremely important for the integration of social care from local authorities with health service healthcare to have a similar regime of rules and standings applying to both. All of us in this House have said repeatedly how much we believe in the integration of these two attempts at providing proper care for older people, chronically ill people and disabled people. It is therefore important that we set a standard which is common between the two. That is the first reason why we should all strongly support the amendment that is before us.

The second reason, from my point of view, is that I very much like the phrases used in the amendment, which state in effect that this kind of service is a public service. It is, in a way, ennobled by the fact that it is a service to the public generally, regardless of whether it is provided by the voluntary, independent or NHS sector. That is also very important.

The third point I briefly make is that it has implications which we have to face up to. There is no time to discuss this tonight. But if we actually want there to be a huge improvement in the relationship between the staff of health service and local authority care organisations, whether voluntary, private or NHS, and the elderly and vulnerable people whom we are talking about—and we do want that—then, as this quite clearly implies, the staff themselves must be treated well. It is no good having profoundly exploited, overused, overcriticised staff and expecting them to live up to the great principles of the Human Rights Act. To my mind the importance of this amendment is not just that it passes. It has clear implications for the training, education, support and attitude towards NHS staff, who too often are heavily criticised for what is a difficult yet often extraordinarily well conducted job. In that spirit I strongly support the amendment of the noble Baroness, Lady Greengross, and the noble Lord, Lord Low.

[Lord Warner]

My Lords, I also support the amendment of the noble Baroness, Lady Greengross. I do so from the perspective of someone who as a special adviser was involved in the framing of the Human Rights Act in 1998. At that time, much of the thinking in the devising of that Act was on the basis that publicly funded services were pretty much synonymous with public delivery of those services. Much of the language around public functions and public authorities was based on that assumption. In fact, that was already out of date at that particular time. Since then, we have never really put this point beyond doubt in legislation. It is timely to do so now, when so many of the services in people’s own homes are contracted out by public bodies to voluntary and private providers. It is a lacuna in the arrangements, despite some of the assurances given by Governments of both persuasions since the Human Rights Act 1998.

[Baroness Wheeler]

I also support Amendment 295G from the noble Baroness, Lady Greengross, replacing the similar amendment from the noble Baroness and the noble Lord, Lord Low, both of whom have argued the case strongly and convincingly on this matter.

The importance of addressing current loopholes in the application of the Human Rights Act to publicly funded healthcare and home care services is underlined by the scale of the legal anomaly that the amendment seeks to address. As we have heard, almost 500,000 older people receive essential care in their own homes provided by the local authority. Some 84 per cent of them lack the protection of the Human Rights Act because their care is provided by private or third sector organisations, or independently by 150,000 self-employed personal assistants who care for people in their homes through the application of personal care budgets or direct payments.

The noble Baroness’s own work in highlighting the inadequacy of at least 50 per cent of the home personal care received by older people as part of her recent inquiry underlined the prevalence of human rights abuses in home care settings. The report makes painful reading for all who want dignified and appropriate standards of care for older people in their homes. The stark reality is that, if their human rights are violated through inappropriate standards of care, they at present have no direct legal redress against their care providers.

Of course, we need to make the caveat that good practice is often exemplified by the private and voluntary sector. As a carer, the care provided by the private sector agency to the person I care for at home is of good quality and the care support workers are committed and dedicated professionals, despite long hours and low pay. Their care for the person that I care for is not covered by the Human Rights Act but would be if he were in residential care. That is a serious anomaly. I hope that the Minister will be able to reassure us that the Government recognise that this is a major problem and will take the opportunity presented in the Bill to address the matter. With an increasing number of people receiving home care from a private or voluntary sector organisation rather than directly from their local authority, there is a vital need for certainty around the application of the Human Rights Act to these care providers.

I was going to comment on four other amendments but none of them was spoken to so I will leave it at that.

[Baroness Northover]

My Lords, we have two diverse areas in this particular group. Clause 75 would consolidate the oversight of mergers involving NHS foundation trusts under the UK general merger control regime operated by the Office of Fair Trading’s Competition Commission. That is the area addressed by my noble friend Lord Clement-Jones. We argue that the approach that we are taking here would have a number of benefits.

First, it would eliminate the risk of double jeopardy for NHS foundation trusts. Uncertainty currently exists as to when and where the Enterprise Act 2002 would apply to mergers of activities involving foundation trusts. As a result, under the current arrangements for review of mergers involving foundation trusts by the Co-operation and Competition Panel, there is always potential risk of duplication or double jeopardy by both the OFT and the Co-operation and Competition Panel. The Bill proposes to consolidate oversight of foundation trust mergers under the OFT. It would already seem likely that most mergers between foundation trusts would meet the relevant thresholds, eliminating the uncertainty with the current approach. We therefore sympathise with my noble friend Lord Clement-Jones’s amendment but feel that it would not be required as foundation trusts would be captured.

Secondly, the OFT would provide effective, light-touch regulation regarding mergers. This gives confidence to providers that might be considering a merger and ensures that mergers go ahead where they are in patients’ best interests and that the process is not unduly delayed by bureaucratic approvals or the risk of political interference. The evidence demonstrates that this approach does not result in excessive intervention, as the Enterprise Act sets a high threshold for looking at the merging of activities.

Thirdly, the approach would avoid the duplication of specialist resources between the OFT and Monitor, ensuring better value for money. Mergers are a specialist area. It therefore seems a far better use of resources to maintain the responsibility and expertise within the OFT and the Competition Commission rather than resource a further sector-specific body. However, we appreciate and sympathise with the argument put forward that Monitor, as the dedicated health regulator, will have a valuable contribution to make in the review of foundation trust mergers.

As part of any merger investigation, the OFT and the Competition Commission would engage with Monitor as the sector regulator in order better to understand the services involved. They would obtain Monitor’s view on how a merger would affect services and whether it would bring benefits for patients. The OFT would need to consider whether the benefits of higher quality, a greater choice of goods or services and greater innovation outweighed the negative impacts of mergers. These views would then be considered in the analysis, along with other evidence. We want to work with noble Lords to see how we can ensure that Monitor’s role regarding mergers is adequately reflected in the Bill.

My noble friend Lord Clement-Jones was asking about thresholds. The thresholds for merger reviews are set out in the Enterprise Act. On this basis, the OFT would not generally review mergers involving a turnover of less than £70 million. This contrasts with the approach of the Co-operation and Competition Panel, which operates at significantly lower thresholds.

As my noble friend Lord Howe said in an earlier part of this debate, the operation or otherwise of EU competition law is something that he will take back and consider further in the light of what my noble friend Lord Clement-Jones said. At this stage, therefore, I will not go into that area further, but I refer the noble Lord, Lord Owen, to those discussions and the fruits of those discussions.

We move on to a separate area raised by the noble Baroness, Lady Greengross, and supported by the noble Lord, Lord Low. The issue raised by Amendments 280 and 295G is one in which I know the Equality and Human Rights Commission is keenly interested, and the Government have carefully considered it in the preparation of the Bill. The issue has been raised with us not only by the EHRC but by the Joint Committee on Human Rights. Noble Lords are right: these are extremely important issues.

The department has set out publicly and in detail the reasons for its firm view that private providers are now, and will be in future, exercising public functions when they provide NHS or public health services. The effect of this is that they are bound by the relevant duties in the Human Rights Act and the Equality Act when they provide those services. As the noble Lord, Lord Low, pointed out, these reasons can be found at paragraphs 1534 to 1537 of the Explanatory Notes and in our response to the letter from the Joint Committee on Human Rights to the Secretary of State, which is available on its website.

In summary, our view is based on the following arguments. NHS and public health services will continue to be commissioned by statutory bodies subject to the framework in the 2006 Act. The nature of the services provided will be determined by those commissioning bodies in the exercise of their statutory functions, and is not affected by the status of the provider. The services provided pursuant to those arrangements will be funded by the Secretary of State, the NHS body or the local authority concerned. There will be no contract between the patient and the provider other than where direct payments are concerned. The relevant provisions of the 2006 Act will continue to make no distinction between private and NHS providers.

21:15

However, the question is raised of why it is not explicit in the Bill that private providers are exercising public functions. There are three good reasons why not. First, as I explained, the Government consider that the existing legal position is sufficiently clear from the case law and that all providers are now, and will be in future, covered by the Human Rights Act and the Equality Act. This was a long-held public position of the last Government as well and we discussed this in relation to the Equality Act, which the noble Baroness, Lady Thornton, will no doubt remember. Our view is that recent court judgments further support that position.

Secondly, we believe that this position is applied, or presumed to apply, in the NHS at present, and we would not wish to create doubt about the current legal system by introducing a specific provision. Our view was set out in the judicial review proceedings in relation to the transfer of NHS community health services to a social enterprise company, and was the basis for the withdrawal of the claim in those proceedings. Thirdly, the department would not wish to cast doubt on other areas beyond health where public services are provided by private bodies by making express reference in this area. Each time the outcome of a legal test is specified in the legislation it weakens the general applicability of that test. The duties that fall automatically on private providers of NHS services can be and are intended to be supported by mandatory standard terms in NHS commissioning contracts. These terms will assist private providers to meet the obligations imposed on them by legislation.

The noble Baroness raised the issue of social care matters, and when something is funded out of public money, it seems to me that the Equality Act would bear upon that. However, I take very much what she said about exceptions to this. To clarify this further, I would like to write to noble Lords on those issues. In the light of that, perhaps noble Lords would be willing not to press their amendments.

[Lord Clement-Jones]

My Lords, I thank the Minister for a totally convincing response. The trouble is that it was a response to an amendment that I did not put, although I could have. The amendment which was responded to would have eliminated the OFT from consideration of FT mergers. My amendment was about inserting an additional ground for consideration by the OFT or the Competition Commission, if it went as far as that, so that the public interest was taken into account, as it is in bank mergers nowadays.

I thought that the Minister’s arguments about why the OFT should be involved were wholly convincing—eliminating double jeopardy with the Co-operation and Competition Panel, providing confidence to providers and so on. Mergers are a specialist area. I am sure that the OFT is great at merger consideration. I deliberately did not put down an amendment about the OFT being eliminated from FT mergers—that was the House of Commons amendment to which I referred in the course of my speech.

The noble Baroness’s assertion that the OFT could ensure that patients’ best interests are looked after is precisely my concern. If ordinary merger principles are followed in terms of the OFT looking at the merging of two foundation trusts, I do not believe that it is in law able to take a very close view of what genuinely is in the public interest in terms of provision of a comprehensive National Health Service. I am delighted that the noble Lord, Lord Owen, thought that that was ingenious. Certainly, it seemed to be the logical way to try to get some sense into these foundation trust mergers. Therefore, I very much hope that—

[Baroness Northover]

I do not wish to interrupt my noble friend’s flow. If I have not covered all the areas that he wished to flag up, I will indeed write. However, I made the point that the OFT needed to consider the benefits and the negative sides of mergers in terms of how they would impact on patients. I hope that my noble friend was satisfied at least on that point, even if the leapfrogging and slipping of various amendments from the agenda this evening has tripped me up at this late hour.

[Lord Clement-Jones]

My Lords, we could all be tripped up at this late hour, as, indeed, I was earlier. However, it is a question of what it is possible for the body that is judging the merits of a merger in competition terms to take into account. The reason for including the public interest considerations in the amendment was that the OFT would be extremely limited in the patient considerations that it would be able to take into account. The noble Baroness was pretty sanguine about that. There is still further work to be done in that respect and further consideration needs to be given to the matter. It seems to me that, if nothing else, the question of whether one’s local trust and local foundation hospital will survive as entities is of huge importance to local people and is something that needs to be judged properly with their benefit in mind when the time comes.

Unless I divine that my noble friend is going to give me further guidance or inspiration, I beg leave to withdraw the amendment.

Amendment 278G withdrawn.

Clause 75 agreed.

Amendment 278H not moved.

Clause 76 : Reviews by the Competition Commission

Amendments 278J and 278K not moved.

Clause 76 agreed.

Clause 77 agreed.

Clause 78 : Reviews under section 76: considerations relevant to publication

Amendment 278L

Moved by

[Earl Howe]

278L: Clause 78, page 101, line 10, after “considers” insert “would or”

Amendment 278L agreed.

Clause 78, as amended, agreed.

Clause 79 agreed.

Clause 80 : Requirement for health service providers to be licensed

Amendment 279 had been withdrawn from the Marshalled List.

Amendment 279A not moved.

Clause 80 agreed.

Amendment 280 had been retabled as Amendment 295G.

Clause 81 agreed.

Clause 82 : Exemption regulations

Amendment 280A

Moved by

[Earl Howe]

280A: Clause 82, page 102, line 16, leave out first “a” and insert “any”

Amendment 280A agreed.

Amendments 281and 281A not moved.

Amendment 281B

Moved by

[Earl Howe]

281B: Clause 82, page 102, line 41, leave out subsection (8) and insert—
“( ) Where an exemption is granted the Secretary of State—
(a) if the exemption is granted to a prescribed person, must give notice of it to that person, and(b) must publish the exemption.”

Amendment 281B agreed.

Clause 82, as amended, agreed.

Clause 83 : Exemption regulations: supplementary

Amendment 282 not moved.

Clause 83 agreed.

Clause 84 agreed.

Clause 85 : Licensing criteria

Amendment 282ZA

Moved by

[Baroness Thornton]

282ZA: Clause 85, page 104, line 11, at end insert—
“( ) Such criteria must include the requirement, at regular intervals, for all licensees to supply Monitor with financial information, in the interests of meeting standards of financial stability and probity.”

[Baroness Thornton]

My Lords, I start by congratulating noble Lords on making it through this day of debate. We are ending the day with this large group on failure, and the smaller group on pre-failure, tabled by my noble friend, in a moment or so.

In the NHS of 20 years ago, the trusts that got into problems were helped, although the help may have been brutal, with chief executives removed or moved on and nasty phone calls to trust chairs. The system gave powers of intervention from the Secretary of State through local strategic bodies, as they became. Financial help was grudgingly provided, usually for a recovery plan, sometimes delivered and sometimes not. The relationships were not defined by legal contract, and NHS contracts could not be enforced in the courts, so there was a system of arbitration within the NHS.

Those days have gone, and we now have an NHS as a network of many sub-organisations, some with linkages through real contracts. With FTs came the idea of a real contract, although in reality, of course, disputes are still sorted out long before reaching a court. We know that services, and even whole organisations, can fail as the impact of demographic, technological and behavioural changes shape our NHS. In reality, we have to deal with trusts that get into severe difficulties and may be technically insolvent, at which point a real organisation may not be allowed to trade. Then we have to accept that a whole trust might need to be shut down. Indeed, how should that be done? How should the continuity of services be maintained, how should the staff be dealt with, and how should the assets, most of which are owned by the state, be dealt with?

We know that this is the tail end of a bigger and important issue of reconfiguration. So how do we ensure that we can adapt services that show poor quality or that need to be delivered in different ways in different settings? Maybe, as with an increasing array of subspecialities, we have to accept regionalisation. Maybe we need network solutions. Is the market the way to do this? In other markets, innovations lead to changes in demand, and the organisations that cannot adapt close down. Is that what we want for our NHS?

Those who might be so inclined might like to wander through the delicate prose of Simon Burns MP in Committee in the Commons. He loves failure. The idea that you have competition is inextricably linked to having failure. It facilitates the market, brings in the innovators and drives out the inefficient. He believes that failure is a measure of market success, not failure.

It is true that in government we introduced a failure regime as we came to realise that, even after all the support and changes of management team, there may be organisations that are simply not viable. However, it is not so much that they were not viable; it is what that means, that continuing to support them is not giving value for the NHS, however much we adjust that value to include non-financial aspects. Indeed, we also wanted to bring out into the light the murky transactions used within the NHS to support organisations, through means such as brokerage loans. The tendency was for bad performers to be bailed out by the good—the opposite of a reforming system. The way NHS accounts were done also had to be changed to make this kind of smoke-and-mirrors accounting more open.

Issues around failure are more likely to operate at service level than at a whole-organisation level. To take a recent example, a well known and respected financial trust is having issues around its 18-week performance. Its general quality is good but it has signalled that it needs help, and it is indeed getting it from a Department of Health team. The question that we need to ask is: would this kind of support be available in the new world? Presumably, it would not; and even if it were, might that help be deemed anticompetitive? Would that good trust be allowed to fail? The link here to reconfiguration is inescapable.

We know and even admit in our rational moments that reconfiguration on a grand scale is what the Nicholson challenge is really about. The need to move services into community settings and to reduce dependency on the district general hospital model is widely recognised. However, we also know that reconfiguration is beset with political problems. In the run-up to the election, about one-third of constituencies had some kind of campaign to keep open a hospital, a surgery or whatever. One felt sometimes that even if there was no threat, one was invented. We had Andrew Lansley and David Cameron claiming that they would prevent any closures. I think that the Government are learning the hard way that promises made in opposition, especially during election campaigns, may turn out to be millstones when the real burden of decision-making passes to them. The examples of broken promises will continue as reconfigurations gather apace.

This is the issue to which our suspicions should be addressed. Is it part of the rationale to put the blame for nasty politically damaging decisions on others? This abdication of responsibility is characterised by the way that Ministers are trying to give away the key roles of the Secretary of State. This is in part a failure of process but is also a failure of leadership. The leadership should be accountable for delivering answers and necessary changes within a reasonable timescale. If we get reconfiguration right, the failure regime would look less necessary. This is far better for patients than the trauma of seeing their local facilities under constant threat or even being closed down. There are examples of where this has been done, and done well—and we need more of them.

In Committee in the Commons, the Conservatives in particular appeared to believe that these unpopular local changes would be less likely under the Bill—if changes in organisations are branded as failures, then those MPs would be well clear of any responsibility. In fact, we have years of evidence because every reconfiguration has to go through a clinical and management review at an early stage—so we know what works and what does not. We could use that evidence, rely on a robust process and stop opportunist politics. However, we know that the market will not bring about these changes any time soon.

In our NHS, the best interests of patients are served by good information that allows early intervention to improve failing services. CQC inspections are also of value in raising the prospect that poor services will be detected early. If you rely on competition, how long does it take for the public to react to the information that a service is bad and for them to choose to go elsewhere, or for that to impact on the finances to the extent that the service is closed down? In our view, using choice and competition to detect and close poor services takes too long and the cost for patients is indeed too high. That is what this suite of amendments aims to tackle.

The amendment sets licensing criteria to ensure that private providers meet standards around financial stability and probity. We need to supply regular financial information for the good providers. This is, in other words, a sort of Southern Cross test. Amendment 249MBA brings into effect the remaining inactivated arrangements for trust special administration from the 2009 Act, as amendments to the 2006 Act. I remember those well. Amendment 353ZZA is a commencement provision for that. Amendment 295 states that health special administrators must exercise their functions to “protect the interests of patients”. As to the Questions that Clauses 125 to 130 stand part of the Bill, this would create a regime for private companies that provide services to the NHS to have special procedures that augment the normal company provisions under the Insolvency Act. It arguably implies that we need stronger protection from the risk of private provider failure. It should be for the commissioners to factor in the risk of using private providers and contract to ensure that arrangements are in place for contingencies. The licensing regime needs to be tough enough to prevent Southern Cross-type failure through active monitoring.

Risk pooling is what the NHS does. We do not need new risk pools, with the costs that they involve. That is why we think that the clauses should be deleted. Clauses 131 to 143 inclusive allow Monitor to set up the regime to provide special administration for both private and public providers to levy charges on providers and commissioners and to manage the finances of a risk pool.

We argue that none of that is required; it just adds extra complexity and cost. Clause 170 is about FTs and failure. The clause removes the ability to deauthorise a foundation trust. We argue that that power should be retained, along with the recognition that some NHS provider trusts may need to be directly managed under the powers of the Secretary of State.

The new clause in Amendment 303ZA makes clear that the initial effort, in the context of failure, should be remedial action rather than going straight for a failure regime. My noble friend has a similar idea behind his amendment. On Amendment 303ZB, the new clause is intended to reinforce and strengthen how reconfiguration is carried out. Under Amendment 303A to Section 65A of the 2006 Act, bodies to which trusts’ special administration regimes apply should remain, so that the special administration regime applies to FTs and NHS trusts.

Again, we are shortening the Bill and making it simpler and probably taking out quite a lot of cost. I beg to move.

[Baroness Finlay of Llandaff]

My Lords, I have several amendments in this group. I shall start with Amendment 294N, which is a probing amendment. As far as I have understood it, social enterprise bodies which are NHS bodies in all but name are coming into existence. They have evolved from PCTs under the transforming community services programme. They will be subject to special health administration arrangements. I ask the Government to confirm whether the social enterprises that come under the health special administration arrangements are coming under arrangements based on insolvency law and that, as such, that allows assets to be transferred outside the NHS and the redundancy payments are not guaranteed.

Amendment 295CA is intended to ensure that clinical commissioning groups are consulted before the Secretary of State makes regulations that allow Monitor to impose charges on commissioners. The charge imposed can include a levy to fund Monitor’s functions that have to be invoked in the event of failures. Amendment 295CB is intended to ensure that when setting such a levy, Monitor takes into account the impact of the levy on the financial stability of the organisation, especially a financial trust that is already in distress or failing. Amendment 304A requires that the commissioners are considered when the services of a failed financial trust are considered by Monitor and should be involved in the decision as to which should be continued, and that such services must include some continuation of education and training, because in planning for the future workforce, if a whole lot of posts were suddenly lost, it would destabilise the workforce planning. That is in addition to considerations such as the service provision and issues of equity and access. That becomes particularly important because if you do not have the staff with the appropriate training, you cannot, in the long term, provide the service anyway.

Amendment 304B is intended to ensure that commissioners are involved in the board's role in agreeing arrangements to secure continued access to NHS services will be achieved. Will that include the board’s selecting which commissioner would become lead commissioner for the process during a failure?

[Earl Howe]

My Lords, this has been an excellent short debate on a large number of amendments, but focusing on a critical issue, which is what should happen to providers when they get into significant difficulty. While the debate has focused on the role of Monitor, it is the Government’s firm view that commissioners should lead the process of ensuring there are services available to meet the needs of local communities.

The Government brought forward amendments in another place to improve our proposals for ensuring continuity of services. These included removing provisions to apply an insolvency-based approach to foundation trusts in the form of health special administration. If a provider of NHS services becomes unsustainable, there has to be a legal framework that provides effective safeguards to protect patients’ and taxpayers’ interests. We have therefore taken an evolutionary approach in developing proposals to ensure sustainable local services. The Bill sets out a clear framework to achieve this.

We will maintain the existing regime for foundation trusts but we will improve it significantly. First, we have removed the need to de-authorise a foundation trust. This is because the Government are committed to all NHS trusts becoming foundation trusts, so that all NHS providers have the freedom to innovate and drive sustainable improvements in quality and efficiency, and are accountable locally. I am aware that the noble Baroness, Lady Thornton, has tabled amendments which relate to the issue of de-authorisation and we will discuss those when we reach the appropriate clause.

Further, the Government will also ensure taxpayers’ interests would be protected by securing solutions that make best use of available NHS resources. We do not want patients to use, or taxpayers to subsidise, poor quality, inefficient services or providers. Instead we will ensure an end to the culture of hidden bailouts. That is why Clauses 131 to 143 set out provisions for a transparent financing mechanism to fund continuity of services during a period of administration. In addition, I reassure noble Lords that the existing regime for NHS trusts, as distinct from foundation trusts, set out in the 2009 Act, would remain in place. Through a separate health special administration regime, legislation for the first time will also extend equivalent protection to patients who use NHS services provided by a company. Provisions set out in Clauses 125 to 130 would achieve this.

I turn to Amendment 282ZA. The Bill gives Monitor broad powers to collect financial information for the purposes of monitoring providers’ financial stability. Monitor will be gathering a range of information, including financial, to enable it to undertake an ongoing assessment of risk. Monitor would also be able to intervene in order to support a provider to recover and to prevent failure where possible.

I understand that some noble Lords are concerned about the range of interventions available when a provider becomes distressed. Providers themselves can take a range of actions, including improving the management capability and expertise that they have. Commissioners are responsible for securing access to local services and they can use contractual levers to respond to poor performance and prevent provider failure. Monitor would intervene on a provider on the basis of a predefined distress test to prevent failure where possible. The CQC would monitor providers’ compliance against patient safety and quality requirements.

This locally led approach is especially appropriate where there is a pressing need for services to be reconfigured to ensure sustainability. I am sure that noble Lords will agree that a reconfiguration is more likely to succeed if it is based on close partnership working between commissioners, providers, local authorities and their local communities.

21:45

Turning to Amendment 303ZA, I strongly agree with the principle of taking proactive steps to address service configurations that may become unsustainable. Indeed, our proposals are specifically designed to strengthen incentives on commissioners and providers to do this. However, I would not support a centralised approach, as envisaged by this amendment, which would move decisions right away from local communities. Our vision is that any changes to services should begin and end with what patients and local communities need. The key to successful service change is ensuring engagement with local communities and stakeholders in order to secure as broad support as possible for what can obviously be difficult decisions. I believe that our proposals will provide an effective and efficient framework that will protect patients’ interests and place a clear responsibility on the provider to turn itself around, with access to support and regulatory interventions where they are needed most.

The noble Baroness, Lady Thornton, questioned the need for a risk pool. In our opinion, the risk pool is an important feature of the continuity of the NHS services framework. It provides a transparent funding mechanism for providers in administration in order to secure essential NHS services. The pool will be funded from risk-based levies on providers and charges on commissioners, and this mechanism will create important incentives on both providers and commissioners of NHS services. Providers of NHS services would be placed under financial incentives to take action to reduce the risk of becoming unsustainable. For example, providers could look to deliver their services in a more efficient configuration. Commissioners would be incentivised to commission services in a way that would reduce the impact on patients of a particular provider becoming unsustainable. This could be achieved, for example, by developing the market to ensure that there were alternative providers of NHS services where possible, and obviously where this would provide value for money.

In contrast, a centrally held fund would effectively be a tax on NHS allocations, and it would fail to strengthen incentives on providers and commissioners. Therefore, we believe that the benefits of a risk pool far outweigh any additional transaction costs.

It is also worth stating that Monitor would be required to run a public consultation on the methodology for the provider levy and publish an impact assessment. This would ensure that Monitor’s proposals were effective and proportionate.

I turn to the amendments of the noble Baroness, Lady Finlay, and shall deal first with Amendment 294N. I should like to clarify for her that health special administration will apply only to companies that are subject to certain licensing conditions. Separately, trust special administration applies to NHS trusts and NHS foundation trusts. Therefore, there are two regimes. When a provider becomes unsustainable, the first concern should be the protection of patients. The amendment risks creating a class of company outside the scope of health special administration which would also not be covered by the trust special administration regime.

The noble Baroness also spoke to Amendment 295CA, and I listened with attention to her. I can now give a commitment that the department will run a full public consultation on the regulations that will provide commissioner charges. This consultation will allow all interested parties the opportunity to contribute to the policy development.

Amendment 295CB is unnecessary, as the Bill already requires Monitor to have regard to the impact that the provider levy will have on providers’ financial sustainability through the duty on Monitor to undertake an impact assessment on anything that it proposes will be likely to have a significant impact on providers.

As regards Amendment 304A, I have already committed to considering education and training, and we will return on Report to clarify this issue.

[Baroness Thornton]

Perhaps I may ask for clarification. The noble Earl refers to providers all the way through. Can we be completely clear that this means all providers —that is, private sector providers, NHS providers, social enterprises and charity providers of health services? Do all these levies and fines apply to them?

[Earl Howe]

My Lords, when I refer to providers of NHS services, I am referring to NHS providers and non-NHS providers. It is to be determined who will contribute to the levy. That is being worked through and I am sure that the noble Baroness will have noticed from the document that we published the other day that this work is ongoing. We will make further announcements about that in due course.

On Amendment 304B, I say that the board should consult the relevant commissioners but it must make the decision itself, which is what the Bill provides for. The noble Baroness, Lady Finlay, asked whether social enterprises will be within the scope of the health special administration regime. Social enterprises are companies so they will be within the scope of health special administration. It is right that they are not treated as NHS bodies as when assets are transferred from PCTs robust rules apply, as I have set out in detail in previous debates. She asked whether the NHS Commissioning Board would nominate a lead commissioner if a provider becomes unsustainable. The answer is yes.

I hope that noble Lords will find that series of explanations helpful and I ask the noble Baroness, Lady Thornton, to withdraw the amendment.

[Baroness Finlay of Llandaff]

Before we finish this set of amendments, I want to mention a particular group. I am grateful to the noble Baroness, Lady Thornton, for her intervention, as I want to refer to charitable sector providers who are finding fundraising particularly difficult now. They are beginning to be hit by the downturn in the economy and the downturn in giving, and there is a real risk that some of the charitable sector providers will find themselves in difficulty. If a levy is imposed on them as well, in terms of their registration with Monitor, that may tip them over. My request is that, in looking at all this, there will be separate consideration of the charitable sector providers from other providers.

[Earl Howe]

I am grateful to the noble Baroness and will take that point away.

[Baroness Thornton]

I thank noble Lords. I will take only a moment, but we will need to return to this. First, this was not looked at properly in the Commons and I can see that that is the case. Secondly, I recall that the chief executive David Nicholson disagrees. He said that he advocates de-authorisation. I believe that the pooling and the levy are bureaucratic and expensive and that the noble Earl does not understand that reconfigurations will not be led locally. I do not think that the Bill adequately approaches how we will manage reconfigurations. To be kind one has to say that the work is ongoing; I am not quite saying that the department and the Bill team are making this up as they go along, but it is definitely an area to which we will need to return on Report. I beg leave to withdraw the amendment.

Amendment 282ZA withdrawn.

Amendments 282ZB and 282ZC not moved.

Clauses 85 agreed.

Clauses 86 and 87 agreed.

Clause 88 : Revocation of Licence

Amendment 282A not moved.

Clause 88 agreed.

Clauses 89 to 92 agreed.

Clause 93 : Standard conditions

Amendments 282B to 284 not moved.

Amendments 284A to 284C

Moved by

[Earl Howe]

284A: Clause 93, page 107, line 13, leave out “National Health Service Commissioning Board” and insert “NHS Commissioning Board Authority”

284B: Clause 93, page 107, line 14, leave out “clinical commissioning group” and insert “Primary Care Trust”

284C: Clause 93, page 107, line 15, leave out “and its Healthwatch England committee”

Amendments 284A to 284C agreed.

Amendments 285 and 285ZA not moved.

Amendment 285A

Moved by

[Earl Howe]

285A: Clause 93, page 107, line 22, at end insert—
“( ) If, at the time Monitor discharges the function under subsection (7), the day specified by the Secretary of State for the purposes of section 14A of the National Health Service Act 2006 has passed or section 6 or 178 has come into force—
(a) in the case of section 14A of the National Health Service Act 2006, the reference in subsection (8)(c) to every Primary Care Trust is to be read as a reference to every clinical commissioning group;(b) in the case of section 6, the reference in subsection (8)(b) to the NHS Commissioning Board Authority is to be read as a reference to the National Health Service Commissioning Board;(c) in the case of section 178, the reference in subsection (8)(d) to the Care Quality Commission is to be read as including a reference to its HealthWatch England committee.”

Amendment 285A agreed.

Clause 93, as amended, agreed.

Clause 94 : Special conditions

Amendment 286 not moved.

Clause 94 agreed.

Clause 95 : Limits on Monitor’s functions to set or modify licence conditions

Amendments 286ZA and 286A not moved.

Amendment 286B

Moved by

[Earl Howe]

286B: Clause 95, page 108, line 21, at end insert “provided for the purposes of the NHS”

Amendment 286B agreed.

Amendments 287 to 287ZB not moved.

Clause 95, as amended, agreed.

Clause 96 : Conditions: supplementary

Amendments 287A to 287BA not moved.

Amendments 287C and 287D

Moved by

[Earl Howe]

287C: Clause 96, page 109, line 38, after “NHS” insert “in order to ensure the continued provision of one or more of the health care services that the licence holder provides for those purposes”

287D: Clause 96, page 109, line 40, at end insert “in order to ensure the continued provision of one or more of the health care services that the licence holder provides for those purposes”

Amendments 287C and 287D agreed.

Amendments 287E to 287EB not moved.

Clause 96, as amended, agreed.

Clause 97 : Conditions relating to the continuation of the provision of services etc.

Amendment 287F not moved.

Clause 97 agreed.

Clause 98 : Modification of standard conditions

Amendments 288 to 288ZB not moved.

Clause 98 agreed.

Clause 99 agreed.

Schedule 10 : References by Monitor to the Competition Commission

Amendments 288A to 288C

Moved by

[Earl Howe]

288A: Schedule 10, page 372, line 26, after “are” insert “not”

288B: Schedule 10, page 373, line 26, after “considers” insert “would or”

288C: Schedule 10, page 373, line 29, after “considers” insert “would or”

Amendments 288A to 288C agreed.

Schedule 10, as amended, agreed.

Clause 100 agreed.

Clause 101 : Standard condition as to transparency of certain criteria

Amendment 288D

Moved by

[Earl Howe]

288D: Clause 101, page 115, line 10, at end insert “or the conditions of a particular licence”

Amendment 288D agreed.

Clause 101, as amended, agreed.

Clause 102 agreed.

Clause 103 : Discretionary requirements

Amendment 288DZA not moved.

Clause 103 agreed.

Clause 104 : Enforcement undertakings

Amendment 288DA not moved.

Clause 104 agreed.

Clause 105 agreed.

Schedule 11 : Further provision about enforcement powers

Amendment 288E

Moved by

[Earl Howe]

288E: Schedule 11, page 378, line 35, leave out from “contains” to the end of line 37 and insert “information which it is satisfied is—
(a) commercial information the disclosure of which would, or might, significantly harm the legitimate business interests of the person to whom it relates;(b) information relating to the private affairs of an individual the disclosure of which would, or might, significantly harm that person’s interests.”

Amendment 288E agreed.

Schedule 11, as amended, agreed.

Clause 106 : Guidance as to use of enforcement powers

Amendment 288EA not moved.

Clause 106 agreed.

Clause 107 : Publication of enforcement action

Amendment 288F

Moved by

[Earl Howe]

288F: Clause 107, page 118, line 5, leave out from “include” to the end of line 7 and insert “information which it is satisfied is—
(a) commercial information the disclosure of which would, or might, significantly harm the legitimate business interests of the person to whom it relates;(b) information relating to the private affairs of an individual the disclosure of which would, or might, significantly harm that person’s interests.”

Amendment 288F agreed.

Clause 107, as amended, agreed.

Clause 108 agreed.

Clause 109 : Imposition of licence conditions on NHS foundation trusts

Amendments 288G and 288GA not moved.

Clause 109 agreed.

Clauses 110 to 112 agreed.

Clause 113 : Price payable by commissioners for NHS services

Amendment 288H not moved.

Clause 113 agreed.

Clause 114 : The national tariff

Amendments 288J to 291C not moved.

Amendment 292 had been withdrawn from the Marshalled List.

Amendments 292ZA to 292A not moved.

Clause 114 agreed.

Clause 115 : The national tariff: further provision

Amendments 293 and 294 not moved.

Amendment 294A

Moved by

[Earl Howe]

294A: Clause 115, page 124, line 14, leave out subsection (4)

Amendment 294A agreed.

Amendment 294AZA not moved.

Amendment 294AZB

Tabled by

[Lord Davies of Stamford]

294AZB: Clause 115, page 124, line 28, at end insert—
“(5A) Where the commissioner of a health service receives an offer from a service provider licenced under section 80 at a price below the price that is payable by virtue of this Chapter, the commissioner shall seek the agreement of Monitor before placing any order for this service.
(5B) Before acceding to a request from a commissioner in accordance with subsection (5A), Monitor shall satisfy itself that—
(a) the quality of the service to be provided will not be inferior to the same service provided by another supplier at the price payable by virtue of this Chapter, and(b) there will be no consequent unacceptable impact on the structure or capabilities of the NHS.(5C) Subject to the considerations under subsection (5B), Monitor shall not unreasonably withhold its consent.”

[Lord Davies of Stamford]

My Lords, I had intended to move this, and to take the opportunity to respond to one or two points that the Minister made on my proposal on competitive pricing, but in view of the lateness of the hour I will find another opportunity to pursue the argument with him.

Amendment 294AZB not moved.

Clause 115, as amended, agreed.

Clause 116 : Consultation on proposals for the national tariff

Amendment 294AA not moved.

Amendment 294B

Moved by

[Earl Howe]

294B: Clause 116, page 125, line 26, leave out “guidance” and insert “such guidance as Monitor proposes to provide for in the national tariff”

Amendment 294B agreed.

Clause 116, as amended, agreed.

Clause 117 : Consultation: further provision

Amendment 294BZA not moved.

Clause 117 agreed.

Clause 118 : Responses to consultation

Amendments 294BA to 294BC not moved.

Clause 118 agreed.

Schedule 12 : Procedure on references under section 118

Amendments 294C to 294H

Moved by

[Earl Howe]

294C: Schedule 12, page 380, line 5, leave out from “each” to end of line 6 and insert “objector”

294D: Schedule 12, page 380, line 7, at end insert—
“( ) In this Schedule, “objector” means—
(a) in relation to a reference made where the condition in section 118(2)(a) is not met, each clinical commissioning group who objected to the proposed method to which the reference relates, and(b) in relation to a reference made where the condition in section 118(2)(b) or (c) is not met, each licence holder who objected to that proposed method.”

294E: Schedule 12, page 382, line 8, at end insert—
“( ) The Competition Commission must give notice to each objector who has made representations in accordance with paragraph 2 of the time and place at which an oral hearing is to be held.”

294F: Schedule 12, page 382, line 22, leave out “entitled to give evidence at the hearing” and insert “present at the hearing and comes within sub-paragraph (5)”

294G: Schedule 12, page 382, line 24, leave out second “is not” and insert “cannot be”

294H: Schedule 12, page 382, line 26, leave out from “not” to “, and” in line 27 and insert “obliged to require the person to attend the hearing”

Amendments 294C to 294H agreed.

Schedule 12, as amended, agreed.

Clause 119 : Determination on reference under section 118

Amendments 294J and 294K

Moved by

[Earl Howe]

294J: Clause 119, page 128, line 4, after “by” insert “clinical commissioning groups or”

294K: Clause 119, page 128, line 38, after “such” insert “clinical commissioning groups or”

Amendments 294J and 294K agreed.

Clause 119, as amended, agreed.

Clause 120 agreed.

Clause 121 : Power to veto changes proposed under section 120

Amendment 294L

Moved by

[Earl Howe]

294L: Clause 121, page 129, line 28, after “are” insert “not”

Amendment 294L agreed.

Clause 121, as amended, agreed.

Clause 122 : Local modifications of prices: agreements

Amendments 294LA to 294M not moved.

Clause 122 agreed.

Clause 123 : Local modifications of prices: applications

Amendments 294MA and 294MB not moved.

Clause 123 agreed.

Clause 124 agreed.

Amendment 294MBA not moved.

Clause 125 : Health special administration orders

Amendments 294N and 295 not moved.

Clause 125 agreed.

Clause 126 agreed.

Clause 127 : Health special administration regulations

Amendment 295A

Moved by

[Earl Howe]

295A: Clause 127, page 134, line 46, at end insert “or (b)”

Amendment 295A agreed.

Clause 127, as amended, agreed.

Clauses 128 to 130 agreed.

Amendment 295AA

Moved by

[Lord Warner]

295AA: After Clause 130, insert the following new Clause—
“Prior actions to health special administration orders
(1) Monitor shall produce annually a report to the National Commissioning Board setting out those trusts and their associated health economies where it considers that, on the evidence available, trusts are at serious risk of Monitor seeking a health special administration order unless urgent action is taken to review existing services and agree reconfiguration of those services to ensure their clinical and financial sustainability and this report shall be made available promptly to the Secretary of State, Parliament and the relevant clinical commissioning groups and health and wellbeing boards.
(2) It shall be the responsibility of the National Commissioning Board, in consultation with the relevant clinical commissioning groups and health and wellbeing boards, to establish a mechanism for producing a response to Monitor within six months of the annual report’s publication on how the services in specified areas can be made clinically and financially sustainable and the extent to which these proposals are agreed by local organisations on behalf of the public.
(3) It shall be for Monitor to decide whether the Board’s response is adequate to secure clinical and financial sustainability in particular areas and, after informing the Secretary of State, to publish its decisions on proposed changes and should the Secretary of State decline to accept Monitor’s decision in a particular case he or she should inform Parliament with his or her reasons, together with his or her alternative proposals for securing clinical and financial sustainability in the particular health economy.
(4) It shall be open to Monitor, by agreement with the Secretary of State and the National Commissioning Board, to establish a panel of independent people with appropriate expertise to assist with securing local agreement on the reconfiguration of services required to secure clinical and financial sustainability.”

[Lord Warner]

My Lords, I rise to a rapt audience to move Amendment 295AA, which will really test the concentration powers of your Lordships’ House. The amendment would insert a new clause on actions that could be taken to reconfigure services in the interests of sustainability before the Bill’s failure regime kicks in. It follows on from the previous group of amendments spoken to, in particular, by my noble friend Lady Thornton.

I had one go at this issue at an earlier stage in our discussions and did not get very far. I have now discussed this issue further with a range of opinion inside and outside your Lordships’ House. This amendment, which has the support of the noble Lord, Lord Patel, and the noble Baroness, Lady Murphy, is the product of a continuing interest in this issue. There is now widespread recognition across the NHS that there has to be a major reconfiguration of services to make them more fit for purpose, more clinically sustainable and more financially sustainable, given the financial and demographic challenges faced by the NHS for the foreseeable future. In a nutshell, specialist services need to be reconfigured on fewer sites, and many district general hospitals have to be reshaped on their sites with a different kind of health and healthcare campus and more social care services alongside them. Far more services need to be delivered in a community, rather than in a hospital, setting.

As was borne out in the discussion on the last group of amendments, the Government seem to be placing a great—and, I would say, undue—faith in local commissioners facing up to this reality and delivering the necessary changes. Meanwhile, MPs, including Cabinet Ministers, continue to march with placards in front of their local hospitals, opposing change and trying to protect their parliamentary majorities. They fear being “Kidderminstered” as majorities and the number of seats shrink. It will only get worse as 2015 approaches.

Much sensible opinion in the NHS simply does not believe that local areas and commissioners can deliver the scale of change required on an unaided basis. It fears that people will stand on the burning platform until failure engulfs them or a cheque arrives. The Government have said that the cheque is not going to arrive, so they are going to stand on the burning platform, as I see it, until the failure regime kicks in. Monitor does not want to be placed in a position where it is endlessly using the failure regime. It will want to intervene when the warning signs are there, rather than waiting for the special administration system to be required. Despite the Secretary of State’s promises of robust decision-making on service reconfiguration, there is little experienced NHS opinion that believes that the elected political class will take the tough decisions fast enough and in sufficient numbers to produce a more orderly reconfiguration of NHS services.

I asked the Secretary of State following one of his robust public utterances at a conference whether he had actually told his Cabinet colleagues how robust he was going to be. The example of Chase Farm continues to affect NHS opinion and behaviour. People want a more reliable pre-failure regime that can be triggered in a timely way that does not totally rely on local commissioners to take action on their own and that imposes some discipline on the elected political class—if I may so describe them—to take decisions in a timely way. That is what Amendment 295AA attempts to do.

Subsection (1) requires Monitor to report annually to the national Commissioning Board those trusts and their associated health economies that are in real danger of clinical and financial unsustainability that will trigger the special administration regime. This report would put everybody from the Secretary of State to the local clinical commissioning groups on notice that action needs to be taken.

Under Subsection (2), it would then be for the national Commissioning Board to gather everybody together locally and agree a mechanism for producing a response within six months of service reconfigurations that would achieve financial and clinical sustainability.

Subsection (3) gives Monitor the decision on whether the solutions proposed are adequate, and if so, to inform the Secretary of State accordingly. The Secretary of State is not cut out of the loop. The Secretary of State could decline to accept Monitor’s decision, but in doing so he or she would have to inform Parliament of their reasons for rejecting it and publish alternative proposals to secure,

“clinical and financial sustainability in the particular health economy”

concerned. To aid this process, subsection (4) enables Monitor,

“by agreement with the Secretary of State and the National Commissioning Board to establish a panel of independent people with expertise”,

to help local area commissioning groups with the necessary reconfiguration of services.

No one under this amendment is cutting out the people at the local level and no one is cutting out the Secretary of State. We are just introducing a bit more discipline into this particular process, one in which it has proved very difficult to achieve change. I hope that the Minister will take this amendment in the spirit with which it is offered. It is there to respond to a widespread concern that we need a better and clearer pre-failure regime that can be used to bring about a more speedy reconfiguration of services in the interests of clinical and financial sustainability, but that also preserves local involvement with expert external facilitation and keeps the Secretary of State involved, albeit with disincentives to political deferment of decisions. The challenges that the NHS faces over the rest of this decade make this an issue that we should address urgently, and in my view we should have something on the face of the Bill to help the NHS engineer the reconfiguration of services that it will so badly need in the coming years. I beg to move.

22:15

[Baroness Williams of Crosby]

My Lords, at this late hour I will keep the Committee only for a moment or two. I congratulate the noble Lord, Lord Warner, on a courageous, statesmanlike and important amendment. We all believe that there have to be huge changes in the NHS, those of us who support it very strongly just as much as those who are critical of it. The noble Lord has thoughtfully tried to produce a machinery of government that will enable some of these extremely difficult decisions to be made. Perhaps I may say without, I hope, offending anybody, that there are echoes here of what happened to the Governments of Greece and Italy—flatly refusing to look at the realities, refusing to change, and ending up with effectively a total loss of trust in the democratic system. I believe that this amendment is an attempt to try to get away from that and to begin to mobilise a much larger section of the public for the changes that have to be made. That can be done only through open debate and the willingness of politicians to get up and express the need for change and their support for it, not by hiding away and doing the popular thing when that is almost certain to bring about the destruction of the remaining health services in any effective way.

I congratulate the noble Lord and say that he is brave to have done this, and to point out rather harshly that we all have to learn that we cannot at one and the same time take part in Chase Farm demonstrations and Chase Farm decisions. What that means is that, inescapably, the Secretary of State has to be at the centre of this operation, unpleasant though it is, because—as most of those who have been in Government know—either you have to take unpleasant decisions or you have to resign. What you cannot do is dodge the issue by saying, “It is nothing to do with me”, because in the end that will not carry the public with you. It is the public we need to mobilise behind us.

[Baroness Murphy]

My Lords, I have added my name to this amendment because it fills in the hole in this Bill that I am still worried about. Clauses 95 and 96 contain good ways of intervening early in individual failures on quality and the financial governance of providers that will enable Monitor to get in and do the business it needs to do with individuals, but what we have not got are the mechanisms that will allow Monitor to address at an early stage failures that can be seen coming up in a local health economy.

I have already experienced in the current regime how difficult it is for a regulator to get discussions going locally between trusts and local commissioners on how to address a local service failure. I well remember the whole of the Monitor board going down to the south-west—the trust will remain nameless—to address a failure of the local economy, to discuss it with the strategic health authority and to attempt to come to a conclusion and come up with a plan about how the local economy would solve the problem. The Minister has already mentioned bailouts. The solution was that the strategic health authority would give a bung, which it duly did and which sent the problem away. But in fact the problem did not go away because the local economy was still failing.

It is this early failure—where you can see that things are mounting up, that it is not going to work and that the sums are not going to add up—for which we need some mechanism. This is a clever scheme, but it may be too interventionist. It may be put into blocks which are too chunky to be inserted into the Bill as it is. But we need to address the problem of failure before it gets to the point of administration. As the noble Lord, Lord Warner, says, Monitor will not want to implement the failure regime and the administration regime until things have gone desperately awry. It should not implement the failure regime when the problem is an economy problem and not a trust problem. We need to have some reassurance that there will be some support for local people who are trying to tackle this in a meaningful way.

[Lord Davies of Stamford]

My Lords, I do not want to hold up the House for too long, but I feel that someone should respond to my noble friend Lord Warner’s amendment on behalf of what he rather dismissively described as the elected political class. I am proud to say that I was a member of that elected political class for 23 years, representing Grantham and Stamford. In the course of those 23 years I had to take action to save both Grantham hospital and Stamford Hospital, separately and at different times, when they were threatened with closure. I used all the methods which my noble friend is no doubt familiar with: meetings with Ministers, lining up local government support, petitions, threatening judicial reviews—even potentially funding a judicial review—and heading major marches. I remember leading over 9,000 people through the streets of Grantham and 5,000 through the streets of Stamford. We won in both cases. Grantham is still a very successful local district hospital and Stamford is a smaller hospital—what you might call a cottage hospital.

The point I wanted to make is this: I would have welcomed the sort of report from Monitor which my noble friend is suggesting. If one wants to save one’s local hospital, and one wants to make sure that the right decisions are made about the health of one’s constituents, one wants a warning as early as possible about the financial or clinical problems—or both—that may be arising. There are often all sorts of alternatives that one can find to closure. It is important for democratic confidence in the NHS that all the possibilities are thoroughly explored and everybody is content that the decision has not simply been taken behind closed doors and then announced to the public when there could have been some initiative that might have saved the day. On behalf of the—slightly dismissed—elected political class, I thoroughly support the amendment of my noble friend.

[Earl Howe]

My Lords, may I say to the noble Lord, Lord Warner, that I am very pleased that—

[Baroness Thornton]

I have a very small piece of advice to give the Minister. I always think that it is best to give in and agree with my noble friend Lord Warner. I have almost always found that this is the best course of action. The noble Earl might recall that, when I was a Minister, on one of the occasions where I did not give in I certainly came a cropper. I urge the Minister to think very carefully and seriously about what my noble friend has had to say. It merits great attention and it merits being in the Bill.

[Earl Howe]

My Lords, before that intervention I was about to say that I was very pleased that the noble Lord, Lord Warner, had returned us to this issue, which I, like he, regard as extremely important. It is a thoughtful amendment and will certainly prompt further thought on my part after this debate.

I do not think that there is any difference between the noble Lord and myself in this respect. I am certainly all in favour of ensuring that wherever possible there is early intervention and proactive monitoring of organisations well in advance of failure so that failure can be averted. The main difference between us, if there is one, is that we believe that this process should be locally led and not led from the centre, which is how I read his amendment. I probably read it wrongly. When the noble Lord spoke to it, he indicated that nothing in it was intended to run counter to that locally led process. I take that on board.

Why are we so keen on a locally led process? The overall aims that we set out are to put patients, carers and local communities at the heart of the NHS, shifting decision-making as close as possible to individual patients and devolving power to professionals and providers, liberating them from top-down control. This amendment would appear to do the opposite and could lead to an increasing level of decisions being centralised and moved away from local communities and their democratic representatives. The more that one does that, the less likely one is to get local buy-in. In a patient-led NHS, if it is to be worthy of the name, any changes to services have to begin and end with what patients and local communities need.

[Baroness Thornton]

Does not the experience of the last few years—we can name the hospitals concerned—show exactly the opposite of what the noble Earl is now saying to us, that this has to be locally led? We have to find some mechanism which allows decisions to be taken that does not dismiss or ignore local feelings. Of course people have to be involved in those decisions but, at the end of the day, we know about Chase Farm and several hospitals I could name. In north London, we know that we have too many hospitals. They have not been closed down because it is politically too difficult to do so. If the decision remains at local level, in north London we will still have too many hospitals. I have lots of MP friends who have campaigned to keep those hospitals in place, particularly before the last general election. It seems that what the noble Earl is outlining now will not work.

[Earl Howe]

Contrary to popular opinion, there have been cases of very successful and rapid reconfigurations of services. Of course, the ones that come to our attention are those that have taken a long time, such as Chase Farm. There is no better or worse example than that.

In reading this amendment, we should be cautious about any process that would significantly weaken both local commissioner autonomy and public engagement. We do not want to conflict with the statutory requirement for NHS bodies to ensure appropriate and proportionate involvement of patients and the public in service changes or reduce the ability for local authority scrutiny to bring effective democratic challenge to reconfiguration plans. I certainly do not think there is a case to reduce democratic accountability in this way.

I agree with the noble Lord that, where it is not possible to reach local agreement on a service change proposal, there should be mechanisms for independent review. We are retaining powers in the Bill for local authority scrutiny functions to be able to refer reconfiguration schemes. As part of the transition, we are also exploring how the NHS Commissioning Board and Monitor can work together to support commissioners and providers. As I have said, the key to successful service change is ensuring engagement with the local community and stakeholders so as to secure as broad support as possible in what can be very difficult decisions.

22:30

It might be asked, and I think that the noble Baroness implied this in her question, how reconfiguration will be triggered under the new system. As we envisage it, the trigger under the new system will be the same as under the current one. The trigger is often that commissioners and providers determine that the current configuration of services does not offer the highest quality care or that they do not meet with current and modern clinical practice. For example, it may be that part of the hospital estate is outdated. There may also be safety issues, especially if a trust has struggled to recruit particular clinical staff.

It is usually the dialogue between commissioners and providers that identifies that services are not currently optimal for patients and that a reconfiguration, rather than smaller-scale operational changes, is the most appropriate way to improve and modernise services. In those circumstances, commissioners will want to take an active lead in shaping how services are redesigned, working with their provider partners. I do not see that as necessarily a long drawn-out process or one that would happen at the last minute. Commissioners are in a very good place to assess these matters well in advance of stress becoming a significant problem. I believe that our proposals will enable local clinical commissioners to deliver sustainable services and allow intervention to prevent failure, where possible and with appropriate support and advice.

Mindful of the time, I hope that that is helpful. I undertake to engage with the noble Lord following this debate to see what more we might be able to do to reassure him. He presented a cogent case; I understand the arguments that he is putting and the reasons for them. I would like to end in the same place as him and provide the Committee with more certainty on these issues. I hope that with the assurance that my ear, as ever, is listening, he will be content for now to withdraw his amendment.

[Lord Warner]

My Lords, I am grateful to everyone who has spoken in this debate for the support that the thrust of the amendment has received. I reassure the Minister that it is not the purpose of the amendment to exclude local commissioners or local people from involvement in reshaping their services. They would feature in the report to the national Commissioning Board mentioned in the amendment only if they were clearly not getting on with the job of making changes. If they were getting on with that job, fine—they would not feature in the report.

I think that we struggle with the situation that the noble Baroness, Lady Murphy, mentioned, that you cannot solve the problem of a particular hospital trust without looking at the problems around the much wider health economy. Often, the local clinical commissioning groups will struggle with the breadth of the economy that they have to consider.

I do not want to delay the House any further. I will certainly take up the Minister’s offer of discussions and I would welcome any contributions from other noble Lords. We need to make progress on this issue before we complete the Bill’s consideration in this House. Meanwhile, I beg leave to withdraw the amendment.

Amendment 295AA withdrawn.

Clause 131 : Duty to establish mechanisms for providing financial assistance

Amendment 295B

Moved by

[Earl Howe]

295B: Clause 131, page 136, line 40, after “provider” insert “of health care services for the purposes of the NHS (referred to in this Chapter as “a provider”)”

Amendment 295B agreed.

Clause 131, as amended, agreed.

Clauses 132 to 134 agreed.

Clause 135 : Power to impose charges on commissioners

Amendment 295C

Moved by

[Earl Howe]

295C: Clause 135, page 139, line 44, at end insert “(but for this not to affect any other method of recovery)”

Amendment 295C agreed.

Amendment 295CA not moved.

Clause 135, as amended, agreed.

Clause 136 : Imposition of levy

Amendment 295CB not moved.

Clause 136 agreed.

Clause 137 agreed.

Clause 138 : Consultation

Amendments 295D to 295EA

Moved by

[Earl Howe]

295D: Clause 138, page 141, line 6, leave out second “that” and insert “the current financial year”

295DA: Clause 138, page 141, line 19, after “each” insert “potentially liable”

295E: Clause 138, page 141, line 25, leave out “the rate of levy” and insert “those factors”

295EA: Clause 138, page 141, line 34, at end insert—
“( ) In this section and section 139 a “potentially liable provider” means a provider on whom Monitor is proposing to impose the levy for the coming financial year (regardless of the amount (if any) that the provider would be liable to pay as a result of the proposal).”

Amendments 295D to 295EA agreed.

Clause 138, as amended, agreed.

Clause 139 : Responses to consultation

Amendments 295EB to 295EG

Moved by

[Earl Howe]

295EB: Clause 139, page 141, line 36, after “more” insert “potentially liable”

295EC: Clause 139, page 141, line 42, after “more” insert “potentially liable”

295ED: Clause 139, page 142, line 5, after first “the” insert “potentially liable”

295EE: Clause 139, page 142, line 7, after first “the” insert “potentially liable”

295EF: Clause 139, page 142, line 35, after first “the” insert “potentially liable”

295EG: Clause 139, page 142, line 38, after first “the” insert “potentially liable”

Amendments 295EB to 295EG agreed.

Clause 139, as amended, agreed.

Clause 140 : Amount payable

Amendment 295F

Moved by

[Earl Howe]

295F: Clause 140, page 143, line 38, at end insert “(but this does not affect any other method of recovery)”

Amendment 295F agreed.

Clause 140, as amended, agreed.

Clauses 141 to 147 agreed.

Amendment 295G not moved.

House resumed.

Charities Bill [HL]

Tuesday 13th December 2011 Lords Chamber

Returned from the Commons

The Bill was returned from the Commons agreed to without amendment.

House adjourned at 10.37 pm.