House of Commons

Wednesday 1st February 2012 Commons Chamber

Wednesday 1 February 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 1st February 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 1st February 2012 Commons Chamber

The Secretary of State was asked—

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

1. What recent assessment he has made of the development needs of Bangladesh.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

The bilateral aid review identified as the main needs of Bangladesh: expanding access to health, education and safe water for the poorest; protecting against risks related to climate change; and supporting private sector development to help the poor lift themselves out of poverty. The UK’s development programme directly targets those needs and will lift 5 million people out of poverty by 2015.

[Eric Ollerenshaw]

How far does the Minister think that the wider work of his Department is helping to meet the desperate need for increased political stability in Bangladesh?

[Mr Duncan]

All three Department for International Development Ministers have visited Bangladesh in the past few months, and we are encouraging all political parties to work towards free, fair and credible elections to be held by early 2014. That requires the politics of vision, not the politics of venom, and the UK stands ready to continue our work with the Bangladesh Election Commission to make the elections a success and to help the democratic process.

[Keith Vaz (Leicester East) (Lab)]

Some 5.7 million people in Bangladesh suffer from diabetes. If this trend continues, 10% of the population will have diabetes by 2025. Which DFID programmes specifically assist the Bangladeshi Government in preventing diabetes?

[Mr Duncan]

Many of the multilateral programmes focus more than our poverty programmes do on this challenge, but the right hon. Gentleman does the issue a great favour by highlighting the significance of diabetes. I can assure him that we will give it the attention it deserves in all the work that we do in the country.

[Tony Lloyd (Manchester Central) (Lab)]

2. What assessment he has made of the (a) financial situation and (b) capacity to fund existing programmes of the UN Relief and Works Agency in 2011-12.

[Caroline Dinenage (Gosport) (Con)]

5. What estimate he has made of the financial situation of the UN Relief and Works Agency in the occupied Palestinian territories in 2011-12.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

In 2011 DFID gave just over £30 million to UNRWA, and we are in the process of setting our budgets for the next few years. We will work with all donors and host Governments to help UNRWA’s long-term financial position so that it can continue to deliver its programmes to meet the needs of Palestinians and Palestinian refugees.

[Tony Lloyd]

The Minister will be aware that about 75% of Palestinians in Gaza depend on food aid from UNRWA, and with the massively increased number of demolitions of homes in Jerusalem and the west bank by Israeli forces, UNRWA’s work is vital to Palestinians. The Government have a good record on funding. Will he give a commitment that that will continue, and will he work to ensure that the international community recognises UNRWA’s importance?

[Mr Duncan]

Yes, we have repeatedly made clear to the Israelis our serious concern at last year’s 40% increase, as recorded by the UN, in the number of demolitions of Palestinian properties in the west bank and East Jerusalem. We view such demolitions and evictions as causing unnecessary suffering to ordinary Palestinians and as harmful to the peace process. In all but the most limited circumstances, they are contrary to international humanitarian law, and we condemn them.

[Caroline Dinenage]

Given that UNRWA is responsible for the refugee camps outside the occupied territories, will the Minister please update the House on what his Department is doing to support these camps?

[Mr Duncan]

My hon. Friend is right to point out that UNRWA’s remit extends beyond the Palestinian territories themselves. Conditions in refugee camps in Lebanon, Syria and Jordan remain fragile, and DFID funds UNRWA to provide essential services to all these refugees across the region. In 2011 our support helped to provide maternal health care to 263,000 women, education for 45,000 children, and food and income support for 29,000 refugees. We are in close contact with UNRWA as it strives to maintain services in Syria.

[Ann Clwyd (Cynon Valley) (Lab)]

What assistance will the Government give to the Palestinians whose houses have recently been demolished?

[Mr Duncan]

Most of the support to refugees is given through UNRWA, but we are giving our full support to the Palestinian Authority, it being the effective government of the west bank, and through it we hope to ensure that all those affected are properly supported by access to the full legal rights necessary to pursue any claims that they might have.

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

May I particularly welcome the extra funding recently announced for the 400,000-plus refugees in Lebanon to help fund health care and education for thousands of children? Does my right hon. Friend agree that although this assistance is welcome in the short term, it is no substitute for the long-term peace settlement necessary to enable these 5 million refugees to go home and get on with their lives?

[Mr Duncan]

My hon. Friend is absolutely right and I am sure that the vast majority of Members in this House agree with him. The permanent plight of someone who is an everlasting refugee is not something that any of us would relish, and it is the peace process that we hope can eventually give a permanent settlement and solution for those who are so affected.

[Glyn Davies (Montgomeryshire) (Con)]

3. What recent assessment he has made of the humanitarian situation in Somalia.

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

10. What recent assessment he has made of the humanitarian situation in Somalia.

[The Secretary of State for International Development (Mr Andrew Mitchell)]

I returned yesterday morning from a visit to Somalia. Thanks to British aid and support, the lives of millions of Somalis have been saved. We have reduced the number of people in danger of imminent death by two thirds, but 250,000 people—many of them children—remain in danger of starving to death.

[Glyn Davies]

On his visit to Somalia, the Secretary of State will have been in a good position to make an assessment of the current state of the famine there. We know that the United Kingdom has made a significant effort in leading the relief work. Is he satisfied that the international community is making the same effort to help the beleaguered people of Somalia?

[Mr Mitchell]

My hon. Friend is right to underline the importance of the whole international community being engaged in tackling the famine. The situation is that some two thirds of those who were in imminent danger of starving to death are no longer in that position, and Britain has been involved in quite literally saving something like half a million lives in the last year. Huge lobbying is still required. Britain has made it clear that we will produce assistance over the next year, specifically to tackle acute malnourishment, providing seeds, fertiliser and clean water, but the whole international community must take up this task.

[Mr Speaker]

I call Mr Buckland.

[Mr Buckland]

Question 10, Mr Speaker.

[Mr Speaker]

The hon. Gentleman’s question has been grouped with question 3. His moment is now; his opportunity is here.

[Mr Buckland]

I want to ask about the situation in Somaliland and the aid that has been channelled to that part of the country. What proportion of our aid is going to consolidate the excellent progress that has been made in civil society in Somaliland?

[Mr Mitchell]

My hon. Friend has used his opportunity well, Mr Speaker. Some 60% of Britain’s development support for Somalia goes into Somaliland, but as the Foreign Secretary has made clear recently, it is extremely important that Somaliland and Puntland settle the dispute on their border as speedily as possible. When disputes are settled in Somalia, we will be able to address the underlying causes of poverty and not have to cope with the symptoms of it.

[Hugh Bayley (York Central) (Lab)]

The consequences of the bad harvest last year and the famine are, of course, enormously aggravated by the lack of security in Somalia and the control that al-Shabaab has in many parts of the country. What are the Government doing, on their own account and through the European Union, to strengthen AMISOM—the African Union Mission in Somalia—and improve security in Somalia?

[Mr Mitchell]

It is absolutely essential that AMISOM is strengthened and given the capacity to operate more effectively, but the answer to the hon. Gentleman’s question is that the Prime Minister has convened a conference on Somalia in London on 23 February. The processes that come out of that will not be led by the international community or Britain; they need to be owned by the Somalis, led by the Somalis and the countries of the region, and strongly supported by the international community.

[Tony Cunningham (Workington) (Lab)]

May I ask the Secretary of State for his response to the criticism in the Oxfam and Save the Children report “A Dangerous Delay”, which is partly based on Somalia? Does he think that there are lessons to be learned, given that an imminent threat of famine is now looming in the Sahel?

[Mr Mitchell]

Oxfam and the other agencies did a service in pointing out—as they did in their report, if not in their press release—that Britain had shown the way and led the world in tackling the famine in the horn of Africa. However, the report is right in identifying the importance of long-term action to support resilience. As for the Sahel, Britain is not going to lead there, but we have announced a significant amount of support, specifically: therapeutic feeding for 68,000 children; support with food and water for 50,000 people; and support in terms of seeds and vaccinations for cattle for 30,000.

[Martin Horwood (Cheltenham) (LD)]

I congratulate the Secretary of State on his visit to Somalia and on Britain’s proactive response to the crisis there. However, may I ask whether he will be joining Turkey, which has said that it will be approaching some of the wealthiest Muslim countries to see if they can make a more substantial contribution to preventing starvation in Somalia?

[Mr Mitchell]

My hon. Friend identifies a most important aspect of the conference on Somalia that is to take place in London, which will be to ensure that all the different nations that are engaged in Somalia work together. It will also be important to ensure better co-ordination of humanitarian relief with the established, richer donors and the donors in the Gulf.

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

In recent years, there have been problems off the Somali coast for travellers, although progress has been made in recent months on that issue. Will the Secretary of State assure the House that liaison will continue internationally to ensure that people can travel across that part of Africa in safety?

[Mr Mitchell]

One of the problems is that of piracy. In Puntland, I was able to see the importance of tackling piracy by arresting pirates and putting them through the judicial system, as well as the other measures that, given some stability, the international community would be able to use to tackle the problem directly. We hope that this subject will also be addressed at the London conference.

[Bob Stewart (Beckenham) (Con)]

6. What recent assessment he has made of the humanitarian situation in South Sudan.

[The Parliamentary Under-Secretary of State for International Development (Mr Stephen O’Brien)]

The situation in South Sudan remains somewhat bleak, in the absence of agreement on the outstanding issues between the two Sudans. Humanitarian needs in South Sudan remain pressing, due to continuing inter-communal violence in Jonglei and elsewhere, and to the influx of refugees and returnees from Sudan. The United Kingdom continues to play a lead role in supporting an effective and co-ordinated humanitarian response. I will be giving oral evidence on South Sudan to the International Development Committee later today.

[Bob Stewart]

Would the Minister care to give us his assessment of the dangers being faced by displaced persons and refugees in South Sudan?

[Mr O’Brien]

I am grateful to my hon. Friend for his question; his knowledge of that part of the world is indeed deep, not least because of the tremendous contribution that his wife made to supporting the people of South Sudan some years ago. More than 85,000 refugees have arrived in South Sudan, fleeing the conflict over the border. There are 25,000 in Unity, and 61,000 in Maban. In Warrup county, the humanitarian community is supporting 110,000 people who have been displaced from Abyei since 2011. In addition, 360,000 have already been assisted in coming down from Sudan, with a potential 700,000 still to come. This is placing enormous strain on the emergency and humanitarian response, but the UK is playing a lead role and, in December, my right hon. Friend the Secretary of State announced a two-year package of support for the humanitarian funds. [Interruption.]

[Mr Speaker]

Order. I understand the sense of anticipation at this time on a Wednesday, but I remind the House that we are considering extremely serious matters affecting the people of South Sudan.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

The United Nations mission in South Sudan has been widely criticised for having a poor mandate and for having its resources in the wrong place. What is the Minister’s view on that?

[Mr O’Brien]

My right hon. Friend the Secretary of State has just returned from the African Union summit that was held in Addis Ababa last weekend, and he is fully seized of that issue. He had direct discussions on this matter with the chairman of the commission, with President Mbeki and with Prime Minister Meles. People are focused on the question of an appropriate mandate, but the current position is that it is better to deploy into the right places the troops who have been mandated, rather than distract ourselves with a review of the mandate itself.

[Malcolm Bruce (Gordon) (LD)]

The Select Committee is looking forward to having an extended exchange with the Secretary of State on South Sudan this afternoon. In the light of the disruption of oil supplies, and the fact that the South Sudan Government are 98% dependent on oil revenues, will the Minister tell us what steps our Government and the international community are taking to resolve the dispute and to support the South Sudan Government in regard to that financial constraint?

[Mr O’Brien]

Extensive meetings took place in Addis Ababa over the weekend, in which my right hon. Friend the Secretary of State was involved at the highest level. The straight fact is that, while the oil dispute is outstanding, progress is going to be impeded. We call on all parties to acknowledge that it is in their mutual interest to pull back from the brink and reach an agreement, with the north getting the ships to sail and the south to release oil from the wells again.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

7. What steps he is taking to increase the number of people in employment in developing countries.

[The Parliamentary Under-Secretary of State for International Development (Mr Stephen O’Brien)]

Economic growth is the primary driver of job creation, and it is a top priority among the United Kingdom’s new development policies on economic development, wealth creation and job creation. The Department is implementing programmes that will strengthen the private sector, encourage investment, improve finance for businesses and enhance the education and skills of the work force in developing countries.

[Mrs Hodgson]

At the last G20 meeting, world leaders committed to establishing a taskforce to look at employment in developed countries. With unemployment rates in developing countries above 60%, will the UK Government urge the G20 taskforce to look not only at developed countries but at developing countries as well?

[Mr O'Brien]

The hon. Lady is absolutely right that we need to look at both developing and developed countries. As discussed throughout what has been a disappointing out-turn from the Doha round, it is important to understand what is coming through in terms of jobs, job creation and investment flows in the emerging countries as well. She is right: this has to be on the agenda for developing countries as much as for developed ones.

[Jeremy Lefroy (Stafford) (Con)]

Is my hon. Friend satisfied that the new flexibility given to the Commonwealth Development Corporation will enable it to increase employment in developing countries?

[Mr O'Brien]

The CDC has undergone fundamental reform over the last 18 months and is now ready not only to identify those things in which it can uniquely and competitively invest—patient capital, as it is best known—but to focus on what will end up being job-full rather than job-less growth in a way that will benefit the economies of developing countries.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Does the Minister still think that companies like Sun Biofuels, which has made more than 1,000 people redundant in Tanzania and treated local people appallingly, are a shining example for countries around the world of how to produce green energy that is good both for the environment and for the economy, despite concerns about the impact of biofuels on food security, water access, land grabs and doubts about whether they even contribute to environmental gains?

[Mr O'Brien]

The hon. Lady raises an issue about whether combining business risk and new green sources of energy is inevitably risky, with failures likely along that track. I understand her concerns, but she should not overlook the enormous progress made in developing economic growth and business potential in these countries, along with the drive towards green energy production and the need to ensure that these countries have an opportunity to leapfrog many of the technologies we have in the western world.

[Tony Baldry (Banbury) (Con)]

8. What development support he is providing to Burma.

[The Secretary of State for International Development (Mr Andrew Mitchell)]

The coalition Government have doubled British aid to Burma. If progress on political reform continues, we will be able to do much more.

[Tony Baldry]

Does my right hon. Friend consider that there is sufficient substance to the reforms in Burma? Is he confident that money provided by DFID for humanitarian relief is getting to the areas where it is needed, such as the Chin state?

[Mr Mitchell]

My hon. Friend poses the key question of whether these reforms are real. The fact that the regime in Burma has now released nearly all its political prisoners—particularly Min Ko Naing whom many Members campaigned to see released—is an enormously encouraging sign. The real test will come with the 48 by-elections due to take place before April. We will see how those elections are conducted and whether they are free and fair. If they are, that will be the most eloquent possible answer to my hon. Friend’s question.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

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

[The Secretary of State for International Development (Mr Andrew Mitchell)]

My Department is preparing energetically for the Prime Minister’s conference on Somalia in London on 23 February. We are working hard to deliver the results we set out to the House in the key reviews conducted last year, and we are procuring humanitarian support for many of the most wretched people in the world.

[Eric Ollerenshaw]

Stepping Stones Nigeria is the charity based in Lancaster involved in educational development in the Niger delta. Would my right hon. Friend be good enough to facilitate a meeting between his officials and the charity to see how far that work can be expanded?

[Mr Mitchell]

The charity is doing excellent work, and we will be pleased to ensure that it can meet officials perhaps to find out how it can access the Government’s new global poverty action fund, which specifically seeks to help non-governmental organisations and charities that are doing brilliant work in difficult parts of the world.

[Mr Ivan Lewis (Bury South) (Lab)]

Does the Secretary of State think that it was appropriate for him to say in Delhi last December that a strategic aim of the United Kingdom’s aid programme for India was “seeking to sell Typhoon”? With that one comment, he undermined the commitment of successive Governments not to tie aid to trade. Does he stand by his irresponsible comment?

[Mr Mitchell]

The hon. Gentleman should not believe everything he reads in the press. Of course I never made any such comment. As he knows very well, British aid has been untied for many years, and it is a commitment of both parties that it should remain untied.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

T3. Can my right hon. Friend confirm that the Government recognise the importance of tackling neglected tropical diseases, and can he tell us what discussions he has had about the matter with the Gates Foundation?

[Mr Mitchell]

My hon. Friend is right to mention the work of the Government, together with the Carter Centre and the Gates Foundation, on the neglected tropical diseases that destroy the lives of millions of people in the world. I pay particular tribute to my hon. Friend the Under-Secretary of State for International Development, who has driven the process for the British Government, to the great advantage of people who are caught by these terrible diseases.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

T2. I welcomed the words that we heard from the Government earlier in condemnation of the displacement of Palestinians, but can the Secretary of State tell us specifically what assistance might be offered to the Bedouins who are currently being displaced from their traditional areas?

[Mr Mitchell]

All these humanitarian issues are wrestled with by the international community. The hon. Lady heard about the very specific support that Britain is delivering through UNRWA. We will consider her question about the Bedouins in the terms that she has specified.

[Richard Harrington (Watford) (Con)]

T4. It is about a year since the Government announced the formation of the Arab Partnership Fund to help countries that were involved in the Arab spring. Is the Secretary of State satisfied with its progress?

[Mr Mitchell]

As my hon. Friend will know, the Arab Partnership Fund is financed partly through the Foreign Office and partly through my Department. We address many of the humanitarian issues, as well as issues involving the capacity-building and economic growth that are essential if progress is to be made, while the Foreign Office addresses many of the political issues. I am satisfied that the APF is delivering what we seek from it, but I accept that much more needs to be done in the future. [Interruption.]

[Mr Speaker]

Order. There are far too many noisy private conversations taking place in the Chamber. Let us have a bit of expectant silence for Mr Alun Michael.

[Alun Michael (Cardiff South and Penarth) (Lab/Co-op)]

T6. On 7 July 2010, the Prime Minister joined me

“in welcoming the peaceful and credible elections in Somaliland”—[Official Report, 7 July 2010; Vol. 513, c. 361],

and promised to increase engagement and aid as a consequence. Will the Secretary of State tell us what his current priorities are in relation to helping economic and social development in Somaliland?

[Mr Mitchell]

We looked at the Somaliland programme following the intervention by the right hon. Gentleman and the Prime Minister, and I can tell the right hon. Gentleman that some 60% of British support for Somalia as a whole goes into Somaliland. During my visit to Hargeisa in Somaliland last year, I was able to observe the specific impact of that support both on economic development in Somaliland and on security. Britain is strongly engaged in supporting the training of the police and security forces.

[Neil Carmichael (Stroud) (Con)]

T5. I am sure that all Members were appalled by the recent bombings in northern Nigeria, when so many people were killed and maimed. Given that 9 million people live in the city of Kano, all of whom are vulnerable to poverty and many of whom suffer abject poverty, will the Secretary of State confirm that he will take action, and continue to take action, to assist there?

[Mr Mitchell]

There were British officials in Kano when the explosions took place. They have all been safely evacuated to Abuja, but my hon. Friend is right to make it clear that our programme of support for northern Nigeria, where there are many extremely poor people who are a magnet for the terrorist recruiter, must address all those issues, and Britain is working closely with the Government of Nigeria to do that.

[Lisa Nandy (Wigan) (Lab)]

T7. On a recent visit to the west bank, I was horrified to learn that schools are routinely targeted for demolition. Does the Secretary of State share my concern that that undermines humanitarian efforts in the west bank and East Jerusalem, and will he join me in condemning that appalling practice?

[Mr Mitchell]

As the Minister of State eloquently set out in answer to an earlier question, and as I saw for myself on a visit to the west bank and Gaza immediately before Christmas, humanitarian aid is targeted directly at helping the victims of what the hon. Lady describes. Our commitment is to continue to ensure that Britain is engaged in the most effective possible resolution of those matters, both on the ground and in international forums.

[Mr Speaker]

Patience rewarded: I call Mr Richard Fuller.

[Richard Fuller (Bedford) (Con)]

APASENTH, a group with 20 years’ experience of working with adults with special educational needs in London, will shortly visit Bangladesh to see whether it can use its expertise to establish a centre there for people with autism. Will the Secretary of State agree to meet me and members of APASENTH after its visit to see how his Department can help that initiative?

[Mr Mitchell]

I certainly undertake to ensure that a Minister meets my hon. Friend to discuss the matter. I suggest that he and the charity engage with the global poverty action fund—a new fund set up by the coalition Government to support non-governmental organisations with matching money. He may find that a rewarding vein to mine.

The Prime Minister was asked—

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

Q1. If he will list his official engagements for Wednesday 1 February.

[The Prime Minister (Mr David Cameron)]

I am sure that the whole House will wish to join me in sending our deepest condolences to the families and friends of Signaller Ian Sartorius-Jones from 20th Armoured Brigade Headquarters and Signal Squadron 200, and Lance Corporal Gajbahadur Gurung, attached to 1st Battalion the Yorkshire Regiment. These were dedicated soldiers who were highly respected by their colleagues. Their courageous, selfless service will never be forgotten by our country.

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

[Paul Farrelly]

May I associate myself and the whole House with the Prime Minister’s remarks and his condolences to the families and friends of the two brave soldiers who have made the ultimate sacrifice in the service of their country?

In the past week, chief constables in England and Wales have warned that policing is on a “cliff edge” and is facing a “watershed moment”, as numbers fall to their lowest in a decade. My force in Staffordshire is cutting hundreds of officers and staff, yet during the TV debates before the general election, the Prime Minister said:

“there’s no doubt about it. We’re not seeing enough police on the streets, we’re not catching enough burglars, we’re not convicting enough.”

How does the Prime Minister’s rhetoric then square with the reality of what is happening to front-line policing now?

[The Prime Minister]

The fact is that the percentage of officers on the front line has actually increased. We inherited a situation where there were 6,000 uniformed officers performing back-office roles in the police. We have had to make difficult spending reductions, but I think that if the hon. Gentleman listens to his Front Benchers, he will now find out that they support the cuts, and they support the pay freeze. They even support our police commissioners so strongly that droves of Labour MPs are going to quit to try to become them.

[Alok Sharma (Reading West) (Con)]

Q2. Tonight, the House will have a historic vote on whether households on benefits should be able to receive more than households in work. Does the Prime Minister agree with me that the introduction of a benefits cap should have the support of the whole House?

[The Prime Minister]

My hon. Friend is entirely right. The cap is right, and the cap is fair. It is right to say that you should not get more than £26,000 a year in benefits—that is £500 a week—and it is fair because we are introducing a new principle into our welfare system: an able-bodied family who can work should not get more in benefits than the average family gets from work. The leader of the Labour party has said that he is not against a cap in principle; tonight we will find out whether he is in favour of a cap in practice.

[Edward Miliband (Doncaster North) (Lab)]

May I join the Prime Minister in paying tribute to Signaller Ian Sartorius-Jones from 20th Armoured Brigade Headquarters and Signal Squadron 200 and Lance Corporal Gajbahadur Gurung, attached to 1st Battalion the Yorkshire Regiment? Both men showed exceptional courage and bravery and our thoughts are with their family and friends.

Before the election, legislation was passed by Parliament with cross-party support to make all banks disclose how many people earn more than £1 million, but it needs the Government to trigger the change. Will the Prime Minister now go ahead and do it?

[The Prime Minister]

We now have the toughest and most transparent regime of any major financial centre in the world. For the first time ever, banks will publish the pay of the top eight executives. That never happened in 13 years of a Labour Government. On the specific Walker reforms, Walker himself said that they should be done at the same time in all countries across the European Union.

[Edward Miliband]

Exactly what we would expect: no leadership on top pay from this Prime Minister. In case he has not heard the news, more than eight people are earning more than £1 million at our banks. What did the Chancellor say in opposition? He said this—[Interruption.] Government Members should listen to what the Chancellor said in opposition. He said:

“We…support…proposals to make those banks disclose the number of their employees who are on high salaries.”—[Official Report, 26 November 2009; Vol. 501, c. 706.]

He even called for the banks to publish their names. It is another broken promise from this Government. I ask the Prime Minister the question again: the legislation is on the books, it is ready to go and it had all-party support, so why does he not make it happen?

[The Prime Minister]

We are listening to the advice of the man who produced the report for the last Labour Government. The right hon. Gentleman asks about the number of people getting £1 million bonuses, but let me remind him that it was the last Labour Government—when he was in the Cabinet—who agreed an RBS bonus pool of £1.3 billion. Literally hundreds of people were getting £1 million bonuses and he signed it off. The issue for the right hon. Gentleman is why he is in favour in opposition of things he never did in government. Some might call it opposition; some people might call it hypocrisy.

[Edward Miliband]

I will tell the Prime Minister what hypocrisy is: it is saying that he will stop a £1 million bonus to Stephen Hester and then nodding it through. I have to say to him that I think we have now heard it all, because he says that the class war against the bankers is going to be led by him and his Cabinet of millionaires. I do not think it is going to wash, frankly.

Let me ask the Prime Minister—[Interruption.] Let me ask him about another simple proposal. He had no answer on transparency. Does he agree with me that to bring a dose of realism to the decisions about top pay there should be an ordinary employee on every pay committee, so that people on a huge salary have to look at least one of their employees in the eye and justify it?

[The Prime Minister]

rose—

[Mr Speaker]

Order. The Prime Minister will know that the use of the word hypocrisy in relation to an individual Member is not parliamentary. Before he begins his reply, I ask him to withdraw that term straight away.

[The Prime Minister]

I am very happy to do that, Mr Speaker. It is just that we are expected to listen to the people who presided over the biggest banking and financial disaster in our history and it is not as if they had nothing to do with it. One of them was the City Minister and the other was sitting in the Treasury. I have to ask: who failed to regulate the banks? Labour. Who gave us the boom and bust? Labour. Who failed to fix the roof when the sun was shining? Labour. Who presided over these multi-million pound bonuses and did absolutely nothing? Labour.

I have looked very carefully at the right hon. Gentleman’s propositions and I do not think it is practical to do what he is suggesting. It breaks an important principle of not having people on a remuneration committee who will have their own pay determined, so I do not think that it is the right way forward. The House might be interested to know, as I have looked carefully at all his proposals, that he also proposed in Glasgow to ban performance-related pay in all but the most exceptional circumstances. That is completely wrong. There are people working in offices, factories and shops around the country who want performance-related pay and who, if they meet some targets, would like to have a bonus at the end of the year. That is pro-aspiration and pro-doing the right thing for your family. That shows that the right hon. Gentleman has not a clue about how to run an economy.

[Edward Miliband]

Now we know where the Prime Minister stands: no to transparency and no to an employee on the remuneration committee. And what was the Chancellor doing last week when they were supposedly cracking down on top pay? He was going to Davos to tell the business community to lobby for a reduction in the top rate of income tax. We know the truth. When it comes to top pay, this Government and this Prime Minister are part of the problem, not part of the solution.

[The Prime Minister]

Mr Speaker, I do not know what the word is for criticising someone who went to Davos when you went to Davos yourself. I think the word Peter Mandelson used when he was in Davos was “struggling”.

[Mr Speaker]

The Prime Minister is exceptionally well educated and I am sure he has a very full vocabulary and can make proper use of it.

[Mr David Davis (Haltemprice and Howden) (Con)]

Yesterday, it was announced that the French company Dassault had won the first round in the contest for the $10 billion fighter aircraft contract with India. That is disastrous news for thousands of workers up and down the country, particularly in my constituency. Given the long relationship between India and Britain and given that we give many times more aid to India than France ever did, will the Prime Minister engage himself and the full force of the Government in attempting to reverse that decision?

[The Prime Minister]

Of course I will do everything I can, as I have already, to encourage the Indians to look at Typhoon, because it is such a good aircraft. The decision is obviously disappointing, but it is about who the Indians have assessed as making the lowest bid and have therefore asked to enter into further negotiations. They have not yet awarded the contract, and I would say to my right hon. Friend, who I know cares deeply, as I do, about the people employed in his constituency, that we do not expect any job losses to stem from this decision and that it does not rule out Typhoon for India. We must go on making the case that this is a superb aircraft with far better capabilities than Rafale, and we will try to encourage the Indians to take that view.

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

Q3. The Deputy Prime Minister recently said that means-testing might be brought in for pensioner bus passes. Was he speaking for the Government and does the Prime Minister really think that is fair?

[The Prime Minister]

I made a very clear commitment at the time of the last election about pensioner bus passes, pensioner winter fuel payments and pensioner free TV licences, and we are keeping all those promises. [Interruption.]

[Mr Speaker]

Order. The House must calm down. I want to hear Penny Mordaunt.

[Penny Mordaunt (Portsmouth North) (Con)]

If a local supermarket closes down, another quickly takes its place. If Portsmouth football club closes down, Pompey fans will not be content with buying their season ticket from Southampton. Will the Prime Minister add his voice to mine in calling for Her Majesty’s Revenue and Customs to meet the club so that it recoups the tax it is owed, our club survives and the fans have their chance to become its owners?

[The Prime Minister]

I will certainly do that, and my hon. Friend is absolutely right to raise this issue. Knowing one or two Pompey fans, I can completely understand that the idea they could go and support Southampton is completely incredible. We must do everything we can to keep the friendly rivalry going.

[Edward Miliband]

This week, the British Medical Journal, the Health Service Journal and the Nursing Times published a joint editorial that said the Prime Minister’s reorganisation

“has destabilised and damaged one of this country’s greatest achievements: a system that embodies social justice and has delivered widespread patient satisfaction, public support, and value for money. We must make sure that nothing like this ever happens again.”

Why does the Prime Minister think he has so comprehensively lost the medical profession’s trust?

[The Prime Minister]

I notice that the right hon. Gentleman does not want to raise the welfare cap today. I think that people up and down the country will recognise that.

There are tens of thousands of general practitioners up and down the country who are implementing our reforms because they want decisions to be made by doctors, not bureaucrats, they want to see health and social care brought together and they want to put the patient in the driving seat. The right hon. Gentleman should look at what is actually happening in the health service. Waiting times are down, infection rates are down and the number of people in mixed-sex wards, which we put up with for 13 years under Labour, is down by 94%. He should be praising the good things that are happening in the health service rather than having his policy, which is to say that an increase in NHS resources is irresponsible. That is Labour’s position; it is this Government who are putting the money in and getting the reforms right.

[Edward Miliband]

Every time the Prime Minister talks about the NHS he just shows how out of touch he is with what is happening on the ground. Let me now tell him who is lined up against the health Bill: 98% of GPs, against the Bill; the Royal College of Nursing, against the Bill; the Royal College of Midwives, against the Bill; the Royal College of Radiologists [Hon. Members: “Against the Bill!”]; the British Medical Association [Hon. Members: “Against the Bill!”]; the Patients Association [Hon. Members: “Against the Bill!”]. He knows in his heart of hearts that this Bill is a disaster. There were rumours last week that he was considering dropping the Bill. He has a choice: he can carry on regardless or he can listen to the public and the professions. Will he now do the right thing and drop this unwanted Bill?

[The Prime Minister]

If you are trying to bring into a public service choice, competition, transparency, proper results and publication of results, you will always find that there will be objections. The question is, is it going to improve patient care and the running of the health service? [Interruption.]

[Mr Speaker]

Order. I apologise for interrupting the Prime Minister. The Prime Minister’s answer must be heard. There is—[Interruption.] Order. There is excessive noise on both sides; Members must calm down. Let us hear the Prime Minister’s answer.

[The Prime Minister]

Let me tell the right hon. Gentleman something that Tony Blair once wrote about the process of reform. Now there is a man who knows a thing about bonuses and pay. He said this—[Interruption.] Listen, listen:

“It is an object lesson in the progress of reform: the change is proposed; it is denounced as a disaster; it proceeds with vast… opposition; it is unpopular; it comes about; within a short space of time, it is as if it has always been so. The lesson is instructive: if you think a change is right, go with it. The opposition is inevitable, but rarely is it unbeatable.”

That was someone who knew a thing or two about reform.

[Laura Sandys (South Thanet) (Con)]

rose—

[Mr Speaker]

Order. The hon. Lady will be heard.

[Laura Sandys]

Thank you, Mr Speaker. A year ago, I asked the Prime Minister for help when the announcement was made of the Pfizer closure in Sandwich. Does he agree that the support and help from his Ministers, which delivered us an enterprise zone and £40 million for jobs in east Kent, have ensured that we are still a leading centre for life sciences?

[The Prime Minister]

I am delighted with what my hon. Friend says. It was a tough and difficult time when Pfizer made that decision, but I think this has shown that, by Government, industry, local people in Kent and organisations coming together, we have been able to keep a lot of jobs, and a lot of investment and research and development, in that area. I would say to all pharmaceutical companies that this Government have the patent box, so if people invent things in this country and develop them in this country, they pay only a 10% corporation tax rate. That enables us to say to pharmaceutical companies all over the world, “Come and invest in Britain.”

[Dan Jarvis (Barnsley Central) (Lab)]

Q4. This week, temperatures across Britain have dropped drastically. Last winter, 200 people died every day from preventable cold weather-related illnesses, but in Barnsley, instead of being able to focus resources on promoting the dangers of cold weather, we have had to set aside £17 million for an undemocratic, top-down reorganisation of the NHS. Will the Prime Minister tell my constituents whether that really is a responsible use of public money?

[The Prime Minister]

First, I would say to the hon. Gentleman and to everyone in Barnsley that this Government have been able to keep the higher level of cold weather payments, which was introduced before the election, and we have kept it for all years. I think that will be a real help, along with the winter fuel allowance. On the NHS, I say to him that he should simply look at the figures. Since the election, there are 4,000 more doctors working in our NHS. There are 620 more midwives working in our NHS. We are treating 100,000 more patients per month in our NHS. That is what is actually happening in the NHS, if he looks at what is happening in his hospital, rather than just repeating what the trade unions are telling him.

[Tom Brake (Carshalton and Wallington) (LD)]

Q5. The Prime Minister will be aware that talks between St George’s Healthcare NHS Trust and Epsom and St Helier University Hospitals NHS Trust on their possible merger have been abandoned. I seek reassurance from him that Epsom and St Helier will be able to engage with local partners, such as local authorities and clinical commissioning groups, in order to come forward with a proposal that meets local health needs, and that the £290 million allocated for the hospital is still available.

[The Prime Minister]

I totally understand my right hon. Friend’s concern about this issue. The priority for the trust remains securing the future of the Epsom, St Helier and Sutton hospitals. I understand that the trust board and those working on a possible merger had already started to look at other options in case the merger did not happen. I understand that they are now looking at the next steps and I am sure that the Department of Health will want to engage very closely with him as this unfolds.

[Ms Margaret Ritchie (South Down) (SDLP)]

Q6. The Prime Minister is keen to tell us that work should always pay, so what would he say to my constituents from low and middle-income families who have contacted me to convey their fears about the measures the Government are bringing forward, such as the removal of working and child tax credits? These are working people who are already facing severe financial difficulties, and the current proposals could cost hard-working families with disabled children and in receipt of the lower disability premium over £1,300 a year.

[The Prime Minister]

I would make two points. Of course we have had to reform the tax credits system. When we came to office, tax credits went all the way up the income scale so that even Members of this House were eligible for them, so we have taken them further down the income scale. In terms of what the hon. Lady says about disability, I would make two points. First, disability living allowance—the absolutely key benefit—is going up by 5.2% this April, which will be well ahead of inflation. The point I would make about universal credit is that the lower rate for disabled children is £53, as she will know. Anyone on that level will be completely protected through transitional payments. We have not yet set the higher rate, but I can tell the hon. Lady that it will be at least what it is now, and possibly higher.

[Esther McVey (Wirral West) (Con)]

Q7. Will the Prime Minister, as a matter of urgency, look at the recent shocking report by Anna Klonowski on allegations of overcharging of vulnerable adults on Wirral and cases of violence and intimidation under a Labour-led council, making sure that those responsible are brought to account and never work in adult social services again?

[The Prime Minister]

I will certainly look at the report my hon. Friend mentions. This is clearly a very serious matter. I will also ask the Minister responsible in the Department of Health to look into the matter further and then speak with her. The Care Quality Commission, which has had a difficult birth, clearly has a really important job to do in ensuring that its inspections are thorough and targeted in the areas where they are most needed. It sounds from what she says that there is clearly a very great need for this to happen on Merseyside.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Q8. Today the Prime Minister denied yet again that he is cutting benefits for disabled children, but the lower rate of disability living allowance for disabled children is being reduced from almost £54 to almost £27, a cut of practically 50% which will affect 100,000 children. Is that not correct?

[The Prime Minister]

What is correct is that no one on the lower rate of payment will receive less as a result of their move to universal credit. No one will be affected by that.

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

Does the Prime Minister agree that a meaningful cap on benefits is essential if we are to end the something-for-nothing culture that developed under the previous Government?

[The Prime Minister]

I think that that is absolutely right. It is right to bring in the cap. It introduces a new principle, which is that you should not be better off on benefits than the average family is in work. What we have had from the Labour party is complete silence. Will it support us tonight in the Lobby? Why does the Leader of the Opposition not just nod? Nod? Answer came there none. I thought that it was all about taking tough decisions—that they were in favour of a cap; they were going to tear up some of Labour’s history; it was time to make some bold decisions. Come on, one bold decision—just nod. Are you with us or are you against us? A great big vacuum.

[Sheila Gilmore (Edinburgh East) (Lab)]

Q9. Will the Prime Minister explain why a 65-year-old constituent of mine, who cannot get a council home, has to pay £100 of her £570 a month rent because of his housing benefit reforms? Why is this Prime Minister so much tougher on the vulnerable than he is on the powerful, with their excessive bonuses?

[The Prime Minister]

We know that the Opposition are not going to back us on the welfare cap, and now we can see that they are against the housing benefit reforms as well. Let me just remind the hon. Lady what her own shadow welfare Minister said. He said that it is completely unacceptable that housing benefit has rocketed to £20 billion. This is what he said. Where is “Baldemort”? He is not at home today. He said that Beveridge

“would scarcely have believed housing benefit alone is costing the UK over £20 bn a year.”

This Government are reforming it; that Opposition are doing nothing.

[Priti Patel (Witham) (Con)]

Q15. Does the Prime Minister agree that all Members who claim that they are on the side of hard-working families throughout the country should vote with the Government tonight to cap benefits at £26,000, which is, after all, the average income of hard-working families?

[The Prime Minister]

My hon. Friend is absolutely right. People up and down the country will be completely amazed that the party that is supposedly meant to stand up for working people thinks that it is okay to get more on benefits than a family gets from working. So let me give the Opposition one more go. Are you with us in the Lobby tonight? Absolutely hopeless.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Q10. It is now clear that the single biggest funder of the Prime Minister’s party got his peerage on false pretences. Can the Prime Minister guarantee that Lord Ashcroft has now told the whole truth about his connections with the building company Johnson International, or is it yet again one rule for the Prime Minister’s rich friends and another rule for everyone else?

[The Prime Minister]

I have answered that question many times, but I might point out to the hon. Gentleman that the largest funder of his party has been based offshore.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

Q11. Eight million households have to make do with earning £26,000 or less before tax. What message does my right hon. Friend think that we will be sending to those people if we renege on our promise to cap benefits at £26,000 a year?

[The Prime Minister]

There will be many people in the country who criticise the benefit cap, saying, “Actually, £26,000, £500 a week, is too high.” I think it is fair, I think it is right, but I think that people expect their politicians to make it clear that you are better off in work than you are on benefits. Plenty of people are excluded from the cap because they are on disability living allowance, not able to work and the rest of it, but if you can work you should not be better off on benefits. That is a simple principle, and I find it amazing that the Labour party cannot agree. One more go? One little nod? Nothing.

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

Q12. In opposition the Prime Minister told millions on TV: “If you work hard, I’ll be behind you.” RBS, which is 82% state-owned, has not signed up to pay the living wage of £8.30 per hour in London and £7.20 elsewhere for all its staff and contractors. Why do his Government support low wages for workers but big bucks and bonuses for banksters?

[The Prime Minister]

I thought that by referring to standing up for people who work hard the hon. Gentleman was beginning to get the hang of it and that we might have had a supporter tonight. What this Government have done with RBS is radically cut the bonus pool, which was massive under Labour; say that there should be a £2,000 cash cap, unlike the massive cash increases under Labour; and begin to get that bank under control.

[Dr Julian Huppert (Cambridge) (LD)]

Q13. The Liberal Democrats’ plan to increase the income tax threshold to £10,000 was on the front page of our manifesto. It will give many working people an extra £700 a year and lift millions of poorly paid people out of income tax altogether. At a time when many working people are struggling to make ends meet, will the Prime Minister agree to go further and faster on that much-needed tax cut?

[The Prime Minister]

The hon. Gentleman is right to raise this issue. I am proud of the fact that we have taken 1.1 million people out of tax. Those are some of the lowest paid people in our country, and the majority of them are women. We are committed to making further progress during this Parliament with this policy.

[Rosie Cooper (West Lancashire) (Lab)]

Q14. Before the general election, the Prime Minister told midwives that he would make their lives easier and that he would recruit 3,000 more of them. Since the general election, nurses and midwives have been down-banded, working harder for less, and midwives in training have been reduced by 3% a year. Were the British people wrong to take him at his word?

[The Prime Minister]

I am very sorry, but the hon. Lady’s figures are, in fact, wrong. Compared with the time of the election, there are over 620 more midwives working in the NHS and there are record numbers in training. We want to do more, but we will be able to do more only if we keep funding the NHS; the hon. Lady’s party is committed to cutting it, saying that NHS funding increases are irresponsible. We will be able to do that only if we keep cutting back on the bureaucracy, which we are doing very successfully with our reforms, and making sure that the money goes into the front end. But there are more midwives. There are more in training. I am afraid that the hon. Lady’s figures are wrong.

[Greg Mulholland (Leeds North West) (LD)]

On new year’s eve 2010, my constituent Jamie Still was killed by a drink-driver who was more than twice over the limit, yet Jamie’s family had to face the fact that the person who had killed him continued to drive for a further eight months until sentencing. Will the Prime Minister agree to meet the family and consider their campaign, which is that people who are seriously over the limit in death by dangerous driving cases should have their driving licences withdrawn as part of their bail conditions?

[The Prime Minister]

My heart goes out to my hon. Friend’s constituents for the loss that they have suffered. He raises a very important point about what happens in cases such as these and what one can and cannot do with bail conditions. I will certainly go away and look at that. It may well be that this is something that we can consider alongside the recommendations that we are considering about drug-related driving. There is more work for the Government to do in this area, and I will certainly listen to my hon. Friend’s and his constituents’ concerns.

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

We believe on these Benches that the Government’s welfare cap is both fair and reasonable, and we will be supporting the Government in the Lobby tonight. But we also believe that the Lords amendments affecting vulnerable people—cancer patients and disabled people—are also fair and reasonable, not least because of the disproportionately detrimental effects, of which the Prime Minister will be aware, on Northern Ireland. Why, therefore, are we so limited in time for debating these crucial issues, which affect so many of our most vulnerable people?

[The Prime Minister]

First of all, I thank the right hon. Gentleman for his support in the Lobby tonight and I look forward to seeing him there. On the issue of the cancer sufferers and the plans for the employment and support allowance, let me just explain that under our plans the number of cancer sufferers who will get extra long-term help through the ESA support group is actually going to increase. We are going to reduce the number of people who have to have face-to-face assessments. These proposals have been fully supported by Professor Harrington, whom we asked to look into the issue because we were not happy with the previous Government’s arrangements and the way in which these things were dealt with.

The point that I would make to the right hon. Gentleman is that there are two types of employment and support allowance. There is the support group, who will always go on getting support, which is not means-tested; as long as they need that help they will get it. There is also the work-related activity group—people who, with help, are able to work. I think it is right to ask them, with support, to get into work, and that is what we are going to do.

[Mr Marcus Jones (Nuneaton) (Con)]

Who does the Prime Minister think is on the side of hard-working low paid families in Nuneaton—the Conservative-led coalition, which is taking the lowest paid out of tax and capping benefits, or the Labour party, which took away the 10p tax rate and is flip-flopping over the benefit cap?

[The Prime Minister]

My hon. Friend is being a bit charitable. The Labour party is not flip-flopping over the benefit cap; it is just flopping.

[Mr Speaker]

Order. Before the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) presents his ten-minute rule motion, I issue my usual appeal to right hon. and hon. Members who are leaving the Chamber. They should do so quickly and quietly, so that the rest of us can listen to the hon. Gentleman. Perhaps he can move into view. [Interruption.] We are exceptionally grateful.

School Transport (Darlington and Sedgefield)

Wednesday 1st February 2012 Commons Chamber

Phil Wilson (Sedgefield) (Lab)

- Hansard - - Excerpts

This petition with 800 signatures is on behalf of my constituents of Sedgefield who live in the borough of Darlington.

The petition states:

The Petition of residents of the Borough of Darlington,

Declares that the Petitioners believe that Associated Transport Provision to schools within the borough should continue to be provided for children starting secondary school from 2013 onwards, as while the Petitioners understand the financial constraints facing Darlington Borough Council, the Petitioners believe that ending the service will be detrimental to children, families and local communities.

The Petitioners therefore request that the House of Commons urges the Government to work with Darlington Borough Council to ensure that Associated Transport Provision to schools within the Borough of Darlington continues to be provided for children starting secondary school from 2013 onwards.

And the Petitioners remain, etc.

[P001002]

School Transport (Darlington and Sedgefield)

Wednesday 1st February 2012 Commons Chamber

Mrs Jenny Chapman (Darlington) (Lab)

- Hansard - - Excerpts

I am tempted to say “ditto”. This petition is on behalf of 800 residents of Darlington.

The petition states:

The Petition of residents of the Borough of Darlington,

Declares that the Petitioners believe that Associated Transport Provision to schools within the borough should continue to be provided for children starting secondary school from 2013 onwards, as while the Petitioners understand the financial constraints facing Darlington Borough Council, the Petitioners believe that ending the service will be detrimental to children, families and local communities.

The Petitioners therefore request that the House of Commons urges the Government to work with Darlington Borough Council to ensure that Associated Transport Provision to schools within the Borough of Darlington continues to be provided for children starting secondary school from 2013 onwards.

And the Petitioners remain, etc.

[P001000]

Graves in Cemeteries in Walsall

Wednesday 1st February 2012 Commons Chamber

Valerie Vaz (Walsall South) (Lab)

- Hansard - - Excerpts

The petition from the citizens of Walsall

Declares that the Petitioners object to Walsall Council's plans to remove borders around all graves at cemeteries in Walsall including Streetly Cemetery, thus allowing lawnmowers, workmen and members of the general public to pass on top of the graves; declares that the Council has never objected or removed any of the borders before or maintained the cemetery as a lawn cemetery and that no consultation has taken place with the families of those buried in this and other cemeteries in the borough; and declares that the Petitioners believe that the plan to remove the borders around graves, which would allow lawn mowers and workmen to pass over graves, is an infringement of their human rights, beliefs and dignity.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to encourage Walsall Metropolitan Borough Council to reconsider their decision to remove borders from around graves in cemeteries in Walsall.

And the Petitioners remain, etc.

A petition in similar terms has been signed by 744 people.

[P001001]

Potential Closure of Peacocks Stores

Wednesday 1st February 2012 Commons Chamber

Huw Irranca-Davies (Ogmore) (Lab)

- Hansard - - Excerpts

The petition concerns workers and their families throughout the United Kingdom who are waiting for news of the Peacocks stores up and down the land that are in administration. It has been signed by more than 600 of my constituents in one store. It states:

The Petition of residents of Ogmore

Declares that the Petitioners are concerned about the potential closure of Peacocks stores.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to prevent the closure of Peacocks stores.

And the Petitioners remain, etc.

[P001003]

Airport Security (People with Disabilities)

Wednesday 1st February 2012 Commons Chamber

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

12:34

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

I beg to move,

That leave be given to bring in a Bill to require security search arrangements at airports to ensure that appropriate levels of privacy are provided for people with disabilities; and for connected purposes.

The Bill would require Her Majesty’s Government to take measures to ensure that the dignity of stoma bag users and other disabled people is protected at airport security checkpoints throughout the United Kingdom and the European Union.

Many people who face life-threatening health conditions such as bowel and bladder cancer and Crohn’s disease must undergo surgery, such as colostomies and urostomies. Such surgery should not end their right to travel, whether it be for business, for pleasure or to see friends and family, nor should it end their right to be treated with dignity while doing so. Unfortunately, that is what often occurs.

One of my constituents who has had cancer and who requires the use of both urostomy and colostomy pouches attended my surgery to tell me of the humiliation that she has faced at several airports throughout the European Union. She requested my assistance in preventing future such occurrences. She explained that the security personnel at Budapest airport were far from sympathetic. After a pat-down search, they wanted to examine her underwear, despite her attempts to explain that she had colostomy pouches. She was required to attempt to explain that to them in public, in front of fellow holidaymakers in the security queue—an experience she described as “totally degrading”.

Sadly, such practices and such a lack of sympathy are not unique to that case. My constituent told me how she had faced poor treatment at an airport in the north-east. A rudimentary internet search reveals similar instances at airports throughout the world, including at John F. Kennedy airport in New York and Tampa in Florida. At John Lennon airport in Liverpool, a colostomy bag user from Ballymena faced a public search. Although it is vital to ensure that aerospace flights are secure, one would hope that in such circumstances, airport security staff would act with compassion, humanity and common sense.

My constituent had a card and a doctor’s letter, with an explanation of her situation in several languages. She faced problems because she was separated from them when her hand luggage was scanned. The man from Ballymena also had a letter signed by his doctor and even offered to be searched privately. His letter and request were apparently ignored by the Securitas guard. Such practices must surely be regarded as a violation of a passenger’s fundamental and inalienable right to be treated with dignity, and they must cease.

The Bill would address those problems. The British Government would be compelled to ensure that all airport security staff in the United Kingdom with responsibility for searching passengers were trained in preserving the dignity of stoma patients while maintaining our security. Furthermore, the Bill would address these issues throughout the European Union by compelling the Foreign Secretary to urge the European Commission to amend regulation No. 300/2008 on common rules in the field of civil aviation security to require all airport security staff in the EU to be so trained. The Government would also be expected to lobby for such training to be mandated worldwide by the International Civil Aviation Organisation through the Chicago convention.

This issue must affect thousands of British citizens every year, but sadly it attracts little attention. I hope that Members recognise that granting this Bill a Second Reading is an opportunity for this House to make a difference to people’s lives by ensuring that their right to dignity is respected.

Question put and agreed to.

Ordered,

That Tom Blenkinsop, Steve Rotheram, Nic Dakin, Yvonne Fovargue, Mr Iain Wright and Jim Shannon present the Bill.

Tom Blenkinsop accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 30 March, and to be printed (Bill 301).

[Diana Johnson (Kingston upon Hull North) (Lab)]

On a point of order, Mr Speaker. I seek your guidance on the written ministerial statement laid today by the Ministry of Defence on the White Paper, “National Security Through Technology: Technology, Equipment, and Support for UK Defence and Security”, and on the reference that was made in Prime Minister’s questions to BAE losing the Typhoon order from India. Is it possible for a Defence Minister to come to the House to address both those issues as they are of such importance to many Members of Parliament and their constituents?

[Mr Speaker]

As the hon. Lady knows, the manner in which the Government make statements is a matter for those on the Treasury Bench. Specifically, it is for them to judge whether there should be a written or an oral statement. Her point of order will have been heard by those on the Treasury Bench and will doubtless be transmitted to the Leader of the House and his deputy. Moreover, the hon. Lady is an assiduous attender of Question Time each day and will be conscious that tomorrow there will be business questions, where she may make an appearance to pursue this point further.

Welfare Reform Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7))

That the following provisions shall apply to the Welfare Reform Bill for the purpose of supplementing the Orders of 9 March 2011 (Welfare Reform Bill (Programme)) and 13 June 2011 (Welfare Reform Bill (Programme) (No. 2)):

Consideration of Lords Amendments

1.Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion at 7.00 pm at this day’s sitting

2. The proceedings shall be taken in the order shown in the first column of the following Table.

3. The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.

Welfare Reform Bill

Wednesday 1st February 2012 Commons Chamber

Consideration of Lords amendments

[Mr Speaker]

I must draw the House’s attention to the fact that financial privilege is involved in a substantial number of Lords amendments. If the House agrees to these amendments, I shall ensure that the appropriate entry is made in the Journal.

Clause 51

Period of entitlement to contributory allowance

12:41

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I beg to move, That this House disagrees with Lords amendment 15.

[Mr Speaker]

With this it will be convenient to consider the following:

Lords amendment 17, and Government motion to disagree.

Lords amendment 18, and Government motion to disagree.

Lords amendment 19, and Government amendment (a) thereto.

Lords amendment 23, and Government motion to disagree.

[Chris Grayling]

Throughout the process of the Bill in both this House and the other place, we have listened carefully to the concerns that have been raised. We have taken them on board wherever possible and provided important clarifications on the Government’s position and responses to technical concerns. However, let us be clear that we stand firmly behind the aims and detail of our reforms.

As you indicated, Mr Speaker, Lords amendments 15, 17, 18 and 23 impinge on the financial privileges of this House. I ask the House to disagree to those amendments, and I will ask the Reasons Committee to ascribe financial privilege as the reason for doing so. It cannot be denied that we are in extremely difficult financial times, and that the Government have no choice but to take measures to address the situation. Tackling the unsustainable rise in spending on benefits and tax credits, as part of the Government’s overall deficit reduction strategy, is undeniably important. However, I emphasise that the affordability of the welfare system is just one objective of the reforms being introduced in the Bill.

We are making principled reforms that will finally tackle the trap of welfare dependency. Universal credit will ensure that work always pays, lifting 900,000 individuals out of poverty, including more than 350,000 children and about 550,000 working-age adults. The Bill will also deliver fairness for claimants and for the taxpayers who fund the system. We will discuss the benefit cap in the next group of Lords amendments, but it is clearly not fair, for example, that households on out-of-work benefits should receive a greater income from benefits than the average earnings of working households. Finally, our reforms will radically simplify the system, ensuring that it is easier for claimants to understand and for staff to administer. Hon. Members should be clear that those are vital principles, of which financial considerations are only one part.

I turn specifically to the provisions on employment and support allowance that are dealt with by this group of amendments. I shall set out the Government’s full rationale for rejecting the Lords amendments. First, Lords amendment 15 was simply a paving amendment that had no effect. Lords amendment 17 would increase the time limit for claimants receiving contributory ESA in the work-related activity group from the proposed 365 days to a minimum of 730 days, which would have to be prescribed in regulations.

12:45

[Ian Paisley (North Antrim) (DUP)]

On contributory benefit, does the Minister accept that giving a person who has made a recovery after suffering from cancer only 365 days to get back into work is a little prescriptive? Does he accept that the Lords amendment would allow them additional time—up to two years—to get back into work? The amendment is about fairness for those people alone.

[Chris Grayling]

I will talk in more detail about cancer, which is one of the measures we are addressing. I accept that there are anxieties in respect of cancer, but the approach that we are taking to all our reforms, and particularly those relating to sickness and disability, is that we should not write off automatically any individual with a particular condition. Applying a one-size-fits-all measure to any one condition is the wrong thing to do.

[Mr Frank Field (Birkenhead) (Lab)]

The Minister initially said that the Government are introducing their measures because they need to save money on the welfare Bill, but he also said—I hope there is great support in the House for this—that their measures will shape behaviour. Are the national insurance measures designed to shape and change behaviour, and in what way will they do so, or are they merely just to save money? In other words, is the Minister doing what the Treasury has required him to do on national insurance?

[Chris Grayling]

The important thing about that measure is that we must have a welfare system in which people have confidence. The principle of our proposal reflects the principle used in the jobseeker’s allowance system—people should get something back for what they have contributed, but not indefinitely. The Government’s measures simply seek to extend that principle to the group on ESA.

[Mr Field]

I do not think there is any agreement on that. Is it not possible to honour national insurance contributions and attach “seeking work” requirements?

[Chris Grayling]

The principle I described is a long-standing one that has been applied to other benefits, such as jobseeker’s allowance. It is important to state that the Government are not taking benefits away from people who have no other form of income, or from people in the support group who need long-term, unconditional help. The measure simply affects those in the work-related activity group. It applies to them the same principle that exists in jobseeker’s allowance.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does not the Government’s proposal conflict with what they are trying to do? The Minister says that benefits will not be taken away from those who have nothing, but their measure will take away benefits from, for example, a couple in which one partner is in part-time work. They could be asked to dig into what they have saved for retirement.

[Chris Grayling]

The principle of the welfare state that I described—that it is there to provide a safety net for those who have no other form of income—has operated for a very long time, including under the previous Government. The welfare state provides a degree of support to those who have another form of income, but it is a long-standing principle of the jobseeker’s allowance system that such support is not unlimited. We are simply applying that same principle to ESA for people who are deemed to have the potential, in due course, to return to work.

[Mr David Winnick (Walsall North) (Lab)]

Is the Minister aware that many of us are grateful for what the House of Lords has done? It has acted as the conscience of Parliament. It is extremely unfortunate that the Government are today determined to reverse its decision. What is so obnoxious about the Government’s measures is that the most vulnerable are being hit, meaning not only cancer patients, but others with life-threatening diseases. It seems that the Government are totally indifferent to the group of people who will be harmed as a result of their proposals.

[Chris Grayling]

I do not doubt the hon. Gentleman’s views, but he is a member of a party whose leader and shadow Secretary of State made speeches a fortnight ago on the need to take tough decisions on welfare. I am afraid that what the hon. Gentleman says is another example of the disconnect that exists within the Opposition.

[Philip Davies (Shipley) (Con)]

What taxpayers in my constituency find obnoxious is people who use the welfare state as an alternative lifestyle choice rather than as a safety net, for which it was first intended. Does my right hon. Friend agree that the Government, through this measure and their other changes, are trying to go back to what the welfare state was initially intended for, namely a safety net rather than an alternative lifestyle choice?

[Chris Grayling]

My hon. Friend is absolutely right that we have to have a system that is fair both to the taxpayer who pays for it and to the recipients. As a result of these reforms, we will have a system that is fairer to those receiving support and also fairer to those who are paying for that support.

Support to find work, for those people who will be affected, will be available for all ESA claimants from the outset of their claim, through Jobcentre Plus on a voluntary basis until the outcome of the work capability assessment and, following the WCA, for those claimants placed in the work-related activity group, through Jobcentre Plus or through the Work programme. Every single person who is on ESA, including those on a contributory basis, has access to the Work programme.

Some have said that the limit is arbitrary. I do not accept that. As the Minister with responsibility for welfare reform explained in the other place, it is similar to that applied by several countries around the world, including France, Ireland and Spain, and strikes an appropriate balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost.

[Dame Anne Begg (Aberdeen South) (Lab)]

Can the Minister clarify, for the avoidance of doubt, that someone who has been in the work-related activity group on contributory ESA for two years who subsequently gets reassessed as belonging to the support group will have their ESA reinstated even though they do not have the national insurance contributions that would allow that to happen?

[Chris Grayling]

I can indeed confirm that that is the case. We have listened very carefully on this issue, and it was a point well made by my hon. Friend the Member for Cardiff Central (Jenny Willott) in Committee. We have listened and we have taken appropriate action. It is important that we look at such details to ensure that we get them right, but that does not detract from the overall principle of what we are trying to achieve.

I believe that a time limit of one year is the correct approach. It applies the right balance between restricting access to contributory benefits and allowing those with longer term illnesses to adjust to their health condition and surrounding circumstances. There is also a very strong financial argument. If accepted, this amendment would reduce the total savings in the spending review period by around a third by 2016-17, which is £1.6 billion. Given the current fiscal climate, we cannot afford to forgo these savings and this is one of a number of very difficult decisions the Government have had to make because, as the shadow Secretary of State pointed out at the time, there was no money left.

Lords amendment 18 would mean that no time limit would be applied to contributory ESA for those claimants receiving treatment for cancer if they have or are treated as having limited capability for work, or they have or are treated as having limited capability for work as a consequence of a cancer diagnosis. The whole point of our approach on these matters is that we have always looked at the effects of a condition on an individual, rather than at the condition itself. We can all think of other cases which could equally be regarded as special cases. We are trying to be sensitive to the very real concerns of individuals suffering from cancer, and since we took office we have made significant changes to improve the protection and support that we provide to them.

Most individuals with cancer are placed in the support group at the outset of their treatment. We have increased the scope of the support group for cancer patients. We have been working closely with Macmillan Cancer Relief to improve how the WCA assesses individuals being treated for cancer. We are now consulting on our proposals, following work by Macmillan and Professor Harrington, our independent assessor of the work capability assessment.

We are clear that our proposals, which are now out to consultation, include a presumption that someone with cancer will be in the support group. What we simply do not accept is that in all circumstances, regardless of the impact of cancer on an individual’s ability to work or otherwise, they should be guaranteed a position in the support group. We have not taken that approach with any other condition and we do not believe that we should take it with cancer.

[Stephen Timms (East Ham) (Lab)]

I know that there has been some discussion in the last few days about whether, if a doctor or nurse were able to provide confirmation that a person with cancer was not able to work, that person would be automatically passported into the support group. Is that something that the Government intend to introduce?

[Chris Grayling]

It is very much our intention—especially for those who have finished their treatment but are not yet prepared to return to work—to have a simple system that enables a medical professional to indicate to us that that person is not yet sufficiently recovered to make a return to work. Our proposals are out to consultation at the moment, but our overall clear goal is that, in the vast majority of cases, someone who is undergoing treatment for cancer or is recovering from the aftermath of that treatment should be in the support group. What we cannot accept is a principle for absolutely all cases and regardless of circumstance, and some people with cancer do work—

[Ann Clwyd (Cynon Valley) (Lab)]

The Minister mentioned Macmillan, which is a well respected organisation. It estimates that some 7,000 cancer patients could lose up to £94 a month. Is that right?

[Chris Grayling]

The issue comes back to the core principle of why we are imposing the time limit. We are not taking benefits away from people who do not have other financial means. The people who will be affected by the 12-month time limit—not just cancer patients, but generally—are those who either have another household income or who have many thousands of pounds of savings in the bank. They are the ones affected. We are not taking contributory support away from those people in the support group. Most cancer patients, as I have just described, will be in that support group. We are not taking benefits away from them, just from those with other financial means.

[Mr Winnick]

Will the Minister give way?

[Chris Grayling]

No, I have already given way to the hon. Gentleman.

If amendment 18 were accepted, it is estimated that it would cost around £90 million cumulatively by 2016-17 based on a two-year time limit, or around £140 million cumulatively based on a one-year time limit. That would be a significant additional cost for the taxpayer, and would fly in the face of a principle that we have tried to bring to this whole process, which is that we do not bracket any condition into one absolute position. We look at each individual case to understand the impact of the condition on the ability to work.

The third area of focus this afternoon is our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth. These changes are part of our principled approach to reform. We want to modernise and simplify the current welfare system, focus support, avoid duplication of provision and redefine the contract between the state and individuals, in advance of the introduction of universal credit. It cannot be right that, for example, where a claimant has qualified for contributory ESA under the youth provisions and some years later they receive a substantial inheritance, they should be able to continue to receive unlimited contributory ESA without the need to have paid any contributions and without any condition from the state.

These proposals will not affect those in receipt of income-related ESA. We expect that around 90% of those who presently receive ESA on youth grounds will be eligible for income-related ESA. It will be a simple transition from their point of view. Only some 10% will not qualify because they have other means available to them—and I emphasise that that means a partner in full-time work or capital of more than £16,000. We are merely targeting the support the Government can provide to where it is needed most. I do not think it is right that someone with independent income or capital should be able to access state support on a long-term, ongoing and unconditional basis.

[Dame Anne Begg]

Can the Minister clarify absolutely that a 20-year-old who will never work and who lives at home with their parents will be able to get income-related ESA? Obviously it cannot be contributory as they have made no national insurance contributions. Even if they live in a household above income support levels, will they continue to get income-related ESA in their own right?

[Chris Grayling]

I cannot give an undertaking in all circumstances, because every circumstance will be different. But 90% of those who presently receive ESA on youth grounds will be eligible for income-related ESA. It will depend on the circumstances of each individual case.

We have already mentioned the fact that the Government amendments allow claimants to re-qualify for a further award of contributory ESA after their ESA has ceased as a result of time limiting, and they are later placed in the support group because of a deterioration in their health. That applies equally to ESA youth claimants.

13:00

There is, however, another factor to take into account—and this, again, is an example of why this is about more than just money. We must also consider the impact of the Stewart judgment given in the European Court on 21 July 2011, as a result of which someone living abroad can qualify for benefit without having to satisfy the past presence test, if they can demonstrate a genuine and sufficient link to the United Kingdom. The Court determined that Ms Stewart arguably could demonstrate a link with the UK because she was in receipt of another UK benefit, was dependent on her parents, who were UK pensioners, and had spent a significant part of her life in the UK.

We want people to qualify only if they have lived in the UK recently prior to the claim, but we are also obliged to take account of the Court’s case-law view of what constitutes a sufficient link. We strongly disagree with the Court’s ruling. The effect of that EU judgment is that we can no longer have a blanket past presence test of this kind for benefit claimants. As a result, the ESA youth provision is potentially more widely available than intended, and given that we are bound by EU law, there is nothing, short of abolition, that we can do by way of domestic legislation—even primary legislation—to change its effect. As a consequence, we could end up paying this benefit, on a long-term unconditional basis, to more people who have never lived in the United Kingdom but who can simply demonstrate a link to it.

[Stephen Timms]

Will the Minister confirm that the case in question relates to a disabled young woman who is living with her British parents—in Spain, I think—but who was born and brought up in the UK?

[Chris Grayling]

It relates to someone who has not lived in the UK for most of the past 15 years, although she is a British national and has a link to the UK. The implication of the court case is that somebody who has a link to the UK but who has had no recent contact with it is none the less entitled to receive benefits. That is where we disagree with the European Court and why we think that its decision was wrong.

We think that the best way to close this door is to abolish the ESA youth provision, but it is not the only reason we are abolishing the youth provision. It is by no means the sole rationale for doing so, but as a matter of principle it is our view that we should make every effort to ensure that our benefits are paid only to those whom we think should be paid UK benefits—those who have recent connections to, or have lived in, the United Kingdom.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I want to try to follow the Minister’s logic a step further. Is he going on to propose that British citizens who have retired abroad—for example, to Spain—will not be able to receive their pensions in the years to come? Is that the logical extension of his argument?

[Chris Grayling]

Of course it is not. We are saying that somebody should not be able to claim a benefit for the first time having not lived in the United Kingdom for many years. That is the argument that we put to the European Court, and it is a principle that we stand by. I emphasise that that is one of the reasons, but by no means the only reason, why we are taking this measure.

[Mr Frank Field]

Has the Minister talked to the Secretary of State about this? Would a more logical position not be that we get exemptions from the European Court ruling, and not distort our social security system to fit the European Court’s decisions?

[Chris Grayling]

I would love to secure a more pragmatic and sensible approach to the regulation of social security in Europe. I have been working on it for the past 18 months with my counterparts in other member states, and I hope that we will make progress as soon as possible. Right now, however, we must obey European case law as delivered to us by the European Court—much as it sometimes might be frustrating to do so.

I have a couple of technical points to make before I finish. As a result of providing for the new category of entitlement, in respect of claimants whose health has deteriorated to such a degree that they are placed in the support group—I referred to this earlier in response to the hon. Member for Aberdeen South (Dame Anne Begg)—it has been necessary to remove the substance of the ESA youth time-limiting measure from the original clause 52 and to insert it in clause 51 via a new subsection in section 1 of the Welfare Reform Act 2007. The Opposition amended that new subsection by changing the period of the time limit from 365 days to a period to be prescribed of at least 730 days. That is Lords amendment 19. As a result, the House will need to agree to amendment 19 but with an amendment consequential upon the rejection of the other amendments providing for entitlement to ESA to be for 730 days rather than 365 days. This will restore the Government’s intention.

A similar complexity surrounds amendment 22, which was voted for in the other place and which ensures that no new claims can be made under the youth provisions in the future—in effect, from whenever that provision is commenced by order. This amendment would amend clause 52 by removing the substance of ESA youth time limiting, which is now included in clause 51, but would retain the key provision in clause 52 preventing new ESA youth claims from being made.

I am afraid that this position is further complicated by the fact that also in the other place amendment 23 was not pushed to a vote and therefore also stands part of the Bill. Amendment 23 effectively allows claims to be made to contributory ESA under the youth provisions for those that are placed in the support group. We therefore now have two conflicting clauses for conditions relating to youth. Finally, if amendment 23 were to be accepted, it would reduce the expected cumulative benefit savings by around £17 million by 2016-17—savings that would need to be found elsewhere in the benefits system.

In the light of these arguments—the urgent need to address the fiscal deficit we have inherited and the need to deliver principled reform to our welfare state—I hope that hon. Members will feel able to support the Government.

[Stephen Timms]

The Government are determined to insert some terrible things in the Bill, and none of them is worse than the indefensible one-year time limit on contributory employment and support allowance for people in the work-related activity group. Amendment 17 removes that one-year limit. The Government are trying to put it back. Now, with the blanket appeal that we have heard for financial privilege, they are trying to prevent the other place from daring to disagree with them once again.

The measure is literally indefensible: the Government have been unable to defend it. The Minister made no effort to defend it in his speech, other than to point out that it would save a great deal of money. He referred to what happens in other European countries, but there, of course, the support that people fall back on is much more generous than here. There is no defence for the one-year time limit, and the House needs to be aware that this change will start to impact in two months’ time, at the beginning of April. According to the Government, 100,000 people will lose contributory benefits at the beginning of April this year, having already been in receipt of contributory ESA for more than one year, and another 100,000 will lose it as they reach the one-year stage of their claim over the following 12 months.

Some people argue that ESA should not be limited at all—for example, the Liberal Democrats. At their party conference, they opposed any arbitrary time limit on how long claimants can claim contributory ESA, and the Liberal Democrat peer Baroness Thomas of Winchester told Members of the other place that what troubled the conference last year was

“the arbitrary nature of the one-year cut-off.”—[Official Report, House of Lords, 11 January 2012; Vol. 734, c. 158.]

Liberal Democrat party policy is clear on this, but we understand that today its elected representatives will take no notice of it.

The Lords amendments that the Government want to overturn are much more modest. They argue that the time limit should be not less than two years and, crucially, that the limit should be set down in regulations rather than in primary legislation. If the Government get their way, absurdly it would require a new Act of Parliament to change the limit. Throughout debates on the Bill—many Members have been present in Committee and other stages of the Bill—the Minister has told us that the purpose of the Bill is to provide the structure and that the details would be in regulations. On this measure, however, with no explanation, the opposite approach has been applied. These debates provide a clear indication of whether Ministers mean what they say when they tell us these things, or whether they are simply reading the script put in front of them.

We do not quarrel with time limiting. As the Minister said, contributory jobseeker’s allowance has been time-limited to six months for many years. The rationale has always been that within six months more than 90% of jobseekers are back in work. If it is to be fair, however, a time limit for ESA must also give people a reasonable chance to get back into work. A year is not enough. The Government’s own figures suggest that 94% of those who qualify for ESA are still on it a year later, so fewer than 6% are managing to get into a job within a year.

[Chris Grayling]

May I ask the right hon. Gentleman how he has factored into his considerations the typical six-month period that somebody in that position would have spent on statutory sick pay before they started on contributory ESA?

[Stephen Timms]

The question is: how long do people need to be on ESA before they get back into work? According to the Minister’s figures, only 6% are off the benefit within a year, whereas 90% are off contributory jobseeker’s allowance within the period that is being allowed for that benefit.

[Chris Grayling]

I would be grateful if the right hon. Gentleman answered my question. I asked him to what extent he had factored in the additional six months that most people would have had on statutory sick pay before starting 12 months on contributory ESA.

[Stephen Timms]

I answered the Minister’s question. What his figures show is that only 6% of those who go on to ESA—no doubt many of them will have been on statutory sick pay before that—are in a position to come off the benefit within one year. That is not a reasonable chance to get back to work, as I think the Minister will recognise if he reflects on the matter.

As the Minister said, Lords amendment 18 specifically addresses cancer. I do not think that anyone in this House will be surprised to learn that, for many cancer patients, 12 months is not long enough to become well enough to get back into work. At 12 months, many people are still experiencing debilitating physical and psychological effects from the cancer and from its treatment. People cannot go back to work in those circumstances, and that is why Macmillan Cancer Relief, which my right hon. Friend the Member for Cynon Valley (Ann Clwyd) referred to, says that

“proposals that ESA claimants who are expected to carry out work-focused activities will only receive the benefit for one year, without being means-tested, will hit cancer patients particularly hard”.

Macmillan also says:

“Three quarters…of people with cancer placed in the ESA Work-Related Activity Group are still claiming ESA 12 months later.”

[Mark Durkan (Foyle) (SDLP)]

Does my right hon. Friend agree that the Minister, with his rather “Let them eat cake” answer to our right hon. Friend, the right hon. Member for Cynon Valley (Ann Clwyd), was emphasising that the 7,000 people affected would generally have another income available to them? That ignores, first, that that other income could be quite modest; secondly, their family circumstances; and, most importantly, the fact that they face other costs—of a personal, family and household nature—because of their condition.

[Stephen Timms]

My hon. Friend is absolutely right. Ministers say that there is no need to worry because means-tested ESA will still be there, but if a partner is earning £7,500 a year, no means-tested support will be provided at all.

In the other place, Baroness Hayter quoted a letter from a 59-year-old man currently on contributory ESA who has worked and paid into the system since he was 15—that is, for 44 years. Now, when his health is failing, he will be left on the poverty line. He draws the obvious conclusion—this picks up on the point that my right hon. Friend the Member for Birkenhead (Mr Field) made earlier—saying:

“It would be better if my wife stopped working then perhaps I could claim income-related ESA—just like any person who has never worked”.

That is the position that this change is putting people in. The Government say they want to reward work; with this measure, they are scrapping the reward for work.

[Mr Frank Field]

Before my right hon. Friend moves on, perhaps he could dwell on that point. The Government rightly say that this Bill is about changing and shaping behaviour, and for all of us in this House, it is important to know that this year we will probably crash through the £200 billion mark. Anybody who thinks that that does not affect people’s behaviour is living in cloud cuckoo land. However, what message is this Bill sending out, when those who have provided and paid their contributions will get no benefits if there is any other income in their house, whereas those who have not played by the rules—who have decided that they will coast it on the back of taxpayers—get rewards?

[Stephen Timms]

My right hon. Friend is absolutely right. I am afraid that the message that this measure is sending to people in that situation is, “You’ve wasted your time.” Indeed, that is the case not only if they have a partner with an income, but if they have any savings. If they have more than £16,000 saved, there will be no means-tested support at all.

Members need to be clear about what the Government will be doing if they get their way. Under this measure, people who are in the middle of a health crisis will be plunged into a financial catastrophe. People who have worked and paid into the system all their lives—people who have, as my right hon. Friend says, done the right thing—will find that the system is not there to help them when they need it.

[Chris Grayling]

The shadow Minister has just talked about the position of somebody who has a spouse who is earning £7,500 a year. Will he confirm to the House that as a result of a diminution of household income, they would also be entitled to working tax credit, housing benefit, council tax benefit and possibly to child tax credit, and that therefore the amount of support that they will receive is substantially more than he is suggesting?

13:15

[Stephen Timms]

It will be a financial catastrophe for a very large number of people, and the Minister should listen to what people in that position are saying to him, because they have made their position extremely clear.

[Ian Paisley]

Does the right hon. Gentleman agree that, very simply, this change that the Government are seeking is saying to cancer patients, “You will be penalised because you are not recovering quickly enough”? That is where the insult rests: they are doing their best.

[Stephen Timms]

The hon. Gentleman is absolutely right: 12 months is simply not long enough for a very large number of cancer patients—or other patients, in fact—to get back to work.

Lords amendment 18 was moved in the other place by Lord Patel, the Cross-Bench peer who was formerly president of the Royal College of Obstetricians and Gynaecologists. He quoted a man with renal cancer who had had a kidney removed and who started claiming ESA in March last year. His partner earns £160 per week, but if the Government win, that man will lose all his contributory benefit in April. He says:

“We have used up virtually all our savings already. I have worked all my life and paid into the system but this doesn't seem to mean anything”.

Is that really how the Government want their system to work? Of course, it is not just cancer patients who will be affected.

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

Does the shadow Minister agree that it is completely illogical to single out cancer as a separate disease when, in fact, there are many illnesses and conditions that may result in someone being unfit for work and when, under these provisions, they would be provided for by being put in the support group?

[Stephen Timms]

The hon. Gentleman is absolutely right—indeed, I am just going on to make that very point. It is not just cancer patients who will be affected; there are many other people in exactly the same position. That is why we have argued for a two-year limit instead of a one-year limit, because with a two-year limit there is a chance for people to get back into work. The National Aids Trust makes the point:

“Many people living with HIV who are found eligible will face significant barriers to work that cannot be overcome within 12 months.”

[Dame Anne Begg]

The other group of people who will be affected by the time-limiting are those who have slowly progressive degenerative conditions. Initially on diagnosis, they may not be able to work—or they may have fallen out of work—but their conditions will not be severe enough for them to be placed in the support group, and they could spend up to 10 years without any kind of independent income-replacement benefit.

[Stephen Timms]

My hon. Friend is absolutely right. A woman with Parkinson’s disease also makes exactly that point:

“There’s no guarantee that I’ll find a job in 12 months. It could take me much longer. I’ve worked all my life and paid for decades into the system on the understanding that there will be support if I need it. To be told that all this support could have a… time limit is…unfair and stressful.”

The charity Sense points out that for some people in the work-related activity group, once their health has stabilised, they will need to retrain to get back into work. It will be impossible for them to do that within the 12-month period that is being proposed.

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

Does my right hon. Friend share my concern about those constituents of mine who have had strokes and who are not able to return to work within that period of time, and the concern that DWP officials are implementing the legislation in advance of its being on the statute book?

[Stephen Timms]

I was not aware of that, and I am concerned to hear it. My hon. Friend is absolutely right that stroke is exactly the type of condition that we are talking about. In the other place, Lord Low read out a letter that had been written to him, which said:

“The state is breaking its side of the contract at a time when people are most vulnerable”,

having had a stroke, or whatever it is. Someone else was quoted in that debate in the other place who made the point that the news of the time limit

“came as a massive shock to me. I have found it…hard to come to terms with the fact that the government can be so cruel”.

They continued:

“My medicine prescription has been increased 4-fold and been supplemented with extra medication since the time limit was announced”.

This is a dreadful proposal. Removing contributory benefit long before most people will have a chance to get back to work will remove an absolutely key plank of the contributory system. In the past, people have been able to depend on support in the event of a health disaster. This change will mean that that will no longer be the case. Those in the other place were absolutely right to say that what the Government are trying to do is shameful. This House should throw it out.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

The right hon. Gentleman has accepted the principle of time-limiting. He says that a year is too short a time, and he is against arbitrary time limits. Will he tell the House the basis on which he alighted on two years, rather than three, four of five?

[Stephen Timms]

If the hon. Gentleman looks at the amendment, he will see that it refers to a period of “at least 730” days. That was proposed precisely because there is as yet no evidence—certainly not from the Department—about what the right period should be. We can be absolutely sure, however, that it should not be less than two years, for all the reasons that I have just outlined.

[Steve Baker (Wycombe) (Con)]

The right hon. Gentleman makes a heart-rending case, but will he tell us what assessment he has made of the extra cost of moving to a two-year limit?

[Stephen Timms]

Those figures were quoted extensively in our debate. Our view is simply this: we should not be taking large sums of money from people who are recovering from cancer or from a stroke, and who have been told throughout their lives that if they paid into the national insurance system, they would be able to get help when they needed it. That pledge needs to be honoured, even by this Government.

Let me turn to Lords amendment 15 and the question of the youth passport. It is astonishing that the spiteful policy towards disabled young people remained in the Bill for so long. It is even more astonishing to see the Minister now trying to ram it back in today, after the other place took it out. The current principle is that people who have been disabled since birth or childhood should be passported on to a contributory benefit. In Committee, the Minister described the principle as an “oddity”, but it has been well established since the 1970s and backed by Tory Ministers throughout the 1980s and 1990s. Only now are this Government trying to scrap it. It provides an independent income for severely disabled people whose disability started before they had a chance to work. The Minister wants to deny them that. The principle that young people who are disabled from birth ought to be able to rely on a secure independent income might seem odd to him; to most people, it is simply right.

The Government’s impact assessment justifies this change, disgracefully, on the basis of simplifying the system.

[Dame Anne Begg]

The change will affect not only those who have had a disability since birth or childhood. A young person who has worked for only six months before having a major accident could also lose out and never have the chance to have an independent income-replacement benefit at any time in their life.

[Stephen Timms]

My hon. Friend is absolutely right.

The impact assessment states that the provision

“puts those previously eligible for ESA ‘youth’ on an equal footing with others who have to satisfy the relevant National Insurance conditions before they qualify for contributory ESA, which will create a simpler system”.

It will not put them on an equal footing. They have been unable to work since before they had a chance to work, or at least to build up two years of contributions, as my hon. Friend points out. They have had no chance to build up their contributions, and they are therefore at a disadvantage, compared with everybody else. Attempting to justify the proposal—in frankly Orwellian terms—as a simplification really takes the biscuit. We are talking about a small group—15,000 people—who have never had a chance to build up a contribution record. It is right that they should be treated differently. A little complexity is necessary for fairness.

It is worth looking at how much money the Government will save by overturning this amendment. It involves a fair amount of contributory ESA —Ministers in the other place said £70 million. However, many of those young people—the Minister said it would be 90%—will be entitled to income-related benefit if they lose their contributory benefit. Furthermore, the amendment from the other place is very narrow. It applies only to the support group—that is, those who the Government accept should be protected from ESA time-limiting. The net annual saving from this spiteful cut will be about a quarter of the amount that the state-owned Royal Bank of Scotland will hand out in executive bonuses this year. It will be less than £10 million a year.

[Mr Frank Field]

When my hon. Friend the Member for Aberdeen South (Dame Anne Begg) asked a question about a 20-year-old living at home, we did not get an answer. I was just wondering whether my right hon. Friend was trying to find out the answer by osmosis. At what point will disabled young people qualify in their own right for means-tested support, as opposed to having a household means test applied to them?

[Stephen Timms]

I also noted that the Minister did not give my hon. Friend the Member for Aberdeen South the assurance that she was seeking. My understanding is that any other income in the household, from any source, contributes to the household income, and the benefit for the disabled young person is therefore removed, pound for pound. My hon. Friend was seeking an assurance that some other provision would be put in place to safeguard the young person, but the Minister was unable to give her such an assurance, because I do not think that that is the Government’s intention. No such provision appears in the Bill at the moment.

[Yvonne Fovargue (Makerfield) (Lab)]

Does my right hon. Friend agree that the measure will have an impact on young people’s ability to form relationships? Having to depend on the income of a potential partner will have a great impact on their lives.

[Stephen Timms]

That is a particularly important point. If a person decides to marry someone who has an income, they will lose all their own income. The independence that the system has provided for 40 years is now being taken away.

[Ian Paisley]

The social impact of the proposals concerns me greatly. The right hon. Gentleman has rightly characterised them as “spiteful”. It is at the point when a long-term severely disabled person is in transition from their teenage years to adulthood that their parents or family unit require additional support. Cutting that support will hit the family, and the young person, really hard, socially.

[Stephen Timms]

The hon. Gentleman is absolutely right. The young person will be robbed of their independence.

[Chris Grayling]

If someone is living independently, they will be entitled to income-based ESA.

[Stephen Timms]

The hon. Member for North Antrim (Ian Paisley) was talking about young people who are living with their parents, who might have a little bit of income or savings. My hon. Friend the Member for Aberdeen South was seeking an assurance on that point, and if the Minister were able to give her that assurance, it would be most welcome.

[Chris Grayling]

Once someone becomes an adult, they count as living independently.

[Stephen Timms]

Can the Minister tell us at what age a person becomes an adult?

[Chris Grayling]

When their child benefit stops.

[Mr Frank Field]

It is at 19.

[Stephen Timms]

My right hon. Friend is prompting the Minister with the answer. We will look carefully at the detail of the proposals. Presumably, they are going to appear in regulations; they are certainly not in the Bill. It is helpful that the Minister has told us that, however.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Concerns have been expressed to me by parents who have tried to save for their disabled children. They have put money aside for them, but the proposals will affect them because the money will be in their children’s names.

[Stephen Timms]

The Minister has told us that someone who receives an inheritance should lose all their support from the state. Those could be similar circumstances to those that the hon. Lady has just mentioned.

[Sammy Wilson (East Antrim) (DUP)]

Does the right hon. Gentleman agree that the answer that the Minister has just given is quite astounding? He seemed to suggest that, in order to qualify for independent benefit, a disabled young person would have to leave the family home, where they have the support and facilities that they need, despite all the additional costs that that would entail. That would end up being even more costly.

[Stephen Timms]

To be fair to the Ministers, I think that there is some confusion on the Front Bench over the position on this. The Minister was asked by my hon. Friend the Member for Aberdeen South, who chairs the Select Committee, to give the House a straightforward assurance. He failed to do so—

[Chris Grayling]

rose—

[Stephen Timms]

Perhaps he is going to have another go.

[Chris Grayling]

Let us be absolutely clear: when someone leaves child benefit—which can be at the age of 18 or 19, depending on their circumstances—they are deemed to be an independent adult. The only issue around the savings rule comes in if they actually hold and own the money themselves. So, if someone gets a £1 million inheritance, they will not carry on getting benefits. Surely the right hon. Gentleman does not disagree with that principle.

[Stephen Timms]

The Minister talks about people getting £1 million, but people who have £16,000 will get absolutely nothing. That is the system that he is putting in place, and I am not surprised that he is ashamed of it.

[Mr Nuttall]

As a matter of general principle, does the shadow Minister agree that there has to be a rule about the amount of capital that people hold? Should not a cut-off apply? It was the Labour Government’s rule: there has to be a cut-off.

[Stephen Timms]

We are being taken into a slightly broader argument, but I will answer the point directly. The capital limit has always been a feature of means-tested out-of-work benefits. It was never a feature of the tax credit system because the previous Government wanted to encourage people in work to save. That incentive to save is being destroyed by the application of this capital limit—exactly the same capital limit—in future to people in work as well as out of work. That is another terrible feature of this Bill.

13:30

[Dame Anne Begg]

What has just been illustrated is the assumption that people are out of work in order to get benefit. We know—well, we hope, unless the Government are proposing to change the new personal independence payment—that there will be no capital rules, so someone with a million pound inheritance will, if they qualify and meet the criteria, continue to get benefit. That has always been in our system.

[Stephen Timms]

My hon. Friend is absolutely right. The number of people who have a million pounds can be counted on the fingers of one hand.

[Mr Frank Field]

Are not Government Members mistaken on this? We are talking about the existing rules, which encourage parents to put away money—they might have found it difficult to do so—for an endowment for a very disabled child. They will now find that their carefulness in not playing the system but trying to seek independence for their offspring will be penalised by the rules, which they could never have foreseen.

[Stephen Timms]

That is absolutely right; that is how the Government are changing the system. Disabled young people, in recognition of their particular circumstances, have been assured since the 1970s—under Governments of both parties—of an independent income from the state. This Government are taking it away from them. As a result of this change, they will lose that security in exchange for very little saving at all to the Exchequer. The Child Poverty Action Group points out that the current arrangement helps

“young disabled people who may be vulnerable to forming unsuitable relationships, or may avoid forming a suitable relationship due to fears about losing an independent income”,

as my right hon. Friend the Member for Birkenhead (Mr Field) correctly said. The current arrangements give the chance of a more secure and independent life to people who would, through absolutely no fault of their own, find that very difficult otherwise. At less than £10 million a year, that is a price worth paying for the independence of severely disabled young people. I urge the House to reject the Government motion.

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

I am pleased to welcome the vast bulk of what the Government are doing. It is a pleasure to hear that people are not being defined by their condition and are not being forced to have decisions taken about them on the basis of a label or a particular condition. That is why, as I say, I strongly welcome much of what the Government are doing.

I would, however, like to reflect briefly on amendment 23, which relates to the youth passport. It is not that I particularly disagree with what the Government are doing, but I wish to focus on a few questions, which I hope the Minister will answer, about how we intend to ensure that these young people are given, as it says in the impact assessment, the “equal footing” that the Government rightly want them to have.

My primary concern is that these young people have not been able to acquire national insurance contributions because they are severely disabled. I would welcome some clarity about the expectation that they will accrue these contributions and be protected in the welfare system at the point at which they become an adult. Despite reading the impact assessment and all the debates in the House of Lords and listening carefully to what has been said today, I am still not entirely clear how that will be achieved.

[Chris Grayling]

Before my hon. Friend moves on and in case I do not have a chance to respond at the end of the debate, I would like to draw his and the House’s attention to the fact that people who leave contributory ESA will still be able to accrue national insurance credits in the same way as happens today for those who are not on contributory JSA. Ultimately, they will still have the same pension entitlement they would have done had they been in work.

[Paul Maynard]

I thank the Minister for that helpful clarification.

Secondly, I want to reflect on the comments pre-empted by what was said by the hon. Member for Makerfield (Yvonne Fovargue) and perhaps go beyond the implementation of this system to look at the wider impact on the ability of individuals to form independent relationships.

As the right hon. Member for Birkenhead (Mr Field) has recognised, we are talking largely about the impact on human behaviour. I am concerned—it is possibly a mistaken fear—that if people were to enter into a relationship and cease to be an independent household, they might become dependent on their partner’s income. That could be a deterrent to forming a meaningful relationship. I may be a simple Member of Parliament who fails to understand this complex issue, but the all-party parliamentary group for young disabled people, which I chair, has asked me expressly to raise this issue, which is at the heart of its concerns about this amendment. I would welcome some clarification of how the Government think people will behave in real life as opposed to in the benefit system.

I shall not detain the House any longer. The Government have my full support on these amendments, but I would like more clarity about how they view their implementation.

[Dame Anne Begg]

Let me say from the outset that I support the Lords amendments and do not agree with the Government’s motion to disagree. I shall talk about two main aspects: one is the time limitation and the second is the can of worms that I have managed to open this afternoon about the youth rate.

The time limit is unfair to people who have worked all their lives, done the right thing and thought that part of their payment of national insurance would provide them with some kind of insurance scheme so that if an unfortunate accident or ill health befell them, they would qualify for an income replacement benefit—in this case, employment support allowance—regardless of their actual income. People believed that it would work like any other insurance policy and would pay out if the unfortunate happened. The Government are breaking that link between the concept of an insurance policy and how much and for how long it will pay.

People suffering from cancer are often used as an example of a group that will fall into the work-related activity category of ESA: cancer patients will often not be well enough to go back to work within the year. Other groups of people have fluctuating conditions and some have slowly progressive neurological conditions. From everything the Minister said today, the assumption seems to be that people in the work-related activity group will move towards work, but some will be on the opposite journey, moving further and further away from work as their condition deteriorates.

Because we assess people not on their condition but on how their condition affects them when they go through the assessment, someone with multiple sclerosis or in the early stages of Huntington’s disease might not qualify for the ESA group, might end up in the WRA group and might qualify only some time in the future. They are likely to be a group that has already been in work and will have fallen out of work precisely because they have been diagnosed with these conditions. Although many of us—and probably those people, too—want to be in work, we live in the real world where employers will often not take the risk of employing someone with that type of condition, especially if the person has already lost one job precisely because of it.

I think the time limit is arbitrary and unfair, and I wish the Government would look at it again. The two-year provision is arbitrary as well—[Interruption.] In fact, I do not agree with time-limited provisions at all, but this is the best we have; it is twice as good as the Government’s proposal. [Interruption.] I am sorry that some Conservative Members at the back of the Chamber find this so funny. The people with Parkinson’s disease and MS do not find it funny. It is their lives that are being undermined, and it is they who will not have an independent income. It is my constituents—and, indeed, those of Government Members sitting at the back of the Chamber—who, because they have saved all their lives, will not qualify for income-related ESA and will suffer as a result. They will lose their independent incomes, and their household incomes, although they may have been cataclysmically affected, may still be too high for them to qualify for income support. Despite what those Government Members sitting at the back may think, income support levels are very low, and the actual level of income on which such households will have to live will therefore not be what they may have expected.

[Mark Durkan]

My hon. Friend may recall that, in an intervention on the Minister, the hon. Member for Shipley (Philip Davies) pledged his support to the Government on the basis that, in rejecting the Lords amendments, they were removing from the system people who had been abusing it as a “lifestyle choice”. The people we are discussing are people who are suffering from life-impacting conditions such as cancer, Parkinson’s and AIDS, or young people who have had disabilities since their birth or childhood. Where does the issue of lifestyle choices come in for those people?

[Dame Anne Begg]

I could not agree more with my hon. Friend. It is not a lifestyle choice to be diagnosed with a progressive, debilitating condition. It is hard. It is difficult. Individuals in that position face enough prejudice in society already, probably from the employers who told them that they could no longer do their jobs. That is why they need to apply for and claim benefit: because they have already faced that prejudice, which the Government may be making even worse. It is hard for those people, and we are making it harder.

[Sammy Wilson]

To a certain extent I agree with what the hon. Member for Shipley (Philip Davies) said about lifestyle choices, but surely, in this instance, people who have decided to save, make provision and do the right thing are being penalised for making a lifestyle choice. It is the kind of lifestyle choice of which I imagine the hon. Gentleman would approve, but the measures that we are discussing will punish people for making what he and many other Members would presumably describe as a good lifestyle choice.

[Dame Anne Begg]

Indeed. As I said earlier, the people who will be punished most are those who have done the right thing. They are the ones who have been in work, the ones who have saved, and the ones who have partners who have been in work and remain in work. It would be much easier for their partners to drop out of work as well, because they and their partners would then, as a household, qualify for the benefit. That would probably be the wrong thing to do from the point of view of the family, but given such a benefits system—I was going to say “a benefits system that would make them better off”, but it might not do that—it will become a logical choice for a working partner in those circumstances to give up work. Although it would probably be wrong, it would be logical.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

Does the hon. Lady accept the principle of means-testing? That is my first question. If so, what level would she set?

[Dame Anne Begg]

I do accept the principle of means-testing, but I am not sure why that is relevant.

[Gordon Henderson]

rose—

[Dame Anne Begg]

Will the hon. Gentleman sit down while I answer his question? The whole point of contributory ESA is that it is based on national insurance contributions. These are people who may have worked for 30 or 40 years, paying into what they thought was an insurance scheme. Does the hon. Gentleman, if he has insurance, expect the insurers not to pay out at the point at which the money is due to be paid?

[Gordon Henderson]

I thank the hon. Lady for giving way to me again. I have been made redundant twice in my life, and on both occasions, because I had capital, I was not entitled to any employment relief. I was given no benefits at all, because I had about £20,000 in the bank, and although I had been paying into the system since I was 16, I had to accept that.

[Hon. Members]

What was your illness?

[Dame Anne Begg]

I think—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Member for Sittingbourne and Sheppey (Gordon Henderson) has asked a question, Dame Anne Begg wants to answer it, and I am sure that other hon. Members would love to hear the answer as well. They may wish to intervene later.

13:45

[Dame Anne Begg]

Thank you, Mr Deputy Speaker.

I think that the hon. Gentleman’s intervention illustrates some of the confusion that exists. Some Members seem to believe that losing a job because of ill health is exactly the same as losing a job by being made redundant, but it is not. As was pointed out by my right hon. Friend the Member for East Ham (Stephen Timms), the chance of obtaining another job is far, far higher for someone who has been made redundant than for someone who has lost his job because he has received a diagnosis of multiple sclerosis, or because he has had a major road accident which means that he is now dependent on a wheelchair to survive. Those conditions are different, and they should therefore be treated differently in the national insurance and, indeed, the benefits system.

[Mel Stride (Central Devon) (Con)]

Does the hon. Lady accept that any responsible policy must be fully costed? If so, will she answer the question that the shadow Minister failed to answer, and tell us how much it would cost for the one-year period to be increased to two years, as the amendment proposes?

[Dame Anne Begg]

At present, those on incapacity benefit—the existing benefit, which the Government are to replace—who have made the necessary national insurance contributions will keep that benefit until they return to work. Is the hon. Gentleman saying the costing should be done on any other basis? Obviously, the reason the Government are introducing the time limit is to save money: there can be no other reason, as the hon. Gentleman has effectively admitted. This is the result of a money-saving decision by the Government. It is not about being fair; it is about saving money to deal with the debt and the deficit, which were not caused by the people—and their partners, wives and husbands—who have tried throughout their lives to do the right thing.

I am conscious of the time, but I now want to say something about the youth rate. When I intervened on the Minister, I was genuinely trying to obtain some clarification, but I have ended up even more confused than before about how the youth rate will work and which groups of young people will no longer receive an independent—that word is important—income replacement benefit. They may receive non-means-tested benefits and, for instance, disability living allowance or the new personal independence payment, but they will not have any income.

Let me give an example of someone I think will be caught by that, someone who came to my constituency office a number of years ago. He was a young lad of 20 who had been in work for six months when he was diagnosed with a virulent condition. I cannot remember what it was, but it meant that he would be unlikely to work again, and indeed his condition was going to deteriorate. This young man lived with his girlfriend, who earned about £15,000 or £16,000 a year, just over the income support level. Under the measures proposed by the Government, he would not qualify for any income at all. He would be wholly dependent on his girlfriend, and the household income would consist only of her income. That does not strike me as right, and it does not strike me as fair. I should be grateful if, before we vote on the amendment, the Minister would tell us exactly which group of people will lose out as a result of the abolition of the contributory youth rate.

[Jenny Willott (Cardiff Central) (LD)]

Does the hon. Lady accept that that young man would probably qualify for disability living allowance? He would therefore have some income, even if he did not receive means-tested ESA.

[Dame Anne Begg]

The household might possibly get housing benefit, but that goes on paying the rent. The young man might get disability living allowance, but that is paid because he has extra expenses due to his disability. What he does not have is an income. He has no money to go to the pub for a pint, to buy clothes, or to do anything that the rest of us, disabled or not, take for granted. He has no independent income. It is totally different if someone is out of work and unemployed. I am disappointed that those on the Government Benches cannot see that distinction, and cannot see that those who are long-term ill or disabled, and who have no prospect of improving their financial circumstances themselves because of the level of their disability, are being penalised by the Government. That is partly why I most certainly will support the Lords amendments this afternoon, and I encourage right hon. and hon. Members to do so, too.

[Jenny Willott]

Returning to the issue of the time-limited employment and support allowance, there is real concern about an arbitrary time limit. As was kindly pointed out by the right hon. Member for East Ham (Stephen Timms), at a party conference the Liberal Democrats showed their concern by passing a motion against arbitrary time limits. However, the amendment from the Lords and the Government’s original proposal both set arbitrary time limits; it is just that one is longer than the other. Neither of the options in front of us would get rid of an arbitrary time limit, as a number of Members have highlighted.

One way to make the system less arbitrary is to ensure that people are in the right category in the first place, with those in the greatest need in the support group, so that they are not affected by a time limit. My colleagues and I have looked long and hard at the issue, and the important thing is to get the assessment right in the first place and make sure that people are in the right category, as those in the support group are exempt from the time limit. We need to make sure that people who need long-term, indefinite support are in the support group and can get that. That is a more effective way to protect those who need the most help than changing one arbitrary time limit for another.

[Dr Whiteford]

I share the hon. Lady’s concern about getting the test right in the first place, but is she confident that the work capability assessment is working as it should?

[Jenny Willott]

I was going to come on to that. If the hon. Lady will bear with me, I will hopefully answer her question.

[Harriett Baldwin (West Worcestershire) (Con)]

The hon. Lady is making many interesting points. Does she agree that when a person has a degenerative illnesses such as multiple sclerosis, their condition may change during any finite period, so it is important to emphasise that people can be reassessed and put into the support group if their condition deteriorates?

[Jenny Willott]

The hon. Lady is right, and many conditions get worse at varying rates—very slowly for some people, and very quickly for others. It is important to make sure that people get the benefit that they should, and that the assessment is right, as the hon. Member for Banff and Buchan (Dr Whiteford) said.

[Sheila Gilmore]

Will the hon. Lady give way?

[Jenny Willott]

I will make some progress, because I have hardly said anything yet, and I am being intervened on left, right, and centre.

The Harrington process is critical to getting the assessment right. I welcome the work that has been done looking specifically at cancer patients, which will ensure that the vast majority go into the support group. That is the right way forward. I also welcome the fact that Professor Harrington is looking at how we assess chronic pain and fatigue, because in many chronic, long-term conditions—particularly fluctuating conditions—those are the elements that cause people most difficulty in thinking about returning to work, and the elements that, at the moment, the work capability assessment is not very good at identifying and reflecting. I really hope that Ministers will implement whatever recommendations Professor Harrington makes on those issues; on past experience, his recommendations have been sensible and have made a significant difference to the assessment.

On the point made by the hon. Member for Banff and Buchan, there is evidence that the system is improving. I looked earlier today at the latest figures on the outcome of the work capability assessments, which I found quite reassuring when it comes to the Bill. We have to treat the figures with caution, but they show that initially, following the work capability assessment, more people are going into the support group than the work-related activity group. That is a crucial point. If we are getting the assessment right, and more people are going into the support group in the first place, the time-limit for people in the work-related activity group becomes less of an issue, because the people who need the most care are getting support indefinitely.

[Dr Whiteford]

My concern remains that far too many people are having to appeal against their work capability assessment result, and those appeals are overturning the original decision, so the system really is not working as well as it should.

[Jenny Willott]

I understand the hon. Lady’s concern, and the issue has been raised over a number of years by those on both sides of the House.

[Chris Grayling]

It is important that we put it on record for the House once again that, possibly with a tiny number of exceptions, no appeals have yet been completed following the introduction of the Harrington reforms. Every appeal that has been discussed up to now took place under the system that we inherited, rather than since we changed the system last summer.

[Jenny Willott]

I am grateful to the Minister, and I hope that when the figures flow through on appeals that have taken place under the new system, we see a reduction in the number of decisions overturned, and in the number of people who go to appeal. That would suggest that the assessment was working properly.

If we make sure that the assessment works properly, it will reduce the arbitrariness of the timetable, but as the Minister mentioned in an intervention on the Opposition spokesman, the right hon. Member for East Ham, it is important that we recognise that many people will receive six months’ statutory sick pay before they go on to the ESA, so they will be receiving benefits for 18 months. It is important that the Government continue the work that is being done to look at ensuring that employers work with staff when they become disabled or fall sick, and do not immediately push them on to ESA. Instead, employees should get the support that they need, possibly to stay in work over an extended period, and get their full entitlement to statutory sick pay and ESA, so that they get the full 18 months’ support to which many of them will be entitled.

[Stephen Timms]

The hon. Lady set out the fact that there was objection at her party conference to an arbitrary time limit. Does she accept the case for setting the limit, whatever it should be, in regulations instead of in the Bill? Putting it in the Bill means that it will take another Act of Parliament to change it in future.

[Jenny Willott]

There needs to be some stability, so that people know what to expect. One of the problems with putting that type of provision in regulations is that it becomes very difficult for people to know what they can expect. That creates uncertainty, which makes it more difficult for people to cope.

To return to the point made by the hon. Member for West Worcestershire (Harriett Baldwin) about people with deteriorating conditions, I welcome the concession that the Government made in the Lords. It is important that people with MS, motor neurone disease, Parkinson’s and so on get ongoing support when they really need it. That is definitely a step forward.

I still have some concerns about work incentives and the means test. A person does not get means-tested ESA if their partner has a low level of income. If the partner worked 24 hours a week on the minimum wage, that would be a household income of £145 a week. However, as people would get increased housing benefit, council tax benefit and so on, the drop in income for that household when the sick or disabled person no longer received ESA would be significantly less than the scare stories are leading people to believe. I also appreciate that when universal credit is introduced, that will be far less of an issue, because the income disregard for households in which there is someone with a disability will be set much higher, at £140 a week. In the future, under universal credit, a household with an income of £140 a week will get the whole of their income and the full universal credit on top of that, so this is mainly an issue for the 18 months between the introduction of the policy that we are discussing and the introduction of the universal credit in October 2013.

I would be grateful if the Minister, if he gets the chance to sum up at the end of the debate, would say whether anything can be done to bridge that gap. For example, we could look at making sure that people in that category are among the first to be moved on to universal credit, so that we can ensure that the period in which they lose out on income is as short as possible. In addition, the DWP impact assessment says that it is likely to cost £30 million in increased benefit payments as the partners of those affected leave work. I would be grateful if the Minister could consider whether there is anything that could be done to reduce that amount of money by considering the effect on such households.

13:59

Finally, the debate has been getting quite heated on the subject of young disabled people. I understand that there is a lot of concern about this group, because they are particularly vulnerable, but there has been a good deal of rhetoric—not least today—about the Government taking away those individuals’ whole income. We have heard suggestions that people will not get anything at all, but it has been made clear today that the means test will not take into account parents’ income once the disabled or sick young person reaches the age of 18 or 19. Despite the best efforts of those on the Opposition Front Bench to muddy the waters, it is quite clear that the means test will only take into account that individual’s circumstances. The parents’ savings and income will not be taken into account and that is why nine out of 10 of the people affected will still receive income-related ESA. That is a crucial message for people who are concerned about this move. The vast majority of people will not lose their benefits, despite the negative messages we have heard, which are creating fear that is unnecessary and worrying.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Will the hon. Lady give way?

[Jenny Willott]

I will not give way any more, because quite a number of people want to speak and we have only half an hour left.

There are still issues about the time limiting of ESA, although many of them will be resolved when the universal credit is introduced. I believe that the Government have been making good progress on improving the assessment process, which is critical to making the system work. I hope that the Minister gets the opportunity—even if only through interventions—to respond positively to some of the points that I have raised.

[Mr Winnick]

This is indeed a grubby and obnoxious measure, but I have no doubt that at 2.30 pm, the Government will carry the day. I sat on the Government Benches for 13 years, and in the unlikely event that my Government had introduced such a measure, I would not have hesitated to vote against it, as I did on other motions on one or two occasions—although not many. I would not have expected my Government to propose such a measure, and I am pleased that we are opposing it. In essence, we are debating a 12-month limit—if the Lords amendments are defeated, as I expect they will be—for those with cancer and other life-threatening illnesses in the work-related activity group of the employment and support allowance. After 12 months, most of them will be means-tested. Some Government Members will ask why such a means tests should not be imposed, but let us be clear, so that when hon. Members vote in half an hour they know what they are voting on: a claimant in the category that I have mentioned whose partner works for more than 24 hours or earns £149 weekly—£149, not £249 or £549—could lose all their benefit. I wonder how many Government Members, who seem so keen on the proposal, could justify that in their constituencies. I certainly could not and would not wish to try.

As has been stated, Macmillan Cancer Support believes that 7,000 cancer patients will be adversely affected by the proposal. The Government’s own figures show that 94% of people with cancer who are placed in the group that I have mentioned need ESA for longer than 12 months. That is not disputed—if it is, the Minister will intervene. I repeat: the Government’s own statistics show that 94% of such people require that support for longer than 12 months.

This is not just about cancer patients. Let me quote a piece written by someone who has a rare bone disease. He is 50 years old and has spent more than three years in hospitals, trying to recover. He is not in a position to take employment, and that is not disputed. He says that he paid national insurance contributions all his life, until his illness, and he gets £89 a week through ESA. He writes that it

“isn’t a big sum…but it makes a huge difference for me. Among other everyday essentials it pays for the heating to keep me warm during the long and often painful days at home while my partner is out at work.”

Not an extravagant sum, is it? We are not being over-indulgent to someone who worked until he had that terrible disease and wants to try to make the best of his life in such circumstances. He says—[Interruption.] I hope the Minister is listening—he smiles.

[Chris Grayling]

If I understand correctly, the hon. Gentleman has just described the very sad case of someone who will not be able to work again and would therefore certainly be placed in the support group and would not be affected by the measures. I am not sure that I understand the point being made.

[Mr Winnick]

He may well work again, but not at this moment. He writes that when the Welfare Reform Bill becomes law in April he, and others, such as cancer sufferers, people with psychiatric problems and those with other life-threatening illnesses will have their benefits “stripped” from them once 12 months is up. If his partner earns the sum I have mentioned of as little as £149 a week and if they have modest savings, he will receive nothing at all once he is means-tested. If that case is an illustration of the Government’s intentions, there is all the more reason for a reluctance to support the measures and a recognition of what the House of Lords has tried to do.

As I listened to the hon. Member for Cardiff Central (Jenny Willott) and to the Liberal Democrat Minister of State, who intervened on my right hon. Friend the Member for East Ham (Stephen Timms), I asked myself whether, if they were in opposition, they would have the slightest hesitation in upholding the decision of the Lords by majority vote. The answer is pretty obvious. To their credit, a number of Liberal Democrats in the Lords decided to vote against the Government, and Liberal Democrat MPs would, in opposition, have voted in the same Lobby as us at half-past 2. It is unfortunate that they are willing to sacrifice their principles so flagrantly as a result of being in the coalition.

Let me end on a quote:

“People who are sick, who are vulnerable…I want you to know we will always look after you. That’s the sign of a civilized society and it’s what I believe.”

That was the Prime Minister at his party conference. What he is now doing with his colleagues and with the support of the Liberal Democrats is hitting out at the most vulnerable people in our society—cancer patients and the rest, including the man I mentioned. Those are the people who will be penalised financially and harmed in so many ways as a result of what the Government are doing. That is a direct contradiction of what the Prime Minister said about protecting the most vulnerable in our society.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Quite a few Members wish to speak, so may I ask for short speeches? That will mean that we can get everybody in and all the views will be on the record.

[Mr Nuttall]

It is always a great pleasure to follow the hon. Member for Walsall North (Mr Winnick), although I do not agree with him on many occasions. I do not agree with him today either, except on one thing—the Government will get this measure through today, and that is because they are doing absolutely the right thing. One thing that I heard time and again from my constituents in the last election campaign was that they were sick and tired of the number of people taking a lifestyle choice to live a life on benefits, as my hon. Friend the Member for Shipley (Philip Davies) has mentioned.

[Philip Davies]

Does my hon. Friend share my surprise that the Labour party, which now has this synthetic anger about the proposals for means-testing, was the party that when in government—the hon. Member for Walsall North himself said that he supported them more often than not—extended means-testing more than any other Government in history?

[Mr Nuttall]

Absolutely. We have heard a lot about this means-testing this afternoon. We have heard that the system is insurance-based, which it is, but with any insurance policy there are terms and conditions. In this case, the means test is just shorthand for the terms and conditions of the policy.

[Sheila Gilmore]

What I find so hard to understand in the argument the hon. Gentleman is presenting is that the very people he might be condemning—people who have not worked and have not had savings—will continue to get benefit. The people who are being damaged by this policy are those who have saved, who are working and who have tried hard.

[Mr Nuttall]

We must have rules of policy in an insurance system. The Labour party accepted that when it was in government and the hard-working families in my constituency, many of whom have no savings at all, or less than £1,000 in savings, will ask why their taxes should go towards paying benefits to people who have far more in savings than they have. That is a perfectly logical and sensible view.

[Sheila Gilmore]

If people thought about this they would realise that if they had been saving and making that effort—and we are not necessarily talking about huge amounts because the measures would start to affect people to some degree at £6,000—they would find the measures unfair.

[Mr Nuttall]

I do not agree. We have to ask why people save. They save for a rainy day. They save in case they lose their job or have an illness. The changes will still mean that the most needy in our society will be looked after. There will still be a safety net that will help those who most need help in our society.

[Dame Anne Begg]

Will the hon. Gentleman be advising his constituents to take out private insurance to protect against unemployment or ill health? After all, he is supporting the limiting of the state’s role in that respect.

[Mr Nuttall]

Some constituents might choose to do that, but that is a matter for them. I am not going to recommend whether that is the right or wrong thing to do because it is a decision they have to take for themselves. It is about personal responsibility. Hon. Members should be in no doubt that at a time when the welfare bill is spiralling out of control and this country has run out of money—we are essentially bankrupt; we are having to borrow money every single day to pay our way—it is essential that we bring the welfare benefits bill under control. It is only by taking tough decisions that that will ever be done.

[John Hemming (Birmingham, Yardley) (LD)]

Like me, my hon. Friend might not be surprised that the Opposition are ignoring the effect of universal credit. Does he accept that many of the families in the margins who are affected badly by means-testing will benefit from universal credit?

[Mr Nuttall]

My hon. Friend is absolutely right. With universal credit, we seek to sweep away some of the complexities of the welfare system that inevitably lead to confusion and the possibility for people to make errors—sometimes deliberately.

I am very conscious that many other speakers want to get in and I am sure that we want to hear the Minister’s reply. Let me say again that I want to speak up for the hard-working families in my constituency and the vast number of my constituents who think the Government are doing absolutely the right thing on welfare. I urge everyone to back these moves today.

14:15

[Ian Lavery (Wansbeck) (Lab)]

If anyone ever had any doubt about the same old Tories and the nasty party, they have just seen an absolutely fine example of it. I am not surprised by the views of the hon. Member for Shipley (Philip Davies) either, bearing in mind that he said that disabled people should work for less than the minimum wage—well done!

[Philip Davies]

Will the hon. Gentleman give way?

[Ian Lavery]

On the issue at hand, one in three of us—

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. It is up to the hon. Gentleman whether he wishes to give way. Having three people shouting at once is not the way to get anyone to give way.

[Ian Lavery]

Thank you, Mr Deputy Speaker.

One in three of us suffers from cancer at any one time. I am very unfortunate, as my parents and my wife’s parents all died at a relatively young age.

[Philip Davies]

On a point of order, Mr Deputy Speaker. Is it in order for an hon. Gentleman to make an accusation that five national newspapers apologised for making? Is it in order for him to make the same accusation and then not give way to allow me to correct him? Those five newspapers at least had the courtesy to acknowledge that they had made a mistake.

[Mr Deputy Speaker]

That is not a point of order for the Chair, but you have put the point on the record which I think is what you wished to do.

[Ian Lavery]

As I was saying, one in three of us—[Hon. Members: “Shame!”] I will start again. One in three of us, sadly, comes into contact with cancer during our lifetime. It is a very difficult situation. I lost both my parents, and my wife lost both of hers, so I understand how sufferers and their relatives and friends are affected. It is not just the disease that has an effect—there is also the mental and physical stress and traumatisation for people who suffer from diseases such as cancer and stroke.

Some of the people who suffer from cancer might not see two years—they might not have a vision of the next two years on this earth—but the Government propose to cut benefits from those people at that time in their lives. It is absolutely dreadful that in 2012 we have a Government who are even considering such heinous acts against the most vulnerable. When the Secretary of State, who has left the Chamber, discusses these issues on television and in the media he seems to relish the fact that benefits will be cut. He seems to have a sense of contentment or self-satisfaction—almost an arrogance beyond belief—when he states clearly that benefits will be cut. To say the very least, it is gut-wrenching.

We as politicians across the board should be looking to defend people whose voices are mostly unheard. They elected us into our positions, and they depend on us. The Government must consider an extension to ESA for two years, and we must exempt those receiving cancer treatments from any time limit whatever. It is breathtaking and incomprehensible that benefits are being cut from people at that critical point in their lives, when some see the possibility that they will not live much longer.

There are regional differences as well, regarding the availability of cancer treatments, for example. The north-east fares very poorly in that. We also have the highest incidence of newly diagnosed cancers, and I am certainly not happy with the cutting of benefits in any way, shape or form to people suffering from cancers, strokes and all those debilitating diseases.

In conclusion, we need to give such people a break—give them a chance and some understanding. You can nod your head all you wish.

[Sarah Newton (Truro and Falmouth) (Con)]

Obviously, the hon. Gentleman is not concerned with the facts at all. Cancer does not respect political boundaries. Do you not think that colleagues on this side of the House have suffered in the same way that you have? Such a person as you have described would clearly be in the support group.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

Follow the debate; you should know what you are voting for!

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We do not need Front Benchers to join in as well. We have enough with the Back Benchers.

[Ian Lavery]

Thank you, Mr Deputy Speaker. I am the sort of person who would not, in any event, agree to cuts for people on benefits who were suffering from debilitating or life-threatening diseases. That is the type of person I am. If you want to vote for that—my apologies. If it is your intention to vote for that, you do it.

[Mr Deputy Speaker]

Order. We are going to go through the Chair and we cannot use “you”. We know better now. Okay, Mr Ian Lavery.

[Ian Lavery]

Thank you, Mr Deputy Speaker.

[Mr McCann]

Will my hon. Friend give me some clarification to get the facts straight? If someone who has worked all their life and paid contributions to the system tragically contracts cancer, after one year will their ESA contributions-based benefit stop?

[Ian Lavery]

That is certainly the intention of the Government’s proposal, and it is absolutely outrageous.

To conclude, bearing in mind the time, I want to say that it is about time that we gave some dignity to the people we have mentioned—

[Chris Grayling]

It is important that the House understands the facts. Somebody who is diagnosed with cancer who goes through chemotherapy will spend an extended period in the support group, so they will not lose benefits after 12 months. Does the hon. Gentleman accept that, today, there are more cancer patients receiving unconditional ongoing support in the support group than under the previous Government?

[Ian Lavery]

What I will not accept is that everyone suffering from cancer will be in the work group. That is not the case. They might be in for a short time or a prolonged period, but they are not guaranteed to be in there all the time. That means their benefits will be cut.

[Sheila Gilmore]

Does my hon. Friend agree that it is rather strange that a Government who have been saying that disabled people should not be condemned to worklessness and should be encouraged to work seem to be turning on a pin to argue that everything will be all right because all those people will be in the support group?

[Ian Lavery]

If that was the case, there would not be a problem with the legislation. Everybody would get what they were due and there would not be the apparent cut.

For the third time, I shall try to conclude. We must give dignity to those people, who are in most need, and stop the war against those in need.

[Dr Whiteford]

I will try to keep my comments brief, given the time pressure on us.

The Lords has done us a big service by highlighting the impact and implications of these measures for sick and disabled people. The 12-month limit to contributory ESA is arbitrary. Regardless of the people in the support group, the measure will affect people who are adapting to radical and serious changes in their health, income and life. They might be suffering from life-limiting conditions, long-term disability or fluctuating conditions. They might be people who have been used to living on an average income, but will have to get used to living on a very low income. Those adaptations take time; getting better takes time. Some people will take less than 12 months, some considerably more. Macmillan thinks that 94% will need support in the work-related activity group for more than 12 months. In that respect, while I do not accept the principle of an arbitrary time limit, I suspect that two years would catch more of those people and see them getting the support they need.

Fundamentally, these measures will upset the contract that we all like to think we have when we pay our national insurance contributions—that there will be some limited safety net for us if we are unfortunate enough to become sick or disabled. That could happen to any one of us in this Chamber, at any time. We do not know when we are going to have an accident or develop a serious illness, so not only cancer is involved, although we know that people across society are affected by it. Other conditions are just as serious, and the same principles apply.

On insecurity, I should draw an analogy with what happened when banks tried to prey on people’s insecurities about the future by asking them to take on insurance for loans they had taken out. The banks have had to pay out seven-figure sums in compensation to people who were mis-sold insurance policies. I hope that that does not happen again as people think, “If I get a serious illness, there will not be support for me.” I am worried that there will be an opportunity for unscrupulous selling of insurance policies to vulnerable people at the most vulnerable times in their lives.

I am concerned about the knock-on impact of the proposals on carers too. In my constituency, I have seen families working longer hours, often in low-paid jobs, just to provide financially for family members who are no longer able to work, but who once were. There is particular concern around young people; that was mentioned earlier in the debate, but it has not been focused on so much. Parents of disabled young adults have often saved throughout their lives as they are concerned about what will happen when they are no longer able to look after their children. They have saved for their children to ensure that they have independent means and a bit of money behind them for when they are adult and their parents are no longer in a position to provide.

It would be unfortunate if the capital of those young people were eroded at a time when they still had some support from their parents. They might be prevented from having an independent old age and might be made more dependent on the state than they would otherwise be. That is about the dignity of young disabled people as much as anything.

I urge the Government to consider the fact that ESA needs to be assessed on the basis of medical need, not an arbitrary time limit. People should get the support they need according to their health, not some arbitrary category that they may or may not fit into.

[Sheila Gilmore]

What we have heard today is that there is a big divide between the parties on our views of what the welfare state is for. The Minister opened the debate by saying that the welfare state is a safety net, by which he meant a safety net only on financial grounds; those who are very poor get help, but those who are not do not. That is not how I see it. The welfare state was set up to help us through the times when we are in difficulties, including illness and poor health. It is the social security that gives us the confidence that we will be provided for when we need it. This distinction clearly illustrates the divide between the parties.

It was very odd to hear the hon. Member for Cardiff Central (Jenny Willott) argue that this matter was somehow not as important as the Opposition think it is because people will end up in the support group. That goes against everything that many disability organisations are saying, which is that people who have an illness or a disability do want to get back to work. Perhaps they are not quite ready to go back to work within a year, but they do want to work. Parking people in the support group is a very odd solution indeed, because we will end up going back to the situation that the Government have so heavily criticised. Where people have saved, they should have that opportunity. If someone falls ill at that age, they will already have incurred considerable financial losses and no doubt bitten into their savings. We are talking not about welfare, but about people who will start to lose benefits when they have savings of over £6,000 a year.

[Sarah Newton]

The hon. Lady is absolutely right that people’s circumstances change, but does she not agree that they can go for a reassessment?

[Sheila Gilmore]

One of the things that it would be interesting to discuss if we had more time, and it is dreadful that so little time has been given for considering these important matters, is whether someone who has been in the work-related activity group—

14:30

Debate interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 15.

14:30

Division 454

Ayes: 324

---

Conservative: 279
Liberal Democrat: 44

Noes: 265

---

Labour: 237
Democratic Unionist Party: 8
Liberal Democrat: 8
Scottish National Party: 5
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Alliance: 1
Green Party: 1

Lords amendment 15 disagreed to.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Government amendment (a) made to Lords amendment 19.

Lords amendment 19, as amended, agreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 17.—(Chris Grayling.)

14:45

Division 455

Ayes: 332

---

Conservative: 283
Liberal Democrat: 48

Noes: 266

---

Labour: 241
Democratic Unionist Party: 8
Liberal Democrat: 6
Scottish National Party: 5
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Alliance: 1
Green Party: 1

Lords amendment 17 disagreed to.

Motion made, and Question put, That this House disagrees with Lords amendment 18.—(Chris Grayling.)

14:58

Division 456

Ayes: 328

---

Conservative: 284
Liberal Democrat: 43

Noes: 265

---

Labour: 242
Democratic Unionist Party: 8
Scottish National Party: 5
Liberal Democrat: 4
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Alliance: 1
Green Party: 1

Lords amendment 18 disagreed to.

Lords amendment 23 disagreed to.

[Mr Deputy Speaker (Mr Nigel Evans)]

I have received a report from the Tellers in the Division at 10.14 pm yesterday on the Question that new clause 11 be added to the Local Government Finance Bill. The hon. Members for Preseli Pembrokeshire (Stephen Crabb) and for Leicester South (Jonathan Ashworth) have informed me that the number of No votes was erroneously reported as 309 instead of 299. I will direct the Clerk to correct the numbers in the Journal accordingly. The Ayes were 225 and the Noes were 299, so the verdict is not altered.

Clause 93

Benefit cap

[Chris Grayling]

I beg to move, That this House disagrees with Lords amendment 47.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to consider new clause 1 and amendments (a) to (j) in lieu of Lords amendment 47.

[Chris Grayling]

As Mr Speaker has indicated, Lords amendment 47 impinges on the financial privilege of this House. I ask the House to disagree to it, and I will ask the Reasons Committee to ascribe financial privilege as the reason for doing so. Notwithstanding that, the House has an opportunity to debate the substance of the Lords amendment and I intend to provide the Government’s full rationale for rejecting it. I will also deal with the matters raised in the amendments tabled by the Opposition and explain why they should be rejected as well.

I should like to start by stressing that this debate is not simply about the financial aspects of what we are doing. The fact is that the arguments in favour of a cap are about fairness and about ending a situation in which, for some people, benefit rates are so high that it is not worth working. It is worth my saying that on this issue, the public of this country are overwhelmingly behind us.

[Philip Davies]

I congratulate my right hon. Friend on disagreeing with the Lords on this point. He is absolutely right that the public are right behind us, but does he agree with many of my constituents who think that the cap is still being set too high? They find it incredible that anybody could possibly think that it was too low.

[Chris Grayling]

Indeed, and what my hon. Friend says makes all the more extraordinary the flip-flopping position that we have seen from the Opposition in the past few weeks.

A recent YouGov poll showed 76% support for the cap, confirming what all of us will know from our mailbags—that the vast majority of the general public agree with the Government. It is not just the general public as a whole who agree with us, it is Labour voters as well. More than two thirds of them support the principle of a benefit cap. They agree with us that it is wrong to pay people who do not work more in benefits than people earn on average when they do work.

The cap will set a firm upper limit on total benefit entitlement, which for families and lone parents will be equivalent to the average wage for working households. We estimate that to be about £500 a week or £26,000 a year, which is equivalent to gross earnings of £35,000 a year.

[Dame Joan Ruddock (Lewisham, Deptford) (Lab)]

I would support entirely what the Minister says but for the fact that in my constituency, rents are so high and housing shortages so great that people do not have a choice. They are obliged to rent properties that entitle them to higher housing benefit, which costs more than the cap. That is the fault of landlords for the rents that they charge, not of the poor people who have no choice and will become homeless under the cap provision.

[Chris Grayling]

The right hon. Lady uses the evocative word “homeless”, but what happens to people in her constituency who are bringing up a family and earning a salary of £35,000 a year? Should they pay for those who are not working to have a home at the taxpayer’s expense?

[Dame Joan Ruddock]

As the Minister will know perfectly well, families in work are entitled to housing benefit, and approximately half of housing benefit recipients in my constituency are working families.

[Chris Grayling]

Of course people on lower incomes can receive housing benefit, but I am not aware that it is paid to families earning £35,000 a year. Surely that is the point. We are setting a dividing line.

15:15

The Opposition say that they agree with the principle of a cap, but they have been an unedifying sight in the past few weeks. Labour has said one thing one day and another the next. Let us take the example of the former Minister and now Opposition spokesman in the House of Lords, Lord McKenzie. On Second Reading, he described the cap as an “arbitrary measure”. On Report, however, he said that he was in favour of a benefit cap. Then bizarrely, no doubt at the instigation of the shadow Secretary of State, he tabled an amendment that was officially judged to be a wrecking amendment. When the vote on it was lost, the Opposition decided that they would support the exclusion of child benefit, and the new clause that they tabled effectively stated that they believed £26,000 a year was not enough.

Of course, if child benefit were excluded from the cap, a household in work would have to earn a gross salary of around £40,000 a year to receive as much as a household with four children would get in benefits.

[Mr John Redwood (Wokingham) (Con)]

I am sure that my right hon. Friend has seen that, in recent years, a large number of new jobs in this country have gone to people who have recently arrived. They have not seemed to be attractive to people who have been settled here longer and are unemployed. Does he think that is because it is not worth their while, as benefits are too high relative to pay?

[Chris Grayling]

That is exactly the problem. Many people are taking a hard look at the financial situation and asking, “Why would I return to work?” Surely that has to end.

[Kate Hoey (Vauxhall) (Lab)]

Although most of us agree that there should be a cap, does the Minister not accept that the situation is different for people living in different parts of the United Kingdom? Costs are different, so common sense says that the cap should be different.

[Chris Grayling]

I was going to come on to the Opposition amendments, but I should make the point that, although this debate is not simply about money, there is no getting away from the fact that their amendments would be costly. They would cut the savings that will be generated by £120 million in 2013-14 and £130 million in subsequent years.

I have great respect for the hon. Lady, and she makes an important point, but it would be altogether more credible if it had not been made at the very last minute. I do not ascribe the blame to her personally, but what we have heard from the Labour party has been quite extraordinary. Its latest effort, in today’s amendments, is to propose a regional benefit cap set by an independent body. The Opposition have tabled that idea and want to discuss it. However, did they table it on Second Reading? No. We had an extensive debate in Committee, which included many of the right hon. and hon. Members who are currently in their places, and I have no recollection of any mention of a regional benefit cap. We then had Report, and again I have no recollection of its being mentioned. My right hon. Friend the Secretary of State led on Third Reading. I have asked him, and he cannot remember mention of a regional benefit cap. There were then the debates in the House of Lords, in which there was no mention of it. I believe that the first time we heard about it was on the “Today” programme about 10 days ago. Frankly, it is a proposal designed to get the Opposition off the hook.

[Margot James (Stourbridge) (Con)]

Can I assume that if the Government accepted the Opposition’s proposal, the £26,000 cap would apply to London and the south-east and my hon. Friend the Member for Shipley (Philip Davies) might get the smaller cap that he wants in his constituency?

[Chris Grayling]

That may well be the case, but of course it is not clear. We do not quite know what is in the mind of the Labour party. Is it suggesting—this is not in its amendments—that the cap should still be set at £26,000, in which case there is no reason why Labour Members should not back our measures? Or do they plan a higher cap in some parts of the country and a lower cap in others, accepting that our benefit system should be regionally based? Frankly, I am completely confused, and the House has every reason to be the same.

[Philip Davies]

I, too, have a great deal of respect for the hon. Member for Vauxhall (Kate Hoey), but does my right hon. Friend agree that the logical conclusion of a regional cap is regional benefits? She cannot call for a regional cap unless she is also prepared to argue for regional benefits.

[Chris Grayling]

My hon. Friend is absolutely right, but that is not a conversation that the shadow Secretary of State will wish to have with his close friends in the trade union movement, who would not approve at all of the idea of beginning to regionalise how the public sector operates.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

The Minister expressed surprise at the concept of variable caps and benefits. Is he not aware that that concept has applied since the time of Beveridge, in the form of local reference rents, which have existed up to now? Why does he not recognise that regional or area variations in the cap are appropriate, because rents vary enormously from area to area?

[Chris Grayling]

We need to be clear about what has happened. We have been through months of debate. The Labour party has got itself on to an almighty hook on the issue of the benefit cap—it is on the wrong side of the argument—and is desperately trying to wriggle free. The Government are having none of it. We are standing by our proposal. The benefit cap that we propose is the right thing and we will press ahead.

[Harriett Baldwin]

My right hon. Friend is right that in the 26 sittings of the Welfare Reform Bill Committee, which I had the pleasure of attending, we did not hear once about the regional benefit cap. Fifty-seven per cent. of those affected live in London. Does the timing of the Opposition proposal have anything to do with the London mayoral elections?

[Chris Grayling]

There might be an element of that—it is difficult to escape that conclusion. The Opposition proposal would have more credence had it not been made at the 59th minute of the 11th hour. We should not take them seriously when they make such ill-thought out, last-minute proposals.

The Government are clear that average earnings are the right way to determine the level of the cap. We do not need the Opposition’s proposed independent body—another quango, I hasten to say—to tell us otherwise. The cap needs to be a single, national one for the policy to make sense. The Government will lay before the House a report on the policy’s impact evaluation after a year of operation.

[Ms Karen Buck (Westminster North) (Lab)]

rose—

[Chris Grayling]

I will give way one more time as the hon. Lady was on the Committee.

[Ms Buck]

The Minister knows that the Committee extensively discussed the impact of housing costs and their interaction with the cap. If a household loses income through the benefits system through no fault of its own, can it claim legitimately to a local authority to be statutorily homeless, in line with existing homelessness legislation?

[Chris Grayling]

I am sorry, but I simply do not buy the homelessness argument that Labour Members keep making. We are talking about a cap equivalent to a salary of £35,000 a year. Labour Members were vociferous 12 months ago when the housing benefit cap was introduced, but we have not seen the consequences of which they warned in the terms they used. I simply do not accept that somebody receiving the equivalent of £35,000 a year should be categorised as homeless and unable to find anywhere to live.

Much was said in the other place on the importance of child benefit. Let me make it clear that the introduction of a benefit cap will not result in a single household losing its entitlement to child benefit, which will continue—rightly—to be paid to the current recipient. That important principle will not change.

We are, however, changing another important principle: households on out-of-work benefits should not in future expect to receive unlimited financial support from the state. Like other welfare benefits, child benefit is funded by taxpayers. We therefore believe that it is right for its value to be taken into account along with other state benefits when applying the cap.

[Mark Field (Cities of London and Westminster) (Con)]

I agree with where the Minister is coming from, but he should not doubt the sincerity of many London Members, particularly those of us who represent inner-London seats. We have deep concerns that some of our local residents will have to move. They will not be made homeless—I agree with him that we should not exaggerate—but they will have to move to other parts of London or the UK.

However, all London Members have constituents who might be forced to move out of central London if they have a second or a third child because of the requirement for more space. Does my right hon. Friend think it perverse that the one category of people who are exempt from that is those on housing benefit?

[Chris Grayling]

That is important. I said at the beginning of the debate that our amendments are not simply about money, but about points of principle. What we are trying to achieve with our reforms is to replicate in our benefits system the realities of the world of work so that people can move quickly from one to the other—we need to do that as closely as we can. Fundamentally, that is what the our proposals are about.

[Several hon. Members]

rose—

[Chris Grayling]

I shall make some progress because we do not have that much time and other hon. Members will want to contribute.

The Government have said that there will and should be some exemptions from the cap, but we believe that work should be the primary way in which households can avoid it. We will therefore exempt households that are entitled to working tax credit. There will be a similar exemption after 2013 for working households on universal credit. Excluding child benefit will only dilute our aim. Being in work—even part-time work—must always pay better than relying on benefits alone.

We have always acknowledged that there will and should be exemptions from the cap among benefit recipients. Those will be households where someone is in receipt of disability living allowance. We will also exempt war widows and widowers. I can announce today that we intend to exempt the small number of households where someone is in receipt of the support component of employment and support allowance but not in receipt of DLA.

We have been clear that we are looking at ways in which to ease the transition for families and to provide assistance in hard cases. That is no different from what we did when we introduced the housing benefit cap a year ago. We used the time before the measure came in to work with those affected; we had flexibilities around the start; and we ensured discretionary funding for local authorities to support hard cases. It is our intention to take the same approach with the Bill.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I support the principle of the cap and appreciate the Government’s efforts to understand the difficulties of those hon. Members who represent high-cost housing areas. The house price in my constituency is roughly double the national average.

Can the Minister confirm what our right hon. Friend the Secretary of State told me in the House on 9 November 2010—that it is “the Government’s policy that” people should not be forced to move

“to a far-off community with which they have no links, and that the intention will always be that”,

if they have to move,

“they should ideally stay in the community or council area where they come from and where they have lived”?—[Official Report, 9 November 2010; Vol. 518, c. 166.]

The Secretary of State gave me that assurance. Will the Minister repeat it?

[Chris Grayling]

My understanding is that those were not the words used by the Secretary of State, but I want to reassure my right hon. Friend.

Let me set out in a little more detail how the transitional measures will work. First, those who are affected by the cap will receive and have access to immediate support from Jobcentre Plus and the Work programme, starting from April this year. We know who the families are. We need them to understand how the cap will work and how it will apply to them, because people in receipt of working tax credit will be exempt from the cap. So we have a 12-month period to work intensively with the families concerned to explain what steps they need to take, to provide support through the Work programme and to look for employment opportunities for them, which will address the issue and move them back into work.

We also always expected that we would provide a grace period—a degree of transition—for people who simply lose their jobs and find that their circumstances have changed dramatically through no fault of their own. We will not penalise those who are in work and doing the right thing. We will put in place a nine-month grace period for those who have been in work for the previous 12 months and lose their job through no fault of their own. We have always intended to make this measure, and I am happy to make that clear to the House today.

In addition, the Secretary of State and the Prime Minister have made it clear that we will provide transitional support to help manage families into more appropriate accommodation—as we did when we introduced the housing benefit cap. So we will follow the same model of additional money for discretionary housing payments that we adopted for the introduction of the housing benefit cap last year. We will ensure that resources are available in the right areas, such as London, where a larger proportion will be affected. We will provide short-term, temporary relief to families who may face a variety of challenges, such as not being able to move immediately for reasons of education or child protection, supporting minimum levels of access to the housing market.

15:30

We will provide up to £80 million for this purpose in 2013-14, and a further £50 million in 2014-15. However, we intend to work extensively with these families over the next 12 months. It is not our expectation that we will need anything like that amount of money, but it is there and available to ensure that we can provide appropriate transitional support for those who may require it.

[Mark Reckless (Rochester and Strood) (Con)]

The whole House will welcome these transitional provisions. In my constituency, many people get up at 6 in the morning to catch the coach to London because they cannot afford to pay the fare for the train, let alone for a flat in Bermondsey. It is not fair on them for their taxes to be supporting benefits for people to live permanently without a job in some of the most expensive accommodation in the country.

[Chris Grayling]

My hon. Friend is absolutely right. As I have said, we have to seek to replicate the realities of working life as closely as possible in the benefits system. If we are paying for people to live in a part of town that they could not afford to live in if they were in work, we are trapping them in a way that will prevent them from getting back to work.

[Mr Andy Slaughter (Hammersmith) (Lab)]

More than 1,000 households in my borough will be affected, as in that of the hon. Member for Cities of London and Westminster (Mark Field). Does the Minister realise the implications of what he is saying? It is easy to score political points, but more than 1,000 children will be taken out of their communities and sent not necessarily to other parts of London but to other parts of the country. That is happening now, and the Minister is complacent about it. Is he prepared to see the dislocation of whole communities in order to make a political point?

[Chris Grayling]

I am afraid that the hon. Gentleman is simply out of touch with the reality of what is happening in our country. He talks about the impact of the cap on children. But children are already having their life chances and opportunities damaged by growing up in households and communities in which no one is working. That is what we are seeking to change. The former Archbishop of Canterbury, Lord Carey, said last week:

“If we cannot make the rewards of hard work more appealing than a life spent on the dole then we will have failed a generation of children.”

That is the reality that we face today and it is why we seek to change the way in which our welfare state operates. The Government clearly have the support of the British people on the cap. If we do not reject the Lords amendment, the public will not understand why. This is a reform that is long overdue and the Government are determined to deliver it.

[Mr Byrne]

I rise to speak in favour of the amendment in my name and those of my right hon. and hon. Friends. I shall state at the outset that we wish to seek a Division on that amendment, and I am disappointed that the Government have tried to invoke financial privilege to defend against a vote on our amendment in the House of Lords, where they know very well that they will once again be defeated. I am, however, grateful that the Minister has incorporated half of our amendment, by ensuring that there will be a grace period of nine months, but I want to set out the dangerous flaws that have now been exposed in the “one cap fits all” approach and also set out what I think would be a better approach.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will give way to the Secretary of State who I know will join me later this week in forming a new all-party group.

[Mr Duncan Smith]

The right hon. Gentleman says that he is upset that we are invoking financial privilege. Will he tell us why, throughout all the debates in the Lords and here, his party has not tabled an amendment to regionalise the cap at any stage, but instead chose to knock out child benefit?

[Mr Byrne]

Of course. The Labour party advanced the position in our amendment not, as the Minister said in a slip of the tongue, 10 years ago but well over one year ago. It was advanced by my predecessor and the Leader of the Opposition. During the passage of the Bill, we have talked extensively about the risks—[Interruption.] The Secretary of State might like to listen to the answer. We have given the Government ample opportunity to put in place safeguards against the dangers of their having to spend a lot of money patching up what is being done this afternoon. In the absence of those safeguards, I want to propose to him a better approach.

[Mr Duncan Smith]

Will the right hon. Gentleman give way?

[Mr Byrne]

In a moment. I will give way to him as often as he wants.

We have set out a clear alternative approach. The Government have today burned one third of the savings that they proposed for this measure because they got the policy wrong. Today, by conceding a nine-month grace period, they have incorporated part of our amendment, but now I want to show the Secretary of State a better way of instituting a principle on which I think we both agree.

[Mr Duncan Smith]

Throughout this debate, we have seen a game played out by the Opposition: on the one hand they are in favour but then they vote against everything. I cannot understand why, if the right hon. Gentleman takes this principled position and if Labour has believed in it for a while, he has not previously advanced this amendment, which he apparently believes so passionately now needs advancing? Why not in the Lords? Why not here before? There is no answer except that he is trying to indicate one thing and run away with the other.

[Mr Byrne]

I spent much of this morning perusing the helpful Conservative party briefing on the Bill—I am sure that Government Members have a copy—page 2 of which contains a useful summary explaining how I, the shadow Business Secretary, the shadow work Minister and the Leader of the Opposition have set out clearly their support, in principle, for the Bill. However, we want to give the Government the chance to institute important safeguards—for example, not allowing the cap to kick in if someone has not been offered the chance to work and instituting new safeguards for homelessness, on which they have had to spend a lot of money today. The Government have not listened to any of that, and now they have had to come back to the House accepting half of Labour’s amendment and spending a huge amount of money, thus burning many of their savings.

[Tracey Crouch (Chatham and Aylesford) (Con)]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will give way, but then I want to set out where I think we both agree.

[Tracey Crouch]

I am grateful to the shadow Secretary of State for giving way. Having read the Conservative briefing, he will recall saying last week that he thought the benefit cap right in principle. Why, then, will he vote against it this evening?

[Mr Byrne]

We will seek a vote on Labour’s amendment on Labour’s benefit cap, and we are disappointed that the Government are trying to invoke financial privilege to prevent us from having that vote again in the House of Lords, where the Government know they will lose.

It is important to start by debating a principle on which both sides agree—the principle that people should be better off in work. Back in 1971, my right hon. Friend the Member for Birkenhead (Mr Field) pointed out the dangers of the poverty trap and the possibility of changes in the tax and benefits system resulting in people not being better off in work. Frankly, little progress was made in tackling that problem during the 1980s and the 1990s, which was why the institution of tax credits under Labour was such an important part of our welfare reform. Together with the national minimum wage, it ensured that people were better off in work. It was wise, therefore, for the Government to accept the principle of tax credits in their proposed changes to universal credit. That, too, is a principle that we support, and it is why we are in favour of a benefit cap, but we would like one that does not backfire and one that works in practice. That is what our amendment sets out.

[Mr Julian Brazier (Canterbury) (Con)]

Will the right hon. Gentleman answer the question put to him just now by Government Members? Does he or does he not accept that it is wrong in principle in the long term for a family to live indefinitely in an area where they could not afford to live if they were in work?

[Mr Byrne]

The principle on which we both agree and which we have advanced reforms to put in place is this: people should be better off in work than on benefits. That is why we are so frustrated with the Government’s failure to get people back to work. Five people are now chasing every job. That is the situation with which we now contend in many of our constituencies. In my constituency, 33 people are chasing every job. That is frustrating for those who believe that people should be better off in work than on benefits. That is why we are so disappointed with the performance of the Work programme.

[Mark Field]

In constructing a regional cap, will the right hon. Gentleman ensure that no more money is expended than by having a cap of £26,000— in other words, that the regional pot will remain as it is? If we are to go down that route, will he also support the idea of regional pay and regional benefits?

[Mr Byrne]

I will come to the localisation of the benefit system, which, as the hon. Gentleman will know, we have had for 70 years in this country, when I set out how I believe our proposal can work in practice.

[Ms Buck]

Will my right hon. Friend help those Government Members to understand one simple fact: that housing support and council tax benefit are in-work benefits, and that—thanks to those benefits and the tax credits policy—it is virtually impossible for any household of comparable size and comparable housing costs to be worse off in work than on benefits? The whole system is constructed to avoid precisely that scenario. Will he also help those Government Members to understand that the impact of the cap hits not only Knightsbridge and Mayfair—the Government want to run the policy by anecdote—but outer London boroughs and suburbs, such as Enfield, Barnet and Brent, as well as Birmingham? Where will those households find somewhere that they can be priced into?

[Mr Byrne]

My hon. Friend did an extraordinary job of deconstructing the Bill as it went through Committee, and she is an acknowledged expert on this subject. Her point is absolutely right. The Minister was not able to confirm that somebody on £35,000 could receive, for example, housing benefit. I am reliably informed that that is, in fact, the case. Because the Government have not thought this measure through, we are now confronted with the extraordinary spectacle of a cap that appears to cost more than it saves. As was pointed out by the hon. Member for Shipley (Philip Davies), who is not in his place now, in some parts of the country that will not send the signal that people are better off in work than on benefits. Only the Government could have introduced a proposal that is, frankly, that much of a dog’s breakfast.

Let us take the cost side first. In this debate, we are in the happy position of not simply having to rely on costing an assertion made by Opposition Members. We are very grateful that we have got the analysis that was presented by our good friend, the Secretary of State for Communities and Local Government. In a blunt warning—not to just anybody, but to the Prime Minister’s Office—the principal private secretary in the Department for Communities and Local Government said:

“we think it is likely that the policy as it stands will generate a net cost”,

and that was before the Government burnt all the money that they have sent up in smoke just this afternoon.

A cursory glance at some of the scenarios that we will see in, for example, the constituency of the hon. Member for Cities of London and Westminster (Mark Field) confirms exactly what is going on.

[Chris Grayling]

Will the right hon. Gentleman give way?

[Mr Byrne]

In a moment.

We are grateful to the Children’s Society for telling us that about half the families who will be affected by the current “one cap fits all” proposal will be families with five children, and on the basis of the first impact assessment—I think—the Children’s Society calculated that about 21,000 families would be affected.

[Ian Paisley]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will give way in a moment.

Let us just see what that scenario looks like in London. The House of Commons Library tells us that a family in that situation will be taking a hundred quid in jobseeker’s allowance, £74 in child benefit, £255 in child tax credit, £32 in council tax benefit and—because of the high levels of rents in London—£350 in housing benefit. Under the cap, a family in that position will lose about £243. There is no way on earth that their rent will fall by that amount. Even out of London, a family in that situation will face losing £87 a week, and there is no way that their rent will fall by that amount either. Those families—some 21,000 of them—will be made homeless. Coincidentally, that is exactly the figure in the analysis produced by the Secretary of State for Communities and Local Government. I am afraid that it is therefore rather ludicrous to suggest that there will not be widespread homelessness as a result of the “one cap fits all” approach, and if anyone wanted any proof of that, the Minister has just given it by telling us that he has had to burn a third of the savings that he proposes to make in sorting the problem out.

[Barry Gardiner (Brent North) (Lab)]

My right hon. Friend is making a powerful case. Does he recall that, when the housing benefit capping measures were introduced, the Government said that rents would be likely to go down? What would he say to my constituent, a higher executive officer with Her Majesty’s Revenue and Customs, whose landlord has put her rent up by £100 from 12 January? She is below the cap for Brent, but she has been told that she will not be able to have a review of her benefits until 14 June.

[Mr Byrne]

My hon. Friend has highlighted a problem with which we are confronted in London and elsewhere. It was remarkable that the Minister managed to get through his speech this afternoon without making any reference to the latest DCLG estimates for how much rents in London and elsewhere are going to rise. According to some analyses that I have seen, they could rise by something like 41% over the next few years. Nowhere is that corrected or remedied in the Government’s proposals. One Department is simply not talking to the other.

[Ian Paisley]

Has the shadow Minister not just illustrated that this is a Greater London-centric issue, given that 60% of the high claims and high benefit payments are in the Greater London area? Across Northern Ireland, only one claimant is in receipt of an amount that would reflect a higher benefit. Yes, something needs to be said about London, but this issue does not affect the whole of the UK in the same way.

[Mr Byrne]

The hon. Gentleman is making the point that we tried to make in our amendment—namely, that a “one cap fits all” proposal does not look as though it is going to work. We have heard the Minister’s reassurances this afternoon that certain families will be referred into the Work programme, but I am afraid that the Work programme is failing. The off-flow rate—the rate at which people flow off benefits and into work—in the last quarter of last year was the lowest since 1998. People are not getting back into work, because the Government’s back-to-work programmes are failing. Perhaps the Minister will tell us what he is going to do about that problem.

[Chris Grayling]

I have two questions for the right hon. Gentleman, to which I would appreciate simple answers. First, as there are not yet any statistics to demonstrate how the Work programme is working, how can he make assertions about it? He does not know, one way or the other. Secondly, as he is skating round this issue in a big way this afternoon, will he tell us whether he supports the principle of a £26,000 a year benefit cap in London? Yes or no?

[Mr Byrne]

As I have rehearsed this afternoon, we simply think that a “one cap fits all” approach is not going to work. The Minister has had to put his hand in his pocket and spend a fortune to fix the problem. He tells us that the Work programme is working well, but the rate at which people are flowing off benefits and into work speaks for itself. It is at its lowest point since 1998. That tells us, I am afraid, that the back-to-work programmes are simply not going to work.

[Anna Soubry (Broxtowe) (Con)]

The right hon. Gentleman says that some people will have to move home. Why does he think that that is unacceptable for the long-term unemployed? Every day, people’s circumstances change. They might lose their job, their marriage or their relationship, and those circumstances mean that they have to move home. Why should the long-term—often third generation—unemployed be exempt from the real world that so many people live in?

[Mr Byrne]

I am very grateful to the hon. Lady for making that point with such force. No one is against people having to move home or to lower-cost areas of accommodation. What people are worried about is 21,000 families being made homeless, local councils having to pick up the bill for that, and that bill having to be paid for by council tax payers such as hers. What conversations has she had with her constituents about how much their council tax bill is going to go up because there is a new bill for homelessness to pay?

[Anna Soubry]

I can assure the right hon. Gentleman, following conversations with my constituents in Broxtowe, that hard-working people overwhelmingly take the view that the long-term unemployed should no longer be better off on benefit than in work. That is not only for the sake of the public purse; it is a result of the compassion that we feel—[Laughter.] Hon. Members should not laugh; they should know better. In the real world, some of the people I used to represent as a criminal barrister were third-generation unemployed. It is for their sake and that of their children that they should be back in work, and that is what these measures have at their heart.

[Mr Byrne]

They should be back in work, which is why we are so angry that unemployment is set to rise, rise and rise again over the course of this year.

[Dame Joan Ruddock]

Let me remind my right hon. Friend and, through him, the House that we are talking about benefits and caps that are completely and utterly inappropriate in London where many people in receipt of housing benefit because of high rents are in work. When they are told to move, as the hon. Member for Broxtowe (Anna Soubry) suggests, there is nowhere for them to move to. Our constituents are being told to move to outer boroughs, but Conservative Members know perfectly well that moving to Croydon, Bexley or Bromley is no solution for people who live in Lewisham, where rents are lower. Let me make a further point. I am told on good authority that Croydon, where it is suggested my constituents could move, is now looking to towns in the north of England to house its homeless.

[Mr Byrne]

It becomes clearer and clearer that the flaws in this one-cap-fits-all policy loom large indeed.

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

Does my right hon. Friend agree that we are getting slightly misleading information about the percentage of people who are long-term unemployed? About 40% of them are on jobseeker’s allowance and have been for less than a year; a further 22% have been on employment and support allowance for less than two years; the remainder are on income support and are not required to look for work. These are not long-term unemployed people idling about; they are people who are either not required to look for work or who have not been on benefit for a particularly long time.

[Mr Byrne]

My hon. Friend is absolutely right. Perhaps if Conservative Members had not tried to play politics and had thought the policy through, we might be in a better place this afternoon.

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

My right hon. Friend is making a powerful speech. In my constituency, as in that of the hon. Member for North Antrim (Ian Paisley), rents might be £500 a month. That is not the sort of rent that we see in London, but one thing the areas have in common is landlords who are quite happy to take the money as often as they can, but who are not so happy to look after the property that the tenants have to live in. There are a number of rogue landlords. Is that not where the fire of Government Back Benchers should be turned—on those landlords?

[Mr Byrne]

Absolutely right, and I shall say a few words later about the dramatic escalation in the housing benefit bill that the Department for Work and Pensions foresees. Somehow, that has not featured in this afternoon’s debate, but we will come on to those facts and figures shortly.

[Ian Swales (Redcar) (LD)]

Having sat through almost every sitting of the Public Bill Committee, I do not recall this issue getting any traction at all, so it is quite a surprise to hear it come up now. The right hon. Gentleman says that one size does not fit all, so is he going to tell us what sizes do fit, starting with London?

[Mr Byrne]

I am going to do exactly that. The Minister makes an important point about regionalisation and localisation, but the point has already been made that we have a local component to the benefit system, and we have had it for 70 years. It was such a big feature of the benefit system that in 1942 William Beveridge devoted an entire section of his report to “the problem of rents”, as he put it. I know that the Conservative party tried to block the Beveridge report back then and that Conservative Members do not want to admit this problem now, but I am afraid that it is a problem that bedevils their policy.

[Harriett Baldwin]

I am glad that the right hon. Gentleman enjoyed my recently published Centre for Policy Studies policy that mentioned regional benefits. On that subject, for the most expensive part of the London would he set the benefit higher or lower than £26,000?

[Mr Byrne]

I shall come on to that directly, but I agree with the hon. Lady on one important point. It is important to take local factors into account. If we take out the pension system, the housing benefit bill is something like a quarter of the overall benefits spending. It has been localised for something like 70 years. Admitting a degree of localisation in the way we set a cap sounds as though it could be perfectly consistent with her proposals, although I have not read her pamphlet.

Let me give the House one more illustration of why this is so important. Perhaps the problem of the five-child family in London is included in the hon. Lady’s pamphlet. Almost half the benefits received by that family will consist of housing benefit, as opposed to only about a third of the benefits received by a family in similar circumstances living in a different part of the country. Pretty often, incidentally, that money goes to the landlord rather than the family in question. I believe that we should have a cap that is different in different parts of the country, but takes account of differences in housing benefit.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Would not a much simpler and more cost-effective solution for London be to do something to control the excessive rents that landlords are pocketing? Then we would not have to transport pensioners halfway around the country.

[Mr Byrne]

My hon. Friend is right, and what has been noticeable by its absence this afternoon is any argument from any Government Member relating to what we should do about private landlords.

[Harriett Baldwin]

rose—

[Mr Byrne]

I promise that I will give way to the hon. Lady in a moment.

A one-cap-fits-all approach will not work in London, and it will not work elsewhere. As has been pointed out by many Members representing all parts of the United Kingdom, the cap that the Government propose may not send people the signal that they are better off in work. Our argument is in our amendment, which says that the cap should reflect differences in housing benefit costs in different parts of the country. That has always been an element of our benefits system, but we would add a couple of extra safeguards. There should be a safeguard against homelessness and the kind of costs that the Minister has had to fix this afternoon, and—in my view—there should also be a safeguard against child poverty. Heaven knows, that is worsening enough under the present Government, and we do not want it to become worse still.

[Harriett Baldwin]

Will the right hon. Gentleman answer my second question? Would the regional benefit cap in central London be set higher or lower than £26,000?

[Mr Byrne]

The hon. Lady will have read our amendment, so she will know that we propose to take politics out of the issue, and to establish an independent commission to set the level of the cap. As has been demonstrated this afternoon, when it is left to politicians, they make a pig’s ear of it.

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

What discussions has the right hon. Gentleman had with his colleagues in the Welsh Government about his proposals for a regionalised or localised cap?

[Mr Byrne]

We have indeed had discussions with our colleagues in the Welsh Government, who accept the importance of introducing different arrangements for London and other parts of the country and of a solution that recognises the need to localise the benefits system.

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

I am still confused about exactly what the right hon. Gentleman’s policy is. He may not know that the average salary in his constituency is less than £18,000 a year. Does he propose to reduce the cap to £18,000 in his constituency, or will his constituents be gutted to learn that he is defending the fact that they can obtain more on benefits than they can on the average salary in his constituency?

[Mr Byrne]

The hon. Gentleman would be wise to look to his own policy. I suspect that some people in his constituency would be better off on benefits than in work on the cap that is being suggested. Is that not true? Yes or no?

[Nick de Bois]

The right hon. Gentleman might like to know that according to the Office for National Statistics, the average annual salary in Enfield North is £25,500, which is close. I can assure him that many of my constituents do not think it fair that while they are earning a gross salary of £25,000, it is possible to receive the equivalent of £35,000 on benefits, which means that work does not pay.

[Mr Byrne]

The hon. Gentleman will accept that there will be people, under the £26,000 cap, who could be better off on benefits than in work in some parts of the country, so surely he too will admit the wisdom of having a different cap in different parts of the country. That is why we suggest that principle, and why we suggest that an independent commission looks at the levels. We have seen the muddle that the Government have got into—a muddle that has cost the Exchequer £80 million this year, and will cost it £50 million in the year after that; that is the cost of sorting out the homelessness that it has, over the past year, been telling the House would not arise. If the Government tried to take politics out of the issue just for a moment, and focused on the good old-fashioned business of getting the policy right, they might be in a better position to put in place a cap that does not backfire.

16:00

[Mr Redwood]

I am interested in the right hon. Gentleman’s idea; I presume that the regulator would be called Ofcap, or conceivably Doffcap. Would his party tell Doffcap that it would have exactly the same amount of money as the Government are proposing, or does he think that there ought to be more money because the amount is not really generous?

[Mr Byrne]

As we have seen, the budgets are moving around all over the place; we have just had £80 million put in this year, and £50 million will be put in next year, so it is not quite clear what the baseline is.

[Barry Gardiner]

I am grateful to my right hon. Friend for giving way; he has been extremely courteous to the whole House in giving way so many times. May I ask him to comment on the idea, mentioned many times by Government Members, that the scheme will get people into work, including those in long-term unemployment? What does he think that they would say to my constituent, a very senior teacher, who says:

“I am a teacher and because of the cutbacks to local councils am unemployable owing to my experience and qualifications as I cost the same as 2 newly qualified teachers…I have survived these past months by selling my possessions and borrowing money”

but

“these avenues are virtually spent and I am in the situation of having to decide between food and heat, let alone how I will pay for my accommodation”?

This man has always worked in my area, has lived there most of his life, and has served my constituents and their children, yet he is being consigned to moving to another part of the country under this legislation.

[Mr Byrne]

That brings me to the final point that I want to make, which is about how the policy will be implemented. We are pleased that the Government will take on half of our amendment and introduce a grace period. The Secretary of State has made it clear, from a sedentary position, that the cap is not intended to apply to those who are in work, but we are still not completely clear about how many hours a week someone will have to work to secure that exemption. I understood, in Committee, that someone needed to be working at least 24 hours a week on the minimum wage for that to happen, but the whole thrust of universal credit is to ensure, and to encourage people to take, mini-jobs. If someone is working five, six or seven hours a week, would they, too, be exempt from the benefit cap?

Finally, what would happen if a partner left their spouse, and that spouse, who had four children and lived in a constituency or neighbourhood across the river, automatically found themselves in receipt of benefits that were above the cap? In that tragic situation of family break-up, what happens to the parent looking after the children? Those are important transitional issues that I hope the Minister can clarify.

[Frank Dobson (Holborn and St Pancras) (Lab)]

rose—

[Mr Byrne]

I give way to my right hon. Friend, and then I hope that the Minister will answer some of my questions.

[Frank Dobson]

Will my right hon. Friend take at least a minute or two to try to get across to Government Members that housing benefit is not kept in people’s handbags or wallets? It is paid out to grasping private landlords, and until we do something about those landlords, the housing benefit bill will continue to soar.

[Steve Webb]

What did you do about it?

[Mr Byrne]

The Minister with responsibility for pensions asks what we did about it; again, in the Conservative party’s briefing for today’s debate, there are some interesting figures about the rise in housing benefit over the past few years, but of course closer inspection of the DWP forecast for the next few years shows that housing benefit is set to rise, year on year, at the same rate as in the past 13 years. That is why Labour has been right to expose the dangers of cutting investment in new housing and the lack of any policy making from the Government on what should happen to the private rental market.

This afternoon, Labour has set out its proposal for a benefit cap that will work in practice. We hope to press it to a vote and that the Government will think again about giving the other place a chance to vote on it—just to reinforce that point.

[Mr Redwood]

This is rightly difficult territory. I am relieved to hear that Ministers have reconsidered the transitional arrangements, and I am pleased that the Opposition welcome that. In the noise and heat of the debate, important truths are getting lost or ignored. We are not generous enough towards the disabled, and I was pleased to hear that they are completely exempted from the proposals, which should be widely welcomed across the House. The exemption of war widows, who often have very little to live on and whose former husbands sacrificed so much to help our country, is extremely welcome, as both parties in government have asked their loved ones to go into battle on our behalf.

I am also pleased to hear that anybody in work is exempted. The Government’s case revolves around something with which I believe the Labour party normally agrees: working should always be worth while. In today’s debate, there has been more heat than light. If the Labour party, the Conservative party and the Liberal Democrat party all believe that it should be more worth while to work, we need such a provision to achieve the desired effect. It comes down to the last-minute proposal that there should be some regional differentiation of the cap. We are no longer arguing for or against caps—we all now believe in that type of headgear—but Labour believes that there should be different fashions of cap across the country whereas, on the Government Benches, the passion is apparently for uniform caps.

[Harriett Baldwin]

Does my right hon. Friend agree that it is difficult to set a cap if one is not prepared to name a level for it?

[Mr Redwood]

My hon. Friend is ahead of me in my argument. So far, I think I have carried an expectant and worried Labour party with me. Labour agrees with all the exemptions, agrees with the delayed transition and agrees that we need to make working worth while.

[Mr Byrne]

I was not sure whether the right hon. Gentleman was about to propose himself as the head of Ofcap in practice.

[Mr Redwood]

No, I like representing my constituents and I suspect that the two jobs would not be compatible. I am very grateful for the kind offer, however, and I notice that the right hon. Gentleman prefers the name Ofcap to Doffcap. As Labour has not yet put forward proposals to deal with the people it describes as fat cat landlords, I think it might well be a case of Doffcap to the landlords, as we seem to be discussing how much money we will route to the landlords through the housing benefit mechanism.

I suspect that if I strayed into the subject of proposals for the housing market and landlords, you would rule me out of order, Mr Deputy Speaker, but perhaps that is a debate for another day. There might be common ground on how we can get better value for the public money being spent while ensuring that we do not cut off the supply of housing, which would be a very stupid thing to do by clumsy intervention. We need more housing at an affordable level for people on modest incomes.

We are talking about a group of people on very modest incomes, and it ill behoves people on decent incomes, such as Members of the House, to be too mean about it. We have the conundrum, however, that we always want to make it worth while for those people to work. We all accept that there will be a cap, but, if it is to be a regional cap, before deviating from the Government’s proposal to the Labour proposal we would need to know what Labour has in mind for the total costings and how the proposal would work fairly within an area as well as between areas.

[Sheila Gilmore]

One thing that the right hon. Gentleman has not mentioned is that when we compare the working family with the non-working family, all too often in this debate we are not comparing apples with apples. The working family would have child benefit for their children on top of the wage that is constantly mentioned and, depending on the number of children they have, they might well qualify for child tax credit. We are not comparing properly, so simply saying that the situation is unfair to those working families gives the wrong impression. Does he not agree?

[Mr Redwood]

I thought it was now common ground that for a large number of people on certain kinds of benefit, work is not worth while. We are trying to solve that problem, so despite all those things that the hon. Lady truthfully reports to the House, we still have that problem, with which both parties are wrestling. That is why the Labour party is not here today saying, “There is no problem: we are going to vote against the whole thing,” but is here with an alternative proposal at the 11th hour—the last possible chance to consider this.

Let us go back to Labour’s argument on the regional cap. If it had come with a properly costed and working proposal, I might have been sympathetic to it, but we do not yet know from Labour what is the total package of money available. We have not even been told whether it wants to live within the budget that the Government have come up with for the proposal or whether it thinks the overall proposal is too mean. If it wants to spend much more, it will not solve the “Why work?” problem because provision will become too generous again and it will have a public spending problem.

[Mr Byrne]

Can the right hon. Gentleman tell us what the budget actually is because although we have heard some figures from the Minister today, he has not set out, for example, whether the grace period will cost any money?

[Mr Redwood]

Ministers are very capable of setting out their own figures. I do not have, at the top of my mind, all the detailed figures the right hon. Gentleman wants, which are properly things for Ministers to report to the House, but they have detailed the total savings overall and they are trying to live within that budget. As has rightfully been reported to the House today, they have given up some of the savings to accommodate the transitional period. It is entirely fair to ask the right hon. Gentleman, who is a specialist, as is the Minister he shadows, to tell us how much difference there would be in his proposals. Clearly, Labour has not yet thought through what the total should be.

There is another, very difficult, issue to consider with regionalism: there are big divergences in house and flat prices within, as well as between, regions. We should recognise this point, which in some ways makes this policy a bit easier to stomach than some on the Labour Benches suggest. I heard a former Westminster councillor saying that she had done some work on the situation of families who would be caught by the cap in Westminster. Naturally I was worried and wanted to hear what her answer was. She said she had found a considerable number of properties that she thought would be suitable for those families, quite close to where they were currently living, which happened to be rather better value than those in which they were currently living, supported by benefits. That seemed rather good news to me. Members from London constituencies will know that within London there is a huge variety of cost in property—often street by street, not merely borough by borough—so I do not think the proposal is quite as penal as some on the Labour Benches suggest. That makes it quite difficult to set a regional cap because such a cap might be no more appropriate as an average than the national cap.

[Naomi Long (Belfast East) (Alliance)]

I thank the right hon. Gentleman for making this point, which a number of Opposition Members from Northern Ireland have concerns about. I represent a Belfast constituency and there are massive disparities between rents in the Greater Belfast area and those in more rural constituencies. If this sort of regionalisation was driven down to a very local level, it could distort people’s ability to seek work in the city or outside it.

[Mr Redwood]

I am grateful to the hon. Lady.

I am conscious that others want to speak so I shall not extend my argument further. I just want to make the point that in order to consider fairly what is an interesting proposal from Labour, the minimum we would need to know is the overall cost in comparison to the Government scheme and how these difficult problems of judgment within areas or regions would be settled. That is an important consideration.

[Mr Byrne]

Presumably, the fact that homelessness will not be created, which is what the Secretary of State has argued over the past year, is the reason why he has had to find another £80 million—to solve a problem that does not exist. In direct answer to the challenge put by the right hon. Member for Wokingham (Mr Redwood), our amendment suggests that the right place to start this debate is by having a level for London and a level for outside London. That would begin to address the problem he is highlighting.

[Mr Redwood]

That is something we need to think rather more about, but unfortunately we have little time to do so. That suggestion might have been helpful, but there is also the problem of the big variety of levels within London. We need to know the extent to which the Labour party wants to validate the current high rents and whether there might be some other solution to the problem of very high rents that lies behind some of this difficulty.

The conclusion I must come to is that the best offer on this issue at this late stage is the Government’s. Something must be done to move things in the right direction and make it more worth while to work. All of us, on both sides of the House, are extremely concerned that in recent years, under both parties, although quite a lot of jobs have been generated a very large proportion of them have gone to people who have recently arrived, because they think the jobs are good enough and that the pay is high enough. There have been reasons—perhaps very good reasons—why people who are settled here and out of work have not wanted those jobs or been able to take them, but part of the answer must be that we have the wrong balance between benefit and work income, and we need to do something about that.

16:15

[Mr Frank Field]

If I may, I shall make one comment on the previous contribution. I thought that the right hon. Member for Wokingham (Mr Redwood) was going to go a stage further: might there not be a connection between the number of newcomers coming here to work and the extraordinary rise in rents in some parts of the country? That also needs to be introduced to our debate today: we cannot run a welfare policy if we have an open-door policy as well.

Those on the Treasury Bench are having, they think, a good day, but if they look behind them they will see that all their supporters are newcomers to the House returned at the last election, except for two Members. There is no reason why those supporters, who have been enjoying themselves so much today, should know where we will be this time next year, or a little later. Some time next year, the Bill and, we are told, universal credit will come into operation. It might be that when those two things hit the tarmac Government Members will hope that Opposition Members show a little more foresight and consideration for those on the Treasury Bench than Government Members have shown this afternoon. My guess is that there will be two God-almighty catastrophes hitting this country. The constituents of Government Members will be at their surgeries and Government Members will be baying for blood. The tables turn in this game.

I want to make three quick points, if I may. I say to those on the Treasury Bench that I do not have their confidence that these measures will be implemented smoothly, neither universal credit nor the proposals before us. A lot of people will be in transition. Whatever the arrangements, there will be hurt, and they will make that hurt felt in the constituencies of Government Members, as well as in our constituencies.

[Bill Esterson (Sefton Central) (Lab)]

Will my right hon. Friend give way?

[Mr Field]

If my hon. Friend does not mind, I am going to be brief.

On the insurance principle, those on the Treasury Bench prayed in aid the public being behind them on the measure. Indeed, the public are behind them on that, but the public are against them on the first group of amendments, which we pushed through. Obviously, the Treasury gave a total that the Department for Work and Pensions had to save from the benefits bill. The truth is that we will never get past the stage of picking on weaker people until we are prepared also to look at stronger people. Why is it that, somehow, the benefits of people in my position—those who are part of the baby boom who have done really well out of this country over the years—are never looked at? Why are we frightened to look at the concessions that, for example, people over retirement age receive as universal benefits?

If we are not to go down this track again—the biggest growth in the budget over the past 20 years is in the transfer payments that we are, in effect, discussing today—we must be a little braver and much more open about those areas that we think should be questioned, rather than having a diet of the sort that has been served up to us today.

On the £26,000 a year cap, are there not lessons for Members on both sides of the House to learn? One is that the Government’s proposals are unbelievably crude. I hope that they will adopt our proposals before they go much further in this reform programme. To my own side, I say that I do not want people to think that it is only out in the sticks that people think £26,000 is a high cap. People in London who work think £26 k is high.

We should not make policy because odd people have talked to us in the street, but yesterday, a couple of blocks from here in Strutton Ground, a window cleaner said to me, “Frank, I start at 4 o’clock in the morning. I wish I could get a guaranteed £26,000 for my efforts.” There are lessons for both those on the Treasury Bench and the Opposition.

My final point has already been made by my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), who probably knew that I was going to make it and so has disappeared. We have had a nationwide housing benefit for more years than I can remember, and one lesson I have drawn is that landlords are very clever at turning whatever we think of as a cap into a floor. Obviously we want to meet people’s rents where possible, although they do not have a right in the long run to live somewhere irrespective of what the rent is, but can we run a housing benefit system while having a free market in rents? My suggestion, drawn from the decades I have been in this House, is that the two are incompatible if we are trying to protect taxpayers.

I hope that those three points have been useful. Given that in a year’s time those on the Treasury Bench will want some sympathy from us when they are operating these measures, it might be rather gracious if they looked more favourably on the amendments tabled by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), which would make their reforms better rather than worse.

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to follow the right hon. Member for Birkenhead (Mr Field), who always provides the House with a thoughtful contribution. It is important to state that the number of newly elected Government Members shows that we were elected on a promise to get to grips with the welfare state. I represent a constituency where the average wage is very low, yet the jobs created there over the past few years have been taken predominantly by hard-working people from eastern Europe. I think that there is something completely wrong with the system if I can meet people on the streets in Llandudno and Llanddulas who tell me that they are better off not taking employment. There is a passion for these changes on the Government Benches, a passion for change that will allow people to do the right thing with their lives and take a job.

I am intrigued and disappointed to see that not a single Labour Member from Wales is in the Chamber to discuss this issue, and I think that I know why. It is because time and again Government Members have asked the shadow Secretary of State to tell us whether his proposed regional cap is for an increase in London, with no change in the rest of the country, or for a reduction in other parts of the country. I do not know a single Labour Assembly Member, councillor or MP who has advocated a lower cap in Wales than in the rest of the country, so it is pretty clear to me that the concept of a regional variation is based on increases in expensive parts of the country but no reductions elsewhere. The Labour party has provided no financial information on its proposal.

I am all in favour of debate on this issue. My right hon. Friend the Member for Wokingham (Mr Redwood) made the point extremely well that there is an argument to be had about the regional variation in pay and benefits, but it is completely unacceptable for the Opposition to turn up with a proposal that is uncosted, untested and, in my view, intended to get the Labour party off the hook rather than contribute to any change. I do not consider myself to be a cynic on this matter, but I wonder why, when the Chancellor highlighted in the autumn statement the possibility of looking at regional pay, the Labour party attacked the proposal, yet it is now looking at proposals for a regional cap, as logically a regional benefit system must follow. I can only conclude that the difference is that benefit recipients are not union members, but public sector workers are.

[Mr Byrne]

I am sorry that the hon. Gentleman felt the need to add that rejoinder. There is already a very localised dimension to the benefits system: housing benefit. We have had a localised housing benefits system for about 70 years, and that is why the amendment states that, if we are to have a different solution for London, compared with the rest of the country, it is housing benefit differences that should be taken into account if an independent commission is appointed to set the cap levels. We already have that in place in this country.

[Guto Bebb]

That is an interesting comment. The right hon. Gentleman almost implies that there are no differences between housing costs in other parts of the country. In Wales there are certainly huge differences, for example between Cardiff and north Wales. In my constituency, there has been growth in the population of young people in villages such as Penmaenmawr and Penmachno, and it has been driven by young people who are working but cannot afford to live in the most prosperous areas. They have moved into areas where it is cheaper to buy because that is what they can afford. Why are people who do work and do take responsibility expected to commute to own a house, while that is not the case for somebody who is in receipt of housing benefit? That is another challenge to which we need to respond.

[Mr McCann]

May I ask the hon. Gentleman a simple question? Does he not get the fact that people who work are also in receipt of housing benefit? Instead, he is trying to put everybody into the same hole of being workshy and wanting to claim benefits?

[Guto Bebb]

I reiterate the point that my Front Benchers have made: there are not many people in my constituency earning £35,000 a year before tax who are in receipt of housing benefit. That is the crucial difference. The average wage in my constituency is £23,000.

People say, “Are we in touch with the general public?” When I was appointed to the Bill Committee on this proposal, I held three public meetings in my constituency, and one message came through loud and clear: “Why on earth are you going to put in a cap of £26,000?” I think that the cap can be justified, because the Government are taking into account the needs of people throughout the country, not just those in my constituency and those in a low-wage economy such as Wales—a low-wage economy, dare I say it, that has suffered badly from continued Labour party rule for the past 80 years.

The big issue is that we are bringing forward a proposal. If the Opposition were serious, they would also bring forward costed proposals, but we do not have that. We have platitudes and excuses to try for tactical purposes to defend the party position. Ultimately, in this measure, we are proposing a benefits cap, trying to ensure that people see that work does pay and protecting the disabled and people who are in work, and this proposal, in the absence of anything else from the Opposition, is a proposal that we should support.

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

May I just make it clear that I oppose a benefit cap in principle? This policy has been borne out of prejudice and political expediency, rather than reason. In every recession there are scapegoats, and it is usually the poor, who become a political football for political game-playing and advantage. I am not morally willing to involve myself in that debasing political game.

We all have to bring our own experiences of our constituents to this debate, which has exposed differences in their lifestyles, and at times it has been apparent that we do live in different worlds. I do not begrudge Members and their constituents who are in good, well-paid employment, a secure home that they can afford and a decent environment, but that is not the experience of many of my constituents, or of many constituents throughout the country.

I have lived in my constituency for about 35 years, and I live in statistically the most deprived ward in the borough. The vast majority of people whom I see around me desperately want to do what is needed to ensure that their families have a good quality of life. They pay back into the community in many ways, they work long hours often in insecure employment and their pay, in many instances, is low and often below the London living wage.

The risk is unemployment, which over recent years in my constituency has increased by 52%, and over the past year by 7%, so there will be times when many of my constituents will not be able to find work. They struggle, above all else, just to provide a decent roof over their family’s heads, and that is because we face the worst housing crisis since the second world war. Housing supply has not kept up with housing demand, council houses that were sold off in the 1980s and ’90s have not been replaced by successive Governments, and there has been an expansion in buy-to-let, higher-rent-charging landlords, who provide many of my constituents with squalid housing conditions and overcrowding—Rachmanite landlords, who are building up lucrative property empires.

[Robert Flello]

Does my hon. Friend agree that, if a tenant complains, those landlords kick them out?

[John McDonnell]

Some Members will have seen recent television programmes that relate to my constituents and to Rachmanite landlords. It has not happened overnight; I blame what has happened over the past 30 years. So what is the logic of the cap for my constituents. Is it an incentive to secure work? The vast majority need no incentive; they are desperate for work. Yes, there is a small minority who will always refuse to seek work, but there are already sanctions for that, introduced by this and the last Government. I already have constituents turning up at my surgery who have been automatically suspended from benefits for three months for the slightest infringement, and they include many who suffer mental health problems or who simply cannot work through the system themselves.

16:30

Is the idea to force people to move to cheaper accommodation? Most in my area pay the rents that they pay because they have no other option; there is nothing to downsize to. In any case, the new housing benefit regulations to force down rents have already been introduced. Benefits in my area already do not meet the full cost of rents. People are faced with options. How do they make up the gap between the benefit and the rent? In some instances this winter, there has been a choice between heating and eating.

I repeat that in my constituency—and this is happening across the country—we now distribute food parcels to keep people in some form of civilised existence. If people are to move, where do they move to? My local council is advising people to move to Leicester, Southampton, Manchester and elsewhere in the north. The problem is that the lower-rent areas are where there are no jobs. We are in a vicious cycle of forcing people into areas where they cannot survive.

For me, the cap simply means that more of my constituents will be forced into poverty. All the statistics demonstrate that children will be hardest hit. There is already the problem of children in families being churned from temporary accommodation to temporary accommodation. That destabilises the family and has an impact on their education. The cap is supposed to control costs, but, as has been said time and again, we simply need to control rents. Let us halt the profiteering by landlords that has gone on in recent decades.

My view is simply that the cap is unnecessary and based on prejudice and political posturing. In past debates in the House, there have also been discussions about cutting the cost of welfare. There was one quote about benefits being an incitement to idleness. Such expressions were used in the debates about the poor law and eventually led to policies of less eligibility and the workhouse. We do not seem to have learned anything in two centuries about poverty and how to tackle it.

[Jenny Willott]

I have made clear my view on the total benefits cap a number of times already in the House, but I take this opportunity to highlight again that Liberal Democrat Members support the principle of a cap and the important message that it sends out that it has to be better for people to be in work than on benefits.

It is also important to exempt those in the support group of employment and support allowance and those who receive disability living allowance. We do not expect those people to work and it would be inappropriate to apply a cap to them, so I welcome the move announced earlier today. I also welcome the package of transitional measures that the Government have announced—in particular, the grace period to protect those who fall out of work. The Government’s grace period of nine months, announced today, is more generous than the six-month period that Labour proposed and was discussed in the other place. I believe that nine months is the right period of time to allow people a chance to get back into work. The vast majority of people who fall out of work will get back into work within that period, so the provision is fair both to families and to taxpayers.

During the debate on the cap in recent months, there has been a lot of rhetoric about huge families sponging off the state. I have sympathy with some of the points made by the hon. Member for Hayes and Harlington (John McDonnell). Some of that rhetoric has been extremely unhelpful. Suggestions that all those on out-of-work benefits are getting more than people in work are simply not true. The rhetoric has been ramped up a little and that has been unhelpful for getting to the truth.

[Jane Ellison (Battersea) (Con)]

Like my hon. Friend, I welcome the Government’s announcement on transitional arrangements, which is particularly valid for those of us with London constituencies. She mentioned unhelpful rhetoric. Does she agree that it is important that, across the House, we convey what those transitional arrangements are, rather than spending a lot of time making political points and scaremongering, which affects all our constituents?

[Jenny Willott]

Many living in London have been told that they are going to be made homeless and that everybody on benefits gets more than people who work. Those messages are unhelpful. They scare people and we need to make sure that, from now on, there is a more sensible, measured tone to the debate.

[Mr McCann]

Will the hon. Lady give way?

[Jenny Willott]

I will give way on that point and then I will not give way again.

[Mr McCann]

What does the hon. Lady make of what the Secretary of State for Communities and Local Government said about the number of people who will be made homeless because of the introduction of this policy?

[Jenny Willott]

I understand that those are old figures that have been withdrawn and that new impact assessments have been published since. The hon. Gentleman can look at those and see what the new figures are.

As has been highlighted by many Members, the cap will hit people hardest in areas with high housing costs. Those tend to be in London, but are also found in cities around the UK. We are not talking about feckless, workshy families with hundreds of children who are sponging off the state. That is why what the Government have put forward today is much more sensible than the proposal sent down from the other place. Exempting child benefit would help those on the margins, but do nothing for those affected by the highest housing costs, who will potentially be most affected by the cap. The Government’s package of targeted support and discretionary housing payments is a much more effective way to deal with the issues that will be created.

I note that Labour Members have not tried to argue otherwise today. They have said little about the amendments that have come from the Lords. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) will correct me if I am wrong, but I think that I heard him say that the Opposition plan to vote against the Government on the motion to disagree, as well as to vote in favour of their own amendment.

I disagree strongly with the localisation of the benefit cap because that would create a hideously complicated system that it would cost a fortune to implement. It has been suggested in desperation by the Labour party at the very last minute. The proposal is incredibly vague and was summarily demolished by the right hon. Member for Wokingham (Mr Redwood).

[Bill Esterson]

rose—

[Jenny Willott]

I will not give way any more because I want to give other people the chance to speak.

There are no arguments in favour of what Labour has put forward. It is far too vague to even be considered at such a late stage. I think that the Government’s approach is right.

As other hon. Members have said, alongside the targeted support and the grace period, we need to look at the issue of rents and the ridiculously high housing costs in parts of the country. That affects working families who are struggling to keep a roof over their heads, as well as those who are on out-of-work benefits. The Government have been forced into a number of the measures that they are taking because high housing costs have forced up housing benefit and local housing allowance budgets over the past few years. That money is going mainly into the pockets of private landlords. Alongside the transitional support, which will help with high housing costs and help families in the greatest need, I hope that Ministers will work with the Department for Communities and Local Government and local authorities to bring down rents in high-cost areas. That would be a much more effective way to tackle this problem in the long term in particular areas and would save the Government money in the long run.

Finally, I am grateful that Ministers have now made it clear that the Government will review the implementation of the cap after a year. I welcome that. I hope that it will identify any issues or areas where there are problems so that action can be taken.

[Simon Hughes]

My hon. Friend has done a huge amount of work. Before she sits down, may I say that the things that should give London Members the greatest confidence are the letter from the Secretary of State, which confirms that an independent consortium is carrying out a review of the recent local housing allowance changes, and that Ministers have today made it clear that this policy will be reviewed in a way that is public and accountable, and that if it then needs to be re-evaluated, that can be done by Parliament and Government?

[Jenny Willott]

I agree with my right hon. Friend. I give way to the Minister.

[Chris Grayling]

I referred to this earlier, but I would like to put it on the record that we certainly intend to carry out a review, as my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) said. We would automatically do so with a major policy innovation of this kind. We will carry that out in a transparent way. I also confirm that we are carrying out the other work that he talked about. I want that to be on the record for him.

[Jenny Willott]

I am grateful to the Minister for clarifying those points.

Finally, the Harrington process that has been put in place to review the work capability assessment has been an extremely effective way of getting outsiders to take an independent look at how Government policy is working. It has made significant improvements. I hope that we can learn from that process for the review of this policy to ensure that we are doing what is in the best interests of those who are affected by the cap and of taxpayers.

[Mr Slaughter]

This is how the benefit system works in high-rent areas. If someone with four children goes to Hammersmith council and asks to be placed, they will not be given a permanent home and will be told that they have no prospect of ever getting one, because Hammersmith council is demolishing, not building, social housing. They will not even get temporary accommodation. They will be put in a direct let property under the relationship that the council has with some of the seediest landlords going. They will be charged market rents, but will be living in appalling conditions.

Let us take a real example of a family with four children who live in an ex-council property—these slum landlords go around buying up such properties—on a council estate in the poorest ward in my constituency. They currently get £450 a week in housing benefit for a four-bedroom flat. That will of course be reduced to £400, so they will slowly but surely get to the point of being evicted.

On the day when they are evicted, those people will go back to the town hall with their children. They may then be accepted as non-intentionally homeless, and they might be put into accommodation in Croydon. However, Croydon council says that when the overall cap comes into effect, it will move its families to Hull. That family will therefore face the prospect of a double move.

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

Will my hon. Friend give way?

[Mr Slaughter]

I will not.

I end by asking the right hon. Member for Wokingham (Mr Redwood), who talked about how people should work, how much more likely it is that that family will be in work when they are in Hull. I mean no disrespect to Hull or its Members, but that family will have been taken away from the schools and community network in Shepherd’s Bush, where they have lived for generations and where there are employment opportunities.

This is about not just intolerance or inhumanity but incompetence. The Government are sundering communities and sending people away from their families and communities, and giving them no prospect of either a decent life or employment.

[Richard Graham (Gloucester) (Con)]

It is an absolute delight to join the debate, which is of key interest to my constituents.

I first wish to talk about the people who have had the least said about them today. Indeed, I do not think any Opposition Member has referred to them. They are the people who pay the £175 billion benefits bill that the Government run up each year on behalf of the people of Britain. I wish to speak for some of the taxpayers in Gloucester.

I have done some research on average earnings in my constituency. The figures are not complete, but I think it will be of interest to Members, and relevant to their own constituencies, that of some 20,000 public sector workers in Gloucester, I estimate that 90% have pre-tax salaries of less than the £35,000 that is equivalent to the £26,000 benefit cap that the Government propose. That figure of 90% means that 18,000 people working in my constituency of 100,000 people are in that position

It is harder to get the same figures for people working in the private sector, but based on a straw poll of three companies employing more than 400 workers, I estimate that some 87% are on pre-tax salaries of less than £35,000 a year. I believe that the vast majority of workers in my constituency would be astonished that Labour proposes that there should be no cap on the benefits that people get.

[Philip Davies]

My hon. Friend is absolutely right, and I endorse his figures. Given the scaremongering that we have heard from Opposition Members, does he know how many of those people who earn £35,000 a year are homeless?

[Richard Graham]

My hon. Friend raises a key point, and I will come on to the definition of “homeless” in a moment, as it is of significant interest.

[Dame Joan Ruddock]

We all appreciate that the hon. Gentleman’s constituents who are in work are hard-working and may be getting less than the national average wage, but will he acknowledge that they may well be entitled to a raft of in-work benefits such as working tax credit, child tax credit, child benefit and housing benefit? It is not a case of saying that people in work have only a certain amount of money and others should not have so much. There is a real difference between people’s overall entitlement and the simple figures about their wages.

16:44

[Richard Graham]

The right hon. Lady makes a perfectly valid point. Some workers receive benefits, but I do not believe that any of them will receive benefits for their family equivalent to, let alone more than, £26,000 a year. I stand to be corrected, even immediately by e-mail to my office, but I am pretty confident.

[Sheila Gilmore]

I tend to agree with the hon. Gentleman. I do not know Gloucester very well, but it would be unlikely for people in Edinburgh to reach that cap, which is exactly the difficulty. Not everywhere is the same. Hon. Members have said that some rents are far too high, but we cannot compare the situation of people in Gloucester with that of people in London.

[Richard Graham]

The hon. Lady is welcome to visit Gloucester. We have lots of things to show her that she will enjoy. If her point was that there are specific problems in London, I agree with her, but I shall come to that later if I may.

The second group of people in my constituency whom I want to address is those on the lowest wages of all. The Government have been clear that one of their major goals—many of us campaigned for this long before the general election—is to reduce, and if possible to eliminate, income tax for the lowest earners in our constituencies. They have done a great deal towards that goal—I believe that 1.1 million have been taken out of income tax altogether. What message do we send to those who are not earning very much and whom we would like to take out of income tax altogether if we do not cap the benefits that those not in work can clock up?

We should send the lowest earners the message that this Government are on their side. We want to take them out of income tax when we can, and at the same time, we want to put a cap on those families who, for whatever reasons, are unemployed. That is a very important message to send, for example, to the young worker at Asda in Barton and Tredworth, who finds that the presents she buys her children at Christmas are not nearly as good as those bought for the children of the family next door, who are living more comfortably on benefits. This is a worker-friendly policy and Bill.

The third group in my constituency whom I should like to address is those who are the most worried and the most vulnerable, including the disabled—I have had several mails from disabled people—war widows and those on PIP or attendance allowances. As the Minister has made absolutely clear, the Bill provides protection for the most vulnerable in our constituencies.

I absolutely recognise that people could well be affected by some elements of the Bill, and the vast majority of them probably live in London. It is not for me to speak on their behalf or on that issue, but the Minister has addressed the problem with three measures: first, the 10-month grace period; secondly, a special nine-month grace period for those who lose their job; and thirdly, a package of discretionary funding. That seems to me to be a significant proposal for hon. Members whose constituencies are likely to be affected.

The right hon. Member for Birkenhead (Mr Field) made a good point when he warned of the consequences of the Bill in a year or two. Many Government Members, including me, are new to the House and indeed to the world of politics, whereas he has years of experience. I do not have his experience of debating measures that sound great on the day but do not deliver quite what they intended, but in 2010 the Select Committee on Work and Pensions, of which I was a member, looked very carefully at changes to housing benefit. There were warnings from well-known charities such as Shelter and speeches from Opposition Members such as the hon. Member for Westminster North (Ms Buck) that thousands, if not hundreds of thousands, of people would be thrown out of their accommodation and have to sleep rough on the streets. A year later, none of that has come to pass, although I may have missed something.

[Mr Duncan Smith]

Does my hon. Friend agree that one of the biggest problems in these debates about welfare is that contributions from the other side, with the exception of the right hon. Member for Birkenhead (Mr Field), are characterised by massive scaremongering about every single change? That has been reprehensible.

[Richard Graham]

My right hon. Friend makes an important point. I have heard from many charities, whose work I deeply respect in many ways and who are active in my constituency, and the strength of their words on some of these issues does amount to scaremongering. I hope that, as on housing benefit, they are proved entirely wrong.

I hugely congratulate the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) on the ingenuity of his argument. I have no doubt that were he to go more deeply into the private sector, as I believe he is starting to do, he would be a fantastic salesman of unsellable products. Today, we have heard from him an extraordinary, last-minute and uncosted proposal that leaves us none the wiser about what the Opposition really believe. I sympathise with the right hon. Gentleman. He said that if we left matters to politicians, they would make a pig’s ear of it. He is right: he did. From the man who was in charge of the spending of taxpayers’ money and realised that he had spent it all, that was a hugely motivational factor for many Government Members, who realised that politicians had made a pig’s ear of it and perhaps it was time for people from outside politics to come in and try to do something to help.

[Mr Byrne]

The hon. Gentleman is very generous and I am grateful for his compliments. But he must accept that Ministers have so badly thought this policy through that they have had to face the indignity of coming to this House and promising to spend £130 million solving a problem that they have told us for the last year would never present itself.

[Richard Graham]

As the right hon. Gentleman will have just heard, I came into this House from outside politics, with a background in the public sector, the charity sector and business, where making concessions and being flexible in achieving goals was generally considered to be a merit. Perhaps if he had shown more flexibility in his approach to the handling of taxpayers’ funds, we would not be in quite the situation that we are today. I am sorry, because I enjoy his company, but I came to the conclusion that his approach today does not remotely add up to a policy. It is simply the continuation of a welfare culture by his party that amounts to gross irresponsibility, married to a something for nothing culture.

In summary, the Bill achieves the following goals. It protects the weak, the disadvantaged and the disabled. There are transitional arrangements in place to help families who are unintentional victims of the Bill in places with high housing costs such as London. It does ensure that workers who are paying the tax that goes to support an enormous benefits bill can see that the Government are taking steps to cap the amounts that are paid out. It is the right thing for Gloucester and for this country, and the amendment is a clumsy, last-minute fudge rather than any solution. I have no hesitation in rejecting it and supporting the Government’s proposal.

[Kate Green]

I need only a couple of minutes to ask three questions, particularly in relation to the Lords amendment on leaving child benefit out of the cap.

As has been pointed out many times, families earning £35,000 or £40,000 and families on benefits both receive child benefit—it is a universal benefit. First, then, how can it be right to have the same cap for a single, childless adult as for a family with children? Secondly, why are this Government, of all Governments, importing a new couples penalty into the benefits system? It might make more sense for a couple, each of whom might separately be below the cap, to separate than to stay together and incur it. I have never understood why this Secretary of State, of all Secretaries of State, wants to introduce such a policy.

Thirdly, how will the cap be uprated—if, indeed, it is to be uprated? What will happen if a family is forced to move to cheaper accommodation because its costs exceed the cap, and then rents rise in the new area and it is forced to move again and again and again? Until we know how the cap is to be uprated, children’s well-being and family stability will be put at risk, but I have yet to hear Ministers address that issue.

[Chris Grayling]

In the past hour and 45 minutes, we have listened to a debate that sums up the difference between the Labour party and the parties in government. With the leave of the House, I will respond briefly to the remarks that we have heard.

It is my view—and, I believe, the view of the public listening to this debate—that we have to change the nature of our welfare state. We have to move away from the world that existed under the previous Government, where children grew up, generation after generation, in houses where no one worked, and where entire communities had people with no experience of work in their family and who knew nothing about how to improve their lot in life. In the Bill, we have introduced a package of measures that will do nothing short of transforming our welfare state.

The great tragedy of this afternoon’s debate is that Labour just does not get it. We have seen an extraordinary attempt by Labour to get itself off a highly visible public hook over a policy that commands overwhelming public support in every constituency in the country. If we walked out on to the streets this afternoon and asked the public what they thought about a benefit cap, we would discover that virtually everyone was 100% behind this policy. Yet what we have heard from the Opposition over the weeks has been an exercise in dancing around the issue. There have been moments when they have said that they favour the benefits cap, but there have been moments when they have said that they oppose it.

[Sheila Gilmore]

rose—

[Chris Grayling]

Let us ask one of them who was on the Committee. Does the hon. Lady support the benefit cap?

[Sheila Gilmore]

I stood up to say that we cannot simply go to the population in the way suggested. When I was out on Sunday, one of my constituents said to me, “Yes, £26,000 seems a lot of money”, but when I asked her what she thought about so much money going in rents to landlords, she immediately changed her mind. We cannot create policy by giving people insufficient information.

[Chris Grayling]

You’d think they hadn’t been in government for a generation!

As we stand here, we still do not know exactly where Labour stands. I cannot, hand on heart, say, when the House divides in a minute’s time, whether Labour Members will vote for the benefit cap or against it. We asked the question again and again but they would not answer. They dance around the issue and come up with lame last-ditch excuses and new ideas that they did not discuss in Committee. At the end of the day, they do not want to give an answer to the public. In a moment, they will have to give that answer, because out there are millions of people watching us this afternoon, asking, “Will the House of Commons back something we passionately believe in?” We on this side of the House will be walking through the Division Lobby tonight in support of a benefit cap. We will be backing the views of our constituents; the question is: will the Opposition? Will the shadow Secretary of State, will the shadow Minister, will all the people who we have listened to in debates in Committee and in this Chamber—

17:00

Debate interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 47.

17:00

Division 457

Ayes: 334

---

Conservative: 277
Liberal Democrat: 49
Democratic Unionist Party: 8

Noes: 251

---

Labour: 240
Scottish National Party: 4
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Alliance: 1
Green Party: 1
Liberal Democrat: 1

[Mr Byrne]

On a point of order, Mr Deputy Speaker. This has been an important debate, yet the Government have ensured that no time was available to discuss Labour’s amendment and to put it to the vote before the knife fell at 5 o’clock. They declared financial privilege on the amendment in order to stop it being debated in the House of Lords. What advice would you give me, Mr Deputy Speaker, on how to ensure that this place is able to vote on Labour’s benefit cap?

[Mr Deputy Speaker (Mr Nigel Evans)]

Further to that point of order, I call Mr Iain Duncan Smith.

[Mr Duncan Smith]

Far be it from me to suggest an answer, but the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) might like to reflect on the fact that his party did not vote on the programme motion.

[Mr Deputy Speaker]

My response to the original point of order is that I am operating under the programme motion that this House voted for; I can do nothing other than that.

Clause 10

Responsibility for children and young persons

17:15

[The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)]

I beg to move, That this House disagrees with Lords amendment 1.

[Mr Deputy Speaker]

With this it will be convenient to consider the following:

Lords amendment 2, and Government motion to disagree.

Lords amendment 3, and Government motion to disagree.

Lords amendment 4, and Government motion to disagree.

Lords amendments 5 to 14, 16, 20 to 22, 24 and 25.

Lords amendment 26, and Government motion to disagree.

Lords amendments 27 to 46 and 48 to 72.

Lords amendment 73, and Government motion to disagree.

Lords amendments 74 to 110.

[Maria Miller]

As Mr Speaker has indicated, Lords amendments 1, 2, 3, 4, 26 and 73 impinge on the financial privileges of the House of Commons. In disagreeing to the amendments, I will ask the Reasons Committee to ascribe financial privilege as the reason to the House of Lords. Notwithstanding that, however, the House of Commons has an opportunity to debate the substance of the amendments, and to provide the Government’s full rationale for rejecting them,

Lords amendment 1 concerns elements for disabled children. Let us be clear about the impact of the amendment. It would force the Government to reduce support for severely disabled children and, moreover, would go against our commitment to increase support for such children to £77. I believe that our original policy, as agreed in this House, is the right one, because it targets support for disabled people not on age but on need, and removes the cliff edge of financial support that is currently faced by young adults and their families.

In these difficult times, we must make tough choices about where to target our limited resources. The choice that the Government have made is to protect the money that is available to support disabled people in universal credit, and to use it more effectively to ensure that the people who face the biggest challenge are given more support. I repeat that all the money is recycled to support disabled people. What we are doing is thinking about the whole life of an individual, and removing the current artificial division between childhood and adulthood. I hope that that reassures my right hon. Friend the Member for Wokingham (Mr Redwood), who spoke earlier about the importance of supporting disabled people. We have ensured that we can protect the money that is so important to them.

As we have reiterated throughout our debates on the Bill, we are overhauling existing support. It does not really make sense to look at any one aspect of universal credit in isolation: it provides families with a new package of support to meet a range of needs, and for that reason we need to consider the overall impact of the offer rather than concentrating on any of its individual components.

A parent with a disabled child and who is working 20 hours a week on the minimum wage is likely to be £73 better off in work under universal credit, rather than only £13 better off under tax credits. About 30,000 more families with a disabled child are in work than are out of work, so it is right for us to target support in a way that helps working families. An out-of-work family with a disabled child can receive just over £8,000 a year in benefits for their child once universal credit has been introduced. That compares with just over £4,000 for an out-of-work family with a non-disabled child, and about £1,000 for a family who only receive child benefit. Our impact assessments and modelling demonstrate that, overall, families are more likely to be better off on universal credit, and that there will be no significant change for disabled children living in poverty.

As all Members know, increasing spending is not an option. We simply cannot maintain the existing rates for disabled children if we are to increase the rates for severely disabled adults. That would cost £200 million, which we simply cannot afford. This is a critical point. If the amendment were agreed to, it would not be possible to increase the addition for the most severely disabled people to £77. Let us be clear: the decision to be made is whether we should maintain rates for moderately disabled children at the expense of raising the limits for severely disabled people. We strongly believe that the fairest approach is to align support between children and adults. We take an holistic view of an individual’s life. In summary, what is fair and right is to simplify benefits within universal credit, and to focus limited resources on the basis of need, not age.

Let me now turn to the amendments that deal with child maintenance:

“we should use every lever at our disposal to make reaching a voluntary agreement more attractive than coming into the Child-Maintenance Enforcement Commission.”

Those are not my words, but those of the former Secretary of State for Work and Pensions, now Lord, Hutton, to a Select Committee of this House in 2006.

Let me make four brief points to put the debate in context. Conflict when families break down is bad for children, as we all know from our constituency casework, and we all know that all too often that conflict can be embedded and entrenched as a result of problems to do with the Child Support Agency.

The role of the Child Maintenance and Enforcement Commission has changed fundamentally. It is no longer about recovering, pound for pound, the benefits payments made to lone parents. Instead we have a benefits system that gives more than £6.5 billion in welfare payments directly to lone parents, both those in work and those not in work. In the past, change has been piecemeal. That has created the current failing system, which costs taxpayers £500 million every year; has nil-assessed more than 250,000 people, some of whom really should be receiving support; and has 100,000 clerical cases. It would not be putting it too strongly to say that we have inherited a real mess from the Labour party. The reform that we are undertaking is long overdue.

My concern is that the amendment from the other place is not about improving the situation; if anything, it would make the situation worse. It is about attempting to divide parents into those who deserve to be charged, and those who do not. Our reforms are about creating a behavioural change for the benefit of children, and about helping parents to work together. The amendment from the other place would make that approach unworkable.

[Malcolm Wicks (Croydon North) (Lab)]

I have been listening carefully to what the Minister has to say. This is complex territory that has bewildered previous Conservative Governments and, frankly, the Labour Government. Will she tell the House how many parents with care do not receive any child maintenance from the other party?

[Maria Miller]

I can tell the right hon. Gentleman how many children do not receive any maintenance from the other party. Given that we spend £500 million a year on a child maintenance system, I think that it will shock the House to learn that for half of children living in separated families, there is no support in place. It is clear for everybody to see that the present system simply does not work, and the reason why it does not work is that it does not support families in coming together.

[Claire Perry (Devizes) (Con)]

May I say how strongly I support the reforms, particularly the link-up with Her Majesty’s Revenue and Customs, which seems incredibly sensible to the parents in my constituency who come to see me? Will the Minister tell us what will happen on the ground locally to support families who are separating? I think that is where the rubber hits the road.

[Maria Miller]

I thank my hon. Friend for her intervention. I will come on to this in a bit more detail in a moment, but I have been working with organisations such as Gingerbread, Families Need Fathers, Relate, and the Centre for Separated Families to make sure that we have the sort of support in place that has not been forthcoming for too many years, so that there is a structure for referring individuals to the right level of support via telephone lines, websites and the expert support that already exists. Importantly, we will also make available funding—some £20 million—to support programmes that help families to resolve their differences. That is doubling the amount of Government support for family relationships.

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

I support a lot of what the Minister is trying to do, and I know how dedicated she is to trying to help the Child Support Agency. However, I support the Lords amendment on charging. I agree with charging later on, when people are refusing to adhere to an order, but if the relationship between parents has already broken down, there is a risk that people will not go for the maintenance that they want because of the charging.

[Maria Miller]

I thank my hon. Friend for the opportunity to clarify an important aspect of the current situation. More than half of parents within the CMEC system would like to make their own arrangements—they positively want to do that—if they had the right support in place, but they do not have that support. They see the CMEC and the Child Support Agency as the only option open to them, and that cannot be right. It cannot be right that we are not doing more to support families so that they can take responsibility and do the right thing.

[Mr Frank Field]

Is not the really big change that we are discussing the fact that when the CSA was first established, the maintenance moneys went to the Treasury to offset what taxpayers were putting up because, generally speaking, fathers were not prepared to do so, whereas now that money remains with the family? Is it not reasonable, in such circumstances, if people are going to get a top-up to their benefit that they should contribute to the cost of gaining that extra money? On the timing, should we not charge people once they are getting the money, not before?

[Maria Miller]

I thank the right hon. Gentleman for making that point. He is absolutely right. Indeed, back in 1991 when the Child Support Agency was initially put in place, some £400 million of savings were attached to it because there was a pound-for-pound withdrawal of maintenance and the welfare benefits that an individual received.

[Sir Bob Russell (Colchester) (LD)]

What would the administrative costs be of levying the £20 fee and processing it?

[Maria Miller]

I just realised that I did not finish my response to the right hon. Member for Birkenhead (Mr Field). He challenged me about the up-front cost, and why we were not just making an ongoing charge once money was flowing. It is very simple. We want not simply to use this to enhance a family’s income but to take the opportunity to help parents to consider whether they should go to the Child Support Agency as they could stay outside the system and make their own arrangements.

[Several hon. Members]

rose—

[Maria Miller]

Hon. Members will forgive me if I make some progress, as I may answer some of their questions before they ask them.

On the cost of the up-front payment, it is important that we recognise that the system costs the taxpayer almost half a billion pounds a year. We want to ensure that we are using the system to support families properly to take responsibility, but we also need to ensure that we make the prudent savings that taxpayers would expect us to make in these difficult economic times. The cost of charging up front will not disproportionately add cost to the whole system—far from it. We are incentivising people to come to their own arrangements. As I said in reply to my hon. Friend the Member for Brigg and Goole (Andrew Percy), more than half the people currently inside the system would like to make their own arrangements. I know that by putting in place an up-front charge we will get some of those people to consider the actions they take.

[Kate Green]

rose—

[Maria Miller]

The hon. Lady will forgive me if I try to make some progress. I know that many hon. Members want to contribute to the debate and we have another significant issue to discuss after this one.

We want to support parents in taking responsibility for their child’s financial support post-separation, so that they do not see the costly and heavy-handed CSA as their only option. As I have said, half the parents using the Child Support Agency tell us they would like to make their own arrangements, with the right support, which clearly demonstrates that the CSA has come to be seen as the default option.

We have already announced that we are putting in place the support that parents need to be able to come to their own agreements, with the collaborative arrangements that are best for children.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

rose—

[Maria Miller]

I will make a little more progress, if the hon. Gentleman will forgive me.

We are doubling Government spending on relationship support with an additional £20 million. I want to put on record my thanks to those groups that have worked hard with us to develop what that support should be—they are, as I have said, Gingerbread, Relate, Families Need Fathers, and the Centre for Separated Families. For families that need the more structured approach of the statutory scheme it will remain accessible and heavily subsidised, but there will be in-built incentives for parents always to see the advantages of working collaboratively and in-built incentives for parents to pay maintenance in full and on time.

Maintenance direct will be a no-cost way for parents to make ongoing payments to each other within the statutory scheme and the full statutory collection scheme, with its strong enforcement powers, will be a service that both parents pay for.

[Mr Dave Watts (St Helens North) (Lab)]

Does the Minister share my experience that it is not a question of the system but a matter of enforcement? Whether the process is voluntary or goes through the Child Support Agency, the problems of children not receiving any money come about because there is either no enforcement or the enforcement is not effective. How will the system provide the enforcement action that is needed?

17:29

[Maria Miller]

I share the hon. Gentleman’s experiences of the current system and although I pay tribute to the staff who work in the Child Support Agency and the Child Maintenance and Enforcement Commission for their efforts to make the system work, we all know, as constituency MPs, that there is a big problem with parents’ attitudes towards payment. There is absolutely nothing in place at the moment to prevent parents from simply waiting until enforcement comes into play. Our measures will ensure that that changes, and will mean there is always an incentive for people to pay on time. Importantly, we will ensure that if we have to take heavy enforcement action, the individual who has caused the situation will pay for it, whether through a deduction of earnings order or through other measures we are putting in place.

It is not the Government’s intention to block parents from using the statutory scheme and we are listening hard to the concerns of parliamentarians in both Houses. To that end, the Government have proposed amendment 75 to ensure that there is a review of charging, and a report to Parliament will be completed within 30 months of the introduction of that mechanism. I can announce today that to underline that commitment the up-front charge for parents choosing to use the statutory scheme will be reduced to £20 for all applicants. In return, parents will receive a calculation of maintenance payable that will, for the first time, be based routinely on HMRC data. Additionally, domestic violence victims will be completely exempt from the application charge. I am sure the whole House will welcome this announcement, which demonstrates that no family will be deterred from accessing the statutory system purely on the basis of cost.

[Mr Roy]

The Minister has just praised Gingerbread. Does she agree with what Gingerbread has said—that 72% of single parents would not be able to come to an agreement and that 50% of those parents would not be able to afford the application fees?

[Maria Miller]

I think it is very important to work with individuals in all the organisations that support families going through separation. We will not always agree on everything but it is important to work together because we must get a solution that is right for mothers, fathers and children.

[Amber Rudd (Hastings and Rye) (Con)]

Will the Minister clarify that the gateway for access by parents will be £20 each and not, as was previously set out, a more complex one? If that is the case, I congratulate her and the Government on listening to people, reducing those charges and making this more simple.

[Maria Miller]

It will be £20 for the applicant only, because we want to make sure that the system is easy and straightforward to administer. For that, applicants will get a calculation of the amount of money their ex-partner would pay them. I should like to reassure my hon. Friend that, on an ongoing basis, the levels of charges will always sit disproportionately on the non-resident parent, because it is important that there is always an incentive for people to come to an arrangement.

[Sheila Gilmore]

Obviously, any change of heart is welcome—I do not think we would not welcome this—but there is something I do not understand. If, as the Minister has said, many people are reluctant to pay, how will charging the applicant—the parent with care—make the other parent more likely to pay?

[Maria Miller]

The hon. Lady and I know that it is very difficult for us to sit in judgment over parents. Family breakdown can be caused by many different things and we need to make sure that the support is there for parents to come together and work together. All our evidence suggests that 50% of people in the CSA system would rather not be there and would rather be working in the way I have described.

[Nicky Morgan (Loughborough) (Con)]

The Minister is absolutely right about the need for collaboration-based arrangements. To respond to the previous intervention, is not the inflexibility of the system one reason why non-resident parents often do not like paying? The constant barrage of letters, telephone calls and everything else means that they feel more and more reluctant but more and more pressured to pay. My constituency cases suggest that collaborative arrangements are sustainable and have worked.

[Maria Miller]

My hon. Friend is right that the inflexibility in the system does not reflect true family life. Every single family is different. It is difficult to reflect that in a statutory system, which is why encouraging more people to work on those arrangements together, whether the issue is finance or access, is the way for children to get the best results after family breakdown.

[Ian Paisley]

It would be churlish to not recognise that the Government have listened, because a £100 access fee would have been prohibitive to families, especially the most vulnerable families, who matter most in all this. I put on record my thanks to the Government for listening on that point, because that will allow more engagement with the statutory agencies, which is how we can get to the bottom of these problems.

[Maria Miller]

I thank the hon. Gentleman for those kind words. It is important that we have a solution that we feel everybody can work with as we move forward.

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

Will the Minister give way?

[Maria Miller]

May I address the amendment directly? The Government accept that Lord Mackay had the very best of intentions in tabling amendment 73 in the Lords. However, his approach means that the Government, before deciding who would pay a charge, would have to consider whether parents had tried to be collaborative. In considering that amendment, hon. Members should ask themselves whether it is the Government’s place to monitor and judge parents’ efforts to work collaboratively after their separation.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

rose—

[Claire Perry]

rose—

[Maria Miller]

I will give way in a moment. The implication of the amendment is that we should say yes to that, but the Government know that the answer absolutely has to be no. Not even under the simplest model of implementation could we see a way to set a level playing field of the sort that parents really need at such a difficult time. It would cost, we estimate, more than £220 million across this spending review and the next—a cost that would not be right for us to accept, and certainly not driving the right outcomes for children.

I give way to my hon. Friend the Member for Maidstone and The Weald (Mrs Grant), who has so much experience in this area.

[Mrs Grant]

I was a legal aid family lawyer for 23 years before being elected to this place, and I had the opportunity to represent many families seeking maintenance. It would be impossibly difficult, practically and fairly, to assess which families had taken reasonable steps to reach an agreement and which had not, unless we created an intrusive, Big Brother society, which I do not think anyone would want.

[Maria Miller]

I thank my hon. Friend for that intervention, because she brings with her a wealth of experience of the practical problems that families face in these very difficult times. An additional effect of the amendment would be to put almost 100% of the ongoing charges on the non-resident parent. We agree that non-resident parents should have a clear incentive to pay a greater contribution to the ongoing costs, but I fear that simply loading all those costs on the non-resident parent could drive some perverse incentives and not provide the ability for parents to work in the collaborative way that I have set out.

[Roberta Blackman-Woods]

We would acknowledge that reducing the amount of money that must be paid up front by the applicant is a step in the right direction, but I am still not clear about the rationale behind the non-resident carer being more likely to pay up because the applicant must pay a charge. I am concerned about conceding the principle of paying up front, because what will stop the Government coming back in a year’s time and hiking up the £20 fee to £100 or £150? Will the Minister explain how the uprating of that amount will be carried out?

[Maria Miller]

I thank the hon. Lady for her helpful support. It is really important that the up-front charge does not become a deterrent, which is why we will look at how charging is working 30 months after implementation. I remind her that the parent with care receives, in return for her up-front fee, a clear and detailed calculation of how much money would be payable to her through maintenance, and for the first time the calculation will use HMRC data, which will ensure that she has all the information needed to decide whether it is appropriate to go into either maintenance direct, where there will be no ongoing charges, or the statutory system.

[Pauline Latham (Mid Derbyshire) (Con)]

I, too, welcome the fact that the cost for the applicant has come down, but will the Minister explain what the charging will be and how much it will cost the Government to collect the £20, because it seems to me that it will cost far too much to collect a mere £20?

[Maria Miller]

I thank my hon. Friend for her question. Of course, we are all very quizzical about the CSA when it comes to costs, because we know that it has been very difficult to administer over the years. She will be reassured to know that we have taken a very straightforward approach and want to keep it simple. By charging an up-front fee and getting people to reconsider staying outside the system, we will be making considerable savings, as I have outlined. When she considers that each case costs around £26,000, or up to £40,000 if it involves any sort of enforcement, she will quickly see that getting people to reconsider will lead to significant savings.

[Claire Perry]

My hon. Friend is being most gracious in giving way. I wish to help underpin her point. As MPs we all face multiple challenging CSA cases, the most distressing of which are those where claimants know that their spouse is earning lots of money but not declaring it. Getting a statement that for the first time is based on HMRC’s reported data and sets out clearly what recipients can expect is a huge advantage, and £20 for that is a cheap price.

[Maria Miller]

I thank my hon. Friend for her support. The key is that we must ensure that we encourage both parents to work together, which is why we have configured the charging system in the way we have. That will always be in the best interests of the child, and hon. Members who work in this area will know that separation can be so damaging for children unless it is dealt with collaboratively.

[Mr Watts]

I am still not absolutely sure what the enforcement action that will drive some parents to pay will be. On the point that the hon. Member for Devizes (Claire Perry) has just made on people who have doubts about their spouse’s income, many of those people are self-employed and do not declare their incomes, so we will not be able to chase them, and that is the problem, not that PAYE will not catch them.

[Maria Miller]

The hon. Gentleman and I know that self-employed people, although a small number of individuals, are disproportionately represented in the problem cases that hon. Members have. He will also know that self-employed people still have to do tax returns, so rather than ex-partners having to pursue individuals who might be self-employed and have no office at which we can get hold of them, we will be able to use the HMRC link, which I think is an important improvement.

With regard to the enforcement that we will be taking to ensure that things really stick, first and foremost it is about ensuring that there is an understanding in the House about the charges that we will put in place for that enforcement action. Implementing a deduction of earnings order does not currently cost the person defaulting on their maintenance a bean. We are talking about making sure that those charges are passed on, which I think taxpayers would expect us to do. We will also consider implementing some of the other enforcement measures that Labour Members put in place through the Child Maintenance and Other Payments Act 2008.

[Sarah Newton]

My hon. Friend is generous in taking so many interventions. My understanding is that each CSA case costs the taxpayer about £25,000 in administration charges, and that can even go up to £40,000 if enforcement action is taken, so what estimate has she made of the savings to the taxpayer that will result from the new proposals?

17:45

[Maria Miller]

My hon. Friend cites those figures accurately, and the savings throughout this spending review period and into the next will be considerable indeed—running, I believe, into about £200 million. That is money we can use to support families directly through organisations such as those I have mentioned, and that is why we have made up-front a very clear commitment to taking £20 million of the money that we will save and directly investing in it in beneficial support for families. That is the right thing to do with the money that we are saving, as is making our contribution to reducing the budget deficit, which we inherited from the Labour party.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

rose—

[Maria Miller]

Will the hon. Lady forgive me if I close on child support now?

We know that we have to get parents to work together, and the issue is not simply about maintenance, but about continuing to encourage co-parenting, post-separation. Again, where possible, that is the right thing for children, and that is why the coalition Government, with our commitment to shared parenting, are putting family relationships and responsibility first. I therefore urge right hon. and hon. Members to reject this amendment from the other place, which could seriously undermine the very principled reform that we are undertaking here today.

[Seema Malhotra]

rose—

[Maria Miller]

If the hon. Lady will forgive me, I want to turn to the housing measures in order to ensure that other hon. Members have an opportunity to contribute.

The amendments to clauses 68 and 11 would dilute our proposals to deal with the widespread problem of social tenants under-occupying their accommodation. The proposed changes would effectively allow that group to keep one spare bedroom and, critically, wipe out up to £300 million a year from the estimated £500 million in savings, which we would have to find elsewhere. That approach is quite simply unrealistic, and in the current economic climate it would be totally irresponsible of us not to press ahead with our changes.

[Mr John Leech (Manchester, Withington) (LD)]

Does the Minister not accept that in many areas there is no alternative social rented accommodation to move to, and that people will be expected to move from social rented housing to smaller, private rented accommodation, which will end up being more expensive and, therefore, increase the housing benefit bill, not decrease it?

[Maria Miller]

I know that my hon. Friend takes a great deal of interest in that issue, as indeed do many other hon. Members, but I simply put it to him that many people in that situation will choose not to move. They will choose to make other arrangements and, perhaps, to get other people in their household to contribute to the bills. Indeed, I am sure he is right that some people will choose to move, and we are ensuring that there is sufficient time for them to consider their options and, importantly, making sure that support and a significant amount of discretionary housing payments are in place, so that local authorities are able to support people who have difficulty with the change.

[Simon Hughes]

I am grateful for the Minister’s understanding, and, as somebody who represents more people in social housing than probably any other English MP, I know that the Government have absolutely the right policy to ensure that people do not occupy properties that are bigger than they need when the state is paying the rent. But it is not practical to insist that they move when there is nowhere smaller to move to, so Lords amendment 4 is entirely reasonable, because it refers to the situation when

“any such landlord is not able to offer suitable alternative accommodation which would not cause a person to under occupy.”

If a landlord is able to do so, of course the tenants must move, but if the landlord is not, the tenants will not be able to move anywhere appropriate.

[Maria Miller]

I thank my right hon. Friend for that intervention; I understand the feeling with which he delivered it. I say clearly to him that we are saying that there is a great deal of time and considerable support for individuals who find themselves in difficult situations. We need to make sure that as many people as possible are able to remain where they are and that they are given the support to do that.

We have made considerable moves to make sure that the right support is in place, particularly for those with disabilities or foster care responsibilities. But I ask my right hon. Friend to consider how we would deal with what would be an enormous loss to the savings. Our basic problem is that there are 1 million spare bedrooms while about 250,000 families live in overcrowded accommodation. It is important for us to try to balance all those factors.

[Kate Hoey]

Would the Minister like to visit one or two people who I know in my constituency? It is only across the river. They are elderly people with one extra bedroom who have lived where they live all their lives. Their children have moved outside London because they cannot get housing here, but they occasionally visit with the grandchildren. This is just unbelievable—it is genuinely unbelievable that any Government would think of making someone move away from their family home. Will the Minister visit and explain the situation to those elderly people, who are so worried and upset by what has been suggested?

[Maria Miller]

I thank the hon. Lady for that intervention. Again, I understand the thoughtful comments that have been made. We are not making anybody move. The average reduction will be about £14 a week, but for many it will be about £12. Given the amount of notice that we are giving individuals and families, we want people to be able to consider the available options.

[Mr Alan Reid (Argyll and Bute) (LD)]

In many islands or remote villages, there is simply no alternative accommodation; the turnover of social housing is so slow that it could take many years for a smaller house to become available. What support will be available for people on islands and in remote villages so that they can stay in their own communities?

[Maria Miller]

My hon. Friend and I have spoken about these matters and I understand the very individual problems that his constituency faces. It is because of those very individual situations that we have put in place significant support so that local authorities can consider different ways to support families living in rural areas some distance from other communities and make sure that they are not dislocated from their support networks.

[Guto Bebb]

This issue has been of real concern to me. In a recent letter that I received, Community Housing Wales argued that more than 40,000 individual tenants in Wales would be affected by the issue of under-occupancy. What it failed to say is that, according to Welsh Assembly statistics, more than 50,000 tenants in Wales are over-occupying. There is a need for social housing providers to look creatively at how they move tenants within housing stock.

[Maria Miller]

It is important that that part of the debate is recognised by the House. For every family in a situation of under-occupying, many have considerable problems with over-occupation.

The hon. Member for Vauxhall (Kate Hoey) talked about her real concern for some of her constituents. I remind her, although she will know this already, that the measures that we are talking about are for working-age people only—not for pensioners. I encourage all hon. Members to ensure that the tone of our debate is based on fact and not fictional evidence.

[Claire Perry]

About a third of my constituency casework is made up of Child Support Agency cases, but another third is made up of housing. In Wiltshire, more than 12,000 people are waiting on the housing list. Week after week, young families come in who simply cannot get the housing that they need. Will my hon. Friend confirm that we must support the principle and do what is being discussed to relieve the pressure on social housing lists?

[Maria Miller]

Absolutely; my hon. Friend makes a clear point and an important contribution to the debate.

[Several hon. Members]

rose—

[Maria Miller]

If hon. Members will forgive me, I will make a little progress, because I know that many people want to contribute to this debate.

Aside from the financial issues, there is the bigger issue of fairness, which hon. Members have talked about in their interventions. Is it fair for taxpayers to take the tough choices about where they live, only to fund tenants in the social sector to live in homes larger than they need? Is it fair that people who are renting from private landlords get housing benefit to live in accommodation that is a suitable size for their household and that those in the social sector are not so restricted?

[Several hon. Members]

rose—

[Maria Miller]

If I am allowed to make some progress, I will perhaps answer some of the questions that hon. Members want to ask.

If social sector tenants choose to continue to live in accommodation that is larger than they need, it is only right that they make a contribution towards the cost. They can meet any shortfall through employment or other means. Those are the sorts of everyday choices that people living in the private rented sector and those who are not getting housing benefit have to make every day.

[Several hon. Members]

rose—

[Mr Speaker]

Order. It is clear that at the moment, the Minister is not giving way. It is for her to decide whether to give way. I gently make the point that it is now four minutes to 6 and the debate must conclude at 7. If Members were to have the opportunity neither to make their points through interventions nor through speeches, I would anticipate an extensive disappointment. I am sure that the Minister will factor that into her calculations in tailoring her contribution to the debate.

[Maria Miller]

I reassure you, Mr Speaker, that I will make the rest of my contribution very brief indeed.

The average weekly reduction is likely to be about £14. However, that is the average. Nearly 80% of claimants are under-occupying their accommodation by just one bedroom and will see an average reduction of about £12 a week. Working for just a few hours a week could help to meet that cost. The substantial investment that we are making in the Work programme and universal credit will ensure that people are supported in finding work, and that that work will pay.

We have listened to the concerns about the impact that these changes will have on specific groups, so we have committed to increase the budget for discretionary housing payments by £30 million from 2013-14. That additional money, which could help about 40,000 claimants, is aimed specifically at disabled people and accommodation for foster carers. We are working closely with a wide range of stakeholders to ensure that we have an effective implementation plan that will support tenants, their advisers and housing providers.

Ultimately, the country cannot afford to fund what is approaching 1 million spare rooms from the taxes of hardworking families, when those spare rooms could be used by other families who are living in overcrowded accommodation.

[Derek Twigg (Halton) (Lab)]

The chief executive of Halton Housing Trust has written to me. He states:

“Based on existing turnover of smaller accommodation it will take over seven years to re-house all of those households who are under occupying their current homes.”

He goes on to state that, in particular, it will affect

“homeless households and those leaving care.”

Does the Minister really think that that is fair?

[Maria Miller]

That is why we are already working with local authorities to ensure that they are well prepared for the changes. We have discretionary payments in place so that local authorities can take account of such problems. We reject the Lords amendment.

I will now move on to the remaining amendments so that I do not incur the wrath of Mr Speaker. The other Lords amendments in this group are minor and technical or simply clarify policy. They have already been announced and I do not intend to go into any further detail so that there is more time for Members to contribute to this important debate.

[Several hon. Members]

rose—

[Mr Speaker]

It is not entirely clear to whom the Minister is giving way.

[Maria Miller]

I’ve finished.

[Mr Speaker]

The Minister has finished her remarks. We are grateful to her.

[Mrs Anne McGuire (Stirling) (Lab)]

I will not follow the same order as the Minister. I will deal first with under-occupancy, because rarely have I heard such a pathetic defence of a Government’s position as I have heard here today. Their proposals are not based on fairness, and they are not intended to deal with the under-occupation of social housing. They are a bare-faced attempt to cut housing benefit.

18:00

Frankly, even though the Minister spoke for three quarters of an hour and kept telling us that she wanted to make progress, I felt as though we were back in the 19th century given some of what she said. She talked about social tenants as though they were a breed apart. I noticed that she called them “these people”. Many Members were once “these people” living in social housing, and some of us still are.

[Mr Frank Roy]

Will my right hon. Friend give way?

[Mrs McGuire]

Since the Minister did not afford my hon. Friend much opportunity, I will give way to him.

[Mr Roy]

I thank my right hon. Friend. What would she say to the 55-year-old man I met on Saturday, who has lived in his council house with his parents for 43 years and is now on benefit? He was genuinely frightened about the proposals being put forward. What can we say to that particular gentleman?

[Mrs McGuire]

That the proposals are unfair and are an attempt to disadvantage those who are already disadvantaged in many respects. They, along with some of the other elements of the Bill, are about to hit the poorest people.

I want to put on record the fantastic work of my hon. Friend the Member for Westminster North (Ms Buck), who is in her place. The Minister talks as though there were millions of houses out there ready for people to move into, but the Government do not know how many there are. They cannot even agree on what constitutes under-occupancy.

[Several hon. Members]

rose—

[Mrs McGuire]

I will certainly not give way at the moment.

My hon. Friend the Member for Westminster North asked Ministers at the Department for Communities and Local Government what constituted under-occupancy, and they said that it was two spare bedrooms, whereas the Department for Work and Pensions has a far more restrictive interpretation.

[Ms Buck]

We know from the Government’s own impact assessment that under-occupation is a problem particularly, but not exclusively, in the north of England, and that overcrowding is a problem particularly, but not exclusively, in the south. Local authorities have legal duties to their tenants, and if somebody from Salford is seeking to downsize, local authorities in Doncaster or Hull are not permitted to take them because of residency qualifications. Will my right hon. Friend help me to understand something that the Government have completely failed to explain? How will tenants be able to move from one local authority to another?

[Mrs McGuire]

Frankly, I do not think the Government know how. The DCLG and local authorities certainly do not know.

[Several hon. Members]

rose—

[Mrs McGuire]

I want to make a little progress, and I also intend to leave some time for other Members to contribute.

I shall give the House an illustration of what I have said, for which I thank my hon. Friend the Member for Blyth Valley (Mr Campbell). Northumberland county council, which has a mixture of housing in various types of locality, has estimated that it will take eight long years before it can put in place the Government’s proposals. During that time, people on the housing list will not be able to get into housing that is suitable for them.

[Claire Perry]

Will the right hon. Lady give way?

[Mrs McGuire]

No, I am not going to take an intervention from the hon. Lady just now.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Will my right hon. Friend give way?

[Mrs McGuire]

I will take one from my hon. Friend.

[Andrew Gwynne]

Does not what we have heard highlight the Conservative party’s misunderstanding of how social housing operates in reality? As my hon. Friend the Member for Vauxhall (Kate Hoey) said, we are talking about people’s homes. Even if they wanted to downsize, the housing stock is not there for them to move into.

[Mrs McGuire]

Exactly.

[Claire Perry]

rose—

[Mrs McGuire]

Oh, to put the hon. Lady out of her misery, I give way.

[Claire Perry]

I am most grateful. On a point of clarification, I thought I heard the right hon. Lady say that Members of this House continued to occupy social housing. Does she think it is appropriate for MPs earning £64,000 a year to occupy social housing and, presumably, have lifetime tenancy over it?

[Mrs McGuire]

The hon. Lady has a philosophical misunderstanding about people’s homes and houses. My mother lived in a local authority house all her life. She never thought it was anything other than her home. She did not see it as second class or inferior. She lived in it and it was right for her.

[Sir Bob Russell]

Does the right hon. Lady agree that successive Labour and Conservative Governments—[Interruption.]

[Mr Speaker]

Order. That is not acceptable. The hon. Member for Devizes (Claire Perry) should not shout across the Chamber, “My grandfather lived in a council house, you twit.” She should apologise. Frankly, she and other Members need to calm down. There is a decorum to this place. I know the hon. Lady. She would not behave like that across the dinner table, and she will not behave like that in this Chamber. That is the end of it. I hope we have an apology.

[Claire Perry]

I apologise profusely, Mr Speaker.

[Mr Speaker]

Thank you. I call Sir Bob Russell.

[Sir Bob Russell]

Successive Labour and Conservative Governments from 1945 to 1980 built a massive supply of family council houses, but for the next 30 years, they did not. It is a question of supply and demand. Does the right hon. Lady agree that we need more affordable rented houses?

[Mrs McGuire]

I would not disagree with the hon. Gentleman. Housing was built in the 1940s and ’50s to deal with the nuclear family that everybody knew at the time. The way in which families have developed, including the growth in the number of single-parent households, was not factored in. That goes for the social rented and private sectors.

[Maria Miller]

rose—

[Mrs McGuire]

The hon. Lady definitely is not getting in—certainly not at the moment.

The hon. Member for Argyll and Bute (Mr Reid) said that there are communities in all nations of this country—smaller communities, but sometimes larger ones—where there is an insufficient supply of houses, which is very true. People might have lived in them all their lives and would be unable physically to move.

[Dr Whiteford]

The hon. Lady makes an extremely important point. This problem is not isolated to Argyll and other island communities. In Scotland, 44% of social tenants need a one-bedroom house, yet only 24% can have one. That is the fundamental nature of the housing stock in the whole country.

[Mrs McGuire]

The hon. Lady makes a valid point.

[Maria Miller]

Will the right hon. Lady give way?

[Mrs McGuire]

All right then.

[Maria Miller]

I thank the right hon. Lady. It is very gracious of her to give way so that I can clarify matters. She will obviously be aware of the new national home swap scheme, which, importantly, will help people to identify housing in other areas, which is what she is talking about. We are also providing funding to councils of some £13 million over the next four years so that they can support under-occupying tenants who wish to move.

The right hon. Lady will also know that there is a great deal of commitment from the Government in terms of helping to build affordable housing: some £4.5 billion will help to deliver up to 170,000 new affordable homes. Those are all ways in which we can make the sort of changes that she wants. Just to clarify, as a lady who was born in a council house—

[Mr Speaker]

Order. This really is an abuse. It is a novelty, in my experience, for a Minister to intervene from the Front Bench reading from a folder. That really will not do. Interventions should be brief, and it would be good if the House—both sides—could get back into the courteous mood in which it found itself yesterday and for part of today.

[Mrs McGuire]

I listened to what the hon. Lady said, but she has obviously had no experience of trying to arrange a mutual swap in a small local authority area. We will have not only mutual swaps in small local authority areas, but national swaps, all supported by some anonymous Government agency. Frankly, the hon. Lady is living in cloud cuckoo land.

[Mr Watts]

Will my right hon. Friend encourage people to consider judicial review, because they are being asked to move to smaller accommodation that does not exist, on which basis the Bill is a fine on benefits and a fine on some of the poorest people in Britain?

[Mrs McGuire]

My hon. Friend makes a very good point and no doubt he will pursue it outside this House.

Before I move on, I want the House to hear what Lord Freud said in the other place when asked about how people would cover the reduction in rent. The Minister glibly passed over it, saying that it was only £12 or £14 on average. Lord Freud said:

“Claimants affected by this measure will have to decide whether to meet any shortfall themselves—from their earnings for example, or they could take in a lodger, or someone they know, to fill the extra bedrooms.”—[Official Report, House of Lords, 18 October 2011; Vol. 731, c. GC72.]

How many times does the Government expect people to take lodgers into their family home? Will social landlords even allow lodgers to be taken in, because in my experience they do not allow it? I see the Liberal Democrats are nodding. Ministers also need to make it clear whether rent received in such circumstances would be taken into account in benefit calculations. They are putting people in an unbelievable bind.

This proposal is ill thought-out and will not achieve its aims. It is predicated on an assumption in the impact assessment that will not work. It will push the poorest people, including those who are working—we should not forget that this is an in-work benefit—into even greater disadvantage. It will force social landlords to take eviction action if people end up in arrears. In other words, it is a disaster of a policy, and we should support the Lords in these amendments.

[Mark Durkan (Foyle) (SDLP)]

As well as the socially disastrous consequences that my right hon. Friend has mentioned, does she recognise that under the parity principle this measure would have to be transposed to Northern Ireland? Particular difficulties will be caused in relation to access to social housing in the future and to the demands for new social houses that are benefit-sized to be built in particular locations. Given the geo-sectarian tensions in parts of Northern Ireland, it could be a factor for destabilisation, with certain communities being seen to be punished for their current demographic status.

[Mrs McGuire]

My hon. Friend has highlighted exactly why this particular proposal has been ill thought-out.

[Anna Soubry]

Will the right hon. Lady give way?

[Mrs McGuire]

No, I do not want to take up as much time as the Minister. I shall move on to the Child Support Agency—

[Anna Soubry]

Will the right hon. Lady give way?

[Mrs McGuire]

I have made it perfectly clear that I am not giving way: I am moving on to the subject of the CSA.

The Government should never have brought forward this proposal, although I welcome the Minister’s statement today that they have reduced the fee. Why they put everybody through the anxiety of putting a fee—

[Anna Soubry]

Will the right hon. Lady give way?

[Mrs McGuire]

I have not really said anything about the CSA yet, so if the hon. Lady could just be patient—

[Anna Soubry]

rose—

[Mr Speaker]

Order. Let me just make it clear. It is obvious that the shadow Minister is not giving way at the moment. On the Government side, during my time in the Chair since 5.30, there was a preference—on the whole—not to give way to Opposition Members and that is now being replicated by the right hon. Lady. Members may make what they like of that, but there is nothing disorderly about it. It is no good people yelling from a sedentary position to express their frustrations. They must try to contain those frustrations, which I notice the hon. Member for Devizes (Claire Perry) is now successfully doing.

[Mrs McGuire]

Thank you for your wise words, Mr Speaker.

We welcome the reduction that the Minister announced today, and for the record, we welcomed in the other place the additional funding of £20 million that was going to be put in to encourage—

[Anna Soubry]

On a point of order, Mr Speaker. Could you help me? If a Member asks a question of the whole House, how does one respond to that question other than by asking that Member to give way?

[Mr Speaker]

The hon. Lady is asking me to speculate about a hypothetical. We could probably have a seminar about the matter, and it might be instructive. There could be a time for that, but it is not now. I feel sure that the hon. Lady has raised not a point of order, but a point of disappointment.

[Mrs McGuire]

I always hate to disappoint Tories, Mr Speaker.

The Minister mentioned some concessions, but it remains an unfair imposition on parents with caring responsibilities to make them pay a fee to obtain, in her words, a calculation of what they may be entitled to. The Government are always keen to say that people should do the right thing, but what happens when they try to do the right thing and adopt a collaborative approach? Frankly, all the evidence shows that a collaborative approach is often the last thing that people can get when a marriage breaks down—all sorts of issues to do with personalities, emotions and children being part of the bartering process between two parents make that almost impossible.

18:15

The Minister was a bit dismissive of some of her colleagues in the House of Lords. I want to come back to them in a moment. If the Minister gets the opportunity to wind up, will she tell the House where the Government got the figure of £25,000 from? That, apparently, is the cost to the taxpayer of each case. I cannot find the source for that figure. If we divide 1,142,600 cases into £450 million, which is how much it costs to run the CSA, we get an annual cost of £393.90. So where on earth does the £25,000 figure come from? I would be interested to know.

Members of the House of Lords did not just object to the amount of money to be paid; they objected on the basis of the principle that if a parent with caring responsibilities was entitled to maintenance for the children or child whom they looked after, they should get that support. An array of Conservative Members of the House of Lords have asked the Government to change their mind: Lord Carrington, Lord Fraser of Carmyllie, Lord Howe of Aberavon, Lord Jenkin, Lord Lawson of Blaby, Lord MacGregor, Lord Mackay of Clashfern, Lord Mawhinney, Lord Mayhew, Lord Newton and Lord Wakeham. I remember the ’80s, and I do not think that any of these people were fully paid up members of the liberal tendency. Yet they have all asked the Government to change their mind on the point of principle. I hope, then, that we get something more than what we heard from the Minister tonight. This is a ridiculous provision that, frankly, should not have been in the Bill in the first place.

Now we come to disabled children. This is the cut that even the Prime Minister did not want to admit to. My hon. Friend the Member for North Ayrshire and Arran (Katy Clark) again asked about it today, and again the Prime Minister refused to recognise the reality. I particularly congratulate the Lords on dealing with this issue and not running away from it, because it would have been easy for them to put this matter to one side after they were defeated by two votes on 12 December. But they did not. They returned to it last night and voted to challenge the Government on the cuts to the disabled children allowance.

The Minister has been clever with her statistics but according to Every Disabled Child Matters, the loss under the new system could amount to as much as £22,000 during the childhood of a disabled child and will cost the parents of a disabled child nearly £1,400 a year, and approximately 170,000 families will have this benefit frozen from 2013. I admit that there are transitional arrangements, but I have never come across a piece of legislation with so much sticking tape—there are reviews here and transitional arrangements there. This is not a strategy; it is a dog’s mess.

Every Disabled Child Matters estimates that approximately 63% of all future disabled children will lose out as a result of this policy. The Minister is an honourable woman and has tried to be gentle with the House today by using fine words about how this will not mean one thing to children and will mean another thing, but the reality is that in order to pay the most severely disabled children an extra £1.75 a week, children who are not as disabled—I use those words advisedly—will lose their benefit. We are talking about children who, for the most part, do not have night-time care needs. Typically, they include children with Down’s syndrome or cerebral palsy, and children who are profoundly deaf. In future, disabled children will not receive any benefit from the transitional arrangements; indeed, any disabled child born after 2013 will access significantly less support.

I appeal to Members, particularly Liberal Democrat Members. I hope that they will look at what their colleagues supported in the Lords. In fact, I even appeal—although not very much—to some Conservative Members to look at what their colleagues in the Lords did. This is an amendment to be supported. It is about decency, about disabled children and about the support that families who are at the hard end of looking after disabled children deserve to receive. I hope that this House supports the amendment.

I said that I would not speak as long as the Minister, but I want briefly to draw the House’s attention to Lords amendment 77. At the end of the last day on Report, the Government secured an amendment to the Bill that, on closer examination, significantly weakened obligations that had been placed on them by the previous Government’s Child Poverty Act 2010. That amendment replaces references to “progress” in the 2010 Act with much weaker language about “measures”. Child Poverty Action Group, among others, points out that that is, in effect, removing the duty to achieve any progress towards meeting the targets before 2020. I hope that we do not lose sight of that.

I have tried—in a shorter time than the Minister—to set out some of the issues that have been raised in recent weeks. Labour Members feel very strongly about those issues because they impact on the poorest, those who are most disadvantaged and those who have been demonised because they live in socially rented housing, and because they do not take into account the fact that children at the age of 14 or 15 might require a bit of extra room and do not all need to be decanted into a tiny box of a flat. I appeal to the Government to consider seriously what is being proposed today, and to support the Lords amendments rather than disagreeing with them.

[Andrew Percy]

I notice that the shadow Minister commented on how she felt the Minister had performed. I would describe her own performance as a little bit chippy, but that is not to say that she did not make a few good points. Many of us on this side of the House have had similar experiences to those on her side. [Hon. Members: “Hear, hear.”] I like her a great deal, but for her to talk about Conservative Members in the way she did—to intimate that they are in some way detached from humanity—not only does her a great disservice, but does the debate in this House a great disservice. [Hon. Members: “Hear, hear.”] That is not to say that the right hon. Lady did not make a good few points, which I will come on to in a moment—I notice that the “Hear, hears” have stopped on this side of the House.

I want to speak about Lords amendment 73 and then say a little something about under-occupancy. I think all of us who have dealt with the Child Support Agency know that it is a body that is not fit for purpose. The example I gave to the Minister the other day—a close family member of mine is going through this at the moment—concerns an errant partner who is being chased more aggressively, and successfully, for his parking fine than for the maintenance of his own children. It seems that the system is currently based entirely on conflict. We need to do something to address that. I agree with everything that the Minister said—and with her intention—about encouraging people to come to their own arrangements. However, I am a little concerned in that I do not necessarily think that, for a lot of people, levying a £20 charge—or any charge—against what will normally be the mother is likely to effect that change.

We have all seen cases where communication has completely broken down and where the errant parent—normally the father—is doing everything they can to avoid having to pay, particularly if they are self-employed, because the system seems to assist self-employed parents in avoiding their responsibilities. I am not sure that imposing a charge on—normally—the mother is likely to change that situation greatly or effect the cultural change that I think we all want.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Does the hon. Gentleman accept that the Minister was unable to give us any indication of the cost of collecting the £20 charge? Is it not clear that the cost of collecting and banking it will far outweigh the moneys received? The proposal is therefore vindictive, rather than anything else.

[Andrew Percy]

I am quite relieved that the Minister did not give us an estimate of the costs, because most Government estimates of costs tend not to be correct anyway. The hon. Gentleman has made his point, however, and it has also been made by Members on this side of the House. I welcome what the Minister has said about the £20 charge; it proves that he has listened.

[Yvonne Fovargue]

I accept the hon. Gentleman’s welcome of the reduction in the charge, but does he agree that the proposed collection charges do not seem logical? It is difficult to see the logic in making a family in need of child maintenance pay the cost incurred by the non-resident parent’s resistance to paying that maintenance.

[Andrew Percy]

That is exactly where I am coming from on this issue; I agree with the hon. Lady.

In closing my comments on this amendment, I will quote Lord Mackay, who said in the other place:

“The motivation of the Government for these charges is said to be trying to bring people to voluntary arrangement. I am entirely in favour of that.”

I would be, too. He continued:

“But if that proves impossible, when the woman is at the stage of having nothing more that she can do, she has to pay. What does that do? If anything, it might make her not go to the Child Support Agency”.—[Official Report, House of Lords, 25 January 2012; Vol. 734, c. 1092.]

[Several hon. Members]

rose—

[Andrew Percy]

I will not give way at the moment—

[Anna Soubry]

rose—

[Andrew Percy]

I will give way to my hon. Friend, as she was denied earlier.

[Anna Soubry]

I am grateful to my hon. Friend, who is as gracious as ever. There is much merit in what he says about a woman who is on benefit chasing a father who is, frankly, not up to scratch. Although £20 is a lot of money for someone in those circumstances who is on benefit, does hon. Friend agree that, if the woman is guaranteed a system that is fit for purpose, there is merit in that small charge being excised on her because eventually she and, most importantly, her children will get what they deserve?

[Andrew Percy]

We all want to achieve a service that is fit for purpose, but I am not sure that the charge is about delivering such a service. It will certainly not cover the cost of so doing. It seems to be more about effecting a cultural change, and I do not believe that charging the mother £20 will effect such a change. It would therefore end up being a tax on the mother who is trying to get money from an errant father. That is why I have a bit of a problem with the principle.

[Mr Watts]

Will the hon. Gentleman give way?

[Andrew Percy]

I will not give way at the moment, as I want to say a little something about under-occupancy, and a lot of people want to speak in the debate.

I listened to the debate about under-occupancy, and I am sorry that it turned into such a knockabout. There is significant under-occupancy in parts of the area that I represent. In my time as a councillor in the city of Hull, I represented a big council estate on which there was a huge amount of under-occupancy, which was largely, but not entirely, due to older people. Dealing with the matter is not as simple as just talking about housing swaps. I have tried to arrange housing swaps for constituents within the local authority, never mind outside it, and it is incredibly difficult. One party often gets cold feet and pulls out of the arrangement, for example. It is not easy to achieve at all.

That does not mean that we should do nothing about the problem, however. The point made by my hon. Friend the Member for Aberconwy (Guto Bebb) was interesting in this regard. We talk about under-occupancy figures, but we must also consider the figures for over-occupancy.

[Katy Clark (North Ayrshire and Arran) (Lab)]

rose—

[Sheila Gilmore]

rose—

[Andrew Percy]

I will not give way; I want to finish in a moment.

When I was a councillor, a lady came to see me. She had inherited a house from her parents. It was her home; she had lived in it with her parents all her life. She would now be considered to be under-occupying that home. I am sure that the Ministers understand this, but I plead with them to take account of the fact that houses are not only public assets; they are also people’s homes, and people have an attachment to them. This is not a simple matter to resolve, even though we should encourage an end to under-occupancy.

[Sarah Newton]

My hon. Friend is right to say that houses are also people’s homes. Does he acknowledge, however, that the tenants of housing associations and local authorities are able to rent out their rooms?

[Andrew Percy]

I am not sure that that is really the strongest argument to plead in aid of change.

These are people’s homes, but we must do something about under-occupancy. My local authority attempted to put a scheme in place to deal with the problem. We moved my grandma out of a bigger house into a small housing association home because it suited her, and it was done at the right time for her. Speaking from my experience as a local authority councillor in an area where under-occupancy is a problem, however, I can tell the House that this is not going to be an easy one to solve.

18:30

[Malcolm Wicks]

It is a pleasure to follow the hon. Member for Brigg and Goole (Andrew Percy), and I shall echo some of his remarks on the child maintenance charge.

I have been privileged to be a Member for 20 years, and I have noted that the issue of child maintenance and child support has been a running controversy and a running sore through Parliament and Government during that whole period. I shall briefly remind the House of the background. While there have, of course, always been children in this and similar countries brought up by only one parent—war widows after the first world war would be an obvious example—it is nevertheless true that in the post-war period there has been a kind of social revolution whereby very significant numbers of children spend either a proportion or all of their childhoods living—usually with their mum but sometimes, in a minority of cases, with their father—in so-called one-parent families. That is about divorce, which remains at a high level; it is about separation—and cohabitation is more likely to lead to separation than marriage; it is about the fact that many children are born “out of wedlock”, to use a quaint term, and live with a single mother.

This has been a major contributory cause to what we call child poverty, which interfaces with economic insecurity. I think that Parliaments and Governments have found it more difficult to grapple with and honestly discuss family insecurity than economic insecurity caused by low wages or unemployment. As I say, Governments have found it difficult. The old maintenance system, which was run by the courts, did not work: it delivered low levels of maintenance or no maintenance to many mothers and children.

The previous Conservative Government established the Child Support Agency—I think they were right to do so—but many former Conservative Ministers bear the scars of trying to make it work. They did not make it work effectively for all children. That was not because of incompetence—there were computer problems and the rest—but because this is one of the most difficult areas of government. It is the state—perfectly properly, in my judgment—trying to mediate during the pain, anger and passions of family breakdown, when issues of access and custody are also present. Although the old Child Support Agency had some successes, it never succeeded in getting maintenance from those fathers—yes, I know, sometimes mothers, but I am going to talk about fathers—who absolutely refused to fulfil their parental obligation and support their own children.

The last Labour Government tried to improve the situation and they might have done to some extent, but if we are honest about this—I am not normally one who tries to take the politics out of politics; otherwise I would have to join the Liberal Democrat party—some humility is justified in this case. For getting on for 20 years, Governments of left and right have failed to tackle this issue adequately. We really need to point again at the sheer scandal of there being too many parents out there who refuse to support their own children financially. That is the reality.

When I intervened on the Minister—it was good of her to give me the statistics—she said that among these families half, fully half, are not receiving child maintenance. What does that mean? It means either that the children are living in relative poverty and/or that other mums and dads in the community, whom we call taxpayers, are being asked in difficult economic circumstances to support not only their own children but other people’s children as well. What I am leading up to is to ask whether the idea of a charge to be able to use the system helps or hinders that process.

I do not think I am against a charge per se. Given that taxpayers have a stake in this, as well as, usually, the mother or “the parent with care” to use the awful jargon, and the child—they are the parties that have an interest in this—I am not against the taxpayer in a sense benefiting through proper payment of maintenance. We could discuss how that might come about; but if there is to be a charge, as was argued by my right hon. Friend the Member for Birkenhead (Mr Field), why should it not be levied when the flows of maintenance are coming to the mother and benefiting the child? Why should a fee be charged immediately rather than later in the process? I think that many Members would agree with that, but perhaps the Minister would like to comment.

[Maria Miller]

I thank the right hon. Gentleman for allowing me to answer his question. Fees and charges have been inherent in the child maintenance system from the start, since 1991. As he knows, his own party advocated the use of fees when it was in government, as indeed did Sir David Henshaw. Why? Because charging fees is a way of trying to get people to take responsibility. If that is done up front before an individual gets into the system, we are more likely to effect the behavioural change that I think is so important.

[Malcolm Wicks]

In general, it is the mothers of Britain—sometimes it is the fathers with care, but it is generally the mothers—who have taken on huge responsibilities. It is the parent who does not pay who is the irresponsible party, and who reneges on his duty to care for his own children. I want a system that can be tough-minded about the fathers who refuse to pay. They are often self-employed, and have become deliberately self-employed. The mothers often know where they live. A mother will have heard about the new person in the father’s life, about the fancy car outside the house, about the foreign holidays—yet the system has failed to make those fathers pay. Let me put the question to the Minister again. Will a charge help in those circumstances?

Many mums will know that the Child Support Agency, or whatever we choose to call it, does not work. We want to make it work, but people say, “My friends didn’t get anywhere.” Only recently I discussed with the Secretary of State the case of one of my constituents who, throughout the lifetime of four children, never received any maintenance. That person thinks that the system does not work. I want it to work, but if some mothers are deterred from using the system, it will be a failure.

This should not be a big party issue, and I hope that the Department will reflect again on when the charge might be levied.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

I support my hon. Friend the Minister on the issue of the Child Support Agency, but I want to make a brief observation on the housing benefit issue. My constituency might be wholly different from those of the Members who have spoke so far, but the overwhelming majority of the cases I deal with at my surgery involve people who want additional rooms because they have growing families or families who are becoming older. If this charge causes some people to want to downsize, that will help to strike a balance, but at present I do not encounter people who want to downsize.

[Several hon. Members]

rose—

[Mr Lilley]

Members will have an opportunity to make their points later in the debate. I am merely saying that in my constituency—

[Mr Watts]

Will the right hon. Gentleman give way?

[Mr Lilley]

I will.

[Mr Watts]

I am grateful.

How are people supposed to downsize when such properties do not exist? Is it not a disgrace that the House is legislating to ask people to do something that they cannot do?

[Mr Lilley]

What I am saying is that in my constituency I encounter people who have no spare room but want one, not people who have a spare room and want to give it up. The situation may be different in the hon. Gentleman’s constituency.

Let me now move on the point that I really want to make, which relates to the Lords amendment dealing with Child Support Agency charges. I am reluctant to discuss the Child Support Agency, as I was the hapless Secretary of State who had to introduce it after it was legislated for by my predecessor. Discretion being the better part of valour, I always delegated the matter to my hon. Friend the Member for North East Bedfordshire (Alistair Burt), whose emollient manner proved the text in Proverbs that a soft answer turneth away wrath. I kept as distant from it as I could.

[Mr Nuttall]

Will my right hon. Friend give way?

[Mr Lilley]

I will not, if my hon. Friend will forgive me.

I am also reluctant to take issue with the Lords unnecessarily. When I was Secretary of State for Social Security, I found that from time to time the Lords would propose amendments to legislation that I had introduced. At first I was shocked that anyone could think that my legislation could be improved in any way, but when I listened to what was said by the Lords in general and the bishops in particular, I usually found that it contained an element of truth. There was something worth listening to, even if I could not take on board everything that they proposed. I welcome the fact that my hon. Friend the Minister has listened to them, has modified the charging structure, and has taken their points on board. However, she is probably right not to adopt the whole principle of what the other place suggests.

I am not entirely persuaded of the Lords’ case, because I think that it is right in principle to charge for a costly service, and it is right that the people who principally benefit from it should pay an element of it in the form of a charge, rather than our leaving the entire cost to the other party or the taxpayer. It is right in principle, too, that wherever possible we encourage voluntary agreements, rather than reliance on state-funded bureaucracy, because voluntary agreements, where possible, are better, and because that reduces the load on an over-extended bureaucracy that has never been able to cope with the load that it has; it is better that it focuses on the most obdurate cases.

It is right in principle to charge both parents, as it is not possible, even though their lordships’ amendment implies that it is, to distinguish who is the goody and who the baddy.

[Kate Green]

Will the right hon. Gentleman give way?

[Mr Lilley]

I will let the hon. Lady make her own points in due course. We may reach our own judgments on who is right and who is wrong, but we cannot make the agency decide that. Both parents will benefit from an arrangement reached by the CSA, and it is right that it should make that arrangement.

I noticed that there were an awful lot of lawyers on the voting lists in the House of Lords. Lawyers do not say, “We won’t charge you if you’re right; we’ll only charge you if you’re wrong. We won’t charge you if you’re the aggrieved party; we’ll only charge the other party.” They should accept that similar rules apply to charging by the CSA.

Finally, as the right hon. Member for Birkenhead (Mr Field) said, now that child support is an addition to a family’s income, rather than it simply being about getting back the taxpayers’ money—I am not sure that it was right to make that move—it is sensible that there should be a charge to the beneficiaries. On balance, I think that my hon. Friend the Minister was right to make the modest concession that she did to her lordships, but to stick to the principle; I am glad that she has done so.

[Kate Green]

I want to make a point on child support, and a point on the Child Poverty Act 2010 and the change that the Government are planning to make to it.

I point out that there is an inequality of bargaining power, particularly in a high-conflict situation, which means that parents with care—usually women—do not have a choice on whether to arrive at a consensual agreement. In practice, women in particular will settle for little or nothing for the sake of a quiet life because they cannot afford the fee. I particularly take exception to the idea that a parent with care who has done everything possible to reach a voluntary agreement, but who meets with a resistant, recalcitrant non-resident parent, will have to pay a fee when it is absolutely no fault of hers that she and, more to the point, her children do not get the financial support that they should.

The right hon. Member for Hitchin and Harpenden (Mr Lilley) says that it is right that those who benefit from or seek to access the service should pay a fee, but it is children who are intended to benefit from a statutory system of child support. Is it right that money intended for children should be hypothecated in that way?

The right hon. Gentleman and the Minister seem to believe that it is impossible for the child support system to take a view on which parent is at fault, but in clause 138 of the Bill, that view is taken by the system, because access to the collection service is being limited to cases in which the commission has decided that maintenance will not otherwise be payable. If it is possible for the commission to make that assessment and to determine that there is no prospect of the non-resident parent making payment, how can no view be taken on whether efforts have been made to receive a voluntary payment or not?

The majority of lone parents are women and women are already typically worse off after separation or divorce whereas men are better off. The fact that those parents will now be hit with a further fee as there will be both an up-front fee and a fee for collection when that collection fails—although I welcome the fact that the fee has been cut to £20, I would like to see it at zero—means that those families on low incomes will be left with very little income.

18:45

[Maria Miller]

How does the hon. Lady suggest that the agency should decide which parent stood in the way of an agreement? Would she take the same view as was taken in the debate in the other place, which is that it would always be the non-resident parent’s fault that an agreement was not in place?

[Kate Green]

The point is that a system is being established whereby the parent with care must access the system. There will be a discussion at that point about the process by which that approach to the agency is made. There is no difficulty at all at that point in taking a decision about the responsibility and behaviour of the parent making that application. I cannot understand why the Government think that it is perfectly okay for other officials in the DWP to make decisions on whether people are making appropriate efforts to make themselves available for employment, but not for a decision to be taken on whether a parent has properly engaged in a process of seeking to reach agreement with a non-resident parent.

I also want to speak briefly about the Government’s proposal to amend the obligation on the child poverty target under the Child Poverty Act. The current obligation is for the Government to report on the progress that must be made to achieve child poverty targets—targets to which every party in this House has signed up. There will now be a far weaker requirement simply to report on proposed measures. In other words, there will be an obligation on the Government to report on what they might or might not do, but absolutely no obligation to report on whether it works or on what difference it makes. That undermines what lies at the heart of the Act, which was a genuine wish across the House in the previous Parliament to see real progress in bringing down child poverty and for every politician in this House to be accountable for that outcome.

I very much regret such a weakening of the Child Poverty Act. In future, the Government could legally produce a child poverty strategy that makes no reference to the number of children in poverty—an extremely important measure in driving progress—and has no clear goals for how the proposed actions will reduce that number. When the independent Institute for Fiscal Studies suggests that the cumulative impact of the Government’s welfare reforms on other measures will be to drive up child poverty between now and 2015 and onwards to 2020, one has to wonder whether the proposal is not a rather cynical and calculating step on the part of the Government to wriggle out of an obligation that they know they are not on track to meet.

[Jenny Willott]

I want to speak quickly on under-occupancy and the Child Support Agency.

The main concern on the Liberal Democrat Benches about under-occupancy and the housing benefit proposals—as hon. Members have heard from a couple of my colleagues and from Members on both sides of the House—is about the impact on rural areas and, in particular, the Scottish islands. There is also a concern about urban areas where an active allocation policy has meant that families have been given larger houses in areas that are less popular. I appreciate that it is difficult to lay out in legislation the need to ensure that tenants are offered appropriate alternative accommodation, but it is important that we ensure that when alternative offers are made they should take into account issues such as family and support networks, which are particularly important in helping people to get back into work. Offers should also take into account the distance people will have to travel, how that will relate to the communities, the lack of public transport in rural areas and so on, as well as where people are working and how easy it is for them to commute if they are required to move.

I understand that the Government will be doing that through discretionary housing payments, but I would be grateful if the Minister would ensure that guidance making those elements very clear is provided for local authorities. I know that discretionary housing payments are ring-fenced, and that is extremely important, but it is also important that general rules taking into account a sensible approach of looking at community links and the availability of alternative accommodation, or lack thereof, are applied across the country.

[Sheila Gilmore]

rose—

[Jenny Willott]

I am not going to give way.

Another concern is that it will take a while to move people and for accommodation to become available. Registered social landlords are concerned to know how long the process will take, so that they can enable a managed process. While that happens, there will be an impact on their income as arrears are likely to build up before alternative accommodation becomes available. Some RSLs have done work on this, including Riverside housing association, which is based in Merseyside. It has calculated that it will take it at least three years to move everybody around. [Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am having some difficulty in hearing the hon. Lady because of all the private conversations going on in the Chamber during this important debate. If hon. Members want to have private conversations, perhaps they could step outside the Chamber.

[Jenny Willott]

Thank you, Madam Deputy Speaker.

Will the Minister look at what an appropriate time frame would be and how long it is likely to take housing associations to move people around properties? Will she ensure that discretionary housing payments are available throughout that period so that people do not receive a large cut in their benefit while they are waiting for alternative accommodation to become available? This is a difficult issue and I know that the Government have made provision for those living in adapted accommodation and for foster carers.

[Maria Miller]

I just want to reassure my hon. Friend on a couple of points. First, we intend to commission an independent evaluation of the impact of the size criteria measure, which will give her some of the information and reassurance she seeks about the impact of the changes. We will also be providing funding of £13 million to councils over four years until 2015-16 for support to tenants who wish to move.

[Jenny Willott]

I thank the Minister for that useful information, which answers in part some of the questions I was going to ask.

It would be helpful if the Government kept an eye on progress. Certain money has been put aside for adapted properties, foster carers and so on, but it would be useful to know that if other vulnerable groups or particular parts of the country are identified as a particular problem, the Government would ensure that that was taken into account in the future allocation of money and in how they look at the impact of the policy on households.

On the Child Support Agency, there is a problem with up-front costs, particularly with the gap that was originally in the proposals between the amount required from those who are working compared with that required from those on benefits. I therefore welcome the Government’s announcement today that they are reducing the fee to £20, which will make a significant difference for a lot of households. Now, we just need to make sure that the service being provided is worth the up-front fee, which frankly it has not been in the past. I hope that we will see some progress in this area so that people will feel they are getting something for their money.

The Minister knows about a particular concern of mine, which I want to raise again today. I still have serious concern about the closing down of old cases and their transferral to the new system. I am sure that all MPs have had people come to see them in surgery with cases in which an irresponsible non-resident parent will not pay, plays the system, refuses to support their own children, and takes years to pin down until a deduction of earnings order in finally put in place. I am concerned about the impact on children of cancelling those orders and making the parent with care start the entire process again, not least because of the difficulties many have had with the CSA in the past and the lack of faith they have in the system. I would be grateful if the Minister would ensure that those cases were prioritised to ensure that when they are transferred to the new system they are properly monitored so that payment keeps flowing as much as possible and that if payment must stop it is only for a very short period so that huge arrears cannot build up, because those cases are the most likely to have a background of large arrears already.

[Mr Watts]

Will the hon. Lady give way?

[Jenny Willott]

I will not I am afraid.

This group of amendments is very varied and we have had a wide debate this afternoon. The Government have made improvements to the Bill, which I welcome, particularly those to the CSA fee. I hope that the Minister will take into account the points that my colleagues and I have raised, particularly on the issue of housing under-occupancy, which is probably the issue of most concern to us in the Bill. So far, I have found that Ministers have listened and taken concerns on board, and I hope they do that today because the Bill is in a much better state now than it was at the beginning of this process.

[Yvonne Fovargue]

I, too, would like to address the issue of under-occupancy and say that the concerns of my local housing department, Wigan and Leigh Housing, are so strong that we have been in correspondence with Lord Freud. There are very few one-bedroom properties, private or council, in my local area, and it will take eight to 10 years to move the 1,450 to 1,800 people who, on the estimates, might want to downsize. During that period, it is estimated, on Lord Freud’s own research, that 35% of those people— [Interruption.]

[Madam Deputy Speaker]

Order. I am sorry to interrupt the hon. Lady, but I did ask Members of Parliament who wish to have private conversations to leave the Chamber, because those conversations are disrupting the debate. This is the second time of asking. Please listen to the debate.

[Yvonne Fovargue]

During that time, 35% of those involved are likely to end up in arrears. That is 2,540 residents, and 83% will struggle to find the extra money. A total of more than 6,000 people will find difficulty in meeting their commitments, on top of the increases in food and fuel prices, and the fact that the Government have imposed rent rises of 8% for 2012-13. What are the Government going to do? I hear the Minister say that discretionary payments will be provided until 2014, but that is not the eight to 10 years that my association says it will take for even the people who want to downsize. That association is extremely concerned that the burden will be pushed on to housing benefit, even when people move, and that hard-pressed local authorities will have even more problems.

[Jeremy Lefroy (Stafford) (Con)]

Briefly, I want to make three points about under-occupancy and disabled people. First, I welcome the Minister’s announcement of funds to ensure that disabled people and other special cases are given the help that they need in transition. The other points that I want to make both arise from a constituent’s coming to see me. This particular family has four members, with two disabled people within it, and it needs four rooms. From the outside, someone might say that parents and two children need two or three rooms, which would give them one spare room. Absolutely not: in this case, every single room was needed, and the family was concerned that under the legislation they would be told that they had a spare room and be forced to move. I would like some reassurance on that point—that where people need all the rooms because of disability, certain rooms will not be considered spare, even if the family being of such a size might otherwise justify that decision.

[Maria Miller]

I can reassure my hon. Friend that if a disabled person has the need for an overnight carer, additional rooms can be allocated. Indeed, if there are disabled people in the house who require rooms, there will be clear support there for them to be able to have those rooms.

[Jeremy Lefroy]

I thank the Minister for that reassurance. On my second point, as hon. and right hon. Members know, many homes have had thousands of pounds spent on adaptations, and rightly so, for disabled people. It would not make a great deal of sense to ask people to move from a home that had had such adaptations into another home, where making such adaptations would cost plenty of money. Also, in the first home, the adaptations might have to be removed. Again, I ask for reassurance that common sense will prevail.

[Roberta Blackman-Woods]

If ever a piece of legislation was to demonise and penalise people who live in the social rented sector, this Bill is it, and I have listened to the debate today. My local authority in Durham has written to me to say that many thousands of families will be affected by the under-occupancy provisions, and both the local authority and the housing associations have written to say that they simply do not have enough alternative suitable housing and that it will take many years to re-house people. That means that tenants, who are already on low incomes, will have no alternative but to pay an additional sum of money—up to £50 a month—that they simply cannot afford or move into smaller, private rented accommodation if it is available, and in places like Durham it is not available.

The point that the Government must take on board is that if those people go into smaller and more expensive accommodation, that will have to be paid for from housing benefit in any case, so the whole policy is an absolute—

19:00

Debate interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 1.

19:00

Division 458

Ayes: 324

---

Conservative: 276
Liberal Democrat: 48

Noes: 255

---

Labour: 240
Democratic Unionist Party: 7
Social Democratic & Labour Party: 3
Scottish National Party: 3
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Lords amendment 1 disagreed to.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Clause 11

Housing costs

Motion made, and Question put, That this House disagrees with Lords amendment 2.—(Maria Miller.)

19:15

Division 459

Ayes: 310

---

Conservative: 274
Liberal Democrat: 37

Noes: 268

---

Labour: 239
Liberal Democrat: 12
Democratic Unionist Party: 7
Social Democratic & Labour Party: 3
Scottish National Party: 3
Plaid Cymru: 2
Conservative: 2
Alliance: 1
Green Party: 1

Lords amendment 2 disagreed to.

Lords amendment 3, 4 and 26 disagreed to.

Clause 131

State pension credit: carers

Motion made, and Question put, That this House disagrees with Lords amendment 73.—(Maria Miller.)

19:30

Division 460

Ayes: 318

---

Conservative: 273
Liberal Democrat: 45

Noes: 257

---

Labour: 237
Democratic Unionist Party: 7
Liberal Democrat: 4
Social Democratic & Labour Party: 3
Scottish National Party: 3
Plaid Cymru: 2
Alliance: 1
Green Party: 1
Conservative: 1

Lords amendment 73 disagreed to.

Remaining Lords amendments agreed to, with Commons financial privileges waived in respect of Lords amendments 16, 20 to 22, 28 to 37, 78, 80, 81, 83 to 86, 88, 90 to 94, 98, 101 to 106 and 108.

Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments;

That Chris Grayling, Stephen Crabb, Stephen Timms, Tom Blenkinsop and Jenny Willott be members of the Committee;

That Chris Grayling be the Chair of the Committee;

That three be the quorum of the Committee;

That the Committee do withdraw immediately.— (Mr Dunne.)

Question agreed to.

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.

[Madam Deputy Speaker (Dawn Primarolo)]

I now have to announce the results of Divisions deferred from a previous day. On the motion relating to the mayoral referendum for Liverpool, the Ayes were 324 and the Noes were 212, so the Question was agreed to. On the motion relating to the mayoral referendum for Nottingham, the Ayes were 320 and the Noes were 213, so the Question was agreed to. On the motion relating to the mayoral referendum for Leeds, the Ayes were 322 and the Noes were 212, so the Question was agreed to. On the motion relating to the mayoral referendum for Bristol, the Ayes were 321 and the Noes were 212, so the Question was agreed to.

Business without Debate

Wednesday 1st February 2012 Commons Chamber

delegated legislation

Wednesday 1st February 2012 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6))

Environmental Protection

That the draft Storage of Carbon Dioxide (Inspections etc.) Regulations 2011, which were laid before this House on 14 November, be approved.—(Mr Dunne.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Local Government

That the draft City of Manchester (Mayoral Referendum) Order 2012, which was laid before this House on 5 December, be approved. —(Mr Dunne.)

The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 8 February (Standing Order No. 41A).

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Local Government

That the draft City of Newcastle-upon-Tyne (Mayoral Referendum) Order 2012, which was laid before this House on 5 December, be approved.—(Mr Dunne.)

The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 8 February (Standing Order No. 41A).

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Local Government

That the draft City of Sheffield (Mayoral Referendum) Order 2012, which was laid before this House on 5 December, be approved.—(Mr Dunne.)

The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 8 February (Standing Order No. 41A).

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Broadcasting

That the draft Local Digital Television Programme Services Order 2012, which was laid before this House on 15 December, be approved.—(Mr Dunne.)

The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 8 February (Standing Order No. 41A).

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Electronic Communications

That the draft Wireless Telegraphy Act 2006 (Directions to OFCOM) Order 2012, which was laid before this House on 15 December, be approved.—(Mr Dunne.)

The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 8 February (Standing Order No. 41A).

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Reform of the CAP

That this House takes note of European Union Documents No. 15396/11, relating to a draft Regulation establishing rules for direct payments for farmers under support schemes within the framework of the Common Agricultural Policy, No. 15425/11, relating to a draft Regulation on support for rural development by the European Agricultural Fund for Rural Development and No. 15688/11, relating to a Commission Staff Working Paper: Executive Summary of the Impact Assessment—Common Agricultural Policy Towards 2020; and supports the Government’s view that fundamental change to much of the Commission’s regulatory proposals is required to deliver the legislative basis necessary to support an innovative, competitive and market-orientated farming industry, genuine additional environmental, biodiversity and climate change benefits and strong, viable rural communities in a sufficiently simple manner to allow effective implementation by paying agencies and farmers.—(Mr Paice.)

Question agreed to.

Delegated Legislation

Wednesday 1st February 2012 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Electoral Commission

That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint John Rhodes Horam to be an Electoral Commissioner in place of Baroness Browning, with effect from 1 March 2012 for the period ending on 30 September 2014.—(Mr Heath.)

Question agreed to.

petitions

Wednesday 1st February 2012 Commons Chamber

19:47

[Phil Wilson (Sedgefield) (Lab)]

This petition with 800 signatures is on behalf of my constituents of Sedgefield who live in the borough of Darlington.

The petition states:

The Petition of residents of the Borough of Darlington,

Declares that the Petitioners believe that Associated Transport Provision to schools within the borough should continue to be provided for children starting secondary school from 2013 onwards, as while the Petitioners understand the financial constraints facing Darlington Borough Council, the Petitioners believe that ending the service will be detrimental to children, families and local communities.

The Petitioners therefore request that the House of Commons urges the Government to work with Darlington Borough Council to ensure that Associated Transport Provision to schools within the Borough of Darlington continues to be provided for children starting secondary school from 2013 onwards.

And the Petitioners remain, etc.

[P001002]

19:49

[Mrs Jenny Chapman (Darlington) (Lab)]

I am tempted to say “ditto”. This petition is on behalf of 800 residents of Darlington.

The petition states:

The Petition of residents of the Borough of Darlington,

Declares that the Petitioners believe that Associated Transport Provision to schools within the borough should continue to be provided for children starting secondary school from 2013 onwards, as while the Petitioners understand the financial constraints facing Darlington Borough Council, the Petitioners believe that ending the service will be detrimental to children, families and local communities.

The Petitioners therefore request that the House of Commons urges the Government to work with Darlington Borough Council to ensure that Associated Transport Provision to schools within the Borough of Darlington continues to be provided for children starting secondary school from 2013 onwards.

And the Petitioners remain, etc.

[P001000]

19:50

[Valerie Vaz (Walsall South) (Lab)]

The petition from the citizens of Walsall

Declares that the Petitioners object to Walsall Council's plans to remove borders around all graves at cemeteries in Walsall including Streetly Cemetery, thus allowing lawnmowers, workmen and members of the general public to pass on top of the graves; declares that the Council has never objected or removed any of the borders before or maintained the cemetery as a lawn cemetery and that no consultation has taken place with the families of those buried in this and other cemeteries in the borough; and declares that the Petitioners believe that the plan to remove the borders around graves, which would allow lawn mowers and workmen to pass over graves, is an infringement of their human rights, beliefs and dignity.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to encourage Walsall Metropolitan Borough Council to reconsider their decision to remove borders from around graves in cemeteries in Walsall.

And the Petitioners remain, etc.

A petition in similar terms has been signed by 744 people.

[P001001]

19:51

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

The petition concerns workers and their families throughout the United Kingdom who are waiting for news of the Peacocks stores up and down the land that are in administration. It has been signed by more than 600 of my constituents in one store. It states:

The Petition of residents of Ogmore

Declares that the Petitioners are concerned about the potential closure of Peacocks stores.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to prevent the closure of Peacocks stores.

And the Petitioners remain, etc.

[P001003]

Green Investment Bank

Wednesday 1st February 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Dunne.)

19:52

[Tony Lloyd (Manchester Central) (Lab)]

It is almost commonplace nowadays to say that the greening of our economy must take place, and must take place quickly. We know that a low-carbon economy offers not just challenges—although it certainly offers challenges—but enormous opportunities, and the success of the green investment bank is vital to that process.

I congratulate the Minister and his Department on an initiative which, as the Minister knows, has been welcomed across the country, if only in the locations where councils are making active bids. As I shall demonstrate, the level of support in Greater Manchester is such, and the quality of the Manchester bid is so strong, that had Manchester not submitted a bid, the Minister would probably have asked us to do so.

I can certainly say that the bid has the support of a number of people, including, obviously, my hon. Friends the Members for Blackley and Broughton (Graham Stringer) and for Bolton West (Julie Hilling), my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), my hon. Friends the Members for Stretford and Urmston (Kate Green) and for Stalybridge and Hyde (Jonathan Reynolds), and the hon. Member for Bury North (Mr Nuttall) on the Government Benches. It is important to say that the hon. Member for Altrincham and Sale West (Mr Brady), the chairman of the 1922 committee, has asked me to place on record his strong support for the Manchester bid.

Manchester has some strong positives when it comes to meeting the criteria that the Government have said are fundamental to the location of the green investment bank. It is always tempting for anyone from the north of England to take a position that does not always see London as the centre of the universe, possibly because it is not, but there are strong reasons why locating the bank in London would send the wrong signals about the type of economy that we want to build in the United Kingdom. That is not an anti-London statement, but a simple matter of practical fact.

We want to use the green investment bank to engineer investment, particularly in manufacturing, and we want to break the cycle of an investment system that has historically been quite hostile to manufacturing, and that is very much based round the London service ethos. People in parts of the north of England have said to me that it is difficult to get the merchant banks to take seriously investment outside the golden triangle of Oxbridge and London; we need to consider location as a key factor in that, particularly if we recognise that one of the roles of the green investment bank will be to overcome the traditional problems of market reluctance or, even worse, market failure. In that sense, a location outside London is important.

Of course, there are practical reasons why the Manchester bid would be better than anything that could possibly come from within London, but I repeat that this is not about pitting Manchester against London; historically, when that has happened, Manchester has normally won the intellectual arguments, if not the physical arguments that go with them.

The Government have laid down important criteria, one of which relates to the concept of connectivity. Of course, in the modern world, Manchester’s international airport is a tremendous asset, particularly when we consider that some 200 cities around the world are accessible from Manchester airport. I would not pretend that that competes with the southern regional airport system that includes Heathrow and Gatwick—of course it is possible to access more cities from them— but Manchester is only a short flight away from that London airport system. We also have very good train communications.

In the modern world, it may not be the physical transportation of people that matters, but the movement of information and, in that area, Manchester scores very highly, not simply against other non-London cities, but against London. Manchester already has one of the most advanced, competitive telecommunications and internet infrastructures in Europe, and it is the only UK city outside London with an international internet exchange. It is the only city in the UK including London to offer next-generation broadband, with fibre to premises allowing remarkable speeds in a true open-access network. BT has completed a £575 million investment programme that places Manchester 10 years ahead of other UK cities, in terms of access to digital communication. Those are the types of connections that the world of today—and the world of tomorrow—will demand.

As for the requirement for adequate office space and energy-efficient offices, the modern offices in Spinningfields, the Co-operative Bank area and Piccadilly place are already the rival of any in the country. Such offices are easily available in Manchester, and are being built to the very highest environmental standards. I think that it is true to say that we have more office space that hits the highest levels of environmental efficiency than other cities outside London.

Manchester has huge and growing business, financial and professional services sectors; 250,000 people already work in those sectors, 50,000 of them in finance, insurance and banking. Of course, Manchester also has a powerful transaction ecosystem—one of the criteria that the Department for Business, Innovation and Skills specified was necessary for a successful bid. We have the Manchester Private Equity Group, and a financial and banking system that is already well used to operating in a transaction ecosystem. Of course, Manchester scores very highly in its cost-effectiveness as a location.

[Graham Stringer (Blackley and Broughton) (Lab)]

My hon. Friend is making a splendid and excellent speech, which I am sure the Minister will not be able to resist. May I just add two details that might aid him? First, Manchester airport has more destinations than Heathrow and, secondly, banks thrive better where there are other banks and Manchester is undoubtedly the second financial centre in this country.

[Tony Lloyd]

My hon. Friend probably knows more about transportation—and particularly air transportation —than almost any hon. Member and he is right about the position of Manchester airport. That is a very important plus, because Manchester airport, by definition, is down the road from the thriving city centre. The growing efficiency of our local transportation system means that it is easily accessible by anybody who comes to the city.

My hon. Friend’s second point is absolutely right, too. The strength of Manchester’s banking system is really important and, in that light, I want to mention the quite recent move by the Bank of New York Mellon, which invested in the city centre. The bank took a decision to come to Manchester some six years ago. Before it first came, it scoured the country in a manner that was very similar to the process that is going ahead for the green investment bank and it considered very similar criteria for the location of its new investment in Britain. At the time, the investment covered a couple of hundred people, who were easily found. They were people of the highest quality, of course, because BNY Mellon was not going to set up without people of both expertise and competence, given that those people would be dealing with the bank’s UK clients. Those people were recruited from the Manchester labour market, because the existence of the banking system mentioned by my hon. Friend the Member for Blackley and Broughton meant that that labour pool was easily available.

BNY Mellon has found that as it has expanded—it has expanded very quickly in six years and now employs more than 1,000 people—it has been able to expand its pool of labour precisely because of that nexus of people in the banking and financial services sector who were readily available. In particular—I hope that the Minister will pay particular attention to this point—the fact that people had the skills and were in the professions that the bank was looking for meant that, as the labour force increased, that had a non-inflationary impact on the bank and on the local labour market. That is an important factor to consider in the location of the green investment bank.

I am aware that the hon. Member for Bury North wants to show that support for this bid is felt strongly across the normal partisan political divides in the House, so I shall conclude. The bid is supported by people from all political parties and by people from all backgrounds, by business, the trade unions and local authorities, and by all those who make up the firmament of modern Manchester and modern Greater Manchester.

I understand that the Minister will be able to say very little tonight because of his almost quasi-judicial position, but I hope he will go away and reflect on the strong case for the Manchester bid. It is a powerful bid from a city that is used to such innovation and from a city that has demonstrated in the past its capacity to work practically, not ideologically. That has seen the city transformed over the 20 years since my hon. Friend the Member for Blackley and Broughton was leader of the city council. Manchester, in transforming itself, has demonstrated the old adage that what Manchester thinks today, the rest of the world does tomorrow. If we are to make this bank a success, let us begin to think that thought in Manchester and ensure that it is a success.

20:04

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

Let me start by congratulating the hon. Member for Manchester Central (Tony Lloyd) on securing this important debate, which gives hon. Members an opportunity to extol Manchester’s virtues as the ideal home for the new green investment bank. This is not about whether I think it is a good idea to have a green investment bank. What matters is that there is broad consensus across the parties and across all sectors in Greater Manchester that it is the best place to have the bank. There are many good reasons why it should be in Manchester—so many that we could fill a whole day’s debate with reasons—but I want to concentrate on five key areas that are crucial to this decision.

First, locating the bank in Manchester would provide taxpayers with excellent value for money because the cost of locating it there would be far less than putting it in London. Of course, it would also help to bridge the north-south divide. Secondly, there is excellent office accommodation available and waiting in Manchester, ready for use by the bank. Thirdly, as the hon. Member for Manchester Central has mentioned, we have excellent transport links. Even with the existing rail link it is just over two hours to London, but that time will be slashed with the advent of HS2. Fourthly, it is important that the staff of the bank have experience of handling transactions of this nature, and there are people with that experience, as I shall demonstrate in a moment.

Fifthly, there must be a thriving professional and financial sector. Greater Manchester has the largest number of firms in the financial and professional sector outside London and the largest legal, accounting and management consultancy sectors. The Manchester city region employs more than 50,000 people across the banking, finance and insurance sectors, and those with specialist skills are available in project finance, structured finance, and advisory and investment management. More than 60 banks are already based in Manchester, which is home to the largest United Kingdom accountancy sector outside London, and is the largest centre of mid-tier private equity in Europe.

It is not good enough just to have the staff—they must also be experienced in the sort of deals that the bank will be required to carry out. In 2011, Manchester professionals in this sector conducted 620 corporate finance deals, which was an increase of 2% on the 2009 total in the north-west. There is also great experience of working in partnership across the public and private sectors, which will be of tremendous value to the green investment bank. In conclusion, I note that the Minister has been listening most attentively and although I do not expect a definite yes this evening, I trust that he will examine Manchester’s bid most carefully and will view it favourably.

20:08

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I congratulate the hon. Member for Manchester Central (Tony Lloyd) on securing the debate and commend my hon. Friend the Member for Bury North (Mr Nuttall) and the hon. Member for Blackley and Broughton (Graham Stringer) for speaking about the importance of this institution and making the case for Manchester to be its home. The House notes that Members from across the Greater Manchester conurbation, and indeed elsewhere, have attended the debate to give their support. That is important for the bid and to put forward the case regarding this institution.

I entirely support the argument that Manchester is a city with a strong and notable industrial heritage. I think I am right in saying that it is home to the very first industrial canal and the world’s first railway station. Manchester has not only a long-standing role in the development of key industrial sectors—engineering and chemicals come to mind, and textiles of course, but also the electrical industries—but an important record of innovation. The hon. Member for Manchester Central pointed that out in saying that it is a city used to transformation. That is an important characteristic in this instance.

I have to be careful, as the hon. Gentleman said. Applications closed on Monday, so he will understand that I must desist from making further remarks, positive or otherwise, about this individual case—strongly represented as it has been in tonight’s debate—because I do not want to prejudice the application in a challenging field. I am sure hon. Members will understand that.

What I can say is that, throughout the country, there has been tremendous support for the bank. The hon. Gentleman said that that has involved principally those places that seek to become its home, but it has been good to see how many other areas that did not, in the end, make an application showed genuine interest. Indeed, the proposal has drawn support from across the political divide, as we have seen here this evening. We welcome that support—that enthusiasm—for the institution.

We see the green investment bank as a key component of the transition to a sustainable economy. It should complement other policies and drive growth in the sector, which is already worth more than £116 billion. This country is well placed to seize the benefits of the transition, being already the sixth largest low-carbon economic goods and services market in the world.

As the hon. Gentleman rightly pointed out, we in this country have a wealth of expertise and many leading innovative businesses in this field which are well placed to secure their role in what will become a global market that is already estimated to be worth about £3.2 trillion. There is a wide range of opportunities here. One thinks immediately of wind power, wave and tidal, building technologies and ultra-low-carbon transport. All those have a key role to play in the debate.

We are committed to ensuring that UK businesses are able to seize those opportunities. That is why last summer my Department, the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs together published our range of policies to support that transition to the green economy, which has been mentioned in the debate.

The plans will form the basis for an important developing partnership between Government and business, but also universities and local communities, if we are to make this a lasting change. Clearly, low-carbon technologies are new—many are only nascent—so in order to invest the substantial resources required in this area, business needs to be certain that the low-carbon sector is indeed here to stay. We are doing our best, and we have taken some positive steps in providing that certainty. For example, we are committed by law to a 50% reduction in carbon emissions by 2025. We have launched the world’s first incentive scheme for renewable heat, which should increase investment in those technologies by £7.5 billion by the end of this decade. We have announced the green deal, whereby householders, businesses and landlords will be able to improve the energy efficiency of their homes and their business premises at no up-front cost, instead recouping the payments through instalments on bills. We are putting some £200 million into supporting the early take-up of that, so we see that market develop and grow.

Clearly, the transition to a green and growing economy requires unprecedented investment. For example, we think that the energy sector alone will require some £200 billion. To ensure that a lack of sufficient funds does not become a barrier to the scale and pace of the transition, we recognise that we need to go beyond traditional policies. That is why we are establishing the green investment bank, which will be the first of its kind in the world.

Capitalised with £3 billion, the green investment bank will complement other green policies to help to accelerate the provision of essential capital. The bank will build the kind of deep expertise in financial markets and in sustainable technologies and innovations that is vital if we are to take those bright ideas and turn them into commercial ventures. It will be a new and enduring institution, rather than a series of Government interventions, and it will address the areas of under-investment that have persisted in years past.

For the benefit of Members, I will briefly explain the development of the policy and the specific issue of location. As I explained in a previous debate, the green investment bank will need to be approved by the European Commission before we can establish it as a fully independent financial institution. We expect to obtain this approval by early 2013. We recently announced that the Government are to pave the way by making investments in green infrastructure, on commercial terms, from April this year. The investments will be funded from the £775 million allocation for 2012-13 made available in the Budget. The investments will be made by my Department’s UK green investments team and overseen by a new investment committee. As part of this, the Government have made available £100 million for investment in waste infrastructure projects and a further £100 million for investment in the non-domestic energy efficiency sector for the next financial year. We also stand ready to invest in offshore wind projects.

Looking ahead, the green investment bank’s operational remit will be to focus on green infrastructure, which means that our initial priority sectors for investment will include offshore wind power generation; commercial and industrial waste processing and recycling; and support for the green deal. The bank will work towards a double bottom line, which in plain English means that it will achieve a significant green impact but also have to make financial returns.

The essence of the matter we are debating is the location of the bank, which has clearly generated a lot of interest. This is the second such debate I have had the pleasure to respond to; there was another from the other side of the Pennines, but I will say no more on that, given that the majority of Members present are from the Manchester side and I do not wish to spoil the debate’s harmonious nature. Clearly the bank’s location will be crucial to its success. It will not be a vast institution—we think it will employ no more than 50 to 100 full-time equivalent staff—but it is clear, as was apparent in both speeches we heard, that people already recognise the economic value of having the organisation in their community and that it will be a genuine asset to whichever area it is located in.

On 12 December last year the Department published a document setting out the criteria that will be taken into account in deciding on the bank’s location. The criteria are the ability to recruit and retain the specialist staff needed to run the organisation; a location that enables the bank to work closely with other parties involved in deals as well as other investment bodies, project developers and green technology providers; and a location that provides good value for money to ensure that the bank is cost-effective. The document invited interested parties to self-assess their location against those criteria and submit relevant information for consideration. I am pleased to say that the process has been met with a powerful and positive response. Manchester was one of 32 locations across the country that submitted a self-assessment. The closing date for receipt of the assessments was Monday, which is why I am being careful not to make any prejudicial remarks on the case for Manchester, because it is important that this is done in a fair and open manner.

All the submissions will now be reviewed against the criteria set out in the guidance document so that we can best identify the viable options, and a review panel has been established to perform the task. Advice will then be put to the Secretary of State, who will announce his final decision in late February and outline the reasons informing his decision. The submissions will also be published at that point. In that sense, this will be an open and clear process. It will not be needlessly lengthy, but people will be able to look at how we reach the conclusion in a few weeks’ time.

To conclude, we are committed to taking action now to enable the transition to a green and growing economy, and we very much welcome Manchester’s contribution to that aim. We believe that we are firmly on our way to a more sustainable economy, with the policies that we have already put in place, with the strong relationship that we are building with businesses to help them to maximise the opportunities, and with a green investment bank that will be able to address the market failures affecting key infrastructure projects. To that end, I confirm that, along with the bids from other potential locations, Manchester’s application to become home to the green investment bank will be given the most careful consideration.

Question put and agreed to.

20:20

House adjourned.

Division 450

Ayes: 324

---

Conservative: 271
Liberal Democrat: 48
Labour: 2
Alliance: 1

Noes: 212

---

Labour: 200
Democratic Unionist Party: 7
Plaid Cymru: 3
Green Party: 1
Social Democratic & Labour Party: 1
Liberal Democrat: 1

Division 451

Ayes: 320

---

Conservative: 269
Liberal Democrat: 48
Alliance: 1

Noes: 213

---

Labour: 201
Democratic Unionist Party: 7
Plaid Cymru: 3
Green Party: 1
Social Democratic & Labour Party: 1
Liberal Democrat: 1

Division 452

Ayes: 322

---

Conservative: 271
Liberal Democrat: 48
Alliance: 1

Noes: 212

---

Labour: 200
Democratic Unionist Party: 7
Plaid Cymru: 3
Green Party: 1
Social Democratic & Labour Party: 1
Liberal Democrat: 1

Division 453

Ayes: 321

---

Conservative: 271
Liberal Democrat: 48
Alliance: 1

Noes: 212

---

Labour: 200
Democratic Unionist Party: 7
Plaid Cymru: 3
Green Party: 1
Social Democratic & Labour Party: 1
Liberal Democrat: 1

Petition

Wednesday 1st February 2012 Petitions

Wednesday 1 February 2012

Protection of War Memorials

Wednesday 1st February 2012 Petitions

The Petition of Ian Coleman and ex-service personnel in Blackpool,

Declares that the nation’s war memorials and their surroundings should be treated as special places and respected in a manner which befits those whose lives they commemorate.

The Petitioners therefore request that the House of Commons urges the Government to ensure the protection of war memorials via a more rigid enforcement of existing laws or by bringing forward new legislation to ensure that war memorials are adequately protected.

And the Petitioners remain, etc.—[Presented by Mr Gordon Marsden, Official Report, 15 December 2011; Vol. 537, c. 1029 .]

[P000992]

Observations from the Secretary of State for Justice:

The Government take a very serious view of damage to and desecration of war memorials, and believe that they should be preserved for the benefit of future generations. The actions of those who steal or damage war memorials stand in stark contrast to the courage of men and women who serve in our armed forces.

We would like to reassure Mr Coleman and all those who signed the petition that tough penalties already exist for those who desecrate war memorials in this way. Theft is a criminal offence under section 1 of the Theft Act 1968, and carries a maximum penalty of seven years’ imprisonment. Criminal damage is an offence under section 1 of the Criminal Damage Act 1971, and has a maximum penalty of 10 years’ imprisonment. The offence of outraging public decency is another relevant offence: as a common law offence, this carries a maximum penalty of life imprisonment. Offenders convicted of any of these offences may also be fined as an alternative or in addition to a term of imprisonment, and may be subject to an ancillary order, such as an order to pay compensation.

Within these maximum penalties, judges and magistrates will seek to establish the harm the offence caused and the culpability of the offender. Courts will also weigh up individual aggravating and mitigating factors in order to determine the seriousness of the offence, which in turn will influence their decision as to the appropriate sentence.

Judges and magistrates have wide discretion when considering these aggravating and mitigating factors. They can and do have regard to the special status of war memorials when sentencing an offender for criminal damage.

The Government have asked the Sentencing Council to consider revising sentencing guidelines, to make the fact that an offence was targeted against a war memorial a formal aggravating factor. This would underline to the courts—and the public—that sentences for theft of or damage to war memorials should properly reflect the seriousness of this public desecration.

We have considered representations on this matter and are of the view that there is sufficient scope within existing penalties to apply tough sentences to perpetrators of such crimes, but it is for the courts to decide what penalty is appropriate given the circumstances.

In recent years, war memorials have increasingly become targets for theft for their scrap value because of the rising cost of metals. In addition, there is a black market for public art made from any material. Some war memorials with figurative sculpture designed by leading artists are collectable items with some being stolen to order.

These recent developments should be addressed by the Home Secretary’s intention, announced on 26 January, to lay a Government amendment to the Legal Aid, Sentencing and Punishment of Offenders Bill to create a new criminal offence to prohibit cash payments to purchase scrap metal; and significantly increase the fines for all offences under the Scrap Metal Dealers Act 1964. This follows the Government’s commitment in the National Infrastructure Plan published in November 2011 to provide £5 million to establish a dedicated metal theft taskforce to enhance law enforcement activity in this area.

The War Memorials Trust has published guidance with English Heritage and Historic Scotland on how to prevent theft from war memorials and what to do if a theft has occurred.

Westminster Hall

Wednesday 1st February 2012 Westminster Hall

Wednesday 1 February 2012

[Hywel Williams in the Chair]

Work Capability Assessments

Wednesday 1st February 2012 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(James Duddridge.)

09:30

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship for the first time, Mr Williams.

I am grateful to have the opportunity to raise the issue of work capability assessments, and I note that the number of right hon. and hon. Members present indicates a degree of interest that merits us having a debate that is often misrepresented. From the outset, I must make two important points. First, I support the principle behind work capability assessments; some Members are against them in principle, but I am not. I agree that those who seek sickness benefit should be assessed to determine their fitness for work. Of all the many constituents who have contacted me on the matter over almost two years, none has disagreed with the principle behind an assessment—that people who can work ought to be helped into work where jobs are available. There are many benefits, which I have seen for myself with constituents who have been able to find work, although they previously thought that they might not work again. Those benefits are not merely economic but relate to health and well-being, and we should not confuse the debate by suggesting otherwise.

To support the principle, however, does not mean ignoring the current chaos of the work capability assessment in practice. Increasingly, over the past 12 months in particular, we have seen a chaotic process, which takes an inordinate amount of time, causes great anxiety for many, takes up huge amounts of public money, especially in the appeals process, and is doing a disservice both to those who want to get back to work and to those who will not be able to work.

The Government, in particular the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), with whom I have discussed the situation in the Chamber and in meetings a number of times, have a habit of deflecting responsibility for how the system operates. Too often, the Minister has a ready excuse for the failings of the work capability assessment. Sometimes, he blames the previous Government, and sometimes he claims that people need to have patience to allow reforms to bed in, but I am not sure that I have ever heard him accept responsibility for the mess that the system is currently in. Part of the reason for that mess is the speed of the roll-out, despite the warnings of the pilot process and the report of the Select Committee on Work and Pensions.

About 11,000 people a week currently undergo the work capability assessment. Between 40% and 70% of those who appeal their assessment win their appeals, depending on whether they are represented. Is it any wonder that the cost of appeals is on track to reach £60 million for 2011-12, up by £20 million on the previous year? Is it any wonder that the number of tribunal service staff has increased by 30% since January 2010? Is it any wonder that tribunal centres, including the one in my area, in Hamilton, now operate on Saturdays to cope with the huge backlog of appeals? The system may have been put in place before the Minister took office, but by signing off on the nationwide roll-out, which has clogged the system, and by not dealing with the defects, the Government now have ownership of the problems and should be dealing with them.

Professor Malcolm Harrington, in his first review of the work capability assessment, made a number of important recommendations to improve the system. The Secretary of State for Work and Pensions welcomed the report and said that he fully endorsed the recommendations. The Minister said:

“We fully endorse Professor Harrington’s recommendations... We believe that the principles of the assessment are right, but that the system which we inherited contained some flaws that risked undermining its effectiveness. We have moved swiftly to put those right.”

Yet in Harrington’s review of the second year, published in November last year, he made it clear that the users of the system, including benefit claimants and the organisations working with them, have seen no difference. The review cited one survey by the Disability Benefits Consortium, which asked 439 welfare rights advisers during the summer of last year whether they had noticed any improvement since the first Harrington review: an incredible 75% reported no change and fewer than 4% saw improvements. That is a damning indictment of the Government’s failure to implement proper change to make the system fairer, not only for those who use it but for the taxpayers who fund it.

One example of the Government’s failure to follow through on its welcome of Harrington’s recommendations relates to the performance of Atos Healthcare. Atos is the multi-billion-pound French IT firm that receives £100 million a year from the Department for Work and Pensions to carry out the work capability assessment. The Atos website, which I am sure the Minister is as familiar with as I am, boasts of global turnover of €8.7 million; Atos employs 78,500 people around the world.

[Mr Wayne David (Caerphilly) (Lab)]

Before my hon. Friend goes into details about why Atos is probably failing as a medical assessment organisation, does he agree that part of the problem begins with the attitude of many of the staff engaged by Atos and their total unprofessionalism?

[Tom Greatrex]

My hon. Friend is entirely right. I have been contacted in the run-up to the debate by a variety of organisations giving me examples, and I have others from my own constituents, of how the process has failed and how it works and does not work. The process does not properly take account of a whole range of issues, from people with fluctuating or mental health conditions down to how people feel and how they are treated when they go into the assessment—for example, the people doing the assessments not making eye contact or asking leading questions to get an answer that is nothing to do with the health conditions.

[Richard Fuller (Bedford) (Con)]

I became a Member of Parliament in 2010 and, right from the start, people expressed concerns to me about the work capability assessment, which was introduced by the previous Government. Can the hon. Gentleman confirm that Atos was hired by that previous Labour Government? Were some of the concerns that he was beginning to talk about exhibited at that stage, or are they only coming to light now?

[Tom Greatrex]

The hon. Gentleman must know the answer to his question, but I have not suggested that the contract was agreed under the current Government.

[Esther McVey (Wirral West) (Con)]

Ah!

[Tom Greatrex]

I do not know why the hon. Lady says “Ah!” from a sedentary position as though that was some great revelation, because no one has suggested anything else. After the pilots, the Select Committee report highlighted issues that should then have been dealt with, but rather than dealing with them, the Minister decided to roll out the process. That is the root of the problems, such as the huge backlog of appeals, the huge cost to the public purse of dealing with those appeals and the huge anxiety and concern of many people. Many people have worked for a number of years and now find themselves, through no fault of their own, unable to continue in their previous line of work, and they would appreciate help to get into work; many others, frankly, are no longer able to work. The process was rolled out without its problems being addressed first, and given how the system is operating, those concerns are now coming home to roost.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Some of us who were Members before 2010 expressed concern to the previous Government. A serious issue in my constituency is the higher incidence than the national average of mental health problems, and some of those people affected have come to see me. One brave gentleman explained exactly how he had gone through the process, which involved a half-hour interview and a tick-box approach that did not take into account the challenges of mental health. As with many of my constituents with mental health problems, he would really like to work, but that short, sharp, tick-box system is not how to help people. I am sure my hon. Friend agrees.

[Tom Greatrex]

I entirely agree with my hon. Friend. Such issues were among those identified. My contention is that those problems should have been dealt with before the system was rolled out further, and we are now dealing with the consequences of those decisions.

The Atos half-yearly report for 2011 was very upbeat. It noted that operating margins had increased year on year to €166 million—an 11% increase from the first half of 2010. Its operating margin in the UK in 2011 was a healthy €34 million. The outlook for the second half of 2011 was similarly rosy: Atos expected profits to increase by 6.2%. I say all that not to congratulate Atos and marvel at how successful it has been, but to preface my next remarks.

Recommendation 13 of Professor Harrington’s first review was

“better communication between Decision Makers and Atos healthcare professionals to deal with borderline cases”.

In their initial official response to Harrington’s 2010 review, the Government accepted that recommendation, noting:

“Decision Makers already contact Atos healthcare professionals to discuss individual case issues in some instances… we will ensure this happens more often… Agreed measures will be adopted nationally during 2011.”

In a letter that I received from the DWP dated 1 November 2011, I was advised that good progress had been made on that key Harrington recommendation. The DWP letter claimed that

“Atos Healthcare Professional deployment in Benefit Centres has been trialled and has proven to be an effective way of improving communications to discuss borderline cases.”

However, on 20 December 2011, just over six weeks later, in answer to a written question that I had tabled, the Minister advised that

“at the end of the trial, Atos health care professional capacity pressures meant that the initiative could not be continued. From the start of December, DWP and Atos have agreed the implementation of a telephone helpline so that Decision Makers can speak directly to health care professionals to obtain medical advice in specific cases. This is an interim arrangement until Atos are in a position to reintroduce the deployment of health care professionals in benefit centres.”—[Official Report, 20 December 2011; Vol. 537, c. 1082W.]

That is a hugely significant development. This may have been due to when I tabled the question or when the Minister chose to answer it, but he slipped that answer out just before the Christmas holidays. The fact that Government policy is not being followed by a company in receipt of £100 million of taxpayer funding a year will startle many of my constituents and, I am sure, the constituents of many other right hon. and hon. Members.

I should be grateful to the Minister if he gave me answers to a number of questions. What exactly does the phrase “capacity pressures” mean? Does it mean that Atos cannot recruit the right number of health care professionals to undertake its work? Is it unable to fulfil its contractual obligations because of the amount of work that it has to get through? What discussions has he had with Atos about those capacity pressures? Does he believe that they undermine the ability of Atos to fulfil its responsibilities under the contract? What other services have been withdrawn as a result of capacity pressures in Atos? I am sure that if he is not able to answer, I will find a way of crafting written questions to get the answers from him.

To me, the phrase “capacity pressures” implies an undermining of the way in which the Government sought to deal with these issues, which was by saying that Harrington’s recommendations would be implemented in full. If that is not happening in the instance to which I have referred and perhaps in other instances because of capacity pressures in Atos, is that not a damning indictment of the failure of the system as it is currently set up?

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House. No one decries the need for profit, but is it not time that we got away from profit and on to service delivery? Does the hon. Gentleman share my concerns about many patients who go through the process of a work capability assessment and particularly those with cancer, whose health deteriorates when they experience more stress? There should be an emphasis on people’s health, rather than on the profit at the end of the year.

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. He puts his finger on a very important point. I am referring to the anxiety and concern that the process causes people, particularly if they are waiting for an assessment. If they enter the appeal process when they have had an assessment, they could wait up to eight months for an appeal. There is an issue about the whole of that process. Long time scales are involved because of the sheer number of people who are being dealt with—or not being dealt with. At the same time, we should never forget that those individuals are trying to deal with the process, and they are feeling huge anxiety. Particularly if they are already unwell, that could well affect their health. That is an important point.

[Jessica Morden (Newport East) (Lab)]

I congratulate my hon. Friend on securing the debate. Does he, like me, see constituents who are caught in a cycle, in that they get zero points when they go for the work capability assessment, they wait seven months for an appeal, the decision is overturned and they immediately receive another letter asking them to take part in another round of assessments? Does he agree that the stress and anxiety being placed on people with very serious conditions is unacceptable?

[Tom Greatrex]

My hon. Friend is absolutely right. I will go on to highlight the case of one of my constituents that I do not believe is atypical of the experience of many right hon. and hon. Members’ constituents. They get caught up in a process that seems never to end, and as my hon. Friend says, that does their health no good at all.

Last December, Citizens Advice published a damning report on the work capability assessment. One of its recommendations was that financial sanctions should be imposed on Atos for the number of incorrect assessments that it makes. As we all know, the taxpayer forks out millions of pounds on the appeals process, to clear up the incorrect decisions initially made by Atos. The Minister takes a strong interest in Scottish affairs. He may well have seen Scotland Office questions a couple of weeks ago. His colleague, the Under-Secretary of State for Scotland, advised me that he and the Secretary of State for Scotland had discussed the issue with Professor Harrington and that they believed it would be addressed. Can the Minister confirm that that is the case? What time scale has he in mind for financial penalties? Does he believe that Atos should compensate the taxpayer for its performance—its failure in many cases? I should be grateful to the Minister if he clarified the Government’s position on that issue.

Ninety minutes is not sufficient time to debate fully the myriad issues that surround the work capability assessment. I could easily fill the time myself by highlighting its flaws and asking the Minister questions. I am sure that he will be relieved to hear that I do not intend to do that. I intend to make just a couple more remarks and then to allow other hon. Members to speak.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I thank my hon. Friend for securing the debate. I am intervening in case he is not about to move on to the issue that I want to raise. There are real problems for people with sensory impairment—a number of charities have come together on this issue—because the whole concept of being in the workplace is to be able to perform any task accurately and swiftly. That is key in the workplace. Does he recognise the pressure that those charities are bringing to bear, in that more emphasis should be placed on the guidance that any activity should be able to be undertaken “safely, reliably and repeatedly”?

[Tom Greatrex]

My hon. Friend makes a very important point. It is no good having someone go to an assessment if the fact that they can sit in a chair or pick up a box and move it once from one part of a room to another means that they are considered able to carry out a task that they may be asked to do repeatedly or continuously in a potential job. That point has been made by a number of organisations that have contacted me about the work capability assessment in the past few days.

I will put to the Minister a few more questions, to which I hope he will respond. They arise from concerns that have been raised by individuals who have contacted me to pass on their experiences of the work capability assessment. Can the Minister confirm whether Atos approved health care professionals are bound by the Official Secrets Act? If they are not, can he confirm whether there are any legally binding conditions, aside from the normal patient confidentiality rules, that prevent Atos approved health care professionals from discussing their experience of the work capability assessment?

As the first Harrington review pointed out, audio recording of the work capability assessment could drive up the quality of assessments by improving assessor and claimant behaviour. Late last year, the Minister advised that he was considering the outcome of the trial in Newcastle of the audio recording of assessments. Will he update the House on when he expects to reach a conclusion on that and whether he will publish the outcome of the trial to ensure full transparency on the issue? He will be aware of the freedom of information request submitted to his Department. Given that many other organisations routinely record their conversations with members of the public to ensure that they are meeting the necessary standards—those organisations range from banks to train companies; I think that even the Independent Parliamentary Standards Authority does it—it should be considered. We need to move on from the trial as quickly as possible. Will the Minister update us on the outcome of the trial?

Individuals who undergo the work capability assessment complete a quality survey to rate the performance of Atos. The survey takes place after the assessment has been completed, but before the claimant is made aware of its findings, which is rather like asking someone for a product evaluation as they leave the shop, before they have had a chance to use the product.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that it is unacceptable that people have to travel 20 miles from the sizeable town of Llanelli to Carmarthen, a local town, where they then find themselves in a lift that does not reach the correct floor, and has a step that leads to a floor without adequate fire escape facilities? Will he ask the Minister what inspections are made of the premises used by Atos with regard to their accessibility for the vulnerable people who have to use them?

[Tom Greatrex]

My hon. Friend makes an important and pertinent point that I hope the Minister will address. It is a real concern if some of the facilities used by people undertaking a work capability assessment are in such a state.

[Pamela Nash (Airdrie and Shotts) (Lab)]

I congratulate my hon. Friend on securing this crucial debate. My constituents share the same assessment centre that my hon. Friend’s constituents use in Hamilton, and their experiences suggest that the building is not suitable for carrying out a work capability assessment. It has no disabled access and the car park is 80 yards from the front door. People are only supposed to walk 40 yards, and they feel as if they are being tricked before the assessment takes place.

Another problem is that information is unofficially gathered during the assessments. One of my constituents is deaf, but he was told that he could not possibly be deaf because he heard his name being called in the waiting room. Clearly, while he was waiting he was looking at the door in order to lip-read. Have my hon. Friend’s constituents shared experiences such as those at the Atos centre in Hamilton?

[Tom Greatrex]

My hon. Friend makes a couple of important points. In some ways, a deaf constituent being told that he is not deaf because he heard his name being called is symptomatic of the attitude held by some of the people who carry out the assessments. I am sure that all hon. Members have heard about such experiences from a number of constituents, and it does the principle of helping people into work a gross disservice.

Although it is important to determine whether Atos staff are polite, courteous and accommodating to individuals undergoing the work capability assessment, the most important issue for my constituents is whether Atos gets its assessment right. I suspect that, if the quality survey were completed after the results of the assessment were known, rather than before, the feedback would be substantially different. Will the Minister undertake to consider that issue further, with a view to obtaining a more realistic overview of the claimant’s experience than that currently recorded in the quality survey?

I will conclude by highlighting the case of a constituent that I think best encapsulates all that is wrong with the current system. The Minister is aware of this case, and he was kind enough to meet me last year to discuss it. Nevertheless, I want to put it on the record because, as I said in response to an intervention, I believe that this example is not atypical of many people’s experiences.

My constituent, who wishes to retain anonymity, suffers from Parkinson’s disease. I am no expert on that condition, and I possess only a rudimentary level of knowledge about the illness. I do know, however, that it is an incurable progressive condition, as I am sure Members are all aware. Like many sufferers of Parkinson’s disease, my constituent has good days and bad days. His condition may deteriorate rapidly, or it may get worse over a long period of time—we do not know. We do know, however, that he will not get better.

Despite his condition, my constituent has undergone two work capability assessments, and on both occasions he was found to be fit for work. On both occasions he appealed the decision and was successful in that appeal. Late last year, however, he was called for yet another assessment. Where is the sense in that? If my constituent has an incurable progressive condition and was found to be unfit for work after his first appeal, why was he called in for a second assessment? If he was found to be unfit for work after the second appeal, why was he called for a third assessment?

I understand the need for the continuous assessment of people with conditions that may improve and mean that the individual in question can return to work, and I accept the principle of regular assessment. Being in receipt of employment and support allowance should not automatically mean that someone is on benefits for life. Nevertheless, common sense must be applied. If an individual is never going to get better, why should we reassess them? It is a waste of my constituent’s time and energy—it takes a considerable amount of energy to get to the assessment and the appeals—and it is a waste of taxpayers’ funds. As we know, the cost to the tribunal service of dealing with appeals is projected to be £60 million this year.

Think of the amount of money that has been spent on that one case. There was the original ESA50 limited capability for work questionnaire, the first assessment and the decision maker’s process after the initial WCA, followed by the first appeal and the necessary post-appeal work that must be carried out by Jobcentre Plus staff. That process was repeated a second—now third—time, and will no doubt be repeated again and again until the Government decide to stop the revolving door of continuous assessment and appeal processes that many people have to undergo. Some people are not going to get better or be any fitter for work after the third assessment than they were after the first or second.

As I have made clear, I believe the work capability assessment to be right in principle but wrong in practice. Although its flaws were clear and highlighted by the pilot process and the Work and Pensions Committee report, the Government went ahead with the nationwide roll-out. I have put a number of questions to the Minister, and I am sure we will hear from many other hon. Members. He should address those questions and not seek to avoid them by laying the blame elsewhere. My constituents, and many people in the country, do not object to an assessment to determine someone’s fitness to work. They do, however, object to a system that seems more concerned with hounding those who cannot work, rather than helping those who want to work.

09:57

[Yvonne Fovargue (Makerfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Williams, and I congratulate my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) on securing this debate. I have long been concerned with this issue, and it has been raised by the citizens advice bureau in Wigan and by my constituents. The level of accuracy in the work capability assessment reports is staggeringly low. More than one third of local decisions are overturned on appeal, and as my hon. Friend has mentioned, there are long delays to both the initial assessment and the appeal. Worryingly, however, in 60% of decisions overturned on appeal, the claimants scored no points at all in the work capability assessment. In 87% of cases, people were awarded six points or fewer—less than half the number of points required to pass the work capability assessment. We are talking not about margins of error but of assessments that are completely wrong. As more people who previously used reports from medical professionals now have face-to-face interviews, it is more important than ever that such assessments be conducted properly. People must have confidence in the judgment and accuracy of the reports.

One of my constituents came to me last week. He had received his work capability report after a long delay, and the letter consistently referred to an assessment of his leg, claiming that he had no problems. The problem was that all the way through, the letter mentioned the wrong leg. My constituent joked about it and said that he did not have a leg to stand on, but he now needs to appeal that decision with an incorrect report. Confidence in Atos is not high among any of my constituents or the advice agencies to which I speak. I am currently involved in a protracted correspondence with Atos regarding quality standards and how it is mystery shopped. Will the Minister tell the Chamber what mystery shopping takes place, how it happens, and whether there are financial penalties for inaccurate reports? The attitude certainly does not appear to be one of “right first time.” In 2010-11, inquiries about ESA claims and the Atos assessment rose by over 40% in my constituency.

I would like to draw attention to the Citizens Advice report “Right first time?”, which came out in January. There is an in-depth study of cases involving people who had been recruited before they attended the work capability assessment—they had not gone through it, and they were not complaining because it was wrong, so there was no bias. The sample is small because it took quite a lot of in-depth work, and a lot of voluntary advisers helped with it. In all, 37 reports were studied in depth. Sixteen had a serious level of inaccuracy, which meant there were very substantial errors that would have a significant impact on the award of employment and support allowance or disability living allowance. Ten had a medium level of inaccuracy, which meant there were some significant errors that would probably affect the point scoring and potential award of ESA. Only 11 reports had a low level of inaccuracy.

There were five main points of error. There were omissions or incorrect observations. One client, who had really pronounced curvature of the spine and real problems sitting, was marked down as having no problems sitting or standing. There was also incorrect factual recording of medical information. One client said he could not use his left arm at all. He could not dress or shower himself, and his wife helped him. The report said he managed to dress and shower himself, and ESA was refused, but he won on appeal. If the information had been recorded correctly at the first assessment, there would have been no need for that appeal.

Medical evidence has also been inappropriately determined. A client who was registered blind was under a consultant ophthalmologist and had regular sight tests. He said the work capability test was a bit random. The assessor sat there waving cards in front of him at random distances, saying, “Can you see that? What about that one?” That took no account of the fact that the client has regular sight tests with someone who knows him and who is qualified to judge.

Another thing constituents often complain about—this has been mentioned—is the closed questions, the lack of empathy, the incorrect assumptions and the fact that information has not been gathered. Clients who come to me with mental health problems, in particular, say they feel terrorised by the ESA assessment. When they walk into the room, they feel the assumption is that they are trying to cheat the system. Some have said they never want to go for another assessment.

[Pamela Nash]

Does my hon. Friend agree that the issue is not just the assessment’s inability to assess mental health issues, but the lack of sensitivity that is shown? That causes stress for people who are already under extreme pressure and who are suffering from mental health issues, including depression and anxiety.

[Yvonne Fovargue]

I totally agree. I am trying to find out where people go when they are refused ESA as a result of the work capability assessment, and it is quite astonishing that there are no figures. These people do not go on to other benefits, but I cannot find information anywhere about where they do go. Given the experience of my constituents, I believe a lot of people are living off their families because they cannot face going for another assessment.

[Jessica Morden]

Does my hon. Friend agree that the problem with the work capability assessment is that it makes constituents who receive DLA extremely wary about the move to personal independence payments, because they see the same experience being repeated?

[Yvonne Fovargue]

I quite agree. The move to DLA, for which the tests are even more severe, will be a problem for a number of people. The confidence of people who have been through a work capability assessment and who have had to appeal will be at an all-time low when they have to do the same for DLA.

The other issue is that there are inconsistencies in reports. For example, a constituent said he had a hypo attack every week—he was diabetic—but when he received the report, it said he had an attack once a month. The difference meant he did not get enough points for ESA, which he would have done if the report had said he had weekly events of altered state, as opposed to monthly events. He had to appeal that decision.

Although the changes following the independent review were meant to improve the process, the Citizens Advice survey my hon. Friend the Member for Rutherglen and Hamilton West mentioned showed that 87% of advisers said the accuracy of Atos reports had not improved. As has been mentioned, there are improvements that might help. The roll-out of audio recording of assessments might help, but what checks will there be on the accuracy of reports? It is no use just recording and keeping assessments if we do not check the accuracy. The summary of the report sent from the health care professional to the claimant might help—if there is sufficient information to help the claimant check the accuracy, if summaries are sent to all claimants and if they are sent in good time.

The Work and Pensions Committee said we need to do more to learn the lessons from the management of the Atos contract and to improve the quality and monitoring of future contracts. There are a number of recommendations in the Citizens Advice report, which I urge the Minister to read. There is deep concern among claimants and advice agencies about the use of face-to-face assessments going ahead for other purposes, such as DLA, which my hon. Friend the Member for Newport East (Jessica Morden) mentioned, and personal independence payments.

The clients who went to their citizens advice bureaux are the lucky ones; they got their appeal, they got represented and they got help. Unfortunately, the proposal in the Legal Aid, Sentencing and Punishment of Offenders Bill to remove the eligibility of welfare benefits advice for legal aid will mean that the number of advice agencies and individuals able to give such advice will drop, so fewer agencies will be able to help people. I therefore urge the Minister to ensure that the work capability assessment system has the confidence of claimants and professionals and that we do get it right first time.

10:06

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Williams. I thank my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) for securing the debate and for his tenacity—I think that would be the best word—in pursuing this issue. He has submitted what is probably a record number of parliamentary questions on it, and my constituents and I are grateful for that, because we have seen that someone is taking it seriously and cares passionately about it.

I want to concentrate on a number of issues raised by constituents. They were keen that I should take this opportunity to make representations to the Minister. People often feel that they are on their own and that they are the only ones having particular difficulties. Given what we have heard already, my constituents’ experiences appear to be very similar to those of constituents elsewhere, and I hope the Minister will take account of that.

I want to echo what my hon. Friend said. Neither I nor my constituents have a problem in principle with the notion that someone who is fit and able to work should do so if work is available. Many people with disabilities wish to hold down jobs and they can do so. Other people will require support, adaptations and particular circumstances to enable them to work. The constituents who come to me most frequently about work capability assessments, however, are those with fluctuating and perhaps long-term conditions. They tell me and my caseworker that the work capability assessment report does not accurately reflect their day-to-day experiences. They often say that they feel as if the wrong report has been sent in. They wonder whether people are making generalisations on the basis of their answers to questions.

People with these conditions also make the point that if they are having a good day, they will probably get along to the work capability assessment. However, if they are having one of their bad days, they simply will not be able, in some circumstances, to attend or to cope with the assessment. In addition, people with mental health issues, in particular, tell me that they do not get a fair assessment. They feel that because their condition is apparently invisible the assessor often seems to know little about it.

Of course, there are problems. Chronic but intermittent conditions can mean that claimants sometimes find themselves moved from ESA to jobseeker’s allowance and back to ESA, with all the work capability assessments in between. That leads to real difficulties because people often find themselves with no financial support while DWP processes are under way, with one claim being closed while another is being opened.

The most frequent cause of concern for constituents is apparent inconsistency. In a recent case in my area the maximum 15 points were awarded by the health care professional; that award was overturned by the DWP decision maker. The GP, the hospital consultant and Atos agreed that the person was unfit to work, but the decision maker in the DWP disagreed. In another example from my constituency a man with a progressive and incurable kidney condition, which requires him to undergo surgical operations every six months, was awarded 15 points; but that award was overturned by the decision-maker in the DWP, even though the decision-maker stated in correspondence:

“I am satisfied that the descriptors have been fully justified with clinical findings, observations and extracts taken from the typical day history provided by Mr A. The medical report…was appropriate, complete and covered all the area of incapacity described by Mr A as well as including a comprehensive typical day history and full set of clinical findings.”

We can understand why constituents find it difficult to understand why, when all the medical professionals and, indeed, Atos, appear to agree, someone in the DWP without a medical background apparently can overturn their findings.

I should like the Minister to tell me how many people—and what percentage—he is aware of who, having been awarded that maximum 15 points, have had the award overturned by the DWP decision maker, and how many of those have had appeals upheld. That may be useful for our understanding. As my hon. Friend the Member for Rutherglen and Hamilton West mentioned, there is concern about the cost of appeals, and I hope that the Minister will tell us the average cost of an appeal, and how much time is spent processing all the associated paperwork.

[Kerry McCarthy (Bristol East) (Lab)]

My hon. Friend makes a powerful case. I went to an appeal with someone with ME who scored zero points. She took with her the medical evidence from the experts at the hospital; when the panel looked at it, it was a case of giving it a tick and telling her that of course she was not fit to work. However, those dealing with the form-filling and Atos stage were not prepared to consider it. It seems ludicrous that my constituent must go through the expense and stress of an appeal, and that the expert evidence cannot be considered earlier.

[Cathy Jamieson]

My hon. Friend makes an important point. I wanted to give some examples of constituents who have had to appeal. One is a man almost at retirement age who has worked in a manual job since leaving school at 15, who became unfit to work. He requires a tube to be inserted into his gullet so that he can eat and drink. He could not bend forward during the assessment process or when he came to speak to me, because if he did so anything in his stomach would be emptied out; he has no muscular control. Initially he was told that he was fit for work. With our assistance he won his appeal. On the other hand I have another constituent, with a progressively degenerative eye condition, who is registered blind and can just about read a 42 point font, which is fairly large. She lost her appeal. There seem to be different circumstances and different approaches.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The hon. Lady makes an important point. My concern about people who must go to appeal is that they do not get the advice and support they need. People who get it are more likely to succeed in their appeals, but Citizens Advice talks about a threefold increase in impact on its services since the process was introduced. I am sure that many hon. Members have had increased mail in that time.

[Cathy Jamieson]

The hon. Lady makes an important point. I do not think that anyone would doubt that there is pressure on advice services. Organisations for individual conditions, such as Parkinson’s UK or the Multiple Sclerosis Society in my area, will talk about their concern that, although they can help so many people, there are others they cannot reach. I know from my case work that more people are coming to me to raise their concerns. They want to be put in touch with advocacy services to help them with appeals; my office cannot take on the job of representing people at every appeal, on account of the numbers involved.

[Nia Griffith]

Does my hon. Friend agree that, given the evidence we have heard today, and our own experiences, the DWP should seriously consider what to do about people with long medical histories of degenerative disease who are continually called in? It seems a complete waste of taxpayers’ money and it is a disgrace that we do that to those people. Will my hon. Friend suggest to the Minister that we might consider some way to exempt such people?

[Cathy Jamieson]

My hon. Friend makes a powerful case, and I am sure that the Minister is listening. On the point about people with long-term degenerative conditions, another constituent called at my office in great distress, when I happened to be there. The lady could hardly open the door to come in without assistance. She was extremely upset having just had a phone call to tell her she was deemed fit for work. She told me that she had had MS for 20 years. She has poor eyesight, mobility and memory. I was so concerned about her plight that I immediately contacted her GP, who assisted with taking up her case. He subsequently wrote:

“I have today issued Mrs E with a Med 3 for 13 weeks stating she is not fit for work (as she is patently NOT”—

he underlines that—

“fit for work). Like her I have not received any written communication stating that she is fit for work, as I would have expected. She should receive such written confirmation and the way to appeal clearly outlined in that letter. My role is twofold, firstly, to continue to issue a Med 3 (medical statement) and secondly to provide written information for her appeal Tribunal.”

He has done that. I do not think that we can overestimate the stress and worry that that incident has caused my constituent.

[Julian Sturdy (York Outer) (Con)]

The hon. Lady highlights the stress that individuals go through during assessments. Several constituents have visited my surgery to explain how they went through such stress. Does not the assessment have to be fair, both to the individual and to the taxpayer, as has been mentioned? Also, is not the assessment becoming a tick-box exercise with a one-size-fits-all approach that does not take into consideration the fluctuating conditions from which people suffer?

[Cathy Jamieson]

The point about fluctuating conditions is well made. That is exactly the problem. Some people with such conditions, in some circumstances, will be able, with the right support, to hold down employment, but others will not be able to do so, perhaps because of the cycle of their condition or because their mental health is affected. I am concerned that the process in question appears to be a tick-box exercise.

One more example from my case work involved a gentleman who lost a leg and badly damaged the other in a childhood accident. Clearly he suffered as a result of that disability. He was awarded zero points. If the system is to have the confidence of the public and the people being assessed, it must be seen as fair. My constituents tell me that there are so many inconsistencies that they feel that they are not treated fairly, that their individual circumstances are not taken into account, and that the procedure is indeed a tick-box exercise.

[Fiona O'Donnell (East Lothian) (Lab)]

My hon. Friend is making an excellent contribution to the debate. The information in question is in the public domain, and part of the problem is that that means people facing the process have no confidence in it. It causes such stress, particularly for people with mental health problems, that it has even driven some to take their own lives. How can that be defended?

[Cathy Jamieson]

I hope that my hon. Friend will understand that I take such issues seriously. I am very concerned to hear that she is aware of people being driven to such drastic action as taking their own lives. Going by the correspondence and contact that I have with constituents, I can say only that I know just how difficult it is for people, and that many feel they cannot face the appeal process—particularly those who have suffered from a condition for years and who feel that the process is undignified and that they do not get the right help and support, and who perhaps do not know to whom to turn.

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

I echo everything that my hon. Friend says about the appeals process and the total lack of credibility of Atos. Earlier, she mentioned the systemic problem of DWP officers overruling all of the evidence, even that from Atos. Will the Minister address the fact that many people who are told that they cannot work again are suddenly taken off the support system in the DWP and put on to the other system, thus causing them great problems? They are made to go through rituals of training and work interviews when everyone agrees that they cannot work again. Surely that power should be clearly defined. If someone is told that they cannot work again, DWP officials should not be allowed to overrule that decision.

[Cathy Jamieson]

I am sure that the Minister will respond to that point, which is also one that I raised earlier. As I had concerns about the work capability assessments for people with a range of conditions, I tabled some parliamentary questions in a bid to find out how many people had been assessed in my constituency. I was disappointed to be told that such information could only be provided at a disproportionate cost.

After hearing about the experiences of a number of my constituents, I tabled another parliamentary question to find out how many assessments had been carried out on constituents who had cerebral palsy, osteoporosis, MS, who were registered blind, who had hearing impairments, who were on the autistic spectrum, who were carers themselves and who had learning difficulties or mental health problems. Those are the people who had come to me saying that they had had difficulties with the work capability assessment. Again, I was told that such information was not available at constituency level. I hope that the Minister can respond to that and tell me whether that kind of assessment, analysis and reporting will be available by parliamentary constituency in the future because it is in the interests of transparency and it would enable us to make comparisons across different parts of the country.

Finally, I have a couple of points around the issue of Parkinson’s, which my hon. Friend the Member for Rutherglen and Hamilton West mentioned in his opening remarks. The Parkinson’s Disease Society says that increasing numbers of people with Parkinson’s are being rejected from the support group. Between October 2008 and November 2010, it says that 45% of people with Parkinson’s who had undertaken the work capability assessment were referred to the work-related activity group instead. As an example, the organisation cited the case of one man who was placed in the work-related activity group despite the fact that his tremor was so severe that he could not hold a pen, walk more than a few steps or button up his trousers himself.

The organisation gives examples of people having long waits for appeals and receiving inconsistent or inadequate support in the work-related activity group. It talks about the ESA assessment process impacting disproportionately or inappropriately on other benefits, the worry for carers and the knock-on effect on other statutory services.

The Parkinson’s Disease Society also gives examples of people who are clearly not fit for work being told that they should get work. A 59-year-old man with Parkinson’s says:

“I feel I could work in the right job, with the right support, but none of this has been forthcoming from the job centre, who wished me well but basically said there are no jobs for able-bodied people let alone someone like me. I’m not surprised that only 6% of people in my position get back into work in 12 months. Everything I’ve done to get back into work I've had to off my own bat.”

On the one hand, we have people who say that they want to work and to cope with their condition and feel that they can do so but who are getting no help, and on the other we have those who feel that they are being hounded. That is not the sign of a caring, compassionate and decent system. I hope that the Minister will take account of what Citizens Advice and others have said and that he will not make this a party political issue. There is agreement across all parts of the House that this system is not working in the way that it should. I hope that in his response, the Minister will consider making some changes and give us some hope for the future.

10:24

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship today, Mr Williams. I am following a very powerful speech from my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). In securing this debate, my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) has done a great service not just to the House but to the many thousands of people in the country who are affected by the issues. I had a number of points that I wanted to make, but as others still want to contribute, I will restrict my comments to two specific problems with the work capability assessment that arise from my constituency.

My first concern relates to people with sensory impairments. In particular, I want to raise an issue that was brought to my attention by a constituent with a visual impairment. In fact, I raised this case in a parliamentary question with a Minister a few months ago because my constituent was having problems filling in the ESA50 form through the audio systems available to people with visual impairment. After months of difficulties, which I do not have time to go into today, it turns out that my constituent may not have actually needed to go through this process because in November, the DWP changed the criteria by which people are allocated to an ESA support group. I am told that the new rules mean that someone with a hearing or a visual impairment could qualify for a place in a support group, whereas between April and November, the position was that someone had to have both a hearing and a visual impairment to qualify for the support group. That has certainly caused my constituent a great deal of concern. By giving her the wrong guidance, she felt that the DWP had sent her down the wrong road for months.

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I am grateful to the hon. Gentleman for allowing me to intervene. I will respond to all the detailed questions in my remarks. On this specific point, there have been no changes to the rules around referrals. There were no changes in November. We have updated our guidance, which we do as a matter of routine, but there have been no changes to the formal rules.

[Mark Lazarowicz]

I understand what the Minister is saying, but the guidance was updated to reflect some of the difficulties that had been raised. The view of the Royal National Institute of Blind People is that Atos may well have been wrongly assessing people between April and November. That may have been the fault not of Atos, but of the incorrect guidance. Will the Minister tell us how many people were wrongly assessed and why there was a need to issue new guidance? Why was my constituent required to go along a road which she did not need to, given the fact that new guidance was issued?

My second point covers the position of people with mental illness, which has been raised by a number of colleagues in this debate. I refer to a report produced by the Consultation and Advocacy Promotion Service, which is an independent advocacy organisation that operates from Edinburgh, Midlothian and East Lothian. The report describes the experience of people with mental health problems going through the work capability assessment process. Again, if time had been available, I would have gone into great detail. Instead, I will simply report its main conclusions.

The work capability assessment for employment and ESA is not designed to assess accurately the needs of people with mental health conditions. It causes a high level of stress and anxiety in people with mental health conditions and, in some cases, it may even make their condition worse. It does not cater for fluctuating conditions, nor does it accurately record how those conditions affect people’s ability to work. That is an experience that many Members will have heard about in their surgeries. I hope, following the Harrington review, that we will see some improvements in that area.

Finally, we are all experiencing these difficulties because of the way in which the process was hurriedly rolled out across the country. We will face, over the next few months and years, even more dramatic changes to the whole welfare system. If we do not learn from the mistakes that we have made so far, we will find that the problems relating to the work capability assessment process are repeated many times throughout the country. Many more people will suffer. Many more people who could get into work might not be able to because they will not be given the support. Many people who will not be able to get into work will be driven to desperation because of the difficulties that they will face. At the end of day, it will also cost the public purse much more money, which none of us wants to see happening.

I hope that the Minister will recognise that we are not trying to make political points. It is not a political issue; we raise it because we hear from our constituents in our surgeries throughout the country every week and we want action. Opposition Members would certainly be beating down the door of a Labour Minister if we were in government and there were the same kind of problems. We need action and assurance. We certainly do not need complacency from the Minister and I sincerely hope that we do not get it in his reply today.

10:30

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

I thank my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) for introducing the debate and I thank other hon. Members for the way they have spoken on behalf of their constituents on an issue of genuine national interest. We could all, across parties, cite chapter and verse on the people who come to our surgeries and citizens advice bureaux who have been made desperate by the system’s failings. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) made the point that if the same situation occurred under a Labour Administration—the Minister has inherited some of this, but the national roll-out before we have solved the problems is a significant issue—we would say the same thing to a Labour Minister: how do we change this to make it work?

I have not only seen constituents, but have regularly been to appeals and seen Atos do assessments as well. I have seen the process first hand all the way through, not only when the constituent arrives in my office and says, “What is happening? Why is my life being destroyed for months while my benefits are suspended? I’m taken off benefits and then seven months later, my appeal goes through successfully, along with a huge proportion of others.” I have seen the process, and as a former Minister who was previously employed in private industry looking at systems management, I can tell the Minister that this is not working. There is a genuine issue and the process and procedures are not fit for purpose—it is so damn obvious when there is this number of successful appeals.

The underlying principle that the Minister must work with is compassion, and we would support him in that, but the system lacks compassion. It has to be fair to both taxpayers—a point made earlier—and those who are going through the process. There are people who are unable to elucidate their circumstances fully when they fill in a form and who are not going to give 101% when they sit in front of somebody tapping into a computer keyboard without making eye contact. There are doctors who will not spend 15 minutes filling in the long narrative history of a medical condition that would lead to the right decision in the first place. Therefore, when people fill in the form for the first time, the vast majority do not fill it in in the detail needed. It is a tick-box exercise, and people have a lot of fear and misunderstanding over that. They tend to come to us, as MPs, after they have failed and are going in for the interview. We say to them, “Take someone in with you, because at least then they can give you some support and guidance.”

The system must be based on compassion, and at the moment, it is not. I say that because I have seen the Atos procedure and the interview, and interestingly, even though I went into the office in Bridgend to see it, I was not allowed to sit and watch an interview, even if somebody was willing, but I could see the appeals. The staff were very kind and as informative as they could be. I was allowed to watch an abbreviated recording of a mock-up interview, in which we saw minimal eye contact, because there cannot be eye contact when someone is tapping away at a keyboard and asking, “How did you get here today? Oh, so you did that,” and then goes on to the next question and the next. It is completely different from the panel. I was allowed to sit and watch it taking place for three hours, with four people—lay people, someone from a medical background and someone from a legal or judicial background—genuinely dealing with individuals with compassion.

I shall give the Minister an illustration of what should be happening to cut the cost for the taxpayer further downstream. A young chap walked in and sat down looking completely healthy. He was in his early 20s. He had someone with him, as one should have at an appeal. The panel started asking him questions. He looked completely fit. “Do you go out with your friends?” “Yeah, I go out with my friends.” “Do you socialise regularly?” “Yeah, I tend to go out every Friday night.” Based on those kinds of questions and the fact that he could walk a certain distance, that guy had been declared completely fit for work. When a gentleman on the appeal panel asked him where he lived, he replied, “Merthyr.” The panel just happened to know Merthyr. “Where do you go out in Merthyr?” “Town centre.” “When you go out socialising with your friends on a Friday night, where do you go? Do you go to clubs?” “No, we don’t do that. We just mooch around town.” “Where do you go?” “We get off the bus and walk right to the centre of town.” “How far is that?” “From the bus to the town centre is about 50 yards.” “I know Merthyr quite well, so do you then go to the rugby field?” “No, I don’t.” “Why not?” “Because if I walk more then 50 yards, I not only get out of breath, but collapse with the condition I have.” None of that detail comes out in the initial stages. I am not saying that we have to flip the process round completely, but its lack of compassion, tick-box nature, lack of fairness to the taxpayer in allowing costs to escalate down the chain and to the individual, and the concerns over good decision making and managerial process mean that it simply is not working.

My message to the Minister is straightforward. The worst thing in the debate would be for him to go into denial or to say that the system is bedding in or just needs a bit of tweaking. There are fundamental issues with the design of the process, and the number of appeals that are successful when the right information is in place and the sheer superficiality of the initial contact with Atos show that the system is not working. I note the earlier comments about whether Atos follows procedures correctly. Whether the problems are inherited or caused by the new work capability assessment or by the national roll-out, the procedures at the Atos end are simply wholly inadequate.

The Minister could save the taxpayer a lot of money if he got this right. He could save a lot of angst and worry, not only for those with fluctuating conditions, sensory impairment or other needs, but for those who are genuinely trying to be honest and fair about their condition and those who want to work if they are fairly assessed. At the moment there is a terror of going through the process. When people come to my office now, I cannot give them a lot of hope, as an MP, about fairness in the system.

My hon. Friends have mentioned the statistics and the national analysis by Citizens Advice and others. As much as the press loves to scaremonger and paint pictures that vilify some of these people and their “scrounger mentality”—“Get them back into work!”—there are many people who want to get back to work and many others who are being unfairly put through pain and anguish when they should not be, such as those suffering from long-term conditions.

Redesign the system, so that it has compassion and is expert-led at the gateway, and improve communication between the Departments. Do not go into denial. This is not a matter of blame. We do not blame the Minister, but we will if he does not solve the problem, because it is now on his watch. We will applaud him if he can turn this round, because we also want people back in work. The great innovation was to turn the system round to take the emphasis away from incapacity and towards capacity—what can people do? There is cross-party support for that, but the changes must be driven with compassion and fairness all the way through. At the moment, the system is wasteful, inexpert and, in terms of processes and management, shot full of holes. Please make it fit for purpose and we will be here in six months applauding you.

[Hywel Williams (in the Chair)]

Order. I have no power whatsoever to make it fit for purpose. The hon. Gentleman’s remarks should be directed to the Minister.

10:38

[Richard Fuller (Bedford) (Con)]

I am conscious of the time, Mr Williams, so I will be as brief as I can. I congratulate the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) on securing the debate and I encourage him to try to secure another debate later in the year, because the process is ongoing, will involve more people, and more issues such as those we have heard about today will come forward. The opportunity to bring such matters to the Minister’s attention is important. We are dealing with the human consequences of failures in a bureaucratic, state-driven system—in this case, incapacity benefit. Similarly, many hon. Members have seen the failures of the immigration system, and its human consequences for our constituents and for people around the country.

[Jake Berry (Rossendale and Darwen) (Con)]

In my constituency, I have had the experience of the fit for work tests being piloted in the Burnley benefits centre. There has been an extreme improvement through the pilot scheme to where we are now. There is more we can do, but I echo my hon. Friend’s thoughts about waiting for the completion of the process before we pass judgment.

[Richard Fuller]

I appreciate that intervention from my hon. Friend.

I would like to place in context some of the concerns we have heard about; first, about being assessed. It is quite natural to expect people to have concerns, as we are making a significant change to people’s lives. In many comments, the issue has not been a generic concern relating to assessment, but a concern about specific types of conditions and cases. Will the Minister confirm that for every 100 assessments, nine people who are found to be fit for work go on to win their appeal? That means there are 91 people who fit into another category.

One fluctuating condition that has not been mentioned is alcoholism, and people who have chronic, long-term alcoholic conditions. One constituent who came to see me had his papers from assessments in the 1990s. Will the Minister provide confirmation on that?

Although it does not relate directly to the debate, part of work capability assessment is that there is then work. In today’s conditions, what can the Minister say will be on his agenda to try to encourage some of these people into work at the end of their assessments? There is much more I would like to say, but because of the time I have to stop there.

10:41

[Stephen Timms (East Ham) (Lab)]

I congratulate my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) on securing the debate. We have heard some important and telling points.

As we have heard, the previous Labour Government introduced the work capability assessment as part of the change from incapacity benefit to employment and support allowance. Incapacity benefit did not help people with long-term sickness or disability back into a job. In fact, in 1997, the vast majority of people in receipt of incapacity benefit were simply abandoned; in many cases having been encouraged to move on to that benefit to reduce headline unemployment.

We started, experimentally, with the new deal for disabled people, which was a striking innovation at the time. I am pleased that the Minister has sought to build on the lessons of that programme, and from pathways to work which followed, into the new Work programme, and the ESA was the next step in that process. The WCA was designed to look at applicants’ functionality, and to assess whether each applicant was fit to return to work, fit to undertake work-related activity, or not fit for either.

Atos was contracted in 2005 for seven years. The current Government opted to extend the contract for a further three years in November 2010—the contract now runs until 2015—and will soon need to decide whether to take up the option to continue the contract to 2017. That decision needs to be influenced by the kind of experiences that we have heard about in the debate.

It is clear that the system has been overloaded. There needs to be change for it to function properly, so we support fully the implementation of the first Harrington review and much of the second. We regret that the Government pressed ahead with implementing the Department’s internal review last year, given the widespread consternation about the findings of that review. We were particularly concerned by one aspect of Professor Harrington’s second review, which proposed that some cancer patients, who until then had been exempted from a WCA, should no longer be exempted. Macmillan Cancer Support was concerned that that would put greater stress on cancer patients when they ought to be concentrating on recovery. It was a particularly frustrating development for everyone. I hope that the Minister will be able to tell us this morning—if not this morning, then in the debate in the House this afternoon—that there will be something of a climbdown on that point.

I am anxious to ensure that the Minister has the time to answer fully the points that have been put to him, so will shorten my remarks. We have still to hear—apart from the point about cancer patients—about a number of other proposed changes that the two WCA reviews have recommended. What is being done on the new descriptors that cover fluctuating conditions—on which we have heard a good deal in the debate—and mental health conditions? There have been some helpful recommendations on those. When will the results of the pilots on recording assessments be released and responded to by the Government—a point also made in the debate?

It is worrying to hear that capacity pressures are restricting the ability of Atos to implement the Harrington recommendations. There needs to be better communication between Atos health care professionals and decision makers in the Department for Work and Pensions if we are to reduce the number of mistakes made in WCAs and the current, astonishingly high number of successful appeals.

I should like to draw attention to an issue that has not yet been raised and is a practical consequence of the problems and delays in the WCA system. The DWP recently revised its estimates of the number of people receiving ESA who will go into the Work programme, which the Government introduced in June. The forecast of the number of people going into the Work programme has been reduced dramatically, and the bottleneck in the WCA seems to be a major part of the explanation. Will the Minister comment on that? It is one of the key reasons why a number of small voluntary sector providers, which are contracted to the Work programme, are now at risk. Groups with specialist expertise to help people with particular health problems are receiving far fewer referrals—therefore, a far lower income—than they were encouraged by the Government to expect. In some cases, they have had no referrals at all since the Work programme started in June. Some are saying that they will have real trouble staying in business at all.

Problems with the WCA, as we have heard, could turn into a serious loss of capacity in the voluntary sector. People then left with no specialist help available would be in a worse position still. How will the Minister ensure that the WCA is refined? When will he introduce the changes that have been called for by charities and Professor Harrington? What assessment has he made of the capacity of Atos to implement those improvements? Will some of Professor Harrington’s recommendations not be implemented, as has been suggested, because of the capacity pressures in the system?

Ministers have defended their decisions about the welfare system on the basis of the need to save money. However, it is very important, particularly for Ministers in this Department, not only that they are saving money, but that the system that they are responsible to Parliament for is working fairly. All hon. Members who have spoken in the debate are absolutely right to highlight the fact that, with this part of the system, there is a long way to go.

10:49

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

Let me be absolutely clear—particularly in relation to the comments made by the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), who proposed the debate, and the hon. Member for Ogmore (Huw Irranca-Davies)—that we are trying to do the right thing. We are trying to identify people with the potential to go back to work and provide them with the help to do so. Sometimes, those people will have a health condition—in the United Kingdom, 7 million people with a health condition are in work—so the number of points that people receive in the work capability assessment does not automatically mean that they do or do not have a health condition. The judgment is all about helping people return to work, perhaps in different roles. Their health condition might prevent them doing what they did before, but that does not mean that there is nothing they can do.

I approach this debate in a non-partisan spirit, but I want to explain the time lines to hon. Members, so that they understand exactly where we are in the process. In June 2010, 18 months ago, prompted partly by a report from Citizens Advice but also by concerns such as those raised by hon. Members, I asked Professor Harrington to take a careful look at a process that was already well under way. Employment and support allowance and the work capability assessment were established in 2008. The work capability assessment had been working since 2008. Statistics on the growth of appeals matched the flow of new claimants into ESA and worked down to some change 18 months ago, but I was unhappy that the process did not seem to be right, so Professor Harrington went away, reported in November 2010—interestingly, the date at the end of the period that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) mentioned when she quoted the Parkinson’s statistics—and made several recommendations to us.

The right hon. Member for East Ham (Stephen Timms) made a point about pilots and roll-outs. Crucially, we did not simply pilot the work capability assessment and then start it. At that time, the questions that we were addressing were whether we could sort out the process and whether we should go ahead and roll out incapacity benefits, which would increase the number of people going through the work capability assessment.

Professor Harrington went away and made his recommendations to us, which we accepted in full and have implemented. He told me, “I believe the system is in sufficient shape for you to proceed with incapacity benefit reassessment.” We set ourselves a goal to put his recommendations in place, improve the quality of the process and address many of the issues to which hon. Members have referred today by the end of last May, when the assessments in the incapacity benefit reassessment were to start alongside the existing process of assessing ESA new claimants. We did that, and we started.

I have heard a lot today about the number of people who have sat through appeals and the number of cases overturned. It is crucial for hon. Members to understand this. I am almost certainly right in saying—I could not swear to being absolutely, 100% right, because there may be a small number of exceptions—that since the Harrington changes were introduced last summer, not a single appeal has been completed. Therefore, all the examples cited today that relate to the appeals process refer to what took place before the Harrington changes to the system that we inherited, which I accept was not doing the job as it should have done. I want everyone to understand that.

As a result of the Harrington changes, we tried to create a more humane, careful and thoughtful system. We have sought to change systems to provide greater protection to those with long-term problems. The right hon. Member for East Ham referred to the internal review that his Government carried out and that we implemented in the belief that it would increase the size of the support group—those who receive long-term unconditional support—and that is what has happened. We believe that the changes that we have introduced will lead to more people receiving long-term support.

[Dr Whiteford]

One issue that I raised with the Minister was that of people turning up for appointments and being turned away because they were double-booked. My constituents who were part of the pilot scheme travel, on average, three or four hours to get to and from an assessment. To be turned away when they have had to rely to get there on family and friends who have taken time off work is a real problem. The Minister has apologised to one of my constituents, but has the policy of triple-booking appointments been changed?

[Chris Grayling]

A situation in which people are treated like that can never be acceptable. Of course, we have an issue with some people not turning up to appointments, and because it is an intensive programme, we do not want a health care professional sitting there without anything to do. Sometimes, we will get it wrong. We will try hard not to, but there is no such thing as a perfect system. That is true of all parts of the system. I openly accept that we will sometimes get it wrong, but we have done everything that we can to create a system that gets it right as often as possible. We have changed the nature of the work capability assessment in the process.

We make a much greater effort to ensure that we have proper medical evidence at each stage of the process from the consultants and specialists working with the people concerned. One reason why so many appeals were successful was that new evidence was emerging only at the appeal stage. We have worked hard to ensure that such evidence comes in much earlier in the process, so if we get it wrong in Jobcentre Plus, we will get new evidence there at a point of reconsideration. That is a crucial change. We are now ensuring that we seek out additional information in Jobcentre Plus before we take the first decision, but we have bolstered the reconsideration process to make it much quicker and more straightforward, so that if we get it wrong the first time, people can get a quick second opinion in Jobcentre Plus. That is crucial to getting the process right.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Will the Minister give way?

[Chris Grayling]

I will not take interventions, because I have only five minutes and must get through a lot.

We have also tried to make the process more humane. People now get phone calls instead of the generated, standard letters that I regard as impersonal and inhuman. All our measures are part of a process of change that I hope will make a real difference to individuals’ experiences—and it is. Indeed, in his second report, Professor Harrington praises those involved in the process for creating a system that he, as an independent figure, regards as much improved.

As constituency MPs, we will always have people coming to our doors saying, “I am being done wrong by,” because sometimes, in an imperfect system, we will not have got it right. Equally, however, some people will still think that we have done wrong by them, but three years later, when they are back in work, they will say that it was the best thing that ever happened to them.

About a month ago, I sat with a woman in a Work programme centre who said that she had been off work with chronic depression for 13 years. She told me that she had arrived on her first day in the Work programme and said, “I can’t possibly work. This is ridiculous. I don’t know why I am here. I am being traduced.” A month later, she was doing voluntary work in a charity shop, applying for jobs and beginning to say, “Actually, this is good.” We are taking people through a difficult period in their lives.

I said “rubbish” to the final comment made by the hon. Member for Rutherglen and Hamilton West not because he is not raising genuine issues—although I hope that I have explained their context—but because the system is not about forcing people into work. It is about finding the right number of people whom we can help into work. The alternative is to leave them on benefits for the rest of their lives, doing nothing. I do not believe that they benefit from that.

[Tom Greatrex]

I was making the point that, given the lack of confidence in the system, many people feel as though they are being hounded rather than helped. That is the crucial matter that must be addressed in the coming period.

[Chris Grayling]

I accept that, but I genuinely hope that hon. Members will take note of what I said about the time lines and the changes that we have introduced. Professor Harrington said of the concerns highlighted in the Citizens Advice report to which hon. Members referred, “This happened before my changes.” I hope that we can send the message that the system is changing and improving and that we are making genuine efforts and will continue to do so. That is why we changed the guidance in November. It is a process of continuous improvement. We want to get it right as far as we possibly can.

I shall try to answer one or two specific questions before I finish. On audio recording, we will offer everyone who wants it the opportunity to have their session recorded. We decided not to implement universal recording because, based on the trial experience, people did not want it. Few people wanted their sessions recorded, and some said that they definitely did not. We decided therefore to offer recording as an option to those who want it. That seems entirely sensible.

Contact between Atos health care professionals and decision makers will be done by telephone. What matters is not the contact between a single person and a block of decision makers, but trying to phone up the decision maker themselves. On capacity issues, as we stand here today, the incapacity benefit reassessment is on time. New claims for ESA have fallen a bit behind, mostly because of the introduction of the personalised statement following Professor Harrington’s report. We discovered in the first few weeks that it took health care professionals much longer to complete the statement than expected, so the number of completed assessments dropped. That has changed. They have caught up again, and we are chasing through to clear the backlog, as we are doing with the appeals backlog that we inherited.

Finally, the right hon. Member for East Ham asked about the Work programme. Incapacity benefit reassessments are progressing according to time. The biggest impact on numbers in the programme has been created by the different mix of people coming through and the bigger support group. I am quite relaxed about having a bigger support group, because if we need to provide long-term unconditional support to a larger group of people than we had expected, it shows that we are making a genuine effort to get it right and are being sensitive to the needs of people with disabilities. We want to help them into work, but we want to do it in the right way.

Micro-combined Heat and Power

Wednesday 1st February 2012 Westminster Hall

11:00

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I have been here before—who can forget my seminal Management of Energy in Buildings Bill, a private Member’s Bill in 2005, which, among other things, tried to promote deemed permission for domestic microgeneration, or my proposed new clauses to the 2008 and 2010 Energy Bills on plans for the development of micro-combined heat and power and passive flue gas recovery schemes? I am afraid that the blank looks of those present seem to answer that question, but I am here to have another go.

[Mr Andrew Smith (Oxford East) (Lab)]

I am grateful to my hon. Friend for giving way so early in his contribution and congratulate him on securing this important debate and commend his expertise. I assure him that he did not receive a blank look from me—he has been a path-breaker on this issue and is leading the way once again.

[Dr Whitehead]

I thank my right hon. Friend for ruining my opening statement about the incomprehensibility of my previous arguments, but I am grateful to him for his support and cognisance.

I am armed today with substantially better prospects than at any stage hitherto as far as micro-CHP is concerned. What is micro-CHP and why am I so exercised about it? Put simply, it is a rather prosaic technology which, while it will probably not induce conversation at dinner parties, is potentially important for all of us, because most of us possess something that looks remarkably like a micro-CHP unit—namely, a boiler. So this is about boilers.

Members will remember how a previous boiler revolution—in which I was pleased to have had a hand in developing revised building regulations—has probably been responsible for reducing more domestic CO₂ emissions than virtually any other measure of recent years. I am talking of the specification in building regulations that condensing boilers should be installed in homes. That measure was implemented in 2005 and changed the face of boiler installation in the UK. Within a year, more than 85% of new boilers installed were condensing. They were 20% more efficient than traditional boilers, saving about 15% of gas consumption as a result.

A micro-CHP boiler goes into a kitchen or on a wall in exactly the same way as a standard boiler. It also heats the house and provides hot water in the same way, but it is powered by a Stirling engine, a Rankine cycle or—this will be the case in the near future—a fuel cell boiler, all of which are efficient and produce electricity alongside their heating duties. A typical domestic installation produces, effortlessly and alongside the normal heating of the household, about 1 kW of electricity, so it might generate 10 kW of electricity over a winter’s day of heating, which is equivalent to the output of a 3 kW solar installation on a sunny day.

Micro-CHP boilers have been promising for some years. The Stirling engine was invented in 1815 and has been promising since then. Indeed, I first visited the site of the then EcoGen boiler plant in Peterborough in 2002 and was told that the product was about two years from market, but it was not, and nor were other micro-CHP plants, and I think that some people have lost a little faith in the products over the years. Now, however, very efficient micro-CHP boilers are on the market. They work well and are coming down in price with larger-scale production. I visited Ceres Power in Surrey during the autumn. It is developing an even more efficient fuel cell boiler and I am confident that it will come to market in the near future. The products are now there and, if we have the imagination, are set for the second boiler revolution.

The simplicity of such a revolution has already been demonstrated. People will have boilers in their homes for the long-term foreseeable future. What is more, about 1.5 million boilers break down or retire and are replaced every year, so it is not difficult to see that, if future building regulations favour micro-CHP boilers as replacements, that would happen not with a great deal of fuss or with many lifestyle magazine articles, but with a further leap forward for domestic energy sustainability, which we will have to work on urgently over the next few years, as the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), is well aware, with the emergence of the green deal and the energy company obligation.

The potential of 1 million boilers installed by 2020 is, on any reckoning, considerable. Not only would that level of installation generate about 20 GW of electricity on a typical winter’s day—which is about equivalent to what we import via interconnectors on any given day—but 1 million householders would save considerable sums on electricity through self-generation, for which there is considerable appetite, as suggested by the upsurge in solar photovoltaic installations. Micro-CHP-generated electricity is eminently compatible with solar PV, because we would generate far greater amounts of electricity at precisely those times of year when solar PV generates least.

The second boiler revolution could act just as dramatically in reducing emissions. Even if those 1 million boilers replace older condensing boilers, rather than non-condensing models, after a 10-year life, they would generate a saving of more than 2 million tonnes of CO₂, which is about half the total estimated CO₂ savings that the Committee on Climate Change has pencilled in by 2020 for the results of greater efficiency in household appliances. That would be a dramatic contribution to emissions abatement.

The heating and hot water taskforce produced the “Heating and Hot Water Pathways to 2020” report last year. It underlines the potential and relative straightforwardness of the revolutionary path:

“Since it is a boiler replacement the route to market is already well established. With over 1.5 million gas boilers installed in UK homes each year (most of which are replacements) the potential market is huge. Also as a direct boiler replacement there is likely to be less installer and consumer resistance compared with other low carbon technologies.

MicroCHP has been said to have the greatest mass market potential of any emerging low carbon domestic microgeneration solution. Studies have shown that microCHP could displace as much as 90% of existing boiler sales.”

That is the ambition that we could set ourselves.

I have given the sunny uplands vision, which will be generated, possibly, by nothing more than a stroke of a pen on a building regulation during the next few years.

[Mr Andrew Smith]

Before my hon. Friend leaves the sunny uplands, is not another of their aspects the fact that a lot of the technology’s development has taken place in this country, so, as well as its environmental benefits, it has industrial and employment benefits? We do not want this to be another industry in which breakthrough developments happen in this country, only for the commercial exploitation to go abroad.

[Dr Whitehead]

I thank my right hon. Friend for that important point, although I am slightly worried that he may have broken into my office and looked at my speech, because I am about to address that precise, important point on this clutch of technologies and their developers.

After the sunny uplands, we have to look at the reality, which is somewhat different. The industry has, on few resources, determinedly placed itself in a position in which it can supply reliable boilers over the next few years to the quantity that I have sketched out, and in so doing substantially reduce the cost differential between micro-CHP and conventional boilers. As my right hon. Friend has mentioned, the UK industry is a world leader on the technologies.

[Caroline Nokes (Romsey and Southampton North) (Con)]

The UK is a world leader in all sorts of microgeneration. Is the hon. Gentleman aware that SEaB Energy on Southampton university’s science park is generating micro-power in shipping containers? That might not be on the domestic scale of boilers, but it is proof that in the UK we are world leaders at coming up with innovative ideas and working out how we can generate power on a small and sustainable scale.

[Dr Whitehead]

I thank the hon. Lady for making that point. Indeed, the Southampton university science park is the base for leadership of a number of innovations in microtechnology, renewables and wave and tidal power. I am familiar with a number of the developments that are taking place there. It is a good plus for both our constituencies that that science park is producing such good work in the area of microgeneration.

The wider deployment of micro-CHP could, as my right hon. Friend the Member for Oxford East (Mr Smith) said, be beneficial for UK jobs. My colleague and next-door parliamentary neighbour, the hon. Member for Romsey and Southampton North (Caroline Nokes), has alluded to the fact that micro-CHP is very good for development and technological advances. The problem with our world lead in these technologies is the fact that, in truth, not many boilers have been deployed yet. Indeed, the initial results of the inclusion of micro-CHP boilers with the feed-in tariff programme last year—a pilot of 30,000 micro-CHP boilers was reviewed after the first 12,000 installations—have been less than sweeping, with only about 200 FITs payments taking place so far within that pilot.

However, that has to be set against the background of the very modest FITs payments allowed for micro-CHP: only 10.5p, along with a 3.1p export tariff. The figure of 10.5p is close to the starting marginal cost element considered to be generic for all renewables of 9p. That is the equivalent of support for large wind resources and is way below the 5% or so return on investment that is considered to be the sort of level that will attract investment decisions among householders and small businesses.

Of course, although micro-CHP is energy and climate efficient, it does not qualify for the renewable heat incentive as far as heat production is concerned for the obvious reason that, all other things considered, it is not fuelled by renewable energy. However, of course, it could be supplied in the form of biogas on an off-grid basis. I am not sure whether the Department would, in those circumstances, accept that micro-CHP would qualify both for RHI and FITs, but I imagine that that is a debate for another day. The fact of the matter is that a technology and an industry that can do great things are now waiting. The sector needs the confidence and future intent to enable it to scale up to the levels needed to produce a large intervention in the UK’s boiler landscape at a price that will eventually be at or close to those of more established boiler installations.

In the meantime, the industry needs some assistance in kick-starting—for example, the 30,000 installation pilot limit could be removed, so that there can be investment in a mass rather than a niche future. The allocation of a feed-in tariff of perhaps 15p per kWh would, along with the export tariff, enable a return even on present prices of about 5% to be achieved. I am confident that that allocation would be short-lived, especially if the Minister were to use his powers of persuasion to convince his counterparts in the Department for Communities and Local Government that a revision of part L of the building regulations in a few years’ time is appropriate. At that point, I imagine that no feed-in tariff support would be needed or necessary.

I hope that the Minister will be able to provide me with some positive encouragement for these very modest proposals in respect of micro-CHP, not least because, if he is not able to do so, I will have to come back and say it all over again. He will therefore have the pleasure of going through all this again—by the way, that is not a threat.

I am concerned that, if no early support and encouragement is given to micro-CHP, someone else will take it off our hands and we will not have the presence, the technical imagination and the investment capacity of the hard-won position our industry is now in. That will have gone or withered and we will be playing catch up. We need that support to come now. We are talking about an extremely modest investment by the Government—perhaps 2% of the FITs budget up to 2015, or far less than that if there is some clever management of the FITs budget. That 2% or less would have a potentially enormous payback for householders and Great Britain plc alike.

11:15

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I am very grateful to the hon. Member for Southampton, Test (Dr Whitehead) for initiating the debate. He has unrivalled expertise and parliamentary experience in this sector. I am delighted that my name will be linked to his long crusade going back over a decade on behalf of these technologies.

I share the hon. Gentleman’s excitement and belief in this technology. When I was in opposition, I began considering the issue of decentralised energy and its potential to be part of our carbon reduction transformation. This technology has the potential to engage consumers in the energy sector and make them more self-reliant and more conscious of their consumption. It can also provide the opportunity to export. All of those things are good. If we can get micro-CHP right, it can play a far larger role in driving the decentralised energy revolution that we want to see—perhaps even more so than some of the other technologies that are sometimes considered to be more glamorous and are grabbing the headlines. Not every home in Britain can have a solar photovoltaic panel on its roof or be in the right place, but very few homes would not benefit from a micro-CHP.

Like the hon. Gentleman, I have been frustrated by the lack of progress and the missed deadlines for the introduction of a wide, scalable, consumer-friendly roll-out. When I was retrofitting my home in 2006-07, I was very keen to get one of the new micro-CHP boilers. Among all the other interventions I was making on my house, it was the one piece of kit that I was really keen to get. It took more than a year to do the retrofit. During that time, we were constantly promised that the boiler would be arriving and it never came. In fact, I left the house as I no longer lived there and, in all that time, it never came—despite being tantalisingly close to getting one and having seen the model.

The hon. Gentleman is right: we need the industry to respond. I recognise that there is a clear role for Government leadership. I can understand the reactions of the industry to investing in innovation, research and development to bring micro-CHP boilers to market, not just as an interesting gadget or as an alternative method of delivery, but as an attractive, price-competitive alternative to taking electricity from the grid or installing a conventional boiler.

The hon. Gentleman is right: the condensing boiler revolution is a great unsung part of our success during the past decade at reducing our carbon emissions. I do not have the figures to hand, but I am sure that he is right. That fairly simple intervention of jump-starting or pushing forward an advance in relatively simple technology had a massive impact. As a result of him having reminded me of that, I will go away and think about whether we have that transformational push in our current policy landscape, with its focus on feed-in tariffs and heat tariffs as a means of pulling through with its very expensive 25-year tail. Is that necessarily the universal panacea that we need?

I do not want the hon. Gentleman to think that we are not committed to providing a feed-in tariff for combined heat and power, because we absolutely are. We are consulting on tariff levels and I will be publishing our proposed levels very shortly—within a matter of days. I will be introducing a new tariff proposal for CHP. Unlike in almost all the other technologies, I will be looking to raise the tariff in those proposals. I do not think that I will be able to satisfy the hon. Gentleman’s demand for 15p, but I am considering raising the tariff.

I have to be honest about the tariff. It is difficult, in the current climate, to make the argument for swimming against the tide, when some other technologies are facing substantial tariff reductions. We are constantly demanding that they deliver greater value for money to the consumer. We are putting any form of subsidy under close scrutiny in the light of the impacts on people’s bills. That is warranted in respect of micro-CHP. The role of the feed-in tariff is not to provide a long, indefinite subsidy to particular technologies. If there is never any hope of a particular technology being able to deploy without subsidy in a reasonable time frame, it is hard to make the case for our subsidising that technology rather than others.

If micro-CHP can scale up, that represents potential. However, it is unlike other technologies. The hon. Gentleman is right. There are other policy levers apart from feed-in tariffs, which are a useful signal, and, let us face it, we have that policy tool in our hand now and we should not ignore its potential, but we may need to come back to other policy levers if the feed-in tariff alone does not send a strong enough signal.

I share the hon. Gentleman’s ambition for the mass deployment of CHP. If we can get that technology to gain customer acceptance and if the industry can come forward, his ambition of 1 million boilers by 2020 is something that we should think about. The industry needs to hear that message. I should like to test that ambition to find out whether it is credible and feasible. I do not want to posit another number and see the same level of progress as in the previous decade.

The hon. Gentleman is right. Back in 2002 there was lots of talk about the potential roll-out. The first phase of the feed-in tariff scheme for micro-CHP has been beyond disappointing. The number of boilers is almost non-existent: a fraction. We set the 30,000 limit, worried that there would be a surge of deployment, but there has been 1% of that.

I am mindful that we need to revisit Government support and leadership. I assure the hon. Gentleman that, in this Minister, there is someone who is interested in this agenda. That is why I set up the distributed energy contact group, which involves all the key players on combined heat and power and decentralised energy. I want to embed that in policy thinking at the Department of Energy and Climate Change, not just in response to one idea, but building on the success of our microgeneration strategy last week, for example, when we had terrific buy-in from stakeholders throughout the sector. I want to build that now and ensure that decentralised energy is right at the heart of thinking in the Department, which—let us be honest—in the past has tended to gravitate to larger-scale energy solutions. We all know that; it is not a secret.

I assure the hon. Gentleman that, under the coalition, we are trying to be more permissive with our ideas in considering the potential of a range of technologies. I am personally committed to driving the decentralised agenda—not just introducing more competition in large-scale generation, but introducing viable consumer models that will work at distributed and microgeneration level.

The hon. Gentleman is right to say that it will be a challenge to decarbonise heat and electricity in homes. It is a big challenge that we will have to tackle on a number of fronts. There is no silver bullet that will allow us to do that. A lot of attention is on the solar PV industry, which takes a significant amount of subsidy—more than 90% of the feed-in tariff budget. The hon. Gentleman knows that it is an attractive technology. The way that it is going, from being the most expensive technology, is exciting. Rapidly falling costs mean that it could reach grid parity, potentially, even within this Parliament at larger scale and, certainly, for the consumer within the decade, and could be cost-competitive with other large-scale renewables within a year or two. The price falls are exciting. However, it is not the only technology out there.

In respect of the carbon footprint, when retrofitting my home I was as keen as mustard to install solar PV, because apart from a micro-CHP sticking some PV panels on is the other whizzy, exciting thing that can be done. Arup surveyed my house, before the feed-in tariff had come in, and it was made clear to me that that was the least cost-effective thing that I could do if I was serious about reducing the carbon footprint.

There is a clear hierarchy when considering reducing the carbon footprint and improving the efficiency of a home. It has to start with energy efficiency, which is why the green deal will put a big emphasis, and a new push, not just on cavity wall and loft insulation, but on whole-house retrofits, including solid walls, windows, doors and the range of interventions to improve the total envelope of the building. After that, renewable heat must be considered and then microgeneration. It is in that order that we should prioritise subsidy, leadership and interventions.

[Mr Andrew Smith]

I am encouraged by the Minister’s positive commitments. Is not another advantage of micro-CHP that it will supply most electricity at the times of peak demand for electricity, which is not always so with alternative technology?

[Gregory Barker]

That is a good point. It is on tap, which is the benefit of it.

I am excited by the innovation that the hon. Member for Southampton, Test mentioned. Traditionally, a lot of the CHP boilers have needed a high heat load—a 5:1 ratio in terms of heat and electricity—but some of the new hydrogen models offer almost a 1:1 ratio. I am not the expert on that; the hon. Gentleman is. It would be a much more attractive proposition for people if they could use such a boiler in the summer, when they are not using their heat load except for hot water, or in the winter when only using a marginal heat load because they have taken all steps to insulate their home to a much higher level.

Developments in CHP now mean that, rather than just having a marginal by-product of a large heat load, it can offer an exciting balance between heat, which we hope to reduce demand for by making our homes more energy efficient, and electricity, which we anticipate there will be an increased demand for as we increasingly go towards a more electrified economy, if I can put it like that.

I reassure hon. Members that we will consider support for micro-CHP as part of the comprehensive review of feed-in tariffs, and I will come back with those proposals shortly. But I by no means regard that as the end of the matter. As we encourage take-up and begin to go beyond the pilot stage, we must revisit the scheme to ensure that subsidy is sustainable. Certainly it would not be sustainable to reach a million homes with the sort of level that we are talking about. That is why we have a sensible cap at 30,000 units. But let me be clear, the feed-in tariff would go beyond that 30,000. I think that is meant to signal a limit in terms of a sensible budgetary constraint on being able to subsidise at that higher level that number of units. I certainly anticipate a long-term future for the feed-in tariff for micro-CHP, but I do not rule out other policy interventions being necessary in order to jump-start this particular technology. The microgeneration strategy that we published in June 2011 is also helping us to stimulate the microgeneration industry, developing the solid steps that were taken in previous years, and I commend the work of the Government supported by the hon. Gentleman.

I thank the hon. Gentleman for calling this important debate and look forward to working with him constructively on a cross-party basis where there is a lot of consensus on where we need to travel. We now have to do the difficult work of ensuring that we have sufficient deployment.

11:29

Sitting suspended.

Community Sports Facilities

Wednesday 1st February 2012 Westminster Hall

[Mr Peter Bone in the Chair]

14:30

[Charlotte Leslie (Bristol North West) (Con)]

It is a pleasure to serve under your chairmanship, Mr Bone.

So often, sport is limited to the last letter of the DCMS—the Department for Culture, Media and Sport—but sport is much more than that. If we are talking Government Departments, sport reaches into issues that concern Ministers of Health, Education, Business, Innovation and Skills, Work and Pensions and the Home Office.

14:30

Sitting suspended for Divisions in the House.

15:08

On resuming—

[Charlotte Leslie]

It is a pleasure to resume the debate under your chairmanship, Mr Bone. I was talking about the importance of sport, and how it reaches into all sorts of areas that are covered by Ministers in the Department of Health, the Department for Education and the Home Office, and I want to argue that sport, and the way it is managed, is crucial to the Treasury and matters financially to our country. The way that community sport and its facilities have been funded and organised in the past has overlooked the great business and community potential of our nation, and a real opportunity exists.

Seldom has the significance of sport for our country’s well-being been in sharper focus than following the August riots that were carried out by disaffected youth, with the London Olympic games glinting over the horizon. Seldom has the need for a nationwide Olympic sporting legacy of aspiration, effort, achievement, action, consequence and reward, which reaches out to all our communities, been more keenly felt.

The UK is the most obese nation in Europe, and obesity costs the NHS £4 billion a year. Within four years, however, that figure is projected to rise to £6.3 billion. Diabetes is also on the rise. The NHS currently spends £715 million on drugs for diabetes, and by 2025 it has been forecast that 25% of the NHS budget will be spent on diabetes alone. Quite simply, if our NHS is to survive the demands put on it by an ageing population, changing demographics, more expensive treatment and ever-rocketing expectations, our population must change its body mass index and its lifestyle.

Something else is often overlooked. Sport is vital not only because of the calories it burns, but because of the mindset it involves. Crucially, it entails a sense of delayed gratification: if we do not take the easy option now, but do something that initially takes a bit of effort, such as going for a jog instead of having that nice second cup of tea and that slice of cake, that will have benefits later, because we will lose weight and look good in that outfit we want to wear. At the sharp end, it is about what my brilliant former swimming coach Eric Henderson called “no pain, no gain”.

That is important not only for the physical benefits, but for the sense of achievement that comes from making that effort, resisting that cake and reaping the rewards of seeing oneself get fitter and make progress. That starts a virtuous circle of achievement, as we believe and see that we can do something, and that, crucially, is what builds self-esteem. That is where sport is so important for young people, particularly the kind who were involved in the riots over the summer.

I have seen first hand the extraordinary effects that sport can have on young people who are most likely to fall into a lifestyle involving gangs and riots. As the chair of the all-party group on boxing, I have seen how powerful boxing is in turning a kid with all the energy, inclination and anger to riot into a responsible and exemplary role model for other young people. I think of inner-city clubs such as the Riverside youth project in Bristol, which is managed by the amazing Dennis Stinchcombe, and which is sending one of its boxers to the GB team this year. Other sports also have a huge impact, and I will mention them later.

Why does sport work? There is the release of pent-up aggression and energy, the structure and discipline that are often so lacking in young people’s home lives and the respect for role models—often male—which frequently do not exist at home for young people. Crucially, there is also the building of self-discipline, self-respect and self-esteem through a cycle of putting effort in and seeing positive results come out.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

My hon. Friend may come to this, but does she agree that where sporting achievement can be measured, so, too, can its positive effect on academic achievement? The one leads to the other, and there is increasing evidence of that. That is another example of how the Government should see these things as an investment, rather than as a cost.

[Charlotte Leslie]

My hon. Friend makes a good point. I am making it in a rather long-winded way, but he has made it in far fewer words. The cycle of achievement translates into learning how to get good grades at school by putting effort in and getting achievement out. It also helps people with resisting the easier lifestyle choices that are less good for them in exchange for achieving a better physique and physiology later. That concept of delayed gratification is essential to the concept of achievement, and it is essential if our young people are to fulfil their potential. They have to put that effort in to get the rewards and achieve their life potential.

I turn again to what we saw during the riots. What was striking was that so many of the young people and kids who were rioting talked about having nothing to lose. The reason they did that is that they could not really see they had anything to gain; they did not know how to achieve, and they had no traction on the cycle of achievement. They may have had dreams, and we often talk about dreams in relation to things such as aspiration, but dreams are not the same as goals. Those young people may have had dreams about being a famous footballer, being rich or having a glorious, glamorous wife, but dreams are very different from goals, because dreams are dislocated from reality. Those children could see no way—they had no ladder—to access those dreams.

Goals, however, are embedded in reality, together with some way of getting a rung closer to where we want to be, whether we want to be a famous footballer, to be super-rich or to have or be a glamorous wife, or whether we want to be a nurse, to start a business or to pass our maths GCSE. Not one of our Olympians will have become an Olympian by just dreaming about it; they will have worked—oh my goodness, how they will have worked—and they will have gone training when they did not want to. That sense of delayed gratification—putting effort in now for reward later—is what will lead our Olympians to the gold medals that I hope and expect so many of them will win.

Nationally, I hope there will be a facility to allow our Olympians to tell the inspiring story of the effort and hard work it took them to achieve those goals, which are many people’s dreams. It is important for not just young people, but the whole country to see that greatness comes not by accident, but through great determination and hard work. That message speaks to the country as a whole in the difficult times we face.

We have a huge opportunity. One thing sport is so good at is showing young people how to, and that they can, reach their goals. They can put effort in and get a tangible achievement out. That works especially well for young people who do not find the classroom an easy place to be. They might find the authority in the classroom difficult to take, but they might excel in other areas.

As my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) said, that is where sport touches Departments such as the Department for Education. Young people’s results absolutely rocket when they are engaged through sport. Building self-esteem through sport helps in employment. Sport teaches discipline, resilience and other employability skills. We talk about trying to embed all those skills in the curriculum, and there they all are, embedded in sport. In terms of Home Office concerns, sport provides fantastic behaviour management and can prevent young people from becoming future inmates. The social and financial benefit to society cannot really be measured.

The benefits of the self-esteem, individual resilience, teamwork, delayed gratification and discipline instilled by sport go on and on, although Members may be glad to know that I will not. Instead, I want to turn to another great benefit of sport that is often overlooked: the financial and business potential it holds for the community.

In securing community sport for future generations, we face an opportunity and a tremendous challenge, and those centre on our sports facilities. Here is the challenge. The model of community sport is substantially dependent on local authority initial funding and maintenance funding. That has meant too many run-down, off-putting facilities, and it has claimed sporting casualties among facilities. Some years ago in my constituency, despite a massive community campaign, the council misguidedly sold off the much-needed Robin Cousins sports centre and the Shirehampton swimming pool. Now, the community has no proper local sports facilities and a growing population of increasingly bored youth.

More widely, to take football as an example, the latest Football Association survey found that the overwhelming majority of respondents identified poor local community facilities as their biggest problem. A Football Foundation survey found that of the 45,000 local football pitches that exist, 38% did not have changing rooms, 94% had no floodlights, 80% were badly drained and out of use in the winter months, and only 1% had the third-generation artificial pitches that can be used for 90 hours a week, as opposed to just four.

Let me illustrate the point more graphically. In another area of my constituency, Henbury Old Boys football club is struggling to raise funds for much-needed renovations to the clubhouse, facilities and changing rooms. Shirehampton football club is thinking of moving away from its much-loved home ground, which is at the heart of the community, and its clubhouse, which was built by the members themselves, because it cannot progress in the league without floodlights for its pitch, and it cannot get them.

One does not need to be a mathematician to work out what the dilapidation of existing facilities is doing to participation rates.

[The Minister for Sport and the Olympics (Hugh Robertson)]

I do not know whether my hon. Friend has tripped across this yet, but I will mention it before we move on. Part of the Places People Play scheme is a sub-£50,000 grant scheme, to which more than 600 clubs have applied. It exists precisely to try to tackle the problems she has itemised. It has been phenomenally popular; in fact, it is the most successful facilities scheme Sport England says it has ever run. My advice to the football club in her area that is struggling with its changing rooms is to make sure it puts in a grant application. The scheme is called Inspired Facilities and it is part of the Places People Play programme run by Sport England. My hon. Friend should encourage the club to put in an application.

[Charlotte Leslie]

I thank the Minister for that, and will certainly do so. I will come on to what the Government have been doing to recognise the issue in question, and the tremendous investment that they have focused towards it.

The Football Foundation’s research from last season shows that where new investment, such as that suggested by the Minister, took place at a community sports facility, participation increased on average by more than 10%. The sad truth is that often, as cuts hit, local authorities sometimes choose to make cuts to their front-line services and sports facilities, or to hike up charges dramatically, shutting out those on low incomes. To go back to what the Minister said, it is welcome and brilliant that the Government have acted so swiftly and strongly to meet the important challenge of investing in community sports facilities. They have pledged enormous, much needed Government investment in those facilities.

Our national lottery reforms have, I believe, brought an additional £135 million for upgrading community sports clubs and facilities. We are linking schools and sports clubs more effectively, helping schools to offer more of their facilities for community use, which is extremely welcome. Schools’ facilities have for so long been shut to the communities that want to use them. The Government are linking up local sports clubs with schools so that the schools can benefit in their turn from the tremendous expertise and dynamism that community sports clubs offer. That has been quite a long time in coming, and it is welcome that the Government have grasped the nettle and linked those two valuable resources.

Additionally, there is a £400 million local sport fund for local authorities, to help with local sports provision, and a further fund of, I believe, about £100 million, for upgrading such facilities as swimming pools. As a former swimmer I have a particular interest in such projects. The achievement is superb, and is a gratifying indication that the Government see sport’s importance and consider it a priority. I am pleased with the investment that they are putting in.

It is vital that that investment does not just build facilities—buildings. If we run facilities as we have always run them we shall get what we have always got: a welcome initial investment and, in the long term, an expensive continuing drain on state funds, which may not always be made available to meet the need. Not only do we need to build and upgrade facilities; we need to build social enterprises. We need to ensure that we build not only facilities but an entire social enterprise model, involving the community, business expertise and smart corporate financial and human capital investment, so that the facilities do not become sponges on precious local authority funding and maintenance grants, but will instead be vibrant centres of the community, using profitable elements of the enterprise to subsidise the loss-making elements that the community needs so much.

The good news is, as colleagues have already told me, that that is already happening. However, it needs to happen more, and it can. Community sports trusts already exist, and the charity the Football Foundation is doing interesting work on providing some kind of model for change. Football is the most popular sport in the country, but 33% of the foundation’s effort in sport goes beyond football; so, for those who are not so into football, it is not just about that. The foundation’s idea works on making an initial investment but also helping to build and support a sustainable hub around a facility, such as a crèche in the club house or better use of bar facilities, including sport on TV, to make a profit that can be pumped into maintaining and improving the facility.

Corporate social responsibility is also an enormous opportunity. Funds cannot be better used than to invest in community sport, but often we also need to think smarter about how we use the expertise of those who work in our large corporates. We should encourage corporates to demonstrate corporate social responsibility by making links so that their staff can mentor and give time to local sports clubs and enterprises. When better than the Olympic year to start something of that kind?

One of the football clubs that I have visited in the Bristol area has been extraordinarily successful in community fundraising, and in building a social enterprise model around the club. One of its secrets is that there was someone on the board whose day job was project management and fundraising. In the face of the decimation by Bristol city council of much-loved sports facilities in Shirehampton, Avonmouth’s National Smelting Co amateur boxing club, run by Garry Cave in his spare time after work, has raised funds to build a new gym to accommodate the ever-increasing number of boxers who want to take part. It did it by pooling the expertise and resources of parents, helpers and supporters. In fewer than two years a brand new and far bigger club was up and running, and well oversubscribed. That is a success story, but it was and is still very tough going, and corporate support would be a massive help.

Such corporate support is already happening. As far as I have been able to see, Barclays has demonstrated good and innovative use of corporate support in its Spaces for Sports investment. What struck me when I visited its facilities was that what I saw was not just about capital investment unleashing participation in sport; it was also about creating and supporting an enterprise for the long term, driven and managed by the community. One of the things said again and again in communities affected by the riots was that facilities owned by the community, with community involvement, escaped the vandalism and damage. That sense of community ownership is massively important.

Money and skills are certainly something we need more of. [Interruption.] I need a drink of water. [Interruption.]

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

To assist the hon. Lady I could offer an intervention.

[Charlotte Leslie]

That is very gentlemanly.

[Mr Donaldson]

I congratulate the hon. Lady on her remarks, to which I have been listening intently. We find in Northern Ireland that a benefit from sport is its capacity to unite a community that is divided—in our case by sectarianism, but often in Great Britain by ethnic differences and so on. Would the hon. Lady consider the positive effects that sport can have in bringing communities together, particularly where there is a history of conflict, but also in areas where there are gangs or criminality?

[Charlotte Leslie]

I thank the right hon. Gentleman not only for his chivalrous intervention but for the excellent point he made. It is true in Bristol that there are areas with opposing gangs, and it is difficult to bring those groups together, but local sports and the boxing club have managed that against all the odds, and things are being done that many people would say could not happen. I agree that the community cohesion that sport can bring is spectacular.

I hope that the House will forgive me if I tend to cough during the rest of my speech.

Sport not only provides an opportunity for large corporates such as Barclays to hone the effectiveness of their corporate social responsibility; it also, crucially, provides a great opportunity for small business and economic growth. At a time when small building companies are struggling, and we need to get young people into apprenticeships and provide opportunities in the construction industry, what I have outlined is a great way to do it. Small and medium-sized enterprises make up 99.7% of the UK’s construction industry, and up to 11 construction firms go bust every day. The Government have already identified construction programmes as a key way of stimulating the economy, and have focused on house building. That is very well and good, but developing new and upgraded sports facilities also provides many SMEs with a crucial lifeline, so that a range of subcontractors, such as architects, electricians, carpenters and plumbers can survive. For example, a relatively small project in Essex, funded by the Football Foundation with a grant of just over £250,000, which for the foundation is relatively modest, enabled the Lawford juniors football club to get a new changing pavilion. In addition, that project alone employed 35 different subcontractors, three quarters of them local, and two apprentices.

Although times are tough, we face a tremendous opportunity. Sport is already one of the nation’s greatest examples of the big society, with thousands of individuals giving up time to volunteer at local clubs. It is superb that the Government—I pay tribute to the Minister—are investing so robustly to protect and support the Olympic legacy. That is a much needed springboard for sport. However, we still need to rethink sport’s dependency on the state, to safeguard its future. The readiness, skills and need certainly exist to build excellent sporting facilities for future generations that are sustainable, vibrant social enterprises bringing growth to communities, and are assets to, not drains on, strained local authorities.

We need to combine the backing of Government, the expertise and action of charities, such as the Football Foundation, and smart CSR—that is, money and skills—from Britain’s businesses, such as that which I saw from Barclays, with our existing community sport network to safeguard and promote sport into the future. What better year in which to pull all those together than the Olympic year of 2012?

15:30

[Justin Tomlinson (North Swindon) (Con)]

Thank you, Mr Bone, for giving me the opportunity to speak in the debate. I pay tribute to my hon. Friend the Member for Bristol North West (Charlotte Leslie) for making a fantastic speech, especially given that she had the hindrance of a croaky throat. During my time as a lead member for leisure on Swindon borough council, we had great pleasure in visiting the Riverside boxing facility. As someone who is not quite as passionate about boxing as my hon. Friend, I was extremely passionate about the huge difference that it made to very challenging communities. I am thinking particularly of the links that it had with the Navy and the Army. Those links enabled people with real drive and enthusiasm to be identified and given an alternative opportunity in life. That facility should certainly be praised.

I want to cover a couple of subjects. I have spoken in similar debates in Westminster Hall in recent weeks, but I am delighted to see that I have a slightly different audience today, so I can recycle some of the points.

The Centre for Social Justice highlighted in its recently published report the vicious cycle whereby prices rise to raise revenue and that threatens participation levels. That is not an idle threat. Local authorities that are under pressure to balance revenues and expenditure often turn to the services that we are debating and consider hiking up prices. In my local authority, when Labour was last running the council, it decided to increase leisure centre prices year on year. That was a false economy not only because usage went down, but because the revenue that it collected went down. I urge local authorities throughout the country to think carefully before taking a short cut to try to raise revenue.

There are alternatives. We found that as we invested capital in the council leisure facilities, we prioritised invest-to-save schemes. For example, as the Football Foundation has identified, there is a chronic shortage of 3G football pitches. By local authority standards, they are relatively cheap to build, and they generate huge amounts of revenue, which can be used to offset other, loss-making leisure activities. We built three 3G pitches at the back of the Link leisure centre on a four-year payback scheme. That paid itself off after 13 months. As in that example, when councils want to invest in leisure facilities, they should partner them with those few sports activities that are so popular that they can generate sufficient income to help to offset the losses made by others.

Local authorities should do far more on marketing where facilities are not being fully utilised. I will use the example of 3G football pitches again. Until I was elected to Parliament, I used to play football with a group of people every Tuesday night. Every so often, at those peak times, there would be a cancellation. Once the hour arrived and the pitch was not being used, that time was lost for ever. I felt that there were so many groups making regular bookings that the authority should have built up a database. It could then have sent out an e-mail to say, “The Thursday 7 pm club is not coming this week. The first club to reply can take up the space available.” That club could pay half the price, so participation would be increased and the local authority would not be wasting money. It would basically be a case of copying what the airline companies do when they are trying to sell off their last few seats.

We should be much more confident about empowering the respective managers to allow people who turn up to play. I am thinking particularly of younger people. Use of the 3G football pitches normally costs £42 an hour. If one is empty, but a group of teenagers turn up and between them they can cobble together £2.50, we should take that £2.50. An additional benefit is that they would be encouraged to use facilities in a controlled and safe environment.

Councils can play other roles, one of which is facilitating sports clubs to find a home. I set up the very successful Sports Forum, which has got more than 60 different sports clubs in Swindon working together. One challenge that many sports clubs have is finding a home where they can participate in their sport. The best example of that was the Esprit gymnastics club, which was based in an industrial retail park and became so successful that 450 children a week were using the facility. However, all the other tenants of the park complained that there were no car parking spaces left, so the club was told that it needed to find a new home.

The club gallantly searched high and low in Swindon, but no buildings with a sufficiently large roof were available, so the council stepped in and identified a building—Headlands school sports hall. Headlands school was being bulldozed to build an academy a few miles down the road, so the relatively new £4 million sports hall was also set to be bulldozed. To cut a long story short, it was agreed that Esprit gymnastics club would take on that building and pay a commercial rent. It was a not-for-profit business, but it obviously charged the children to take part. The sports hall was a considerably bigger facility, for which it was then able to obtain external funding. Now, on a weekly basis, more than 2,000 children use that facility, which is still standing.

The people to whom I have been referring have sub-let part of the building to the Kirsty Farrow dance academy, which is very successful, and the Leadership martial arts academy, so it is a thriving community facility. They also manage the neighbouring football pitches. The local authority does not run the facility. It is run by volunteers so successfully that I am determined repeatedly to invite my hon. Friend the Minister to visit it to see what a fantastic jewel in the crown it is for Swindon.

Last week, I met people from Swindon Supermarine rugby football club, which is based on the Swindon Supermarine collective site. That includes the football club, the archery club, the bowls club, the diving club and, of course, the rugby club. They want to build additional facilities, including an indoor 3G facility not just for rugby, but for football and other sports. The Rugby Football Union will be supporting that. I am delighted that, following that meeting, Swindon borough council has agreed to offer as much advice as it can ahead of the process of looking to build, putting in bids and going through the planning process. All those different sports clubs will come together and work together, so that that site continues to be something very valuable for my constituency.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I am grateful to my hon. Friend the Member for Bristol North West (Charlotte Leslie) for securing this important debate. At the outset, I declare that I am a parliamentary fellow of Sport England. My intervention is linked to the point about local authorities. Does my hon. Friend the Member for North Swindon (Justin Tomlinson) agree that it is crucial that excellent local authorities, such as his, work in partnership with organisations such as Sport England? That organisation has launched the £32 million Sportivate programme to get 14 to 25-year-olds playing sport. It is attracting more than 300,000 extra people into playing sport. Local authorities need to work in partnership with excellent organisations such as Sport England to ensure that everyone can play sports.

[Justin Tomlinson]

I thank my hon. Friend. His intervention is very helpful because it ties in perfectly with my next point. To return to the Sports Forum principle, one reason why that is so successful, with the 60 different sports clubs coming together, is that there is a pool of expertise that can draw on national organisations that can come and give presentations. The Sports Forum meets every three months. We are talking about three 30-minute segments. They are advertised in advance. One segment could be, for example, about how Sport England can help, and Sport England will come along and give a presentation.

There is the sharing of best practice. For example, some sports clubs were looking for facilities and some sports clubs had facilities that were under-utilised. They merged to become stronger as a unit. Also, the expertise can be provided to apply for funding, because if ever we need nuclear physicists, it is for filling in funding application forms. We were fortunate in Swindon because we had many people who were very good at that, and they helped other sports groups to apply for funding.

I would extend what I am talking about to local authority leisure centres and sports centres. The Oasis leisure centre—the rather famous band copied the name— wants to have a major redevelopment. It will be, in all senses, a leisure centre, rather than a place for serious sport, which will leave our other major centre, the Link centre, pretty much providing the sports side. I should like the Sports Forum to have a much greater role in running that, because it has expertise in how to deliver sport and because that could help to attract external funding. An example is the new netball facility that was built. The national netball association and local netball clubs are helping to set the programme and ensuring that that is a big success. We must use the skills that sports clubs have.

I want to deal briefly with private finance initiative schools and community facilities. While I was a councillor, there were many shiny, brand-new schools in the new housing estate that I represented. We did not have a huge amount of open space other than inside the large fences of the PFI schools. They charged an absolute fortune and priced many different community groups out of there. It was an absolute, crying shame; we had young people who wanted to turn up and kick a football around, but they could not get access to the open fields. We must be careful of that, especially in built-up areas.

I have been trying to push for more sport in the community on Friday and Saturday nights, using community facilities such as school buildings, local authority sports facilities, parish councils and community centres. We as a nation spend a huge amount of money on youth services and facilities, and although some are good, many are not. It would be far better for the local authority to use the money to commission football or street dance coaches, for example, to work in those facilities. The respective local authority, parish council or school would not charge for the use of those facilities. All that they would have to do is raise a bit of money to go towards the cost of the coaches, and that could come from the youth service budget. Children could be charged 50p a time, so that they have a sense of ownership. In that way, we could get them doing something active and constructive on Friday and Saturday nights. When I go around schools and colleges, the idea is very much supported by young people. Last week, a sports coach UK organisation told me that it was interested in the idea and that it could provide a long list of potential coaches for the different areas. I am sure that many other organisations would get behind such a scheme.

On planning issues, we are right to focus on sports facilities—physical buildings—but often all that we need to do is ensure that there is sufficient open space. I previously represented a new build estate where there was not sufficient accessible, usable open space. Under the technical national definitions, we had lots, but they just happened to be lots of hedges and places where we certainly could not kick a football. We need to be mindful of that.

When I was growing up, we were influenced by whatever was on TV. If it was the Tour de France, out came the bikes. If it was cricket, out came the cricket bats. We played football for the majority of the year and tennis for the three days that we used to last at Wimbledon in those days.

We need to take advantage of the new homes bonus and section 106. Too often, leisure is not at the forefront of getting money to invest in facilities. For the smaller developments in existing residential areas, we should consider using some of the money to provide more accessible, usable open space or traditional sports community facilities. Again, we should consider the opportunity to devolve the ownership and the running of those sports clubs.

We have previously talked about school sport partnerships. I was delighted that the Government extended the time for them to secure a future. The vast majority, or at least the ones that were doing a good job, have been successful in doing that. My only plea concerns the facilities that they then provide activities in. The people involved are often fantastic coaches. They are fantastic at getting support for volunteers, but they are not necessarily business-minded. As not-for-profit businesses, they need some help and training to ensure that they are good at running the books, so that they can continue to do a fantastic job.

I am encouraged by a much of what the Government are doing. This is something that the Government take very seriously. The Minister is well thought of by all the sporting groups that I meet. We must ensure that this matter remains very high on the political radar, both locally and nationally.

15:43

[Karen Lumley (Redditch) (Con)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Bone. I thank my hon. Friend the Member for Bristol North West (Charlotte Leslie) for securing this debate. I will not speak for long, but I will highlight a couple of community facilities in my constituency.

Next week, we will open a new sports centre, with a £6.5 million swimming pool. It is the first leisure centre in the country that is partly heated by innovative technology. It will take energy from the town’s crematorium, thereby reducing the overall CO₂ emissions in our borough. Of course, we would be delighted if the Minister wished to pay us a visit.

The centre will lead the way in improving health equalities and increasing participation in Redditch, with targeted projects to help our diverse population. To celebrate the opening of the venue, community games will take place in May and will involve sports clubs and the voluntary sector. There will be activities for eight weeks, culminating in a competition day focusing on Olympic sports and the promotion of volunteering and healthy lifestyle choices.

The special Olympics group is another great community facility. I should perhaps declare an interest here as I have just been appointed its patron. It comprises a group of Olympians with learning disabilities. They take part in all sorts of sports, including athletics, swimming, soccer and badminton. They are a pleasure to watch, and I have seen them compete in many events. They are inspirational young people, and 169 of them have competed in events this year. They are a credit to my town and an example of how community sport and its facilities really work. Without such community sports facilities, our young people would suffer. They make our town a healthier and happier environment. Long may they continue.

15:45

[Neil Carmichael (Stroud) (Con)]

I thank you, Mr Bone, for asking me to speak, and I congratulate my hon. Friend the Member for Bristol North West (Charlotte Leslie) on securing this excellent debate. The timing is appropriate because this is the year of the Olympics in London. It is right that we should be focusing on sport. It is right, too, because we need to encourage people to live more healthily. Exercise definitely leads to a healthier lifestyle. My hon. Friend was right to emphasise the importance of exercise.

Let me talk about my own district council of Stroud, which has just reopened its leisure centre to great success. I pay tribute to Councillor Keith Pearson and his team for having the imagination to get on with the job of delivering an outstanding centre with so many improvements on the previous regime. Gone are the days of Mr Brittas and the “Brittas Empire”. Instead, we have an efficiently run organisation with clean facilities. The changing rooms are absolutely excellent and I invite Members to come and see them at any time—preferably to change for some sport. The centre demonstrates that councils can do things properly if they put their minds to it, and Stroud district council has done exactly that.

The centre expects some 25,000 users from the community around Stroud, which is a fairly impressive number. There is also Dursley swimming pool, which has a solar panel system to assist with the heating, so the pool is not just really good for the community but environmentally friendly. Things can be done by Conservative councils, and I applaud that. It is important that we recognise that councils can and should play a role. It is also critical that communities outside the council help in these matters, too.

My son is a footballer; he is a pretty impressive defender. I often go and watch him play at various football clubs across my constituency. It is really great to see so many clubs flourishing and providing decent pitches for people to play on and it is a great tribute to local communities that they allow these facilities to be developed and then support them. The support that local communities give to such clubs is critical.

[Rehman Chishti]

My hon. Friend is making an important point about local communities and local authorities. Medway has just spent £11 million on the Medway Olympic park in one of its most deprived areas—there is a seven-year life expectancy difference between one part of the constituency and another. Does he agree that it is crucial to get such facilities in deprived areas as well as in affluent ones, so that children with social deprivation issues can use the facilities and improve their health as well?

[Neil Carmichael]

I thank my hon. Friend for that intervention and I am grateful to him for making it, because that is an important point. We must ensure that we reach out to all communities, especially the ones that he has described. We must have healthy people who enjoy their lives, are properly engaged and play a full part in the society that we want to create. That was what my hon. Friend the Member for Redditch (Karen Lumley) was referring to when she spoke about people with disabilities, and it is great that she emphasised that point.

There are communities in my constituency that support people with disabilities in their interest in sport. Most impressively, a huge amount of money was raised for a swimming pool as St Rose’s school, Beeches Green, for people with severe disabilities. That is wonderful; it shows that people care, that they can deliver the right kind of support and that people recognise that absolutely everybody should have opportunities to play sport wherever possible, which is completely right.

There are also threats to sport in my constituency. Stroud rugby club needs a new facility and to upgrade its rooms—in fact, it needs to move. We must help clubs such as that to seize the initiative effectively and ensure that they can deliver the right kind of facilities for the huge number of young people who want to play rugby. The place is full on a Sunday morning. My son is no longer interested in going to the rugby club at weekends—it’s football for him, although he plays rugby at school—but those who go to Stroud rugby club are really enthusiastic, and that is an important stepping stone to more involvement in sport. I am very keen for Stroud rugby club to thrive and I support it in its endeavours.

I went to Gloucester rugby club a few weekends ago to watch a very exciting game between Gloucester and Toulouse—my wife is French, so there were some issues about who was supporting whom. While there, I noticed the sheer involvement of the people watching the match. We must not forget that element when we talk about facilities. It is important to encourage people to go to and support sporting events. They will be watching people they know—members of their families and so forth—which is part of the collective activity of sport and should be promoted.

My hon. Friend the Member for Bristol North West mentioned corporate support; it is important and we should encourage it. The Government need to find ways to help to lever in the corporate support that is so necessary for many fledgling clubs and for developed clubs that want to move forward or expand their assets or facilities. We should not forget the sports such as skateboarding that we would not necessarily think of as sport, because they also give opportunities to young people to be involved.

The community facilities that we want are essential, and should be encouraged to develop into other services as well, such as social clubs, because that gives them an added dimension and another way to be successful. I have noticed that the clubs in my constituency that have moved on and developed in that way have prospered, and they continue to provide excellent opportunities for young people.

15:53

[Dr Phillip Lee (Bracknell) (Con)]

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate my hon. Friend the Member for Bristol North West (Charlotte Leslie) on securing this timely debate. I congratulate the Minister on his strong performance as a Minister since 2010—he has been outstanding. This is obviously an important year for sport. I also congratulate my hon. Friends on their contributions so far, particularly my hon. Friend the Member for Redditch (Karen Lumley), who has given me an idea. One of the sporting facilities in my constituency is a top-100 listed golf course, which happens to be next door to the crematorium, so I will encourage my local council to investigate the possibility of recycling heat into the clubhouse.

I would like to talk about how I see sport and how sport benefits the individual, the wider community and the nation as a whole. I know that my hon. Friend the Member for Bristol North West and I share a passionate belief that sport can and does do good and should be encouraged and supported in every possible way. Forgive me, but I would appreciate some indulgence as I take a tour of my constituency. I am proud to do so, specifically on this topic, because it has possibly some of the best community sports facilities in the country. In my experience, the people of Bracknell and the surrounding area are generally quite happy, and I think that those two things are linked.

Bracknell has three sports centres, including an Olympic swimming pool, which my hon. Friend the Member for Bristol North West competed in once upon a time. The Coral Reef water sports park is a separate facility that is visited annually by hundreds of thousands of people from the south of England. The Look Out discovery centre on Crown Estate land in Swinley forest, which is used for mountain biking, walking and running, has 250,000 visitors a year. We also have one of only three trampoline centres in the south of England. Lily Hill park houses Bracknell rugby club, and I remember playing there aged 19—not so long ago. I lost the game unfortunately, but was very impressed with the facilities. We also have numerous football clubs. In fact, my first visit to my constituency was to play football for Wycombe district football club at the age of 11, and I lost that game as well. We also have a baseball club, which is a five-time national champion. Those are just the community facilities—state-owned, dare I say. We also have a ski slope, an ice rink and an outward-bound youth challenge network, which are all privately funded and are now profitable going concerns. That is just Bracknell.

In Sandhurst, we have 80 acres of land owned and managed by the local town council. We have football pitches, a very successful cricket club, a skate park, a tennis facility and we have the annual Sandhurst fitness funday, which I attend every year because it tries to improve the health of the community. In Crowthorne, we have the Pinewood centre, which is an old TB hospital with a series of wards—TB hospitals had big wards and were in the middle of nowhere. When it was closed, the local council took it over and each ward now houses a society, including a remarkable gymnastics club. When I visited, the doors had to be opened to allow people to run in to do the vault—the standard of the gymnastics is awe-inspiring. There is a judo club on the same site, which included an Olympian. There are also football teams, and boxing clubs in Crowthorne and Bracknell.

Finchampstead includes Finchampstead memorial park, which has a very successful cricket club. We have a football club that is tied with Reading football club, and there is a netball club. I could go on and on. It is a remarkable series of communities all within my constituency. All the councils and councillors—Iain McCracken is one of the people responsible for the portfolio at Bracknell forest—should be congratulated on their success in maintaining all the facilities over the past few decades.

On the sustainability of sports facilities, I do not think that it is the state’s responsibility to fund all facilities; that is not sustainable and makes no sense. The state has a role as a partner, but charity and private money should also play a part. We cannot go back to an age when it was the council’s responsibility to provide all facilities, because that is nonsense. I am proud of the fact that a large number of facilities in my constituency are a partnership between the community and the council.

The wider point that I would like to make about sport is that it is good for us, and as a doctor, perhaps I can say that more strongly than others can. It makes us healthy, and I still see too many patients who are obese, who drink too much, smoke too much and have lost the drive and desire to get on and to compete in life.

Sport from an early age is important, and I mean competitive sport, not the nonsense about everyone being a winner. Life is tough, and trying to protect children from the realities of how competitive life is, is abusive. I would not describe it as child abuse, but it is abusive, because those children enter the workplace and wonder why they cannot deal with competition. Sport has an important role to play in physical health, but also mental health. We need to get back to believing and understanding that we want winners. To have winners we must have losers, by definition. We need to connect effort with reward. Sport is a way to do that and educate people.

Sport can also benefit communities. As I said earlier, I think I have such remarkable communities in my constituency because sport plays a large part in their life. That is why sport is so important, so integral to a happy environment and to the well-being of each of my constituents.

The Football Foundation is an example of an agency that has money from the Government, premier league and the FA. I am doing a fellowship with the Football Foundation, learning about the industry of football, warts and all. The best part has been coming to understand and see the impact that the Football Foundation is having up and down the country.

My hon. Friend the Member for Bristol North West and I had the pleasure of a tour of facilities around London a few months ago. When one visits the facilities, such as the ones near Wormwood Scrubs—they were in a shocking state and are the responsibility of the council—one realises that the council is under no statutory obligation to provide leisure facilities. I am not going to make a party political point, but at the moment it tends to be Labour councils cutting back and blaming it on Government cuts. The reality is that the way in which those sports facilities are being managed is not sustainable.

The Football Foundation model puts in a proportion of the grant to help and support schemes that have an aspect of sustainability, be it a bar, a crèche or whatever. Thereby the facility is maintained, is successful and popular in the community.

[Simon Hart]

My point might relate only to isolated rural areas such as mine. Does my hon. Friend agree that in many places it is the work of local charities—not the big corporates—and local businesses, volunteers and lottery funds that keep the sporting facilities and infrastructure together?

[Dr Lee]

That is an important intervention. Many times, the local builder or plumbing firm sponsors the football shirts. My hon. Friend is right.

Organisations such as the Football Foundation need to work in partnership with communities and councils, in order to establish much needed sports facilities. I do not know whether anyone here has tried to book a five-a-side football pitch anywhere in the country. It is a woeful situation; it is not possible to get space on those pitches. Why have we not got more of them? The reason at the moment, I think, is that the foundation is struggling to get match funding from councils. Perhaps the Minister might look at making it a statutory requirement for councils to concentrate on leisure facilities. He might say to councils that cutting sports facilities will increase Government expense in the provision of health care services.

[Justin Tomlinson]

On that point, as I mentioned in my speech, local authorities can look at this as an opportunity. My local authority invested through Invest to Save, paid the money off in 13 months and has been making a profit ever since. Because there is such a chronic shortage, 3G football pitches are potentially very profitable.

[Dr Lee]

My hon. Friend is right. To quote the phrase of “instant gratification” used by my hon. Friend the Member for Bristol North West, the difficulty is that it is all about the instant—it is about how to cut and balance the books. No long-term perspective is taken. The reality is that if I play football for a year, that is not likely to make an impact on my health when I am 70. This has to happen over a number of decades in order to get the return. A longer perspective on the part of councils and Government needs to be taken.

There has been the woeful selling of school fields. I drove past a school near where I live: we have more flats and more houses and fewer school pitches. It is lamentable, particularly in the year of the Olympics and the European football championships and in a country that is passionate about sport. I have stood on football terraces up and down the country. People are passionate about sport, about their club winning—not competing or taking part but winning. I think we can harness that. The best way to do that is to ensure that there are sustainable facilities.

In conclusion, my constituency is a model of how communities can engage in and support sport, financially and through participation. The well-being of the community is much enhanced in the process. Sport and the provision of community sports facilities can lead to better health, behaviour and community spirit.

16:06

[Clive Efford (Eltham) (Lab)]

It is a pleasure to join the debate under your chairmanship, Mr Bone, for the first time, I believe. I pay tribute to the hon. Member for Bristol North West (Charlotte Leslie). She has been a doughty fighter on behalf of sport in general. She has made many contributions both in the Chamber and Westminster Hall on behalf of sport and young people, pointing out the role that sport can play in encouraging participation among young people, challenging some behaviour and turning lives around. I have certainly seen many examples of that in my constituency. I commend her for the work she has done to bring the matter to the attention of the House.

Sport is a very important part of not just our society and culture, but our economy. It contributes in the region of £3.8 billion, according to the British Institute of Sport and Leisure. The health and sport industry makes a major contribution to employment, as well as to the well-being of many of our constituents. It also offers many opportunities for communities to come together. We have heard an enormous number of examples from hon. Members today of not-for-profit organisations where public-spirited people come together to run them and make a major contribution to our local communities.

I am grateful to the Sport and Recreation Alliance for providing figures. One of its reports, under its former guise of the Central Council of Physical Recreation, stated that 26% of volunteering takes place through sport and recreation; and that the economic return of volunteers outnumbers investment in the sector by a ratio of 30:1. There is an argument for sport not just for enjoyment but as a significant contributor to local economies. It also contributes to health, as the hon. Lady said. There are enormous costs to our NHS from obesity and diabetes. As she said, the cost of dealing with illnesses related to the body mass index is currently about £15.8 billion. That is due to rise by 2050 to a staggering £49.9 billion, if current trends are not addressed. It is important to recognise the potential cost to our country and economy of not tackling such issues. It is also important to recognise the value of sport and how it can contribute.

In these economically straitened times, when people’s disposable incomes are stretched, it is also important that we do not exclude people from accessing sport because of cost, particularly those from more disadvantaged backgrounds. Many people have referred to problems with increasing costs, especially at private finance initiative schools. A PFI school in my constituency is just being completed. Its policy is certainly to open its doors to the local community and groups, but it must also cover the costs of doing so, which creates a problem for local organisations that want to access those facilities.

We must do all we can to ensure that people are not excluded from using the excellent facilities that have been developed in many schools, as that is key to improving accessibility to sport in future. It is important that the Minister has regular discussions with his opposite numbers in the Departments for Education and for Communities and Local Government to ensure that access to sport is maintained. Costs are likely to rise in the current economic situation, but we must not exclude the most disadvantaged people in our communities.

As the Minister knows, many people are disappointed by the cuts to school sport partnerships. He has made it clear that that is not his specific area of responsibility, but I refer him to an answer that the Secretary of State for Culture, Olympics, Media and Sport, the right hon. Member for South West Surrey (Mr Hunt) gave at Culture, Media and Sport questions. He said:

“Some school sports partnerships did an excellent job but, overall, participation among young people fell under the last Government—it has fallen from 58% to 54% over the last four years”.—[Official Report, 15 December 2011; Vol. 537, c. 915.]

I have searched, but I cannot find that figure. If the Minister has the answer now, I shall take it, otherwise he can write to me.

[Hugh Robertson]

The hon. Gentleman will find the answer in the Active People survey. It refers to people between the ages of 16 and 24, and, I think, relates to a period from 2005 to 2011. I think that the point that my right hon. Friend was making, correctly, was that whatever the successes of the school sport partnerships in schools may have been, they were not tackling the post-school drop-out, which got worse, not better.

[Clive Efford]

I am grateful for that. I suspected that that was the answer. School sport partnerships are for school-age children, not for 14 to 24-year-olds, so the survey did not compare like with like. My concern is that the figure has been used as an example.

I think someone said that “prizes for all” was the previous Government’s policy on encouraging people to participate in sport. Encouraging everyone to experience many different types of sport is in no way contrary to encouraging them to participate in competitive sport. Most people who play sport understand that the first competition they must win is the one against themselves. Whether we are playing in a team, on our own or just training in a leisure centre, we are competing first and foremost against ourselves—everything else is secondary. Encouraging young people to experience that enjoyment and opening them up to as many types of sport as possible through excellent schools facilities is essential if they are to have a lifetime’s association with sport.

On the national planning policy framework and the changes to planning policy guidance 17, what discussions is the Minister involved in to secure a replacement of facilities where there is an application to build on playing fields? PPG17 and the School Standards and Framework Act 1998 required developed playing fields to be replaced. Sport England and other consultees must still be consulted under the new requirements in the NPPF, but there is no guarantee of replacement in the wording. Is the Minister lobbying hard on behalf of sports-lovers everywhere, who want our playing fields to be protected in future, to ensure that the replacement guarantee is retained? It was successful in reducing the number of school playing fields that were lost. It might surprise some Government Members to know that between 1979 and 1997, 10,000 school playing fields were sold.

[Hugh Robertson]

The hon. Gentleman must give way on that point.

[Mr Peter Bone (in the Chair)]

Order. I point out to the Minister that the hon. Gentleman does not have to give way.

[Clive Efford]

I shall give the Minister a chance to come back; I am a fair individual. After the 1998 Act—this is available through freedom of information and is on the Department’s website and the website of the Department for Education—was introduced, only 226 school playing fields were lost. A myth has built up that school playing fields have been disappearing at an alarming rate over the past 13 or 14 years. That idea is incorrect and must be put right.

[Hugh Robertson]

I am afraid that the 10,000 figure is incorrect. When we were in opposition and I was doing the hon. Gentleman’s job, we were always slaughtered with it, so I spent a considerable amount of time looking into it. No figures were collated for the loss of playing fields until 1999, so 10,000 is a guesstimate. I met the Labour special adviser who dreamed up the figure. In the days when Tom Pendry was doing his job, a set of figures was aggregated. They ran that out over years and produced the figure, and it became accepted wisdom. There is no statistical backing for it at all.

[Clive Efford]

I do not have much time left. The 226 figure is an answer to a question to one of the Minister’s colleagues. The 10,000 figure dates from an FOI request in 2009, so I do not know where the former Minister, Tom Pendry, comes into it. Needless to say, even if the figure is out—even, to be generous, by 50%—the difference is staggering. It is essential, therefore, that the Minister lobbies hard to ensure that the replacement requirement is included in the planning framework when it is finally agreed.

I shall move on, because I want to give the Minister a decent run at answering his colleagues’ questions. I have a concern about opening up schools and school clubs under the 14 to 25 strategy announced by the Department and Sport England. Under the policy, by 2017, the Department will have created 6,000 partnerships with local sports clubs. Is the Minister aware that, on average, 4,000 secondary schools across the country already have partnerships with 14 sports organisations? By my reckoning, that totals significantly more than 6,000. Can he explain where the existing partnerships will fit alongside the 6,000 that he intends to create? Will they be new partnerships or will they be in addition to existing ones? What is the future for existing partnerships?

It is ironic that the strategy will be based around schools. I fully support the intention to open up schools. A lot of work has been done on that, as existing partnerships indicate. However, many of the best facilities in which clubs will be set up are in Building Schools for the Future schools. In my constituency, the facilities built as part of that £6.5 billion programme are state of the art. Sadly, some sports clubs will be set up in sub-standard facilities, because not all schools enjoyed BSF, which would have improved, rebuilt or refurbished every secondary school in the country. Alongside that, enormous benefit would have been gained from improved sports facilities. It is worth nothing that, since 2000, in addition to what was going to be spent on BSF, Sport England has invested £1.5 billion in capital investment throughout the country and local authorities have spent up to £650 million on improving sports facilities. Therefore, although the money announced by the Government is welcome, it appears to be woefully inadequate.

My final point is about planning and floodlights. What discussions is the Minister having with his colleagues in the Department for Communities and Local Government to ensure that problems with floodlights do not continue? Modern technology means that they are not as intrusive as they have been in the past, that they do not damage quality of life, and that many of the fears in local communities about them are misconceived. As has been mentioned by some of the Minister’s colleagues, of the about 2,400 3G—third generation—or artificial surfaces in this country, fewer than 2,000 have floodlights. Few grass pitches are floodlit—grass pitches can only be used for up to six hours a week if they are to be maintained to any standard—so it is important that we increase the provision not only of artificial surfaces, but of floodlights. What work is the Department doing in that regard? With that, I had better sit down to give the Minister an opportunity to respond.

16:21

[The Minister for Sport and the Olympics (Hugh Robertson)]

It is a pleasure to serve under your chairmanship, Mr Bone. Members may not be aware that our Chairman is one of the finest slow left-arm bowlers ever to have represented the Lords and Commons cricket club. It is nice to have a Chair with expertise in the area under discussion, although he is probably the only slow left-arm bowler to have ever represented the club.

I am grateful to my hon. Friend the Member for Bristol North West (Charlotte Leslie) for securing this debate. I also thank her for her work with the all-party boxing group on boxing and as the president of a number of amateur boxing clubs, including some in her own constituency.

This is an important debate at an important time. I am always keen to stress that London 2012 is not the story about sport in this country, but the start of the story. It would be only right to congratulate the England and Wales Cricket Board, which recently secured the 2013 champions trophy for this country. After 2012, we will have the rugby league world cup and the champions trophy in 2013; the Commonwealth games in 2014; the rugby union world cup, the world canoeing championships and the world gymnastics championships in 2015; the world athletics championships in 2017; and the cricket world cup in 2019. There are also bids outstanding. We are, for example, contemplating a bid for a youth Olympics and a series of other smaller competitions. London 2012 is, therefore, very much the start of the story, not the end of it. It is crucial that we use this period to do what so many hon. Members have spoken about, namely to drive an increase in participation in sport.

That will be testing against the current economic backdrop, but the lottery reforms that we implemented in May 2010 have already, according to Camelot’s figures, resulted in an upturn of money, so the amount of money going into sport as a result of the end of the Olympic levy, as well as the lottery reforms and the fact that those changes are driving greater ticket sales, will go up from the £1.3 billion in 2010 to an estimated £1.8 billion. That is an extra £0.5 billion over a six-year period, so the reforms could have a considerable impact.

I suspect that most hon. Members would prefer to hear me respond to the points that they have raised—although that might be a novel theory—than listen to my prepared speech. My hon. Friend spoke movingly and correctly about the beneficial effect of sport on young people’s lives. I agree with her and suspect that everyone else present does, too. Like her, I pay tribute to the Riverside youth club in Bristol, whose work I have heard about, not least from my hon. Friend, as well as other, independent sources.

My hon. Friend made a good point about floodlights, which the shadow Minister, the hon. Member for Eltham (Clive Efford) also touched upon. Floodlights have historically been a difficult issue, because everyone who wants to play sport wants to have sports facilities with floodlights, but everybody who lives near a sports facility with floodlights want them turned off at 10 o’clock at night. The shadow Minister is right that the latest generation of floodlights cause significantly fewer light problems than earlier generations. Bizarrely, the taller the tower on which the lights are put, the less pollution, because everything goes down, whereas with a shorter tower, it spreads out. As part of the Inspired Facilities fund—I had a feeling that this was true, but have just checked it to make sure—sports clubs can apply for floodlights, so provided that they can get planning permission, which is often the sticky bit, they can, in theory, apply to the fund and get floodlights built.

My hon. Friend is also right about the need to reduce the dependency on the state. That is one of the reasons why I have been so keen—against opposition from those involved—to progress with the restructuring of UK Sport and Sport England. Sir Keith Mills, who has looked into this, is clear about the combined commercial opportunity if the success of elite athletes is married to the mass participation strategy—the mass market—for any commercial sponsor. British sport’s ability to drive commercial sponsorship has been poor. Some individual sports have done well, but non-departmental public bodies have not done well in driving sponsorship. The Team 2012 initiative was not a great success. It needs a new start around a different commercial property to make it work.

My hon. Friend the Member for North Swindon (Justin Tomlinson) talked about local authorities investing in sports hubs. He is right that, if we started with a fresh map, we would undoubtedly build sports hubs, because the whole family could go to them and everyone could participate. The problem is that sport in this country has not grown up in that way. Most towns and cities have their rugby, football, tennis and cricket clubs, and swimming pool, in different places, but he is right that hubs are the way forward. I encourage him to get Sport England involved in discussions. He should probably make an application for his new sports hub to its Iconic Facilities funding stream—I am sure that my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti), as Sport England’s parliamentary fellow, will put in a good word for him with the chief executive. I wish him well with that.

Access to school facilities is a nut that we have not cracked over many years in this country. The new sports strategy has a particular funding stream. Members throughout the House will have shared my frustration of driving past schools with unused football pitches on a Saturday morning, while people are queuing around the block to use the local authority facilities. That is sometimes down to insurance and caretakers, but often it is due to lack of will-power. Where schools want to make it work, they can, and where people do not, they do not. The new strategy has £10 million to help people get over the hurdles and I hope that that will start to iron things out.

My hon. Friend the Member for North Swindon is also right about coaches and the impact that they can have. The schemes work very well in some places. Charlton Athletic is a shining example of how a football club can have an influence on a local area. I am sure that my hon. Friend’s own football club in Swindon does something similar. Charlton Athletic draws funding from Kent county council to run precisely the sorts of schemes that he has mentioned. I encourage him to look at that model and then see if he can interest his own county council in funding Swindon or similar sides.

My hon. Friend was on the money once again on the question of business training for not-for-profit organisations. The organisation that he should speak to in that regard is one that has been set up by Keith Mills—that is his second name-check of the afternoon, but he is a marvellous man who does a lot for sport. He has set up a small charity called sported, which exists precisely to give business training to not-for-profit sports organisations—people who are keen to do something about their local sports facility, but who lack the technical expertise to bring it about.

My hon. Friend the Member for Redditch (Karen Lumley) spoke well about her sports facilities in Redditch. I have actually been to some of them in a previous incarnation, before her time in Parliament. Some interesting models are emerging from the Localism Act 2011 in relation to community asset transfer and how it can be used to pass the ownership of sports facilities to the groups that use them. My hon. Friend is right to draw attention to the Special Olympics, which represents a remarkable movement full of remarkable people. The difficulty for the Special Olympics is that it has a constant battle with the British Paralympic Association about whether those involved are Paralympians or Special Olympians and all the politics that goes alongside that. I am delighted that as a result of the new disability strategy at Sport England, the Special Olympics has got funding for the first time. Some £250,000 of funding will go to Special Olympics Great Britain. I hope that that will encourage those involved in the belief that people are taking them seriously and that they are a valued part of the sporting landscape.

My hon. Friend the Member for Stroud (Neil Carmichael) spoke very well about Stroud rugby club and, indeed, its move. One of the things we did when we were trying to settle the listing debate in 2010 was to recognise that it is up to sports to market their own broadcast rights as they see fit. In passing, we should congratulate the ECB on the renewal of its new contract. By allowing sports to have that freedom, we encourage them to invest a proportion of their proceeds in community sports facilities.

The Rugby Football Union was one of the national governing bodies that signed up—indeed, all of them did—to a commitment to invest 30% of their UK broadcast income in grass-roots facilities. If my hon. Friend is keen to help Stroud rugby club move, it would be well worth his while spending some time with the RFU and Sport England to see if he can get them together to discuss what can be done to help. Again, he made exactly the same point about the need to lever in more corporate money. That is very much at the centre of what we are hoping to do as part of the restructuring of the non-departmental public bodies.

My hon. Friend the Member for Bracknell (Dr Lee), who is doing a sports fellowship with the Football Foundation, made me laugh—unintentionally, probably. I spent three quarters of a year at the Royal Military Academy, and the concept of a Sandhurst fitness fun day was absolutely not a part of that particular period of my life. Sheer agony for hours on end seemed to be the key. He spoke very well about the various different sports facilities in his constituency. He is absolutely on the money about the issue with the Football Foundation. It has been a central tenet of the Football Foundation’s existence ever since it was set up to look for match funding from local authorities. I saw the chief executive, Paul Thorogood, two weeks ago. He made the point that finding match funding is becoming, for reasons we would all understand, much more difficult. We will have to work with the Football Foundation to find ways around that.

The Football Foundation is a first-class organisation; it absolutely does what it says on the tin. Every time it builds a new 3G sports facility, the thing is booked out within a month and people cannot get a space. That shows the demand for such facilities. Encouragingly, the latest generation of those pitches is much more multi-sport-use-friendly. As soon as I empty my piggy bank out and can find some more money in it, I will do my utmost to ensure that the Football Foundation gets some more money because it is a good organisation that does a good job.

[Clive Efford]

I agree with the Minister’s comments about the Football Foundation, which is an excellent organisation. It has been able to get more bang for its buck by attracting match funding. Is he suggesting that he will make money available to replace that match funding and that it will not require match funding in the future, because to go down that route means that we will get less for the money?

[Hugh Robertson]

That is absolutely right. Of course it is important that any part of an area applying for funding should show enthusiasm and commitment by raising a bit of money itself. I am not saying that we will remove that but, without going into the Football Foundation’s finances in any great detail this afternoon, there are two connected problems.

First, the Football Foundation is increasingly finding it difficult, through no fault of its own, to get exactly matched funding from local authorities. That point was made by my hon. Friend the Member for Bracknell. Secondly, because it takes longer to gain that funding and the Football Foundation is partially Exchequer funded, it finds it difficult to shift the capital inside the financial year—1 April to 31 March. It does not want to get into a position whereby because it cannot shift the stuff out the door and get the match funding, it has to hand the money back. We are talking about quite a complicated accountancy issue. Suffice it to say, the Football Foundation is a first-class organisation and I am delighted that my hon. Friend is involved with it. We will do what we can to help it as soon as things ease.

On the contribution of the shadow Minister, the hon. Member for Eltham, he is absolutely right to draw attention to the health benefits of sport, which many other hon. Members also mentioned. It is enormously encouraging that the Department of Health—I thank it for this—now deals with that directly in primary schools through the Change 4 Life sports clubs. It has committed to funding that for the foreseeable future.

[Rehman Chishti]

I congratulate the Minister on being one of the finest Ministers in the Government. I do not say that because he is a fellow Kent MP or because he is a fellow cricketer; I say it simply on merit. He will be aware that some excellent research carried out by Sport England has shown that if sport participation were to increase by 1 million people weekly, the taxpayer would save £22.5 billion in health associated costs. What are we doing to encourage and get that extra 1 million people playing sport a week?

[Hugh Robertson]

An extra 1 million people a week would cover the entire population inside a year, would it not? It is a lovely idea, and I thank my hon. Friend both for his kind comments and his obvious enthusiasm, which is undoubted. One of the extraordinary features of community sport in recent years has been that, despite the huge impact of lottery funding, the number of people participating in sport in the community has remained rigidly static or has marginally fallen over a 10-year period.

There are a number of reasons for that and this afternoon is not the time to go into them, but I will mention a couple of factors. The measurement system is very tough and people have to play three separate instances of sport. People who play top league cricket or hockey generally train in the week and play at the weekend, so they fail the measure. The measure uses fixed telephone lines, so we are not convinced that enough young people are being picked up. It is also fair to say that the sport governing bodies who now have responsibility for the matter have not worked out the consumer behaviour changes that are required to make it work. A number of issues are tied up with the participation measure, but getting it shifted is absolutely at the centre of what we are trying to do.

The shadow Minister mentioned the national planning policy framework. He is right. The Government’s objective was clearly to reduce a vast number of planning regulations to a much smaller and more easily manageable document. As a result of that, a number of things have gone out of the window. I have spent a lot of time with sports going through exactly what they need. I have also spent time with both Sport England and the big five. He will be familiar with that term, which relates to football, both codes of rugby, cricket and tennis. We have been to see the Minister of State, Department for Communities and Local Government, my right hon. Friend the Member for Tunbridge Wells (Greg Clark). Formal submissions have been made and informal meetings have been held. We will wait to see the effect of that when the consultation is completed.

The hon. Gentleman talked about partnerships with local sports clubs. The 6,000 figure that is used is the number of new clubs that sport governing bodies themselves think they can set up. That is a figure given to us as a result of statistics collected mainly from the FA, the Rugby Football League, the RFU, the ECB and the Lawn Tennis Association.

Finally, the hon. Gentleman mentioned floodlights. That issue is tied up with the consultations on the NPPF. Someone can apply for floodlights under the Inspired Facilities part of Places People Play. As I say, if I had put my hand up this afternoon and said, “We have absolutely cracked angry residents who don’t like floodlights on their sports facilities,” it would not have been entirely fair. However, he is absolutely right to raise the matter.

[Mr Peter Bone (in the Chair)]

Thank you for that excellent debate.

Foreign Policy (Soft Power)

Wednesday 1st February 2012 Westminster Hall

16:38

[John Glen (Salisbury) (Con)]

May I say what a pleasure it is to serve under your chairmanship for the first time, Mr Bone? I declare an interest as secretary of the all-party group on the British Council and as a governor of the Westminster Foundation for Democracy.

The purpose of calling this debate is to focus on the role of soft power in British foreign policy and how it is to be used in defining country strategies. Over the past decade, Governments have become increasingly aware of the importance of soft power. I define that as the power to attract and co-opt alongside the hard power of traditional military and economic means of achieving foreign policy objectives. There is a growing acceptance that soft power is an important component of foreign policy and should be seen as a complement to rather than a substitute for hard power.

I want to talk about how there can be better integration between the different elements of hard and soft power. My impression is that, although different institutions work effectively on their own, they could deliver a lot more if they actively collaborated on a systematic basis in all countries where they operate.

I want to share some examples of Britain’s soft power assets, and then examine the need for the development of a co-ordinated vision for our foreign policy by addressing some of the practical realities and questions that surround putting that into practice. It is important to recognise at the outset that, compared with many countries, Britain has an immensely rich set of soft power institutions, resources and tools. In 2010, we were ranked joint first in the Institution for Government soft power index. In 2011, we were placed second, behind the USA. Soft power institutions, such as the British Council, the Westminster Foundation for Democracy, Voluntary Service Overseas, the Commonwealth Foundation and the BBC World Service perform a valuable role in developing trusting relationships with overseas countries.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I congratulate my hon. Friend on securing this important debate. On soft policy and achieving our foreign policy objectives, does he agree that a fundamental part of winning over people’s hearts and minds, as we have seen in Afghanistan, Pakistan, Syria and Libya, has been the work of the BBC World Service in communicating that we have a lot more that unites us than divides us?

[John Glen]

Absolutely. I will come on to speak about the World Service in a moment. All those assets deploy so much of what is great about this country: the English language, arts, education, and the values of civil society and democracy.

I pay tribute to the work—since, I think, 1934—of the British Council. It now works on the ground in more than 100 countries, particularly in strategic areas such as the middle east, north Africa and in emerging economies. It may be helpful to know that last year it provided more than 1.3 million hours of English language teaching, supporting 5 million English teachers across the world. It now uses digital broadcasting to reach 100 million students. In addition, it provides exams and qualifications, and links UK primary and secondary schools, universities and arts bodies with overseas institutions in long-term beneficial partnerships. Despite taking a 26% budget cut in this comprehensive spending review period, it has a clear resolve to continue its core work by continuing to win competitive education and development contracts.

As my hon. Friend mentioned, the BBC World Service also makes a massive and effective contribution to the development of the UK’s relationships abroad. It reaches 166 million people every week—through radio, television and the internet—in 27 languages, as well as English. Unlike the state-sponsored media of many of the countries in which it operates, its editorial independence ensures impartiality and objectivity. It is that professionalism and impartiality that generate trust and credibility overseas. The audience of BBC Arabic TV increased by more than 80% in recent months, including an increase in the online audience of 300% during the height of the Egyptian protests—clearly, it is a very powerful tool. Recent changes in funding streams and organisation will allow the World Service to work more closely with the domestic BBC, benefiting both the UK and other countries.

The Westminster Foundation for Democracy engages with political parties across the world. That work involves—I have done some of it—training party officials to develop their capacity to create policy, to campaign and to fulfil effectively their function as Government or Opposition parties in emerging democracies. That work builds up democratic institutions and understanding. It also generates long-term trusting relationships between those countries and the UK, and the individuals in those Governments and the UK. All these institutions leave a legacy and impact on the individuals who encounter them and inevitably lead many to develop a natural empathy, respect and affinity for our country.

As I suggested at the outset, given all that these institutions do, there is a need better to co-ordinate their work into an holistic vision for our foreign policy. We have to recognise—this is my experience of being a member of the Defence Committee and working for WFD—that different Departments and institutions naturally have varying perspectives on foreign policy and the status of our relationships with countries across the world. That includes the Department for International Development, the Foreign and Commonwealth Office and the Ministry of Defence, as well as soft power institutions such as the British Council and the BBC World Service. For example, the primary objective of DFID focuses on poverty and long-term development goals, but that might not always align with the immediate demands of a military intervention to secure a strategic objective for British foreign policy.

[Rehman Chishti]

My hon. Friend talks about the work of DFID, one aspect of which is education and its link to our foreign policy. We gave Pakistan £650 million for education to provide people with opportunity, aspiration and a life away from sectarian violence. That has implications for our own security—the training camps in Afghanistan and Pakistan were linked to the terrorist attacks in London in 2005. DFID’s work on soft power foreign policy—giving people hope, opportunity and aspiration through education—provides a diversion from sectarian, ethnic terrorist tendencies.

[John Glen]

I am not in any way seeking to criticise any individual player; my core argument this afternoon is about the co-ordination between those contrasting perspectives. When I went to Islamabad last autumn, DFID’s massive contribution was very clear.

Any one of these perspectives—development, diplomacy, military or culture—need not displace the others. Rather than picking one, or one being the lead, the challenge is skilfully to harmonise and develop a single, shared vision for our foreign policy. My experience in Afghanistan—in the DFID compound and then talking to people from the FCO and various military leaders—was that they all had a different perspective. What seemed to be lacking sometimes was a desire to integrate fully different views. If one had a clear development goal, it was very easy to find that goal in conflict with a military objective. Rather than seeing those different views as a barrier, the Government need to work systematically to synthesise those complementary perspectives and refine overall policy definition.

There are some excellent examples of where that already works in practice. The stabilisation unit, which is owned jointly by DFID, the FCO and the MOD, brings together expertise from those Departments with police and military personnel. It despatches task forces to conflict-stricken areas—for example, Afghanistan—to develop political processes, reduce conflict and violence, and provide a basis for future development. It remains unclear why the unit should be taken out of Afghanistan at the end of 2014.

The challenge to achieve the systematic co-ordination of different departmental perspectives on a large scale is compelling. We must identify different perspectives where they exist across Government. That will mean undertaking the difficult task of recognising where a departmental mindset is preventing co-ordination and collaboration with another Department’s activities, perhaps between the FCO and DFID. No doubt some Departments and organisations will need to make compromises to agree a comprehensive strategy for the greater good of diplomatic and long-term relations in a region or country.

It is also desirable to aim for a closer working relationship between soft power organisations and the Ministry of Defence. As the ongoing work of the British Council in Libya has shown, soft power institutions can build relationships of trust ahead of and after military intervention in a country. If that approach can be developed in respect of future military interventions, it could ease the work of the armed forces, particularly when working alongside civilians. Working with soft power institutions and making use of diverse expertise could aid the MOD in defining viable exit strategies, rather than just asserting that those will exist. The institutions that I have mentioned have a more nuanced understanding of cultural barriers and attitudes of populations on the ground and can probably more reliably estimate what will be achievable by military means.

We need to recognise that Foreign Office diplomats, wonderful though they are, are not the only actors in British diplomacy. Although diplomats achieve much for British trade and political understanding, arm’s length bodies, such as the WFD, working to build civil society and government infrastructures and developing strong relationships with emerging political parties, do much to develop trust and credibility where Britain’s historic ties are less strong or apparent.

Our diplomacy must allow soft power institutions to play a more significant role in maintaining mutually beneficial, positive relationships throughout the world. As I have emphasised, the key challenge is overcoming ingrained departmental mindsets and historic positions to harness the complementary perspectives and resources of an increasing range of diverse institutions, especially arm’s length soft power organisations.

We must put in place effective leadership, accountability and co-ordinating procedures throughout our institutions to enable what I am arguing for to work properly, and to define a sophisticated foreign policy strategy that serves the interests of the UK optimally across the globe. That will mean determined effort from Ministers and senior civil servants to put vested interests aside, and the instincts of the budget holder being left at the door as each Department recognises that others have something meaningful to contribute. It will also mean having difficult but vital discussions about our vision and objectives with individuals who may have a different starting point at the outset.

It is only through a determined approach of that type that the UK can maintain its unique standing in the world and make best use of these enormously powerful resources and assets that our great country possesses.

16:53

[The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)]

Thank you, Mr Bone, for giving me the opportunity to contribute to this short but important debate. I praise my hon. Friend the Member for Salisbury (John Glen) for securing it. I agree with his two central arguments: first, we need to ensure that soft power is co-ordinated across the Government and is not just seen in Departments and, secondly, it must be properly integrated with hard power, so that we can bring to bear Britain’s collected and varied assets in an effective, focused way on the problems that we seek to address. Let me expand on that, because although that gets to the nub of it, I have the opportunity to speak at greater length.

The starting point for the Government is that there is a great role for soft power—probably a greater role than in the past—in today’s international landscape. By soft power, we mean a state’s ability to achieve preferred outcomes, not by coercion but by persuasion or attraction, building up networks, engaging with people at all levels to increase trust and respect and being prepared to listen and to show respect in turn.

Soft power is especially important as political and economic power spreads south and west. The countries that have traditionally exercised political leadership in the world over several hundred years are no longer able to ally their political roles with such a big share of the world’s economy. Britain—others are in the same position as us—needs to bring to bear a wider range of assets to try to ensure that our position is understood and sympathised with around the world. We have many advantages in our favour, which I will come to.

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

I apologise for being late entering this debate.

On the growth of power in the east, does the Minister agree that, although we have an extraordinary historical connection with countries such as India and China, it is clear that we can no longer trade on that historical relationship? As we begin to think about soft power, we cannot think that we necessarily have some cultural competitive advantage any more.

[Mr Browne]

I basically agree. A slightly more complicated answer would be that our historical and cultural connections, which are extensive around the world, can sometimes put us in an advantageous position compared to our competitors, but they sometimes put us in a disadvantaged position.

We should not assume that, just because Britain has a comprehensive range of historical ties with other countries, we are necessarily the preferred partner of choice of the Governments, or the people and companies, in those countries. We should not think that we are able to rest on our historical laurels. We need to ensure that our soft power advantages are continuously updated and are relevant to the interests of the countries with which we engage. Let me run through a few of them, so that hon. Members better understand my point.

It is reckoned by independent observers that four of the top 10 universities in the world are in the United Kingdom. I think that the other six are in the United States. Another way to make that point would be to say that we are the only country apart from the US with universities in the top 10 in the world. At any point, some 400,000 foreign students are studying in this country. That is a huge soft power asset. If people go to Malaysia, for example, as I do, it is striking how many of the political and business elite have studied in British universities and have a depth of understanding of Britain that is greater than would otherwise be so.

We have the second largest number of Nobel laureates—second again to the US. Our museums and art galleries and other cultural assets are envied and admired throughout the world. In respect of more popular culture, it is striking how popular the premier league football fixtures are around the world. They are watched by, I am told, 4.7 billion people in a season. I suppose that a lot of those people will be counted on a repeat basis. Nevertheless, that is an extraordinary amount of total dedication to watching events happening in the UK on television. UK premier league football is watched in more than 200 countries.

In political terms, we are unique—the right use of that word—in being the only country that is a United Nations Security Council permanent member and a member of the European Union and the Commonwealth. We have ties right around the world that are not replicated even by countries that are as significant as the United States of America and China.

My hon. Friend the Member for Salisbury mentioned the BBC World Service and the British Council, and I strongly endorse his support for those institutions. The foremost daily newspaper in shaping global opinion is the Financial Times—a British newspaper—and the weekly periodical that is most influential in shaping opinion around the world is The Economist, which is a British magazine. A persuasive case can be made for the BBC being the broadcaster that is most influential in shaping political opinion around the world.

All those different areas of thought leadership are amazing achievements, which we often take for granted. Not even the United States or, for that matter, Germany, France, China or Russia is leading the debate globally in that respect. Despite having less than 1% of the world’s population, not the British Government but media institutions in Britain are at the forefront of shaping opinions around the world.

I take the opportunity to pay tribute to the Westminster Foundation for Democracy, which my hon. Friend mentioned. It is valued by Members throughout the House for its role in promoting elections, civic engagement and the development of political parties around the world.

17:00

Sitting suspended for a Division in the House.

[Sir Roger Gale in the Chair]

17:15

On resuming—

[Mr Browne]

Thank you, Sir Roger, for giving me the opportunity to resume my contribution to the debate. Before we broke for the Division, I was talking about Britain’s soft power advantages and gave a number of examples. I was talking about the Westminster Foundation for Democracy and the significant role that it plays in promoting values that are endorsed with enthusiasm by parties right across the House.

I want to talk about co-ordination across the Government—something that my hon. Friend the Member for Salisbury mentioned in his introductory speech. Departments and publicly funded bodies are facing the challenge of how we can make the most effective use of the money that we have. There is a role for us to identify ways in which we can work even more closely together. We have already undertaken an exercise on how that might work in practice, and we will publish the results later in the year.

We have to tread warily, however. Many of the United Kingdom’s most effective soft power resources are independent of Government control. It is that very independence that makes them valuable—a point that was acknowledged by my hon. Friend in his speech. People who might not wish to talk directly to the British Government will engage with them, so we should not do anything that is perceived as compromising that independence. That does not mean that we should not look for opportunities to work together with our partners as much as possible. I shall give two examples.

First, I was recently in Brazil, where our UK-Brazil season later this year will bring together the Foreign Office, UK Trade & Investment and the British Council, working in tandem with other Departments, commercial organisations and cultural institutions, to promote the UK and to build new dynamic partnerships. Secondly, the Great campaign, launched by the Prime Minister in September, involves the Foreign Office, the British Council, UKTI and VisitBritain. That single campaign brings together all our overseas activity to promote Great Britain under a common banner, to get people from around the world to visit the UK and to do business here. It is expected to deliver 4.6 million extra visitors to the UK, generate tourist spending of £2.3 billion and create almost 60,000 new job opportunities.

The Foreign Office’s work on the Olympics and Paralympics has brought in a wide range of partners, both inside and outside the Government, working together to use the 2012 spotlight to build the reputation and influence of the UK right around the world. They will attract almost 15,000 athletes and will be held before almost 11 million ticket holders and an estimated global audience of 4 billion people. It is a great opportunity for us; they are distinctive events. Together with the royal jubilee this summer, that focus on Britain will be envied by every country around the world—even, I would venture, the United States. The events are important in their own right; they are not public relations events. Nevertheless, we need to be alert to their positive implications for how Britain is perceived globally.

We have been considering how to bring the elements of soft and hard power in a cohesive way into what is sometimes referred to in the jargon as smart power. Military power does not provide the only, or even the best, answer to many of the world’s challenges. Economic and social solutions to intractable problems are at least as important. The building stability overseas strategy, which was launched in July, was the first integrated cross-Government strategy to address conflict issues. Earlier in the debate, we discussed how some of that work had been carried out, and Pakistan was cited as an example of where different Departments and agencies are working together to achieve their departmental objectives, as well as the overall objectives of the United Kingdom Government.

Promoting stability in fragile countries reduces the threat of national and regional conflict. Instability and conflict provide fertile grounds for terrorist and criminal activity, thus preventing economic development and promoting migration. As part of that strategy, we have been working not only with the Ministry of Defence and the Department for International Development, but with key international stakeholders including non-governmental organisations and international partners, to improve our ability to anticipate potential conflicts and take fast and effective action to prevent a crisis and to help build robust societies.

Soft power is not an end in itself, but a capability to be used in pursuit of a wide range of foreign policy objectives. To make the most effective use of soft power, we must recognise not only the strengths and weaknesses of our partners, but how we are perceived by our target audiences. We must be prepared to engage carefully and respectfully with those whom we wish to influence, and we must use all the channels available to us. Soft power must also be fully integrated into policy making and delivery.

I believe that soft power will become more important in the years ahead. In terms of expenditure, Britain has the fourth largest military in the world, and we are the world’s sixth or seventh biggest economy, depending on how that is measured. As I have said, we possess key advantages such as our permanent membership of the United Nations Security Council, and we are leading members of both the European Union and the Commonwealth. Those formal expressions of power remain important in promoting our national interests and foreign policy objectives, although the ways in which countries exercise influence in the world are often becoming more subtle and varied than the exertion of formal power by a Government.

The United Kingdom has many attributes that are admired, such as our education sector, culture, sport and civic society, and that is a huge asset for the country around the world. Where appropriate, the Government are determined to make the most of such attributes, although many of those things are not necessarily led or directed by the UK Government, but are attributes of British society as a whole.

It has been a pleasure to serve under your chairmanship, Sir Roger, and again I congratulate my hon. Friend on giving the House the opportunity to discuss this important issue.

Unemployment (Halifax)

Wednesday 1st February 2012 Westminster Hall

17:23

[Mrs Linda Riordan (Halifax) (Lab/Co-op)]

I am delighted to have secured this debate, and to serve under your chairmanship, Sir Roger. I also thank the Minister who will reply to the debate. Before I get to the heart of the issue, however, I would like to paint a background picture of Halifax and describe the social and economic situation in which we find ourselves today.

I grew up in Halifax and went to school there, and I know the people of Halifax well. It is a great place in which to live and work. No one wants to be out of work, but sadly far too many people are. People do not want handouts but the chance to do a good day’s work for a good day’s wage. People do not want to live in—and I do not want to represent—a town where levels of unemployment might be at 15% or 20%. I requested this debate to place on the record what is happening in Halifax, and say why something needs to be done.

Even if the possibility of 20% unemployment in Halifax sounds a little exaggerated, that is sadly where we could be heading unless something radical is done to get people back into work. In recent times, too many regeneration schemes have been axed and new projects scrapped, and too many policies have made the poor poorer, instead of giving them hope of work.

For many years, jobs in Halifax and Calderdale came from a number of industries that sadly are either no more, or are shadows of their former selves—I am talking about engineering, manufacturing and, going further back, the woollen industries. Over the past two or three decades, we have seen a steady decline in those industries that provided employment to key groups of people in my constituency. Today, the two biggest employers are the Lloyds Banking Group—better known to most local people as either the Halifax building society or HBOS—and Calderdale council. Other key employers include the hospital in Calderdale and the primary care trust, and other public sector employers.

Well-run private companies such as J&C Joel in Sowerby Bridge, Harveys department store, or Iplas recycling group in the heart of Halifax, together with many more small companies, provide much needed employment and are key businesses in my constituency. They are models of how to make a profit, provide employment and maintain a dedicated and motivated work force. Over the years, Halifax has relied on specific sectors to provide employment, but when those sectors declined, a vacuum was created. In Halifax, it has never been enough to rely on private sector jobs to fill the void that is created when public sector jobs are lost. The town needs much more than that, which is why regeneration schemes, investment in new schools and the new hospital, together with a strong public sector and the right macro-economic policies, have helped maintain levels of employment in the town.

[Craig Whittaker (Calder Valley) (Con)]

I thank the hon. Lady for securing this debate. My constituency is also in the Calderdale district, and like her, we are all concerned about unemployment, although I think that the figure of 20% may be a little far-fetched. As MPs, we must do all we can promote the area for business growth, which we know to be the key thing. That is particularly true when 20% of constituents in Halifax and Calder Valley work in manufacturing.

Does the hon. Lady agree that although we are incredibly concerned about unemployment, we must also celebrate success? I highlight the example of JLA in Ripponden, which has spent £1 million; KT Hydraulics has recently spent £2 million, and Decorative Panels has invested £8 million. Boxford has recently moved from the hon. Lady’s constituency to mine, spending £6 million and creating many jobs.

[Sir Roger Gale (in the Chair)]

Order. I have been very tolerant, but an intervention must be an intervention.

[Mrs Riordan]

I thank the hon. Gentleman for that intervention, and as I will show later in my speech, I do not intend to talk down Halifax—quite the reverse. I saw the Halifax Courier on Saturday night and read about the new jobs that have been created in Calder Valley. The Halifax Courier is a great source of local knowledge. It talks up Halifax and I have worked with it on many local campaigns, including that to get a direct train service to London, which we accomplished a couple of years ago.

Why have I called this debate today? It is not to make overt party political points, but rather to set out the background and put on the record the current unemployment figures in Halifax which, I am afraid, speak for themselves. I find such figures alarming and wish to seek answers and assurances from the Minister about what can be done. What can be changed, and what initiatives is he planning to ensure that levels of unemployment start to reduce in my constituency?

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Lady on securing this debate; the difficulties that she has expressed are mirrored in many of our constituencies. Does she believe that the onus should be put on apprenticeships and further education colleges to provide proper courses for what industry needs, together with a closer working relationship with organisations such as the CBI and the Federation of Small Businesses?

[Mrs Riordan]

I thank the hon. Gentleman for his intervention. I agree with his point about apprenticeship schemes. In fact, just last Friday, I visited Goodall Transport in Sowerby Bridge in Halifax. It has been there for quite a few years. It would like more money coming up north, because it sees money directed more to the south of England. Also, it struggles with paying VAT before it gets that VAT into the company. It might invoice someone today and have to pay the VAT at the end of February, but not get the VAT by then. Perhaps the Minister will reply to that.

I hope that the Minister agrees that the current levels of unemployment in the town that I represent are unacceptably high, that the current upward trend in the number of people out of work is alarming and that a worryingly large number of those people are in the key 18 to 24 and 25 to 50 age groups. For example, the number of people out of work aged 24 and under has gone up by more than 25% in the last year, and in the 25 to 49 age group, it is up by more than 15%. The overall employment rate is only 66%. That is an alarmingly low level. I hope that the Minister shares my concerns about those rates. Does he agree that under one in four of the active adult population out of work in Halifax is a damning statistic? Will he outline what initiatives can be taken to improve that situation and put in place job creation measures as a matter of urgency, not just at macro-economic level, but at a micro-economic level that benefits my constituents?

Earlier today, I was looking at the statistics from five years ago. The unemployment level in Halifax has nearly doubled in that period. Despite the stereotyping last week of benefit claimants, they are people who want to work and need to work. The whole social fabric of a town can collapse if unemployment levels get too high. Let me be clear: I think that one person out of work is one too many. Does the Minister share my concerns about the figures that I have mentioned? What policies can he introduce to help to stem the flow of job losses, which is rapidly becoming a torrent?

The current situation is fragile, and the campaign to save jobs in the town’s two biggest employers—Lloyds HBOS and Calderdale council—goes on. The knock-on effects for the town of more job losses at those two big employers would be devastating. As Roger Harvey of Harveys department store regularly says to me, “Many town centre businesses need and rely on these jobs.” The fabric of the town is held together by them, and we need both a strong public sector and a private sector in Halifax to ensure that the town’s economic and social base is held together. With the greatest politeness and respect, I say to the Minister that the Government might be misunderstanding towns such as Halifax if they think that a reliance on private sector jobs will create new jobs or replace the ones that are being lost and being lost at a rapid rate.

In that sense, every effort should be being made to protect all jobs at Lloyds HBOS. The Government own more than 40% of that company. Will the Minister tell me what input he has into the board of Lloyds and what he is doing to protect jobs in Halifax and other constituencies? Will he also tell me how shedding public sector jobs helps towns such as Halifax? Will he do all that he can to compensate for those losses and outline what measures he is taking to ensure that new jobs will be created?

Calderdale council is at the heart of the Halifax and Calderdale economy. The reductions in council budgets are hurting the town. Again, may I gently mention that towns in the home counties and other parts of the country can better absorb public sector job losses? When there is a private sector, or towns have grown up with more service-based industries, new jobs can be created much more easily. In northern towns such as Halifax, which have always had a strong and important public sector, that is much harder to do. I hope that the Government fully realise what makes the economy in places such as my constituency tick and how cutting the public sector, but not giving the private sector the means to create new jobs, leads to a damaging and shocking increase in unemployment.

I do not want to knock everything. There are success stories, such as those that I mentioned at the beginning of my speech. I recently visited the Iplas recycling company. The managing director, Howard Waghorn, has visionary and innovative ideas for his company. Likewise, the order book of J&C Joel in Sowerby Bridge continues to expand. However, those are well-run, long-established companies. The new industries and entrepreneurs with innovative ideas needed for the 21st century will not appear in towns such as Halifax simply through the waving of a magic wand and hoping that new jobs are created. I do not want to pretend that everything in Halifax is gloomy. It is not. We need to keep our self-confidence and hope. There are success stories. I am sure, or rather I hope, that the Minister will quote them back to me when he replies.

In essence, I would like the Minister and the Government to recognise the underlying problem that exists in towns such as Halifax, not hide away from it. I hope that the figures that I have cited alarm the Minister as much as they have alarmed me. I would like to hear some answers about what can be done, not excuses for what has not been done. I would like the Minister to assure me that job creation and regeneration schemes will be targeted on Halifax. The initiatives from the Department for Communities and Local Government will help Calderdale council. However, we want not short-term fixes, but long-term solutions. Therefore, I would be grateful if the Minister outlined what his short and long-term plan is for reducing unemployment in Halifax today, before the terrible consequences of further unemployment become a crisis, with people out of work and the whole social fabric of the town ripped apart.

17:37

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Halifax (Mrs Riordan) on securing the debate and on the very measured but passionate way in which she presented her case. I entirely agree with her that one person unemployed is too many and that the rise in unemployment in Halifax and other towns is absolutely a source of concern. She said that something must be done, and I entirely agree. I hope to use the few minutes available to me to set out what the Government are doing to deal with some of the very important points that she raised.

To set the context, for claimants of jobseeker’s allowance, the national average rate is just under 4%. The figure for the hon. Lady’s region, Yorkshire and Humberside, is 4.6%, but the figure for Halifax is 6.4%, so her town is above average in the region, and the region is above average in the country. I therefore take the point that she makes about the particular pressures on her town.

Part of the Government’s strategy is to move away from some of the schemes that unemployed people have faced in the past. The hon. Lady and I will both have met people who were sent on a scheme by the jobcentre and came away from it thinking, “What was the point of that?” It did not help them to get a job, yet the provider of the scheme got paid and went home happy. We want to change that. We want to move, and are moving, towards a system whereby the companies that we pay to help people from unemployment, from incapacity benefit and so on into work get paid only when they deliver.

The whole philosophy behind the Work programme, which is still gearing up across the country and gathering momentum, is that the providers get paid only when they get people into jobs and, specifically, when they get people into sustained jobs. The bulk of the money is end-loaded. They get very little money up front, and if they do not deliver for the people of Halifax, they do not get paid. That is a sea change from the sort of schemes that we have had in the past.

Let me give the hon. Lady a flavour of what is being provided in the west Yorkshire area, within which her constituency falls. In each area, we have two prime providers for the Work programme. They are the main contractors, and we have two because they have to compete against each other to do their best for the people of west Yorkshire. Each year, we look at how each provider has done, and if one is doing a better job than the other, more people are referred to it, so the successful providers that are good at getting people back to work receive more referrals and make more money from that. We do not mind them making money from it, because they are saving the taxpayer money and helping the individuals concerned.

The two main providers in the west Yorkshire area are Best and Ingeus. Best has a series of subcontractors that provide services to the hon. Lady’s constituents. One of the reasons that people get stuck on out-of-work benefits—not just jobseeker’s allowance, but incapacity benefits, employment and support allowance and so on—is that they have physical or mental health issues. Condition Management Partners, a subcontractor in west Yorkshire, helps such people to overcome their mental or physical health issues by providing cognitive behaviour therapy, motivational interviewing techniques and other such therapies. That is a voluntary third sector organisation working with a prime contractor to help people who have barriers to work.

We want to make sure that there is not a core of people in Halifax who have just lost touch with the labour market. The longer such people are out of touch with the labour market, the less chance they have of getting a job. We need to get them back in contact with the labour market. I entirely take on board the hon. Lady’s point that there needs to be jobs for them to go to, and I will say a bit more about that later. We want the people who have been on long-term benefits, particularly incapacity benefit and jobseeker’s allowance, to be effective competitors for those jobs. We know that jobs are being created and that vacancies will exist. There are hundreds of vacancies even now at the hon. Lady’s local jobcentre. We want the people who have been on long-term benefits to be effective participants in the labour market, so that when jobs come up, they can apply for them and get them, thereby breaking out of that cycle of long-term benefit dependency.

Another subcontractor of Best is Forster community college, which is a public sector organisation in the supply chain that provides help for Work programme participants with drug and alcohol issues. It also provides specialist support for ex-offenders and homeless people. For all those people, the danger is that their characteristics are such that they appear less attractive to employers. When private sector, or even public sector, jobs are created, they are always at the back of the queue and then get stuck on benefits. We want to make them as attractive to employers as everybody else so that they do not get stuck on benefits.

The other main provider in the hon. Lady’s region, Ingeus, has a series of subcontractors, including a group called Specialist Health Advisers, which is helping people with the basics such as exercise and healthy eating. The barriers preventing long-term unemployed people from being effective participants in the labour market include having got out of the habit of work, having got out of routines or not looking after themselves. We are trying to tackle many of those issues. Part of our strategy is getting people who are on benefit to be attractive to employers. I entirely take the hon. Lady’s point: unemployment has gone up. None the less, employment is still up compared with 18 months ago. There are more people working than there were 18 months ago. Somebody is getting those jobs, and the challenge is to ensure that help goes to the people of Halifax who are perhaps the furthest from the labour market and who are in most need of support and intervention. We pay extra for that. If somebody is unemployed but could probably get themselves a job, they do not come near the Work programme, but if they have been long-term unemployed or long-term sick, we pay extra money—in excess of £10,000 in some cases—to a provider to get that person into work. We must tackle what I call the supply side. We need to ensure that unemployed people are supported and enabled.

I am sure that the hon. Lady would be the first to say to me that that is not enough. Clearly, there have to be jobs available. She mentioned some successful private enterprises in her constituency. She mentioned an environmentally friendly company. We will shortly be launching the Green investment bank, which will provide money specifically for new enterprises and growth industries. This is not just about London and the south-east; it cannot be. We have a regional growth fund that specifically helps areas that are dependent on the public sector to make the transition to a better balance between public and private. There will always be an important role for the public sector in her area, but there is no reason on earth why, with the right support, Halifax should not have a thriving private sector as well.

Let me give one example of the incentives that we are giving. New businesses outside London and the south-east will be exempted from up to £5,000 of employer national insurance contributions for each of the first 10 employees they hire. That is a concrete and practical thing, which I am sure she will welcome.

We are also using deregulation as a way to help small businesses. I remember that at one point my local party wanted to employ its first employee. I was absolutely horrified by all the paperwork involved and the bureaucracy of running PAYE. There is a real barrier to taking on that first employee. We have said that all small businesses will be exempt from all new regulation for the next three years. Therefore, we are saying to people who start new businesses, “We are on your side. We want to give you support.” We are lowering the rate of corporation tax, with the small firms rate cut to 20%. Again, we are trying to ensure that, where a company makes a profit, it keeps more of it so that it can invest it in the local area.

We contacted the Jobcentre Plus district manager in preparation for the debate. I know that Jobcentre Plus is working very hard. Next week, for example, it is hosting a jobs fair to coincide with national apprenticeships week. I understand that the district manager would be very pleased to meet local MPs on a one-to-one basis. If the hon. Lady is happy to take up that invitation, he will talk through some of the issues that she has raised today that we may not have the chance to cover in as much detail. No one can supply as much local detail as the Jobcentre Plus manager on the ground.

The hon. Lady mentioned young people. I agree that unemployment is devastating for anybody, but at the start of somebody’s working life, it is a particular tragedy. That is why I am pleased with what the Government have been able to do on the apprenticeships front—an issue that was mentioned by the hon. Member for Upper Bann (David Simpson). My understanding is that, last year in Halifax, there were 1,150 apprenticeship starts. That programme is being expanded and we will update those figures shortly. Many people recognise that the apprenticeship scheme, which is linked to an employer and is about learning and applying skills, is a much better way of dealing with youth unemployment. It gives young people a focus and links to an employer. Although it does not guarantee a job, it makes someone more employable and gives them a reference. I am proud that the Government are doing so much in that regard.

I must admit that I am not an expert on Halifax. I was not aware of the full details of the hon. Lady’s constituency. I should say, however, that normally my right hon. Friend the Employment Minister would be responding to this debate, but with the Welfare Reform Bill going through the House, he has had to be in the main Chamber. I had a look at some of the figures for Halifax, which I am happy to leave with the hon. Lady. I have a chart that shows the number of people who have been on out-of-work incapacity benefits for the last decade in Halifax. What struck me was how the number had not moved. For 10 years, despite the booms and the busts, there was the same number of people—obviously not all of them are the same people but many are—stuck on the list. I entirely take her point that we should not stigmatise or parody the position of people on benefits. Although many people are on benefits through no fault of their own, we have allowed ourselves to get to a situation in Halifax and in many other such towns in which nearly 5,000 people have consistently been on ESA or incapacity benefit for the last 10 years. The question is: are we doing right by those people? Many of them will be in their 50s. If we just left them alone because there are not many jobs, we would be saying, “You can be on incapacity benefit for another 10 years and then you can have a pension, but it won’t be much of a pension because you haven’t been working.” We can do better than that, which is why we are keen to have these Work programme providers incentivised to help the long-term sick and disabled to overcome the barriers to work which get greater the longer people are out of work.

The hon. Lady asked about the Government’s macro strategy. She mentioned public sector job losses. She would accept, I think, that a substantial rebalancing of public spending had to be done. She was not unduly partisan in her remarks, so I will not be in my response, but it is commonly known that substantial public sector savings had to be made.

Given that—this is from memory—roughly two thirds of everything that Government spend is spent on pay, and that is certainly true if we exclude social security benefits, we cannot scale back public sector spending without significantly scaling back public sector employment, particularly if we are going to protect pensions and so on. It can be done partly through pay, as the Government have obviously done, but it will also imply a smaller public sector. It is therefore doubly crucial that we assist towns where the public sector—the local authority, the hospital and others that the hon. Lady mentioned—has been a major employer.

The hon. Lady described what has happened to the private sector and how the wool industry among others is in long-term decline. The public sector will not fill that void. Across Europe, Governments are retrenching, so it would be dishonest for me to say that the public sector will take up the slack. I think that she and I are agreed that the vital thing is to facilitate a vibrant private sector, but I also agree with her that that will not just happen. Part of the solution is about skills and training—I have mentioned apprenticeships—part of it is about unsticking the folk who get stuck on benefits and part of it is about the overall macro-economic position.

To give one example, the hon. Lady mentioned her local department store, which needs people to have spending power in their pockets. My right hon. Friend the Deputy Prime Minister has been pressing for a rise in the tax threshold, and the Government are committed to that. Instead of low-paid people paying tax after roughly £6,500, as they did last year, by the end of this Parliament they will not pay tax until after £10,000. That extra £3,500 at a basic rate of 20% is an extra £700 a year in their pockets, and I know that it would be very welcome if we moved faster on that.

People at that level of income tend to spend it. We know that, if we put money into the hands of those on lower and modest incomes, they will spend it. When we faced difficult decisions before Christmas on what to do about benefit levels for the coming year, there was a lot of debate about consumer prices index inflation peaking at 5.2% in the year to September. That very high figure has come down significantly since, so what was the case for using the full 5.2% for jobseeker’s allowance, ESA and all the main benefits, as we did? One of the things that convinced us that it was the right thing to do was the fact that those people would spend that money, thus boosting the local economy, and that decision will have helped the hon. Lady’s constituency, where benefit income is a significant part of income.

We agree with the hon. Lady: something must be done, and it is being done at both the macro and micro level. I hope that she will continue this conversation with her local Jobcentre Plus district manager, who, I am sure, will be pleased to meet her.

17:52

Sitting adjourned without Question put (Standing Order No.10(11)).

Written Ministerial Statements

Wednesday 1st February 2012 Written Statements

Wednesday 1 February 2012

ECOFIN

Wednesday 1st February 2012 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

The Economic and Financial Affairs Council was held in Brussels on 24 January 2012. Ministers discussed the following items:

European Markets Infrastructure Regulation (EMIR)

Ministers agreed a Council position on outstanding issues relating to the authorisation of Central Counterparties (CCPs) on EMIR. This will facilitate trialogues with the European Parliament. The Government have been clear that the national competent authority (NCA) must retain a pre-eminent role with regard to the authorisation of CCPs. I secured agreement that the Council position retained this principle. The Council position means that in order to block authorisation, a significant majority of an authorisation college must vote against the NCA. Furthermore, the Government also secured safeguards that mean the NCA has the option to take the decision to binding mediation facilitated by the European Securities and Markets Authority (ESMA). Finally, in order to maintain the objectives of the process, I secured a clause stating that any vote against an NCA is explained in writing setting out which provisions of EMIR and/or EU law have not been met.

I also secured a clause in EMIR to prevent discrimination against any member state as a venue for clearing services in any currency. This is related to a wider concern for the UK in relation to the ECB’s location policy that states that non-euro area based CCPs, which includes UK-based CCPs, which clear a certain threshold of euro-denominated products should move to the euro area. The UK considers that this policy is contrary to fundamental principles of EU law and is challenging the location policy in the European Court of Justice. This challenge is ongoing.

Proposals from the Commission on Economic Governance

Ministers exchanged views on the two Commission proposals to strengthen economic governance in the euro area. The first proposal would require euro area member states to present their draft budgets at the same time each year and would give the Commission the right to assess them. The second proposal would strengthen economic and fiscal surveillance of euro area countries facing, or threatened with, serious financial instability. On the first proposal, some Ministers raised concerns about the administrative burden and timing of the reporting requirements. On the second proposal, several member states noted that the recommendation of a country to receive financial assistance should require a consensus vote, in line with decisions to grant financial assistance. The presidency asked the working group to consider these issues further.

Presentation of the Presidency work programme

The presidency presented Ministers with its programme for ECOFIN for the next six months, identifying important areas of work. First, the presidency emphasised the need to implement the six-pack and take forward the new two-pack proposals on economic governance. The second priority is to improve the stability of the European banking sector through progressing financial services dossiers. Thirdly, the presidency emphasised the importance of tax co-ordination. Finally, the presidency noted the need to co-ordinate the EU position in international forums. The Commission and Ministers supported the work programme and agreed to support the presidency.

The presidency work programme is available at: http://eu 2012.dk/en/Global/Soegeresultat?q=work+programme &size=10

European Semester (including Annual Growth Survey and EuroPlus Pact)

The presidency outlined the timetable for the European semester and the Commission set out its priorities. I intervened to emphasise that fiscal consolidation is a necessary but not sufficient condition for restoring growth. Structural reforms are also needed, and the Council should have substantial discussions on these issues. The EU should exploit its full potential as a single market and negotiate trade agreements with third parties, to stimulate growth within the EU and elsewhere. I stated that I would support an EU growth test, to ensure that the regulatory burden of proposals are fully considered, not only in ECOFIN but in other Councils. I also made it clear that the Council should not spend time discussing a financial transactions tax when it is clear that there is no unanimity on the issue. Other Ministers intervened in support.

Follow-up to the G20 Meeting of Finance Deputies (Mexico, 19-20 January 2012)

The presidency and the Commission gave a debrief of the G20 Finance Deputies’ Meeting. Deputies discussed the global economy and framework, strengthening financial regulation and IMF resources. G20 Finance Ministers and central bank governors will meet in Mexico on 25-26 February.

Implementation of Stability and Growth Pact

Ministers discussed the Commission’s assessments of Belgium, Cyprus, Malta, Poland and Hungary’s progress on correcting their excessive deficits. The Commission assessed that the first four member states had taken effective action and no further steps under the excessive deficit procedure (EDP) were necessary. The Commission proposed that Hungary had taken no effective action to bring the deficit below 3% of GDP in a sustainable manner. The Council voted in favour of the Commission’s proposal. As Hungary is not a member of the euro area it cannot face sanctions under EDP. However, failure to take effective action to correct their excessive deficit could lead to the suspension of Hungary’s cohesion fund commitments. The Government believe that sound public finances are essential for sustainable economic growth.

Revised Code of Conduct of the Stability and Growth Pact

Ministers endorsed the revised code of conduct. The code of conduct provides guidelines on: the implementation of the stability and growth pact and the content of stability and convergence programmes. The code of conduct has been updated in light of the new economic governance legislation. The Government supported the revised code of conduct. The Commission and the Economic and Financial Committee will review the code of conduct again later in the year.

Eurogroup plus meeting on 23 January

Ministers met prior to ECOFIN on 23 January, to discuss the European stability mechanism (ESM) treaty and the intergovernmental treaty on stability, co-ordination and governance. Ministers reached agreement on the treaty establishing the ESM and agreed that entry into force of the treaty would be brought forward to July 2012. I intervened in order to secure agreement that, in line with the spirit of the agreement reached at the December 2010 European Council, there should be no new commitments from the European financial stabilisation mechanism as soon as the ESM is established. Heads of states and Government discussed the new intergovernmental treaty further at the Informal European Council on 30 January. The Government believe that the inter- governmental treaty should not undermine the operation of the single market, or otherwise infringe on areas of policy which are for discussion by all member states in the EU context. The intergovernmental treaty should not cut across the provisions and procedures in the EU treaties, or seek to bypass the prescribed procedures for amending the EU treaties.

Eurogroup debrief

The Commission debriefed Ministers of the eurogroup meeting over breakfast. The Commission are due to release their latest forecasts, which will take into account the downside risks the Commission identified last autumn. Ministers agreed that further discussion on euro area issues were needed.

Housing Update

Wednesday 1st February 2012 Written Statements

[The Minister for Housing and Local Government (Grant Shapps)]

I would like to make a statement to update hon. Members on the coalition Government’s action on housing, following the publication of our housing strategy in November 2011.

We have acted quickly to ensure that the measures set out in the strategy have a rapid impact on delivering the new homes and jobs that the country needs and put power and incentives back into the hands of local communities.

Housing finance reform

My Department is today publishing the final determinations which will deliver a coalition agreement commitment to replace the discredited Housing Revenue Account subsidy system. This will involve a £19 billion deal between central and local government, delivering a new devolved system for financing council housing. Responses to our consultation show overwhelming support for our reforms. These reforms will give councils the resources, incentives and flexibility they need to provide high-quality, efficient housing services for their communities.

Under the current system. Government make a series of complex calculations each year about how much they think each council should be able to raise in rents and how much they should need to spend on their housing services. On the basis of this desk exercise in Whitehall, Government take money from some councils and give money to others.

In recent years, this has produced a national surplus for Government, currently forecast to be around £670 million in 2011-12. This so-called “tenant tax” would continue to grow each year under the current formula. Local authorities do not know from one year to the next how much they will gain or lose from this redistribution, making it hard for them to plan ahead.

Under the new system, councils will keep all their rent income and use it locally to fund their own homes. This will give councils the stability they need to develop long term business plans with the most efficient local mix of maintenance, repairs and replacement works. Instead of waiting to see what turns up in the annual subsidy round, councils will take responsibility for their homes. This will enable and encourage active local asset management to meet the future housing needs of communities.

Alongside this freedom from central control, councils will have more money to spend on their homes. The reforms do not change the rent policy established by the previous Government in 2001. But the new system deals with the chronic under-funding for capital works under the subsidy system which led to the huge backlog in Decent Homes works. The stock valuations on which the new system is based include higher assumed costs for management, maintenance and repairs, based on independent research. This will give councils on average 15% more to spend on services for tenants.

Today we are publishing the final determinations which provide the legal and financial framework for this new system. Copies have been placed in the Library of the House. The determinations and supporting documents are also available at:

www.communities.gov.uk/housing/socialhousing/councilhousingselffinance/.



The new system will replace the Housing Revenue Account subsidy from April this year.

The NewBuy Guarantee

We are announcing today that the new build mortgage indemnity scheme will be open for all new build houses and flats up to £500,000 and will be available to UK citizens buying their main home. The scheme will support up to 100,000 prospective borrowers to access a 95% loan to value mortgage. This scheme will particularly help first time buyers who currently find the size of a required deposit prohibitive.

We are also announcing today that the scheme will be known as the NewBuy Guarantee. We have already published a guide for those interested in the scheme on our website and house builders are already taking expressions of interest.

Extending the Right to Buy

On 22 December, my Department published a consultation on proposals for reinvigorating the Right to Buy, suggesting that we offer tenants a £50,000 cap on discounts across England, more than tripling the cap that currently exists in most of London and also giving a substantial increase for the rest of England. This proposal sits alongside plans to deliver one-for-one replacement so that for every home sold under the Right to Buy, a new Affordable Rent home is built.

Unlocked stalled sites

On 22 December, my Department also published a prospectus for the £420 million “Get Britain Building” investment fund, which sought expressions of interest from developers by 30 January 2012. This will help unlock progress on stalled sites that have planning permission and are shovel ready, thereby helping to create jobs and economic growth and the delivery of up to 16,000 new homes by December 2014. We halved the paperwork required and the response from industry has been positive with thousands of visits to the web page.

Regenerating surplus public land

The Government have moved rapidly to take forward the next phase of our programme to free up redundant, formerly used public sector land and buildings to support new homes. We are working with smaller landholding Departments and agencies, such as the Ministry of Justice and Home Office, to maximise the release of their surplus land for housing. We are working not just with Government Departments and agencies, but also the BBC, Network Rail and the Royal Mail.

We are putting in place support that Departments can draw on to help unlock release of their land, including through the Homes and Communities Agency, and a small advisory group of experts which will start meeting shortly, and provide practical advice to Departments on disposal of key sites.

Fairness in social housing

We are also pressing ahead rapidly with our plans to make social housing fairer, including consultations on new allocations guidance for local authorities to ensure that social homes go to people who genuinely need and deserve them the most, such as hard working families and ex-servicemen and women; and proposals to tackle fraud in social housing.

Streamlining building regulations

My Department has also launched yesterday a consultation on streamlining building regulations to save businesses money by cutting excessive red-tape while delivering safer and more sustainable buildings. The consultation includes proposals for the next steps to improve the energy efficiency of new homes, to pave the way for the introduction of zero-carbon homes from 2016, and for help with the roll out of the Green Deal this autumn.

Strengthening protection for leaseholders

Last year, my Department consulted on proposals for increasing the value limits that determine the eligibility of residential long leaseholders (those with a lease of more than 21 years) to rights in two specific areas.

These are rights to remain in their properties at the end of their lease terms as an “assured tenant” and to extend the lease or purchase the freehold of their leasehold house on particular terms. Legislative change would be subject to parliamentary approval.

Today I am publishing the summary of responses to the consultation and I can confirm our plans to bring outdated protections for leaseholders back in pace with changing property prices. The Government propose to raise the £25,000 “value limit”—or notional annual rental value—outpaced by house price inflation since it was set in 1990 to £100,000, enabling many leaseholders to stay in their home when their lease comes to an end. A copy of the summary has been placed in the Library of the House.

New Homes Bonus

We are announcing today the final payments for the second round of New Homes Bonus. Commenced in April 2011, the bonus is based on the council tax of additional homes and those brought back into use, with an additional amount for affordable homes, for the following six years.

The bonus will be paid in respect of 159,000 homes from October 2010 to October 2011 including 22,000 long-term empty properties brought back into use. The allocations also include the first affordable homes enhancement, which totals £21 million in respect of 61,000 new affordable homes.

This means we will pay councils £432 million of New Homes Bonus for local authorities in England. This includes the second instalment of £199 million in respect of year 1 and £233 million for housing growth in year 2. We will also address losses of New Homes Bonus in areas affected by last summer's riots through a separate grant from riot recovery funds.

We are confident that the New Homes Bonus will continue to support local authorities in engaging local communities in a debate about the benefits that growth can bring. The Department has written to local authorities confirming their final allocations and I have written to all Members of Parliament in England. A full list of the allocations is being placed in the Library of the House. Further information on the bonus can be found at: www.communities.gov.uk/housing/housingsupply/newhomesbonus

Supporting infrastructure: Growing Places

I am also, together with my right hon. Friends, the Secretary of State for Transport, and the Chief Secretary to the Treasury, confirming individual Growing Places Fund allocations.

This funding will benefit the 39 Local Enterprise Partnerships across the country. It will get housing development moving again, provide additional funding for infrastructure projects already in the pipeline and promote wider economic growth.

Local areas will be in the driving seat, with funding directed to Local Enterprise Partnerships, bringing private sector expertise to help deliver significant infrastructure projects.

Now that funding has been confirmed, Local Enterprise Partnerships and their local authority partners will be able to get to work allocating funds to address the constraints which they consider to be a priority. A number have already identified their priorities, and others are assessing options—we expect funding to be put to work quickly to support local economic growth. Funding will be paid towards the end of February 2012.

In summary, the coalition Government are getting on with the job of delivering the commitments set out in the Housing Strategy—bringing to life proposals to deliver more new homes, built to the highest quality; to get housebuilders building again; and to support tenants and prospective buyers to own their own home.

Youth Volunteering

Wednesday 1st February 2012 Written Statements

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

I am today announcing a grant of £10 million over two and a half years, to support activities for young people in England.

The grant will be used by Youth United, an initiative set up by HRH The Prince of Wales, which is a coalition of organisations that collectively provide volunteer-led volunteering opportunities for 1.5 million young people. The Youth United youth member organisations are: Air Training Corps, Army Cadets, Boys’ Brigade, Fire Cadets, Girlguiding UK, Girls’ Brigade, Marine and Sea Cadets, The Scouts Association, St John Ambulance, Volunteer Police Cadets.

Youth United will use this funding to recruit and train up 2,700 new adult volunteers to run 400 new groups of their member organisations in communities across the country. This will mean over 10,000 more young people will be able to join a pack or troop over the next two and a half years.

Youth United will target this funding towards areas with few resources, where there are currently limited opportunities for young people and where too few adults have the skills and experience to support existing groups or to establish new ones.

The areas identified where this money can make the biggest impact are:

Birmingham

Bradford

Knowsley

Hackney

Haringey

Manchester

Middlesbrough

Newham

Redbridge

Rochdale

Tower Hamlets

Youth United will also work in an additional four areas which will be targeted as HRH Prince of Wales’s priority areas for helping young people:

Broadwater Farm Estate (Tottenham)

Burnley

Burslem (Stoke-on-Trent)

Redcar (Redcar and Cleveland)

This funding will enable 400 new groups to start. Once established, these new groups are expected to be permanently self-sustaining, raising their own running costs through local fundraising activity and/or subscriptions. I fully expect that these new groups will continue to provide valuable skills and opportunities for young people for many years to come.

National Security Through Technology

Wednesday 1st February 2012 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I am pleased that we are publishing today our White Paper on “National Security Through Technology: Technology, Equipment, and Support for UK Defence and Security” which has been developed jointly with the Home Office. This fulfils one of our commitments in the strategic defence and security review and follows on from the Green Paper “Equipment, Support and Technology for UK Defence and Security: A Consultation Paper”. As its title implies, the White Paper emphasises the contribution that using, sustaining and developing technology makes to our security.

This is the first time that the UK Government have set a formal statement of our approach to defence and security technology, equipment, and support. This is our high-level policy until the next strategic review, which is expected to be held in about 2015. It supersedes the defence industrial strategy 2005 and the defence technology strategy 2006.

We must ensure that our armed forces, national security, and law enforcement agencies have the best capabilities we can afford at the best value for money for the taxpayer. Balancing these considerations appropriately is even more important given the economic situation we face.

Wherever possible, therefore, we will seek to fulfil the UK’s defence and security requirements through open competition in the domestic and global market, buying off-the-shelf where appropriate. We will look first for products that are proven, that are reliable and that meet our current needs. This is the best way of ensuring that our armed forces and security services have access to the equipment they need at the time they need it and at a price the nation can afford.

However, and importantly, where essential for national security, we will protect the UK’s operational advantages and freedom of action; when we do this it will mean sustaining the necessary people, skills, infrastructure, and intellectual property that allow us to build and maintain our national security.

Technology underpins this approach so it is our intention to end a long period of declining budgets and maintain MOD’s investment in science and technology at a minimum of 1.2% of the defence budget as protection for our future.

Defence and security procurement has a significant industrial and economic impact. Our policy on technology, equipment and support for UK defence and security also supports our wider economic policy objective to achieve strong, sustainable and balanced growth for the UK. A healthy and competitive defence and security industry in the UK contributes to growth and a re-balanced economy.

The White Paper reaffirms our commitment to doing our utmost to assist UK-based suppliers in obtaining export orders and to increase opportunities for small and medium-sized enterprises (SMEs) to fulfil their potential. We will continue to create the right conditions for SMEs to deliver the innovation and flexibility that we need and which they bring. We are doing this because of the benefits to the companies themselves, to the wider UK economy and to the security of the United Kingdom.

This assistance for SMEs is part of our wider work to ensure public procurement promotes growth, and includes publishing medium-term procurement pipelines; simplifying procurement processes to reduce burdens on industry, and engaging with potential suppliers at a much earlier stage, before formal procurement begins, to increase their opportunities to participate.

The defence and security sectors are vital to the success of the UK economy. In 2010 the UK was the second biggest exporter in the world with £6 billion of sales and the UK security industry was the fifth most successful exporter of security products with £2 billion of sales. The Government remain committed to robust and effective national and global controls to help prevent exports that could undermine our own security or core values of human rights and democracy; to protect our security through enhancing strategic defence relationships; and to promote our prosperity by allowing UK defence and security companies to operate effectively in the global defence market.

We are proud of the strength of the UK defence and security industries. They help provide the UK armed forces, national security, and law enforcement agencies with some of the very best kit available. They are better equipped now than they have ever been. We recognise the wider impact that Government spending choices on defence and security can have and we are therefore establishing a new ministerial working group to co-ordinate the cross-Government aspects of our new approach.

This White Paper, alongside the publication later this year of the MOD’s 10-year equipment plan, is intended to be a high-level guide to our approach to meeting the requirements of our armed forces. At a time of financial constraint across Government, it is even more important to provide the clarity that will help industry to invest in the right areas, protecting both our security and the contribution these companies make to the UK economy. We plan to continue to invest a significant amount in defence equipment and its support: over £150 billion over the next 10 years.

The White Paper is part of a broader defence transformation programme, which also includes implementation of the Levene review, the Materiel Strategy, and Lord Currie's review of Government Single Source Pricing Regulations.

As the companies offering defence and security products and services become increasingly aligned, these steps will encourage a vibrant UK-based industry that is able to win a significant share of the world market, and to meet the varied and changing capabilities required by our armed forces and security services.

Offshore Oil and Gas Licensing

Wednesday 1st February 2012 Written Statements

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am pleased to inform the House that I am today inviting applications for petroleum licences for unlicensed seaward blocks which will form the 27th round of offshore petroleum licensing.

Supporting around 350,000 jobs and spending around £14 billion a year, the UK oil and gas industry plays a vital role in the UK economy and in meeting our energy needs. Indigenous oil and gas production supplies the equivalent of about one half of the UK’s primary energy demand. It is vital that we continue to do all we can to maximise economic recovery of indigenous hydrocarbon reserves. The licensing of new areas forms an essential part of this process enabling the exploration necessary to ensure we tap into, and fully realise, our remaining reserves—which could equate to around 20 billion barrels or perhaps more.

DECC’s draft plan to offer licences for offshore oil and gas exploration and production through a 27th licensing round was the subject of a strategic environmental assessment (SEA) completed in October 2011.

The assessment can be viewed here:

http://www.offshore-sea.org.uk/sit/scripts/book_info.php?consultationID=17&bookID=18

The SEA includes commissioned reports on various components of the natural environment and effects of previous activities.

The potential implications of the exploration and production activities that could follow if the draft plan was adopted were considered at an expert assessment workshop and a series of stakeholder workshops. The results of these workshops were assessed further and documented in an environmental report that then formed the basis for consultation with consultation bodies and the public. The three-month consultation period on DECC’s draft plan and the environmental report was advertised in a number of local and national newspapers and emailed to a wide range of individuals and organisations.

DECC has considered all responses and a post consultation report for the latest offshore energy SEA was prepared and in August 2011 placed on the SEA website.

The post-consultation report can be viewed here:

http://www.offshore-sea.org.uk/site/scripts/consultation_download_info.php?downloadID=285

This summarises consultee comments and DECC responses to them. In the 12 October 2011 statement to Parliament on the assessment we announced our intention to make preparations to proceed with this 27th offshore licensing round.

Outcomes

In deciding to proceed with a 27th offshore licensing round, DECC has had regard to the conclusions and recommendations of the environmental report and consultation feedback. As a result of the SEA process, blocks in the deepest waters of the south-west approaches are currently not being offered as part of the 27th round of offshore petroleum licensing because of inadequacy of data including data on potentially vulnerable components of the marine environment.

A number of blocks excluded from earlier licensing rounds on the basis of recommendations of previous SEAs, or currently in the process of appropriate assessment consultation, are currently not being offered as part of the 27th round of offshore petroleum licensing.

The environmental report recommended the blocks in or overlapping with the boundaries of the Moray Firth and Cardigan Bay SACs should also be withheld from this licensing round for the present pending conclusion of the further assessments initiated following the 24th licensing round applications. We have therefore excluded at present 14 blocks in the Cardigan Bay area and 12 in the Moray Firth from this round of offshore petroleum licensing.

In addition, some blocks are currently withheld from this round of offshore petroleum licensing at the request of the Crown estate as they overlie the Cleveland potash mine, and some at the request of the Ministry of Defence due to them being used for intense military testing and training.

Licensing of the blocks not currently included in this round may be revisited in the future, as more information on those blocks becomes available.

In addition, a number of blocks may be licensed but with conditions attached restricting or prohibiting certain marine activities. It should be noted that the—Offshore Petroleum Production and Pipe-lines (Assessment of Environmental Effects) Regulations 1999—(as amended) and the—Offshore Petroleum Activities (Conservation of Habitats) Regulations 2001—(as amended) variously require that all major activities undertaken in connection with UK offshore hydrocarbon exploration and production are subject to environmental assessment before consent can be given for these activities.

Before any licence awards are made, DECC will assess whether the grant of licences applied for in the 27th round is likely to have a significant effect on the management of any protected conservation sites. Where such effects cannot be excluded, a further detailed assessment will be needed to determine whether there are any adverse effects on the integrity of these protected conservation sites. This is required under Council Directive 92/43/EEC on “the conservation of natural habitats and wild fauna and flora”, and UK implementing regulations.

DECC has, with industry and statutory environmental advisers, established an offshore oil and gas environmental monitoring committee charged with co-ordinating the strategic monitoring of potentially significant environmental effects of the industry, including those that could arise from the implementation of the plan to hold a 27th round of offshore licensing.

Legal Aid, Sentencing and Punishment of Offenders Bill

Wednesday 1st February 2012 Written Statements

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

I have today arranged for copies of the Government’s response to the report of the Joint Committee on Human Rights to be placed in the Libraries of both Houses. The response was published on 30 January 2012.

The Committee issued its report on 19 December 2011. I am grateful to the Committee for its work in relation to the Bill.

Parliamentary Question (Correction)

Wednesday 1st February 2012 Written Statements

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

I regret that the oral answer given to the hon. Member for North Down (Lady Hermon) on 25 January, Official Report, column 290, contained an error. The case of Lisa Dorrian, raised by the hon. Member for North Down, falls outside the remit of the Independent Commission for the Location of Victims’ Remains. The commission was established to obtain information, in confidence, which may lead to the location of the remains of victims of paramilitary violence, “The Disappeared”. “The Disappeared” is defined for this purpose as those killed and buried in secret by illegal organisations prior to 10 April 1998 as a result of the Northern Ireland conflict. Lisa Dorrian disappeared in 2005 and therefore her case is outside this remit.

The correct answer is as follows:

[Mr Swire]

: I suspect that the only thing that can give partial closure to the hon. Lady’s constituents is the location of this individual. I am not certain whether the hon. Lady has signed the early-day motion, but if she has not I urge her to do so. Clearly, if the information is there the Police will act on it, but the case of Lisa Dorrian does not lie within the commission’s remit as her disappearance occurred in 2005. The commission is only able to examine the cases of those who disappeared before 10 April 1998, as a result of the Northern Ireland conflict. In terms of the remaining cases of the Disappeared that the commission is dealing with, I can assure the hon. Lady that it will be properly resourced for this work both by ourselves and by the Irish Government. We are absolutely determined that we will work our way through as many of the missing as we can, but I stress that this is an information-led process and we urge anyone and everyone with any information to bring it before the two commissioners.

Garage Customer Experience

Wednesday 1st February 2012 Written Statements

[The Secretary of State for Transport (Justine Greening)]

Maintaining vehicle road worthiness and servicing is one of the most important costs of running a car for most motorists. I am today announcing the Government’s intention to work with industry and motoring organisations to improve the motorists’ confidence and experience when they have to take their car, motorcycle or other private vehicle to a garage.

Motorists are generally not experts in the mechanics, electronics or component parts of their vehicles—what matters to them is that the vehicle is safe to be on the road, that they are paying a reasonable price and that what they are paying for is necessary work carried out to a good standard. Motorists want reliable servicing and MOTs from garages they trust and it is in the interests of reputable garages to deliver to a high quality.

Almost every motorist has to visit a garage or other authorised testing station at least once a year for their vehicle to undergo an MOT test—and for many people, that minimum statutory spot-check of a vehicle’s roadworthiness is either combined with an annual service or leads to repairs and further work. Each year in Great Britain some 35 million MOTs take place at some 21,000 authorised premises—the annual cost to motorists of the test alone is in the region of £1 .5 billion. The UK car service and repair sector is worth around £9 billion per year to the GB economy.

The garage sector is regulated in several ways. The sector has to comply with business laws and consumer protection legislation. The MOT scheme is regulated by the Vehicle and Operator Services Agency (VOSA) of the Department for Transport. Self-regulation has an important role to play also. For example, around 6,500 garages self-regulate their customer service through the Motor Codes Ltd Code on Service and Repair which has full approval status under the approved codes system (OFT). And nearly 1,000 garages have been accredited with the BSI Kitemark scheme for automotive services.

The package of measures I am announcing today does not duplicate these existing controls and arrangements. But they will add value for the motorist and enhance their experience when having to deal with garages whether for an MOT test or more generally.

I am taking two immediate steps today. First, having listened closely to the very many views put forward and considered the available evidence, I have decided that I am not going to carry out further work in relation to relaxing the first test date or the frequency of testing.

Secondly, I am publishing for the first time today information gathered by VOSA about the standards of MOT testing. VOSA’s MOT compliance survey 2010-11 showed that, despite large parts of the MOT test being subjective, 88% of testers were applying correct and consistent standards. There were 12% of testers who had their overall assessment of the vehicle’s roadworthiness challenged by VOSA, suggesting there is still room for improvement. Publication of these data represents a considerable increase in transparency on the accuracy of MOT tests.

VOSA already carries out targeted work to improve this figure. However, I want to go further and make it easier for consumers to take action if they have not received the service they need from MOT testers. Further short term steps I am therefore taking are to:

engage the key motoring organisations in surveying their members over the next few months to determine the most significant and frequent problems they encounter at garages, how transparent and consistent charging and service standards are and what examples of best practice customer service they have experienced—and to publish their results;

identify and work with organisations able to carry out mystery shopper exercises that could supplement those which VOSA already carry out as part of their targeted supervision of the scheme;

work with the Motorists’ Forum to establish a sub-group to bring together a broad range of relevant motoring and industry organisations, such as the MOT Trade Forum, to help deliver the package that follows.

Over the next six months my Department will carry out the following actions:

so that consumers can be confident that the garage they choose has signed up to deliver to the highest standards, we will work with the industry and stakeholders to encourage much wider adoption of existing codes (such as that provided through the SMMT and Motor Codes Ltd) and to develop those codes to include MOT testing services. Our ambition is that it should be the norm for garages to comply with such codes;

in order to make more information available to help motorists know how the scheme is supervised, which garages perform well and which less well, we will review the MOT data gathered by VOSA and—informed by the surveys above—further improve transparency;

we will also work with industry, motoring organisations and others to make it easier for consumers to give feedback on their experiences of garages in a transparent way that others can view, and to boost awareness of existing consumer feedback tools;

we will help motorists to spot clocked vehicles by arranging for MOT test certificates to show mileage information for the last three years, and encouraging car buyers to check the full MOT history of vehicles by accessing online the authoritative MOT database;

to help motorists know how long wear and tear items such as brakes and tyres are likely to last after an MOT test, we will work with the MOT trade initially to consider whether to adjust the MOT technical test standard.

The Government intend to develop with the Motorists’ Forum sub-group a robust means by which we can measure consumer confidence over time across all garage services.

I see the above package of measures as an important element in our overall road safety policy, alongside delivering increased confidence and value for money for motorists having their vehicles MOT tested or serviced. I expect more ideas and measures to develop once the Motorists’ Forum sub-group is established, and there will be opportunities for all interested parties to contribute to the debate.

Workplace Pension Reform

Wednesday 1st February 2012 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I am pleased to be able to publish today the Government’s response to consultation on workplace pension reform. The formal consultation, which ran from 18 July to 11 October 2011, addressed the legislative changes recommended by the Making Automatic Enrolment Work review, and sought views on draft regulations published alongside the consultation document.

I would like to thank all those people and organisations who have offered their views and advice in response to our recent consultation.

The Government response document and guidance for those certifying pension schemes will be made available on the Department’s website today. The final versions of the regulations will be available on the Department’s website later today.

I will also place a copy of the Government response document and the guidance in the Library.

House of Lords

Wednesday 1st February 2012 Lords Chamber

Wednesday, 1 February 2012.

15:00

Prayers—read by the Lord Bishop of Norwich.

Council of Europe

Wednesday 1st February 2012 Lords Chamber

Question

15:06

Asked by

[The Earl of Dundee]

To ask Her Majesty’s Government what plans they have to promote active citizenship in Europe during their current chairmanship of the Council of Europe.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, our chairmanship priorities were outlined in my Written Statement of 26 October 2011. They include, among other things, reform of the council's work on local and regional democracy, which should assist in strengthening the citizenship role in member states.

[The Earl of Dundee]

I thank my noble friend for that reply. Can he affirm that our chairmanship will seek measures to improve the co-ordination of local democracy, including among the Council of Europe's separate branches for local government, non-government organisations and the Parliamentary Assembly itself? Can he also assure us that our chairmanship will recognise and encourage experience of good practice such as city diplomacy, where different cities and centres already improve their local results by working together on similar issues and problems?

[Lord Howell of Guildford]

The answer to my noble friend is yes on both points. The Council of Europe can have a major role in facilitating exchanges of the sort he described, and one priority of our chairmanship is to streamline and make more efficient the Council of Europe's work in the field of democratic local governance. Also, there can be real gains for local communities where those responsible for local services and the governance of towns and cities can exchange good practice and share knowledge and experience with their counterparts in other states, and that, too, we intend to encourage in our chairmanship.

[Lord Anderson of Swansea]

My Lords, the European Union's Europe for Citizens programme concentrates mainly on town twinning, so we should avoid duplication in the Council of Europe, but the European Union programme also deals with communicating with citizens on the work being done by the European Union. Is not there a case during our presidency for informing the citizens of the wider Europe of the valuable work being done in many fields by the Council of Europe?

[Lord Howell of Guildford]

Yes, I am sure there is. The noble Lord is quite right: the Council of Europe covers about 800 million people, which is wider than the European Union. Of course there can be a constructive interchange and the work of each body can be promoted by the other to their mutual benefit.

[Lord Phillips of Sudbury]

My Lords, does my noble friend accept that the so-called democratic deficit is developing in this country and in wider Europe, perhaps to be greatly exacerbated by the eurozone crisis? Is he aware that 2013 is to be the EU year of citizens in action? In that regard, will he assure the House that citizenship education will remain part of the core curriculum, as it has been since 2002, given that there are now questions as to whether it might be taken out of the compulsory core curriculum?

[Lord Howell of Guildford]

I very much hope—it is a hope rather than an assurance—that all those involved in these great institutions will work in that way. This switches the commentary from the Council of Europe to the European Union, which of course is different, but we all look back to the Laeken declaration, which urged the European Union to bring itself closer to the citizenry, and the Council of Europe is of course on the same sort of track. This is an age of the empowerment of citizens and, as some people say, of empowerment of the street, sometimes with good results and sometimes with less good results. In all cases, empowerment of the citizen, responsibility of the citizen, education and bringing home the potential role of active citizenry remain absolutely vital.

[Lord Tomlinson]

Does the Minister agree that at a time when we need some good news to be given by the United Kingdom to Europe, it would be appropriate during our chairmanship to ratify the European convention on combating violence against women? I know that the consultation process finishes at the end of March, but if they really get their skates on that will be something for Dominic Grieve to announce when he comes to the Council of Europe in April.

[Lord Howell of Guildford]

I agree that this would be a good aim. A number of areas need further consideration before a final decision can be made on whether to sign the Council of Europe convention on preventing and combating violence against women and domestic violence. As part of this further consideration, which is on very real and important issues, I am advised that the Home Office launched a consultation in December, about two months ago, on whether to create a new offence of forced marriage. The consultation period will end on 30 March and we will then be able to make a definitive decision in line with the hopes of the noble Lord.

[Lord Hamilton of Epsom]

Following my noble friend’s question about the crisis in the eurozone, what is the Government’s policy towards unelected Governments of so-called experts in Greece and Italy?

[Lord Howell of Guildford]

I think that my noble friend will be the first to recognise that we have to leave the member states of Europe, and indeed the nations and democracies of the world, to decide how best to govern themselves. From time to time they call upon experts and technocrats to make up for the deficiencies of quarrelling democrats.

[Baroness Farrington of Ribbleton]

My Lords, I declare an interest as an honorary vice-president of the Standing Conference of Local and Regional Authorities of Europe. Will the Minister please give an assurance that during their presidency our Government will do everything to ensure that citizenship education includes the rights of Roma, Gypsy and Traveller populations within the countries of Europe? There is terrible discrimination in Council of Europe countries against these groups.

[Lord Howell of Guildford]

The noble Baroness is absolutely right that discrimination against Roma and concerns for the position of Roma are very important issues. As she knows, the secretary-general of the Council of Europe convened a high-level meeting way back in October of not last year but the year before. That was after the really chilling example of the French deportations of Roma and it produced the Strasbourg declaration on the treatment of the Roma. However, I fully agree with the noble Baroness that this issue should remain at the top of the agenda, and it is one that we should examine and promote very carefully and assiduously during our chairmanship.

[Lord Richard]

My Lords, if there really is a campaign called Citizens in Action, would the noble Lord urge whoever is responsible for it to look again at the title, which, to put it mildly, has a certain ambiguity about it?

[Lord Howell of Guildford]

I am sure that the noble Lord, with his learning and skill, could contribute to better titles and labelling for some of these programmes.

Health: Diabetes

Wednesday 1st February 2012 Lords Chamber

Question

15:14

Asked By

[Lord Collins of Highbury]

To ask Her Majesty’s Government what plans they have to act on the National Diabetes Audit Mortality Analysis 2007–08, published by the NHS Information Centre, which estimated that up to 24,000 deaths from diabetes per year could be avoided by the condition being better managed.

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

My Lords, we are working with the National Diabetes Information Service and National Health Service organisations to ensure that local services have the audit data for their own areas to show how they compare with others and where improvements can be made. NHS Diabetes has a suite of tools that can be used to help drive improvements and reduce avoidable deaths.

[Lord Collins of Highbury]

I thank the Minister for his response. Diabetes UK estimates that about 26 per cent of the 450,000 residents in nursing and care homes in England have diabetes. Care home residents are a highly vulnerable group of people and, without regular screening for diabetes, they are at an increased risk of complications such as heart disease, stroke, kidney failure, blindness and amputation. What are the Government doing to ensure that residents in care homes receive the appropriate screening that they need for diabetes?

[Earl Howe]

My Lords, much will depend on the way in which primary care engages with those in social care to ensure that the residents of care homes, who need diabetes care management, receive it properly. We very much want to see that joined-up commissioning arise from the reforms that we are currently in the process of debating in your Lordships' House. The noble Lord makes a very good point. We have many tools at our disposal. There is no shortage of guidelines in this area. Much will depend on the training of care home staff and a lot of work is going on under the aegis of the National Clinical Director for Diabetes in this area.

[Lord Rennard]

My Lords, does the Minister agree with the 15 checks or services promoted by Diabetes UK that every person with diabetes should receive or have access to? In particular, does he agree that they should have access to high-quality, structured education, firmly embedded in the NHS, based on a programme such as that for type 1 diabetics, promoting dose adjustment for normal eating?

[Earl Howe]

My Lords, the answer to my noble friend is yes. Those checks and services are firmly supported by NICE, by the National Service Framework and by the NICE quality standard. I also agree with him that structured education is fundamental if we are to ensure that patients can self-manage. A number of tools are available for that. He mentioned one for type 1 diabetics that has the acronym DAFNE—dose adjustment for normal eating—and for type 2 diabetics there is DESMOND—diabetes education and self-management for ongoing and newly diagnosed.

[Baroness Finlay of Llandaff]

Can the Minister please tell the House what levers the Government will have in the new NHS to ensure an increase in the use of insulin pumps for the control of diabetes in children, given that the pump appears at face value to be expensive, but as a long-term investment it is very cost-effective because it results in far better control of diabetes and a lower incidence of hypoglycaemic attacks, which is important for children at school?

[Earl Howe]

My Lords, we know that insulin pump therapy can make a huge difference to glycaemic control and the quality of life in some people. It is not appropriate for everyone, as the noble Baroness will, I am sure, recognise. We know that much more has to be done to improve the uptake of insulin pumps in line with NICE recommendations. The NHS operating framework for this year highlights the need to do more to make these devices available. The NHS Technology Adoption Centre has published guidance to support NHS organisations in the adoption of these devices and I know that the National Clinical Director for Diabetes, Dr Rowan Hillson, chairs a working group focusing on the uptake of insulin pumps.

[The Earl of Courtown]

Does my noble friend agree that one of the greatest problems for those suffering from diabetes—particularly type 2 diabetes—and for those looking after them, is that they are not actually taking up the education that is available so that they can learn how to live their lives to get a better result from their illness?

[Earl Howe]

I agree with my noble friend. We are firmly of the view that education is a major action area for primary care clinicians, and for those in secondary care too, if we are to avoid unplanned admissions to hospital, which are unpleasant for patients and very costly for the NHS.

[Lord Brooke of Alverthorpe]

Does the Minister agree—I am sure that he does—that the recommendation that there should be more comprehensive and effective preventive care is an important part of the report, and that it is important to highlight the link between obesity and this illness? Does he agree that it is now high time for the Government to introduce calorific labelling of alcohol products so that people know the number of calories they take in when they drink, and to stop citing the European Union as the reason why they are not doing it?

[Earl Howe]

The noble Lord is to be congratulated on bringing me back to the very important subject of the labelling of alcoholic drinks. I hope that the House will feel that he was a little unfair in blaming the Government for the line that they have taken on this. As the noble Lord knows, labelling is an area that is very largely a matter of EU competence. However, he is right that type 2 diabetes is closely linked to obesity and insufficient physical activity. We would like to see businesses use a more consistent front-of-pack nutrition labelling approach than has been achieved in the past, particularly with food.

[Lord Harrison]

Will the noble Earl recognise another acronym, the DAFNE programme, and give greater government support to rolling out such a programme, as illustrated by the noble Lord, Lord Rennard? Will be also reply to the Danish Government, who have made diabetes a priority under their presidency for the coming six months? What is being done with our Danish colleagues to promote a better understanding of diabetes and its treatment?

[Earl Howe]

The noble Lord is right to emphasise the role of DAFNE. The 2011-12 NHS operating framework signals the need to commission patient-structured education for people newly diagnosed with diabetes, and at appropriate points in their life as their condition progresses. I do not have a briefing on the dialogue with our Danish colleagues on their programme of action, but I will write to the noble Lord on that.

House of Lords: Scottish Referendum

Wednesday 1st February 2012 Lords Chamber

Question

15:22

Asked By

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what assessment they have made of the impact of the proposed referendum on Scottish independence on reform of the House of Lords.

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

My Lords, the Government can proceed only on the current constitutional framework. We will of course take all relevant factors into account when planning the timetable for reform.

[Lord Hunt of Kings Heath]

My Lords, I am enormously grateful to the noble Lord, Lord Strathclyde, for that illuminating response. Remarkably, it appears that Mr Clegg’s Bill is to be the centrepiece of the Government's legislative programme for the next Session. However, this will be in advance of the outcome of the Scottish referendum which could—I am sure the noble Lord will agree—have profound constitutional significance for the United Kingdom. How will the Government take that into account? Furthermore, as Scotland is to have a referendum, why on earth are the British people not to be allowed one on Lords reform?

[Lord Strathclyde]

My Lords, there were a number of questions there. The noble Lord is right that it would have profound constitutional implications for the United Kingdom if there were to be a referendum result in Scotland in favour of breaking up the United Kingdom. However, as I said in my Answer, we can proceed only on the current constitutional framework. If there is a Scottish referendum, I for one—and, I am sure, the noble Lord for another—will campaign in favour of retaining the United Kingdom. The Government of course considered the case for a referendum on the future of the House of Lords. However, given that all three manifestos in the most recent election were remarkably similar on reform of the House, we feel that people's views have already been taken into account.

[Lord Cormack]

My Lords, the manifestos were rather different. However, does my noble friend agree that those of us who are concerned about the future of the United Kingdom must not take the people of Scotland for granted and must not appear to patronise them? To anticipate the results of the Scottish referendum would seem to do precisely that. Therefore, is there not the strongest possible case for getting the issue decided before we turn to House of Lords reform?

[Lord Strathclyde]

My Lords, of course we must neither patronise nor anticipate. On the other hand, normal work should not come to a halt because of a possible referendum. That is why we are carrying on with our stated proposal for reform of the second Chamber.

[Lord Kakkar]

My Lords, if the Scottish people were to determine that their constitutional destiny lay with the devo-max model, would it be appropriate for them to participate in elections for the Deputy Prime Minister’s senate in 2015?

[Lord Strathclyde]

My Lords, a rather different question is raised by the noble Lord, and I am not sure that I know entirely what is meant by this phrase devo-max.

[Noble Lords]

Oh!

[Lord Strathclyde]

My Lords, I hear some moaning from the other side, but I expect that if we asked three of them what they thought devo-max meant we would get four different answers. It would probably be the same if we asked them their views on House of Lords reform. The point is that any different arrangement of the United Kingdom would of course have an impact on an elected House, in the same way as it would have an impact on the House of Commons.

[Lord Foulkes of Cumnock]

My Lords, I am not going to ask about devo-max. However, last week, in reply to a question from my noble friend Lord Campbell-Savours, the Leader of the House gave an unequivocal reply that no list of new Peers is being proposed. In the Daily Telegraph today he was quoted as saying that there is a new list, and indeed that the SNP has been asked to nominate. Would he care to clarify the position?

[Lord Strathclyde]

My Lords, I stand by my original answer. It is, of course, up to the Prime Minister to decide when and if he comes forward with a list. I am not aware that he has any current plans to do so. I certainly voiced a view that there is no reason why there should not be a Scottish nationalist in this House, but I do not believe that any has been proposed.

[Lord Maclennan of Rogart]

My Lords, would it not be wise to allow the United Kingdom to reach consensual decisions about the role, powers and composition of this House when the future political relationships of all the constituent nations of the country have been settled?

[Lord Strathclyde]

My Lords, I do not think there is any requirement for us to wait on a referendum on breaking up the United Kingdom, which may not take place until the end of this Parliament, before legislating on what a future second Chamber will look like. However, as I said in my earlier Answer—which I think is not out of keeping with what my noble friend has just said—if the relevant factors were to change, we would take them into account when planning the long-term timetable for reform.

[Lord Cunningham of Felling]

My Lords, would not the best way of improving Scottish influence on proposals for House of Lords reform be to abandon the current, deeply flawed draft Bill, and replace it with support for the excellent Bill tabled by the noble Lord, Lord Steel of Aikwood, which commands wide-ranging respect in this House?

[Lord Strathclyde]

My Lords, I am well aware of the respect with which it is held in this House. However, it does fly in the face of the three manifestos on which the Members of the House of Commons were elected only 18 months ago.

[Baroness Symons of Vernham Dean]

My Lords, is it not the case that because the people of this country had no chance to vote for any party except those that support Lords reform, they ought to be afforded such an opportunity?

[Lord Strathclyde]

My Lords, that is a good point: when all the parties are united, there is no room for much opposition. However, if a Bill is published after the gracious Speech, I am sure that there will be very effective debate within Parliament, because, as I have said before, very often the differences on House of Lords reform exist within the parties rather than between them.

[Lord Brooke of Sutton Mandeville]

My Lords—

[Lord Low of Dalston]

My Lords—

[Noble Lords]

Brooke!

[Baroness Anelay of St Johns]

My Lords, it sounds as though my noble friend Lord Brooke has the Floor just at the moment.

[Lord Brooke of Sutton Mandeville]

My Lords, to revert to an earlier answer, why does my noble friend think that the world is not going to come to an end if a Bill to abolish the House of Lords is introduced into your Lordships' House?

[Lord Strathclyde]

My Lords, I am always wary of my noble friend winning this sort of competition to speak in the House. I rather wish that I had taken the question from the noble Lord, Lord Low.

Northern Cyprus

Wednesday 1st February 2012 Lords Chamber

Question

15:29

Asked By

[Lord Sharkey]

To ask Her Majesty’s Government, in the light of the United Nations Secretary-General’s comments on the lack of progress of talks on the future of Cyprus, whether they will now consider recognising Northern Cyprus.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the United Kingdom remains committed to supporting the UN-led process on Cyprus. Although only limited progress was achieved at the latest round of talks between the two leaders and the United Nations Secretary-General, the process has not ended. The UN Secretary-General has called for a decisive move to reach a final agreement, and will provide a report to the Security Council at the end of February.

[Lord Sharkey]

My Lords, the Minister may recall that, writing in the Times on 8 November 2010, Jack Straw said:

“It is time for the UK Government to consider formally the partition of Cyprus if the talks fail”.

The talks he referred to did fail, as did the next and latest. In the same article, Jack Straw also said that,

“the chances of a settlement would be greatly enhanced if the international community broke a taboo, and started publicly to recognise that if ‘political equality’ cannot be achieved within one state, then it could with two states—north and south”.

Does my noble friend the Minister agree with Jack Straw on this point?

[Lord Howell of Guildford]

No, I do not. Jack Straw is not a member of the current Government, of course, and his comments were made in a private capacity as an MP. The guarantor power, the UK, has undertaken by treaty to prohibit any activity aimed at promoting, directly or indirectly, either the union of Cyprus with any other state or the partition of the island; so I repeat—a pretty emphatic no.

[Lord Maginnis of Drumglass]

My Lords, I beg leave to take the opportunity to pay tribute to my late and dear friend, Rauf Denktas, whose courage and leadership frustrated EOKA-B’s Akritas and Ifestos plans for ethnic cleansing. After 49 years’ discrimination against Turkish Cypriots and 38 years of successive Greek Cypriot rejections of resolutions, including the 2004 Annan plan, is it not time for the United Kingdom to cease its systematic humiliation of Turkish Cypriots?

[Lord Howell of Guildford]

On the first point, our high commissioner sent a letter of condolence to the leader in the north of Cyprus and to Mr Denktas’s family. I personally associate myself with those condolences, having had an opportunity to meet him in the past. I do not think that the other language used by the noble Lord is justified. “Humiliation” does not come into it. The aim, and it is a noble aim, is to see equality of treatment and the bizonal federal ambition for a peaceful Cyprus achieved, with all citizens on an equal footing. There is no question of humiliation being involved.

[Lord Triesman]

My Lords, I start by expressing our agreement with the position that the Government have expressed this afternoon. It reflects a long-term policy and desire to see equality of treatment. I agree strongly with all those propositions. Does the Minister agree that if any process was inaugurated towards recognising Northern Cyprus, it would flow in exactly the opposite direction to any prospect of achieving the objectives that he has set out?

[Lord Howell of Guildford]

I am just trying to fathom out that question. First, I thank the noble Lord for his agreement and support for what we are all trying to do. This matter rises well above political parties and differences. As I was reminded this morning, these negotiations have been going on for 43 years. It really is time that we encouraged, by every effort possible, a resolution of these differences for the island of Cyprus. The noble Lord says the pressures go in the opposite direction to everything that we are trying to achieve, but I am not sure they do. I think the pressures, throughout the world and certainly from the United Nations Secretary-General, are that there can be some reconciliation and resolution. The main issues involved are to how to share power; the question of property, which is very sensitive; citizenship; and elections. On all these, I think it is possible for there to be progress, although I have to admit that for the moment it has been very modest.

[Baroness Knight of Collingtree]

My Lords, I am chairman of the group for Northern Cyprus in this House and I recently led a delegation there at the invitation of that country. Since the Minister has mentioned the length of this dispute, will he also bear in mind that every one of those 43 years has meant pain and suffering? Even today, if a Turkish Northern Cyprus group should visit the south, even on a sporting occasion, it is set upon and viciously attacked. This situation goes on and on. Surely some really hard effort must be put towards ending it.

[Lord Howell of Guildford]

I fully agree with my noble friend. Of course, these are unacceptable conditions for any citizen. The whole aim of working for a comprehensive settlement must be to make all those kinds of treatments and suffering, and the anecdotes associated with them, a matter of the past.

[Lord Harrison]

My Lords, I renew my previous request to the Minister to ensure—

[Lord Hannay of Chiswick]

My Lords, does the noble Lord agree that since the deadlock in the talks at the moment is at least half the responsibility of Mr Eroglu, it is pretty odd to be discussing the matter on the Order Paper today?

[Lord Howell of Guildford]

First, I defer to the extreme knowledge of the noble Lord on this matter. It is very hard to apportion the blame. All the parties concerned say that they want to make progress. The Governments, as it were, of the countries concerned, Turkey and obviously Greece—which are not directly involved because clearly this matter must be left to the people of Cyprus to sort out—have indicated a positive attitude. We have a positive attitude, as does the United Nations, and we just have to take our opportunities as they come. At the moment, the talks of the other day have come to a halt, but the Secretary-General is pressing ahead. He has asked Alexander Downer to do more work and to create a review. If the review is positive, he has said that he would like to move towards a multilateral conference in late April. So there may be hope on this front, but I do not want to raise those hopes too high.

Health and Social Care Bill

Wednesday 1st February 2012 Lords Chamber

Order of Consideration Motion

15:38

Moved By

[Earl Howe]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 8, Schedule 1, Clauses 9 to 24, Schedule 2, Clauses 25 to 50, Schedule 3, Clauses 51 to 54, Schedules 4 to 6, Clause 55, Schedule 7, Clauses 56 to 60, Schedule 8, Clauses 61 to 75, Schedule 9, Clauses 76 to 101, Schedule 10, Clauses 102 to 107, Schedule 11, Clauses 108 to 120, Schedule 12, Clauses 121 to 149, Schedule 13, Clauses 150 to 178, Schedule 14, Clauses 179 to 181, Schedule 15, Clauses 182 to 230, Schedule 16, Clause 231, Schedule 17, Clauses 232 to 248, Schedule 18, Clauses 249 to 251, Schedule 19, Clauses 252 to 273, Schedule 20, Clauses 274 to 276, Schedule 21, Clauses 277 to 293, Schedule 22, Clauses 294 to 296, Schedules 23 and 24, Clauses 297 to 305.

[Lord Hunt of Kings Heath]

My Lords, I am sure that at Report on the Bill there will be issues which relate, however indirectly, to the finances of the National Health Service. Perhaps I may ask the Leader of the House whether the Government could give an indication of the procedural implications for this House on the Welfare Reform Bill following a Statement on financial privilege by the Minister earlier today in the other place.

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

My Lords, I thank the noble Lord for his kind invitation for some procedural advice. We will be dealing with the Welfare Reform Bill when it comes back from another place. I should say that matters for privilege are not a matter for the Government but a matter for the House of Commons and the Speaker of the House of Commons on advice from his clerks. The position of privilege has of course been jealously guarded by the House of Commons since 1671. It is well precedented and there is nothing unusual, although the second Chamber might always think that the Commons using financial privilege is a little unfair.

We will get to that Bill in due course. I cannot comment on the Health and Social Care Bill, which is of course the subject of the Motion before us now, as to what the Government’s attitude will be on defeats. But, as I said earlier, there is nothing unusual about financial privilege being prayed in aid. Since there are many former Members of another place present in this House I am sure that they will readily understand.

[Lord Grocott]

My Lords, the Leader of the House has given us a proper and guarded answer to quite a difficult question. However, does he not agree that this encapsulates the kind of problem which needs to be resolved before we have a directly elected second Chamber? It goes to the heart of one of the issues that has been accepted as the norm by both Houses for many decades but which would undoubtedly be challenged time and again in the event of a directly elected House. I do not expect the noble Lord to give an immediate answer now—he will give a guarded response—but can I try to be helpful and suggest that this is the kind of issue which the committee of my noble friend Lord Richard should look at, and that that may involve an extension of the period of time the committee needs to consider it? But it is clearly issues like this—alongside, in relation to an Oral Question taken earlier, issues like the impact of a referendum in Scotland—which need to be considered by the Joint Committee before we proceed any further.

[Lord Campbell-Savours]

My Lords, before the House approves the Motion, perhaps I may ask the noble Earl, Lord Howe, a question about the risk register appeal, because we now have some dates that change the debate. I understand that the Report stage is to begin on 8 February and that it is expected to complete by somewhere around the middle of February.

[Noble Lords]

March.

[Lord Campbell-Savours]

The appeal on the risk register will be held in a tribunal on 5 and 6 March, and therefore there might be an opportunity for Members to raise the issue of the decisions of the tribunal, depending on the dates that the Government actually set for the Report stage. Would he care to comment on that? Further, if there is not too much flexibility, has the noble Earl considered what the Companion says on the admissibility of amendments tabled at Third Reading:

“The principal purposes of amendments on third reading are … to clarify any remaining uncertainties”?

The risk register may well raise issues that constitute “remaining uncertainties”. Can we have an assurance that if it is not possible to raise them on Report, there will be some flexibility at Third Reading under the heading in the Companion that I have just read out to ensure that we can have a debate on any issue arising out of the tribunal’s decisions? I am sorry to have to raise the matter in this way, but this is an opportunity to do so.

[Baroness Hollis of Heigham]

My Lords, perhaps I may ask a question of the noble Lord, Lord Strathclyde. I ask him as the Leader of the whole House—which I know he is very mindful and respectful of—and not just as the leader of a government coalition party. Whenever we deal with a social security Bill—apart from turning negative regulations into affirmative regulations—that almost inevitably involves expenditure, either increasing it or reducing it. That may also apply to health Bills and transport Bills. If, on any choosing of the Speaker and one of the noble Lord’s right honourable friends at the other end in a position of authority, the claim can be made that that is financial privilege—this is before the Speaker has even ruled on it, so clearly there is a government view so far as I can tell; I stand to be corrected—and if any Bill involving any element of expenditure, including on welfare, pensions, health and education, can at the fiat of the House of Commons be ruled as money and therefore privilege, then, taking the noble Lord’s statement that this House is a part-time House, it will become a very part-time House indeed because we might as well go home.

[Lord Strathclyde]

My Lords, let me deal with the two questions put by the noble Baroness, Lady Hollis, and the noble Lord, Lord Grocott. My noble friend Lord Howe, who is an expert on these matters, will respond to the noble Lord, Lord Campbell-Savours. In response to the noble Baroness, as I said earlier, this is a matter for the House of Commons; it is not a matter for me. It is the Speaker who takes a view on the advice of the clerks. I would not be at all surprised if they had had a discussion with the Government, but there is nothing new in any of this. No procedure has changed and no substantive law or practice has done so. It is perfectly possible for this House to suggest and recommend changes to Bills over a whole range of issues, no doubt including financial ones. How the House of Commons deals with those is a matter for that House.

I thought that the points made by the noble Lord, Lord Grocott, were precisely the kind of points that he might make if a “reform of the second Chamber” Bill were brought forward. I would not dream of trespassing on matters which are the preserve of the noble Lord, Lord Richard, and his Joint Committee. I am sure that they will have taken account of what the noble Lord said.

[Lord Hunt of Kings Heath]

I thank the noble Lord, Lord Strathclyde. Perhaps I may come back to a point he raised. I am sure that the procedure was followed appropriately in the other place and I assume that the Government made application to the Speaker. The question is whether it was wise for the Government to use this process in this place, because, essentially, they are hiding behind parliamentary procedure to curtail consideration of the amendments that your Lordships passed on the Welfare Reform Bill. In essence, my noble friend has put it absolutely right: if the Government continue to do this on these Bills, our role as a revising Chamber is effectively undermined.

[Lord Strathclyde]

I simply disagree with the noble Lord. This situation has existed for 350 years. It was as though the noble Lord were suggesting that the Government had found some new ploy to stop the will of the House of Lords. I think that the noble Lord, Lord Grocott, will agree that we are an unelected House. The House of Commons is an elected House. It has protected its financial privilege since 1671. Nothing has changed for the debates that we will no doubt have on the health Bill and the welfare Bill.

[Lord Mackay of Clashfern]

I wish to question the timing of such a decision on the part of the Speaker. It seems somewhat of a waste of time if your Lordships debate provisions which turn out to be completely sacrosanct because of the decision on privilege made at the other end. The expense involved in your Lordships coming here and taking part seems a waste of taxpayers’ money at a time of considerable austerity if the whole procedure is useless. I suggest that the timing of such decisions needs to be looked at.

[Lord Martin of Springburn]

Perhaps it would help the noble Baroness, Lady Hollis, if I were to say to her that no Speaker takes these decisions lightly. It is not done with representation from the Government, in the sense that they come in and say, “We want to do it this way and you’ll give us a hand, Mr Speaker”. Perhaps I can give an insight into what happens in the Speaker’s study: the Speaker takes advice from the clerks—I stress that is clerks in the plural. You have clerks there who act like the devil’s advocate and put a contrary view. They end up giving strong advice to the Speaker. Therefore, the Speaker is independent in this matter of Government and Opposition—let us not kid ourselves that the opposition Whips are not often in there pounding the ear of the Speaker. If the Speaker’s signature goes on that piece of paper, it is done very sparingly and with considerable advice from those who are experts in this matter.

[Lord Rooker]

My Lords, that being so, and referring to the Motion that we are debating at the moment, would it not be for the convenience of everybody concerned with the Health and Social Care Bill if, for every amendment tabled, we knew before we debated it on Report in this House that it was subject to financial privilege? We would then know that we were wasting our time, as the noble and learned Lord, Lord Mackay, said. The problem is the lack of knowledge. If we know beforehand and we have a certificate for a money Bill, we know that it is a money Bill. We do not know that with domestic policy Bills. If particular amendments are a cause for concern among the authorities of the other place, that should be signalled before we debate the issue in this House.

[Baroness Farrington of Ribbleton]

My Lords, in my experience there are two issues. One is the matter of degree. I hope that the Leader of the House will agree that this is not a clear, black and white issue in terms of the individual parts of a Bill that could be declared financial privilege or the range of parts of a Bill that could be declared financial privilege.

Secondly, the Leader of the House said the week before last in your Lordships’ Chamber, and I hope that I recollect his words accurately, that obviously a wholly or partially elected second Chamber would exercise greater authority and power and have greater legitimacy. Does the Leader of the House believe that people would stand for election were huge chunks of legislation to be declared beyond their competence?

[Lord Newton of Braintree]

My Lords, to avoid repetition, I say that I would still like to hear answers to the questions raised by my noble and learned friend Lord Mackay, the noble Lord, Lord Rooker, and the noble Baroness, Lady Hollis—what is the point against this background? Also, what is the application to the Bill that we are about to get back to, the Legal Aid, Sentencing and Punishment of Offenders Bill, where a lot of money is also involved? Are we completely wasting our time?

[Lord Elton]

Would my noble friend enlighten me? I think I know the answer to this, but I may well be wrong: the more an amendment changes the volume of money in issue, the more likely a Bill is to become a money Bill. If that is the case, we all know where we are: it is just a question of how high the bar is.

[Lord Strathclyde]

My Lords, I am rapidly becoming an expert on privilege, which I was not expecting a few moments ago. I am grateful to the noble Lord, Lord Martin of Springburn, because he explained with his experience the process of deciding privilege in another place, which I repeat is not a matter for me as a member of the Government. Nor is it a matter for the Government or a Member of this House. It is something that has been jealously guarded by the House of Commons for many years.

My noble and learned friend Lord Mackay, the noble Lord, Lord Rooker, and indeed the noble Baroness, Lady Hollis, raise the same question, which is how we could be pre-warned. I am not sure how that process could take place because we do not know what the Government will lose or what amendments the House of Lords will press to a Division. I dare say that we could. I am thinking as I am speaking, which is always a dangerous thing to do from the Dispatch Box, about a system where amendments might be deemed to be likely to invoke privilege by the House of Commons. But I suspect we can probably do that ourselves. Maybe my noble friend Lord Elton was correct in saying that amendments that mean a substantial increase in expenditure of public spending are more likely to invoke privilege than those that do not. Perhaps that is the way to go.

I wonder if we are profiting in continuing this debate now. Would it not be better to wait until the Welfare Reform Bill returns from the House of Commons with its amendments to see if privilege has been invoked? There is then a well trodden process in this House. I do not think that the House wastes its time by debating the issues. We do not insist on all the amendments that we pass in this House. We sent them back to the House of Commons to get the Government and the House of Commons to think again. If they have thought again and invoked financial privilege, we should let the matter rest.

[Lord Hughes of Woodside]

My Lords, I have listened to the noble Lords, Lord Martin of Springburn and the Leader of the House. They both claim, each in their different way, that this is a wholly independent procedure. Are we really to believe that one morning the Speaker gets up and says, “Eureka, I’m going to decide whether this is financial privilege or not”? Who initiates the process? It is hard to believe there was not a nudge and a wink from the Government to try to save their own blushes.

[Lord Howarth of Newport]

My Lords, is not the reality that when the Government have run out of arguments and patience they ask the Speaker if he will invoke financial privilege? They cross their fingers and hope that he will do so. Do this Government actually want the House of Lords to operate as a revising Chamber or not?

[Lord Strathclyde]

I do find it faintly comical that former Members of the House of the Commons, who would have died in a ditch to preserve and protect financial privilege, decide to take a completely different view as soon as they are translated into Members of this House. I said earlier that surely the time for us to have this debate is when we are faced with the facts of the Bill, with the amendments from the House of Commons. We will have the benefit of seeing the debate that is taking place in the House of Commons as we speak. Would that not be a better way of proceeding? I very much hope that we will be able to pass this Motion from my noble friend Lord Howe, unless he wishes to add anything to the questions that were put to him.

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

My Lords, perhaps I could address the question posed by the noble Lord, Lord Campbell-Savours, about my department’s risk register. When I last spoke to the House on this matter, I promised to use my best endeavours to ensure that the appeal hearing on the matter of the risk register took place at the earliest possible date. As a result of discussions between my department and the tribunal that will hear the Government’s appeal, that date was brought forward from the one that I originally announced to 5 and 6 March. I believe that is a welcome development. The outcome of the appeal will not be known until a few days after that. It is of course a matter for the tribunal.

As regards the timing of Third Reading, the noble Lord will know that it is a matter for the usual channels in this House. I am aware that there is a Motion in the name of the noble Lord, Lord Owen, which invites the House to consider the matter of the department’s risk register before the House goes into Third Reading on the Bill. I suggest that once the timing of the appeal outcome and of Third Reading are known, it would be appropriate to revisit this question. However, it is perhaps a little early to decide now quite what the best order of events should be.

Motion agreed.

Legal Aid, Sentencing and Punishment of Offenders Bill

Wednesday 1st February 2012 Lords Chamber

Committee (7th Day)

15:59

Relevant documents: 21st Report from the Constitution Committee, 22nd Report from the Joint Committee on Human Rights, 21st and 22nd Reports from the Delegated Powers Committee.

Clause 45 : Recovery of insurance premiums by way of costs

Amendment 141

Moved by

[Lord Thomas of Gresford]

141: Clause 45, page 31, line 30, at end insert “, (2A) or (2B)”

[Lord Thomas of Gresford]

My Lords, Part 2 of the Bill has its complexities, but all sides are agreed on two principles.

[Baroness Anelay of St Johns]

My Lords, I am aware that the noble Lord, Lord Thomas of Gresford, is hesitating so that he may have the Minister’s ear.

[Lord Thomas of Gresford]

All sides are agreed on two principles—access to justice must be maintained and undue cost must be squeezed out of civil litigation. The issue is what the best framework is for achieving these ends. Unlike with Part 1 of the Bill, public money is not directly involved in supporting the litigation that we are referring to in Part 2.

All sides recognise the unforeseen and unintended consequences of the Access to Justice Act 1999, which threw the burden of the success fee and the ATE insurance premium on to losing defendants and removed from the claimant any interest in the amount of the success fees and premiums that they were only theoretically obliged to pay. Save for the recent changes introducing fixed fees in Road Traffic Act litigation, lawyers have been able to charge 100 per cent success fees, whether or not they undertake other, riskier cases. Insurers have fixed levels of premiums with which not even the costs judges on taxation are able or willing to quarrel.

This policy may have helped claimants by allowing them to retain the full amount of the damages awarded to them. However, the removal of the restraint of competition as to the size of success fees and ATE premiums has put an undue burden of fourfold cost on defendant insurers. Ultimately, this is not in the public interest, because insurers take their profit and pass the burden on in increased premiums for motoring, household, employers and public liability insurance. Self-insured large companies and public bodies such as the NHS and public authorities that are funded from the public purse generally carry the burden themselves.

The Bill proposes to shift the burden. The claimant will pay the success fee, which will be limited to 25 per cent of his damages for pain, suffering and loss of amenity and loss of earnings and expense to the date of trial. He will also carry the burden of the ATE premium to an amount that is not limited. The champagne corks will indeed be popping in the City by relieved liability insurers and in NHS trusts, town halls and board rooms all over the country. If these defendants win, all their own costs will be paid by the ATE insurers—assuming, of course, that there is still an ATE market and that the premium is affordable—unless a regime of one-way cost shifting that I talked about on Monday last is introduced at the same time, which will require defendants, win or lose, to pay their own costs.

The Jackson report, which sets out all the consultations that Lord Justice Jackson undertook, demonstrates that insurers and public bodies are up for it and accept that one-way cost-shifting, a system that has operated in legal aid cases since 1949, is a fair price for removing from them their present liability for uncontrolled success fees and uncontrolled “after the event” premiums. If one-way cost-shifting is introduced, at a stroke a claimant will lose the fear of having to pay the defendant’s costs if he loses the case, costs that might ruin him and remove the roof from over his head. At a stroke, the “after the event” insurance premium, which is currently in place largely to cover the defendant’s costs, will be savagely cut back. A claimant will have to cover only the risk that if he loses he will be responsible not for the defendant’s costs but for his own disbursements, court fees, expert and medical fees. Just as it is conceivable that in competing for business a solicitor might advertise that he will not charge a success fee, a solicitor with a large standard practice might well be prepared to absorb disbursements in the cases that he loses. We shall have to see whether that happens.

All this is by way of introduction to my amendments, which deal with a discrete area of litigation—environmental law, involving public law and private claims and the tort of nuisance. Public law cases are judicial review claims brought mainly by individuals concerned by inappropriate development—for instance, whether planning permission has made proper allowance for the effect on local flora and fauna by a particular development or whether a waste dump is in the right place. Private nuisance has enjoyed a real renaissance through the help of independent solicitors since the access to justice scheme came into being. A private nuisance is an interference to land or to rights associated with land caused by the unreasonable conduct of the defender. It is the last resort for local residents who need injunctive relief from a polluter who will not run his enterprise with proper concern for his neighbours, and where the regulator is unable or unwilling to take steps to abate the problem.

I am indebted to Stephen Hockman, Queen's Counsel, a former chairman of the Bar, Stephen Tromans, Queen's Counsel, named as environment/planning Silk of the Year at the Chambers Bar Awards 2011, and Gordon Wignall, a barrister specialising in nuisance cases and editor of the third edition of the Law Society’s Guide to Conditional Fees. I have circulated copies of their joint opinion on the impact of the Aarhus convention on costs and funding rules that are applicable in environmental cases.

The Aarhus convention is concerned with access to justice in environmental matters and was ratified by the United Kingdom in February 2005 at the same time that it was ratified by the European Community. The relevant text is set out in the opinion, but the effect is that the United Kingdom is bound to provide “adequate and effective remedies” in this area,

“including injunctive relief as appropriate, and be fair, equitable, timely and not prohibitively expensive”.

The convention applies both to judicial review claims in the administrative court and to private law actions in nuisance. The Supreme Court, in a recent case, has referred the question as to the test to be applied in order to determine whether proceedings are “prohibitively expensive” to the European Court of Justice. In one case that is quoted in the opinion, for example, a defendant’s costs amounted to well over £3 million. Is that prohibitively expensive?

Since the Minister and others already have a copy of the full opinion, I will simply put the conclusions of the learned counsel on the public record. First, the current costs rules run contrary to the international treaty obligations of the United Kingdom, which the United Kingdom voluntarily accepted. Problems arise largely out of the insistence on the “costs follow the event” rule, which tends to lead to inconsistency with the aims of participating in environmental justice and results in a claimant’s liability to pay prohibitively expensive costs.

Secondly, the compliance committee’s last deliberation in the ClientEarth case required the United Kingdom to review its costs rules and recommended rectification. Thirdly, two detailed reviews relevant to environmental proceedings in England and Wales have subsequently been undertaken and presided over by members of the Court of Appeal. The learned counsel are referring to the Jackson report, which we have been discussing, and to the report of Lord Justice Sullivan on access to environmental justice. These have been endorsed by the senior judiciary, and the primary recommendation was that the use of qualified one-way cost-shifting in environmental cases would have a dramatic inroad into the “costs follow the event” principle.

Fourthly, by withdrawing the recovery of “after the event” premiums, the size of which cannot be met by claimants or their legal representatives, without providing at the same time for one-way cost shifting as a replacement in environmental claims, the Government have elected to retreat from the full proposals of the Jackson report and the Sullivan report, which were conducted by those eminent Lords Justices. Fifthly, the consequence is that the United Kingdom, already in breach of its convention obligations, is diverging from rather converging with its own environmental expectations and those of the international community.

Sixthly, the further consequence is that claimants who wish to protect the environment and participate in environmental justice are even less likely to be able to do so than at present. This is predominantly because of the risk of incurring a liability for defendant’s costs that may well be prohibitively and grossly expensive in any event, but also because of the uncertainty that claimants face about their liability for those costs, which under the Government’s proposals will be known only once the litigation, whether public or private, has been concluded.

Claimants in environmental cases do not want damages; they want relief from the consequence of poor decision-making by public bodies or protection from the degradation of their environment. Even in multiparty actions, damages-based agreements are not a solution. My amendments would enable the Government to honour their international environmental obligations rather than turn their back upon them.

Amendment 147 would provide in subsection (2A) that in an environmental claim the losing defendant would pay the premium in respect of disbursements by way of fees for expert reports paid by the claimant. In subsection (2B), the losing defendant would pay the premium on the costs insurance policy if he had agreed to do so prior to the commencement of the proceedings. There are occasions when a defendant will agree to pay the claimant’s premium for “after the event” insurance whether he wins or loses, because if the defendants succeed then they will get all their costs from the ATE insurers.

Amendment 150 defines “environmental claim” by the same definition as is contained in the Aarhus convention. The use of this definition would ensure that only nuisance cases that were truly environmental in nature would be within the scope of my amendment. Insurance recovery claims and private nuisance—for tree-root subsidence, for instance—would not get the amendment of the amendment.

Amendment 157 would introduce qualified one-way cost-shifting in both environmental claims and other claims. The amendment was drafted before I had refined my own views, which I explained at small length on Monday last on this topic. The word “unreasonably” therefore appears in the amendment but I repeat my objections to the vagueness of the word “unreasonable” and reiterate the necessity for clarity by expanding what is unreasonable, as Lord Justice Jackson did, into the familiar expressions of “fraud”, “frivolous and vexatious conduct” and “abuse of the process of the court”.

Why should we single out environmental law for different treatment from other areas of litigation? Essentially, I am not. In the amendments I am arguing for one-way cost-shifting as a precondition for change and for the premium for cover for disbursements—a far lesser amount than the current premiums recovered against the potential defendant’s cost liabilities—to be recovered from the losing defendant. That is very similar to what I was saying on Monday, when I suggested that there are positive benefits in dividing liability for these lesser premiums between the claimant and the defendant in a staged way. In any event, the issue is far more urgent in environmental cases because of our obligation to comply with the Aarhus convention.

A tidy mind might try to bring every aspect of litigation into one structure, one piece of architecture—the word that the Minister used on Monday—but litigation is not like that. Time and again the Jackson report emphasises that one size does not fit all. I quote from page 44:

“many submissions during the Costs Review have emphasised that ‘one size does not fit all’. The Bar Council, for example, states: ‘What is abundantly clear, from Jackson LJ’s Preliminary Report and from the Bar Council’s review, is that “One size does not fit all.” Particular types of litigation give rise to particular issues, be they funding issues, case management issues or otherwise”.

That is a recurring theme in the Jackson report and every practising lawyer will agree.

16:15

[Lord Carlile of Berriew]

I apologise for interrupting my noble friend. Before he sits down, will he help us on this matter in relation to his narrower point on the Aarhus convention? He was kind enough to circulate the learned opinion of Mr Hockman and others, including, as I understand it, to my noble friend the Minister. Will my noble friend tell the House whether he has had a response to the opinion of Mr Hockman and others? If not, does he agree with me that it might shorten the debate if, after he has sat down, the Minister were to indicate whether or not the Government accept the premise of the Hockman opinion?

[Lord Thomas of Gresford]

I am most grateful to my noble friend for interrupting me with one paragraph to go, which would have relieved your Lordships a great deal. The opinion has only recently been produced to me and the Bill team has had it only for a day, so I could hardly expect an immediate response. I hope that my noble friend the Minister will be able to deal with some of the issues that are raised and the issues that I am raising in my remarks.

To conclude, that one size does not fit all is a recurring theme in the Jackson report. Every practising lawyer will agree with that. Proof of the issues that arise in litigation—sometimes liability, sometimes causation, sometimes quantum, and so on—gives rise to different risks and therefore to different solutions. This very Bill, for example, proposes different statutory instruments making different provision for different types of case. I look forward to hearing my noble friend’s response in due course. I beg to move.

[Lord Lester of Herne Hill]

My Lords, I must choose my words carefully because I do not wish what I say to be taken to be outright opposition to my noble friend’s amendments, although I have a certain degree of agnosticism, if not scepticism. I suggest that those who are interested in this area might read the New Yorker article of a couple of weeks ago, which described the abuse of power by the claimant lawyers in the Exxon South American environmental litigation case. That indicates the need for very careful safeguards, even in an environmental setting.

The only reason I speak at all is because it occurs to me that there is a less radical solution to some of the problems that has been fashioned by the courts themselves without any legislative intervention: namely, the protective costs order. I see that the noble Lord, Lord Beecham, shakes his head. I shall explain what I am talking about. The problem with English cost rules is, of course, the winner-takes-all rule, which can, as my noble friend has indicated, have a seriously chilling effect on the ability to bring public interest litigation. It is the fear of claimants and their advisers of having to pay the legal costs of the defendant that has a chilling effect.

I was involved in the Corner House case for a small NGO that was seeking to challenge the lack of proper consultation by the Secretary of State in relation to anti-corruption provisions in the export guarantee area. This was not an environmental matter but it did concern public law. The problem was that the little NGO had absolutely no funds to pay for me but, more importantly, the department. The department would not give an assurance in advance that if it succeeded, it would not ask for the whole of its costs against the NGO. Therefore, the puzzle was how the NGO could bring the public interest proceedings not simply by dealing with the claimant’s position but dealing with the other side.

Sir Henry Brooke, to whom I pay tribute and who throughout has led thinking on this issue within the judiciary, advocated the use of a protective costs order, which enabled us to go before the court and say, “Even if we lose, can we please have a protective order that protects us against the risk of having to pay the other side’s legal costs in advance, so that we know that the worst thing that could happen to the Corner House NGO would be if it had to pay its own costs?”. I am glad to say that that was what was eventually decided and the result was that the Corner House was able to litigate.

I am embarrassed to say that I signed a 100 per cent success fee agreement without realising the consequence, which was that I actually profited from what I had thought to be a public-spirited case. I did not return the money, since it was being paid by the Government. I am against 100 per cent success fees and I would never do it again—ever.

However, the point I am making is not about success fees, but that if one develops through the courts, on a case-by-case and flexible basis, a way of softening the winner-takes-all rule in appropriate cases—not just environmental but all cases—that would enable the weak and impecunious to avoid the effect of that rule. The Constitutional Court of South Africa has decided that the winner-takes-all rule should never apply in important constitutional cases, and that in a proper public-interest case each side should at least bear its own costs and, in some circumstances, the Government should be required to pay the claimant’s costs, or give an undertaking in advance to give that protection.

This is a slightly long-winded way of saying that there are other means that perhaps are to be encouraged by the legislature, or perhaps not. There are other means that the courts themselves have been developing that can deal with some of the points made by my noble friend without something quite as radical as the proposals suggested in his amendments.

[Lord Avebury]

My Lords, does my noble friend agree that the protective costs order that he was successful in obtaining in the case he mentioned was a one-off, that it was not a general rule of law but a matter of luck that his clients were indemnified against the likelihood that they would have to pay the other side’s costs, and that in the amendment that would be a general rule of law that would apply to all such cases?

[Lord Lester of Herne Hill]

Actually, I cannot agree, because the Court of Appeal’s decision was a kind of precedent and it has been followed. There have been arguments about what limits there should be on claimants—whether they should be like an NGO or otherwise—but it would be perfectly possible for a rule to be made by the Lord Chancellor expressly empowering the courts to apply protective costs orders on a more general basis. This was not just a one-off decision; it applied in a line of cases and has been developed since.

[Lord Thomas of Gresford]

I am sure that my noble friend would agree, however, that protective costs orders are matters of discretion for the judge who hears an application, and that the threshold is extremely high. In his particular case, he obviously advanced matters of considerable public interest that were much wider than only the issues in the litigation that affected his clients. So a protective costs order can be applied for in such cases. However, I was involved in the case following the flooding of houses at Aberfan that occurred as the result of the spoil banks placed there after the disaster. In that sort of case, where individual householders were affected, protective costs orders would not have met that threshold.

[Lord Beecham]

My Lords, at the risk of being accused of unqualified one-way sycophancy, I must again congratulate the noble Lord, Lord Thomas, on the clarity of his presentation of this complex issue. Although I somewhat dissociate myself from the preamble to the substantive part of his speech, I entirely concur with his amendments. At this stage, I should also express my thanks to the learned counsel whose advice has instructed me in a matter about which, hitherto, I knew nothing. Aarhus meant absolutely nothing to me up till now. It seems that I may have shared that failing with Her Majesty's Government. We shall see from the Minister’s reply whether that is a correct inference or not.

The noble Lord referred to the ClientEarth case in which the Aarhus Convention Compliance Committee observed that the cost rules pertaining in the United Kingdom placed it in systemic breach of Article 9.4 of that treaty. The committee concluded that we had not as a country adequately implemented our obligation to ensure that procedures are not prohibitively expensive. Counsel's opinion, to which the noble Lord referred, identified two particular issues. The first is that of uncertainty. The second is the sheer amount of the defendant’s costs that might fall on unsuccessful claimants. The noble Lord referred to the case of Barr and Biffa waste company, which arose from a complaint about odours emanating from a landfill site, where the costs were indeed nearly £3,250,000.

Lord Justice Jackson has much to say about those issues. His remedy is, as the noble Lord pointed out, a move to qualified one-way cost shifting. He gave six reasons for his conclusions, which are germane to the thrust of the amendments. He said:

“This is the simplest and most obvious way to comply with the UK’s obligation under the Aarhus Convention in respect of environmental judicial review cases”.

He continued:

“For the reasons stated by the Court of Appeal on several occasions, it is undesirable to have different costs rules for ... environmental judicial review and... other judicial review cases”.

His third reason was that the requirement for permission,

“is an effective filter to weed out unmeritorious cases. Therefore two way costs shifting is not generally necessary to deter frivolous claims”.

They simply do not arise. His fourth point was that,

“it is not in the public interest that potential claimants should be deterred from bringing properly arguable judicial review proceedings by the very considerable financial risks involved”.

He pointed out that:

“One was costs shifting in judicial review cases has proved satisfactory in Canada”.

His final point, which goes to the issue raised by the noble Lord, Lord Lester is that the protective costs order regime,

“is not effective to protect claimants against excessive costs liability. It is expensive to operate and uncertain in its outcome. In many instances the PCO decision comes too late in the proceedings to be of value”.

So with respect to the noble Lord, the protective costs order regime is not, in the view of Lord Justice Jackson, an answer to the difficulty.

[Lord Lester of Herne Hill]

I hesitate to disagree with the Lord Justice, but I do not understand that point, as one can apply at the very beginning, a very early stage, for a protective costs order—certainly in judicial review proceedings. I do not know why he thinks that it is too expensive or comes too late, because that has not been my experience.

[Lord Beecham]

I cannot answer for Lord Justice Jackson, but that is a subsidiary point. His point is that it is expensive to operate and uncertain in its outcome. Therefore, he regards it as an inadequate protection to the one-way costs shifting which the noble Lord, Lord Thomas, has rightly advanced as the best way to deal with these matters. Lord Justice Jackson’s approach was, as counsel’s opinion, to which the noble Lord and I have both referred, makes clear, endorsed by Lord Justice Sullivan’s working party, which was very clear in stating:

“An unsuccessful Claimant in a claim for judicial review shall not be ordered to pay the costs of any other party other than where the Claimant has acted unreasonably—

to go back to the noble Lord’s earlier point—

“in bringing or conducting the proceedings”.

16:30

I rely heavily, as noble Lords will have gathered, on the opinion of learned counsel, which some of your Lordships will have seen, and certainly the Minister, and more particularly—and perhaps in a sense, in fairness to him, more relevantly—those who advise him will have seen. Counsel make some interesting observations. They say:

“It is disappointing to see that whilst the senior judiciary increasingly recognises the relevance of the Aarhus Convention as a requirement of the rule of law, the Government’s own legislative proposals do not recognise, or are not concerned with, the United Kingdom’s difficulties in complying with the Convention.”.

They go on to say, among other points, that,

“it does not appear to have been appreciated by those responsible for Part 2 of the Bill—

this very Bill—

“that if the intention of the Government’s proposals is indeed to reduce the costs of litigation, then the replacement of the need for ATE insurance altogether by the use of QuOCS would have a massive positive effect, particularly when combined with the inability to recover success fees: it would genuinely encourage participation in matters concerning the environment as envisaged by Aarhus. Lord Justice Jackson’s proposals would stand some prospect of success in his aim of promoting rather than impeding access to justice”.

Learned counsel conclude:

“In the circumstances, it is clear from the Aarhus Convention Compliance Committee that current costs rules run contrary to the international treaty obligations of the United Kingdom which the UK voluntarily accepted”.

They go on to say:

“Two detailed reviews relevant to environmental proceedings in England and Wales have subsequently been undertaken and presided over by members of the Court of Appeal. They have been endorsed by the senior judiciary. The primary recommendation was”—

again—

“the use of QuOCS in environmental cases, which would have a dramatic inroad into the ‘costs follow the event’ principle”.

Counsel say:

“By withdrawing the recovery of ATE premiums (… which cannot be met by claimants or their legal representatives) without providing at the same time for QuOCS”,

the Government have retreated from the full proposals of the two reviews conducted by the judiciary. Furthermore, they say:

“The consequence is that the UK, already in breach of its Convention obligations, is diverging from, rather than converging with, its own environmental expectations and those of the international community”.

Finally, they say that,

“claimants who wish to protect the environment and participate in environmental justice are even less likely to be able to do so than at present”.

That is a pretty comprehensive and damning indictment of the Government’s approach to their responsibilities under the Aarhus convention to international law and, more particularly, to potential claimants in this country dealing with significant issues concerning the environment and what is adversely affecting the environment.

The remedy is in the Government’s hands. It is, in their cherry-picking process of dealing with Lord Justice Jackson’s report, to pluck this particular cherry and use it for the benefit not only of the citizens of this country but of this country’s observance of its international obligations. I strongly support the noble Lord’s amendment.

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

My Lords, I am most grateful to the noble Lord, Lord Thomas, for his usual thorough presentation of these amendments and for sending me this opinion of learned counsel, which, as he rightly said, was delivered only 24 hours ago. Even though, as the noble Lord, Lord Bach, will know, the Ministry of Justice is one of the most efficient and speedy departments in Whitehall, the matter is still in the hands of my advisers, and I am sure that we will take it on board. In passing, I should say that I had to clear another piece of paper the other day about asking the advice of learned counsel, and I saw just how much it costs to ask for such advice, so I thank the noble Lord for such an expensive gift.

I was also interested in the confession of my noble friend Lord Lester about accepting success fees. As the debate has unfolded, it has occurred to me that this is indeed a money Bill, but perhaps not in House of Commons terms. Let me also deal with another canard or slur that has been put across the Chamber from the noble Lord, Lord Beecham: that the Aarhus convention is something new to the Government or to government Ministers. Perhaps I can draw his attention to the fact that on 19 October, we in the Ministry of Justice sent out a consultation paper, entitled Cost Protection for Litigants in Environmental Judicial Review Claims, with the specific aim of enabling the UK to implement its obligations under the Aarhus convention. Yet again, when the facts are known, it is clear that the Government are on the case, on the ball and moving forward, despite the attempts of the Opposition to say otherwise.

[Lord Beecham]

It is said that they are in breach of their obligations under the convention.

[Lord McNally]

As I said, we are consulting. I shall return to the question of getting it right. The problem is that the noble Lord, Lord Beecham, is impetuous in so many ways, whereas this Government are determined to get things right—you can see the advice that I get on getting things right.

On Monday, we spent some time discussing QOCS and we heard the concerns of my noble friends and others that the matter should appear in the Bill. This afternoon, I do not want to repeat the more general arguments on these matters, but we need to get the details and the rules right to ensure that they are tailored properly in respect of the category of proceedings to which they apply. For example, in personal injury cases, it may well be that there should not be an initial financial test. However, the position is likely to be different for defamation, and perhaps for environmental cases too, which typically involve more than one claimant—sometimes many claimants. In such cases the costs involved can impact considerably on the ability of the public bodies that are under challenge to perform their general functions.

As the noble Lord, Lord Thomas, explained in moving his amendment on Monday, he was looking for specific words rather than words like “unreasonable”, which he said had such a broad meaning. Indeed, the noble and learned Baroness, Lady Butler-Sloss, added that the word “unreasonable” was liable to cause serious difficulties of interpretation and yet, as the noble Lord, Lord Thomas, has confessed, the word “unreasonably” is in Amendment 157.

It is precisely for those reasons that we are not yet ready to crystallise in statute, and ring-fence away from development in rules, words which are more properly left to the rules, where they can follow detailed discussions with stakeholders. They can be tailored and nuanced for the particular category of proceedings and, of course, the Lord Chancellor will remain accountable for the policy on these issues which is reflected through the Civil Procedure Rules.

Amendments 141, 147, 148, 149 and 150 deal with the recovery of ATE insurance premiums in respect of environmental claims under the Aarhus convention. Amendment 157 would introduce a new clause to provide for costs protection in the form of qualified one-way costs shifting—QOCS—for claimants in environmental claims and, it would appear, for all judicial review claims, whether concerning environmental issues or not.

The Government are, of course, conscious of their obligations under the Aarhus convention. Put simply, the convention requires us to ensure that parties have access to a procedure to challenge relevant environmental decisions that is, among other things, not prohibitively expensive. How we discharge those obligations has been a matter of debate for some time. It was addressed by Lord Justice Jackson in his report and was considered in a number of cases in the High Court and above. Amendments 141, 147, 148 and 149 seek to allow ATE insurance premiums to be recoverable from the other party in these cases. As I indicated in our debate on Monday, the Government's policy is that ATE insurance premiums should no longer be recoverable except in the particular instance of clinical negligence expert reports. Therefore, we do not favour this or any other extension of ATE premium recoverability.

Amendment 157 seeks to apply QOCS to environmental claims, subject to qualification in respect of unreasonable behaviour. The proposed clause would displace any rules of court in this area and provide for the Lord Chancellor instead to have the power to make regulations to extend QOCS to other areas in future. That seems to be something of a departure from the general principle that in civil proceedings, matters relating to costs are regulated in detail by rules of court. It is not clear why the departure would be beneficial.

As noble Lords are aware, the Government are introducing a regime of QOCS in personal injury cases to help balance the impact of the changes to no-win no-fee conditional fee agreements, and in particular as an alternative to “after the event” insurance. Claimants will continue to be able to take out ATE insurance if they wish, but they will pay the premium, which will be lower than the rolled-up premiums presently never paid by anyone other than a losing defendant. Although Lord Justice Jackson suggested that QOCS might be considered for use in some non-personal injury claims, the Government are not persuaded that the case for this has yet been made.

I noted the dispute between the noble Lord, Lord Beecham, and my noble friend Lord Lester about protective costs orders, which are also part of this consultation. As a matter of principle, the Government’s view is that protective costs orders can provide appropriate costs protection in environmental cases. Environmental organisations and the working group chaired by the then Mr Justice Sullivan, to whom noble Lords referred, expressed a preference for QOCS, having argued, including in a submission before the Aarhus Convention Compliance Committee, that an appropriate PCO regime could provide full compliance with the requirements of the convention. With a PCO, it will be clear from the outset what costs the claimant will have to pay if their claim is unsuccessful, while ensuring that some contribution is made toward the costs of public bodies that have successfully defended the claim. As I said, we have consulted on the issue.

The Ministry of Justice consultation Cost Protection for Litigants in Environmental Judicial Review Claims outlines proposals for a cost-capping scheme for cases that fall within the Aarhus convention. The consultation closed on 18 January and we will announce the way forward in due course.

[Lord Lester of Herne Hill]

I had not realised that there was a consultation, and I am delighted to hear that that has now been done. The issue seems to go beyond environmental litigation. Perhaps further thought might be given within the costs rules to a user-friendly procedure in all public interest cases whereby the individual can obtain an order quickly and at the beginning, as recommended by Lord Evershed’s committee in 1950. Lord Evershed recommended that the Attorney-General should be able to certify an issue of public interest where the costs rules would be displaced. I realise that this matter would be for the rules committee, but could consideration be given to that sensible procedure that would be not generalised but case based, on a user-friendly procedural basis, with the judge giving a decision so that people will know where they are from the beginning?

16:44

[Lord McNally]

I am not sure that I am able to commit to anything as rash as following up a recommendation that is a mere 62 years old. As always with interventions by my noble friend, I will take that away, but I should also make the point, given that this is the last of a series of amendments chipping away at—to use the term that I used the other night—the central architecture of the reforms that we are trying to introduce, that we have consulted on these matters. We have indicated the idea that PCOs may be a way forward in our commitment under the Aarhus convention. I will certainly make sure that the learned counsel’s opinion is fully studied. As I have explained, the Government’s view is that the best way forward is within the rules rather than within legislation, but this has given a good airing to the issue. The whole House is now more familiar with the Aarhus convention—I understand it is a Danish town—and we are the better for that debate. I therefore ask my noble friend to withdraw his amendment.

[Lord Thomas of Gresford]

My Lords, it is a relief to know that the Ministry of Justice, like New York, never sleeps. No doubt the opinion will be pored over and there will be further discussions before we get to Report.

I invite my noble friend to do this now. He says that the proper way to proceed is for one-way cost-shifting to be introduced by tailored Civil Procedure Rules. Your Lordships will recall that on Monday the noble and learned Baroness, Lady Butler-Sloss, and I made the point that there should be guidance from Parliament, not simply a discussion between the Executive and the Civil Procedure Rule Committee, about the parameters of those rules and what the boundaries and structure are to be. I would be grateful to know from the Minister the position on this particular point. He is shifting the burden of the success fee and the ATE premium over to the successful claimant. Is that going to be co-ordinated and timed to come into effect at the same time as one-way cost-shifting? That is the key issue. If you do not have one-way cost-shifting, you are shifting to the claimant the liability for the defendant’s entire costs, if he should lose, and consequently an enormous premium. We heard of premiums of £900,000. I am familiar with a premium of £80,000. I think that the standard is in thousands for any sort of claim. If, on the other hand, one-way cost-shifting comes in and the defendants’ costs are paid by the defendants win or lose, we will be concerned with a premium for a much smaller thing, which is the disbursements of the claimant, should he lose. The risk is that much smaller.

[Lord Bach]

We on this Front Bench agree absolutely with the question that the noble Lord, Lord Thomas of Gresford, has asked the Minister. It is crucial. To broaden the point slightly, the great danger in the Bill is that we are changing the current arrangements, but the way that they will work in practice is subject to regulations of which there is no sight at present. We need from the Government a statement about how they intend to implement this part of the Bill if they get it through. We have no idea at all. The example that the noble Lord gave is the best one of all. It is critical, but there are other examples where a great deal relies on regulations that are to be made at a later stage, sometimes to be passed by affirmative resolution, sometimes by negative resolution. It is not really a satisfactory way of changing the civil law in such a fundamental way. I would be grateful if the Minister, in his reply to the noble Lord, Lord Thomas of Gresford, would deal with the general point as well.

[Lord De Mauley]

He did.

[Lord McNally]

The noble Lord is absolutely right. I have given my reply. That was the reply of the noble Lord, Lord Thomas, to my reply. But I am very happy to take the point. We are considering a consultation. We have said that our judgment is that it is better in rules rather than in the Bill.

[Lord Bach]

Should all that not have been done before the legislation comes before one House, let alone a second House of Parliament? The result of the consultation, or the Minister’s consideration of it, will probably not be known until this Bill has become law. Is that not much too late and entirely the wrong way round?

[Lord McNally]

The pained look with which the noble Lord, Lord Bach, comes to the Dispatch Box and implies that the Government is the first Government in the world to bring forward legislation with further consultations needed about specific regulation is a bit rich. The implications of this Bill will come into force in April 2013. We have a period of time for such consultations. As I said before, I take the point that there has to be a synchronisation in these matters. I do not think we are doing anything unusual by legislating in this way, but we take on board the points made in this debate.

[Lord Thomas of Gresford]

I am grateful to my noble friend for saying there will be synchronisation. The scales of justice have been tipped against defendants by this fourfold cost that they have been calling for over a period of time. The purpose of this Bill is to even the scales of justice up. If there is any period between shifting from that side to this side the success fee and the ATE insurance without providing one-way costs as the balance, the scales will go completely in the opposite direction, and it is the suffering claimants who will come out the worst in a situation like that.

I cannot resist coming back to the question of protective costs orders, having heard my noble friend Lord Lester. Protective costs orders are applied for in public interest cases. I am not concerned simply with public interest cases. These could be the private individual, the householder whose house is flooded, in the example that I gave—

[Lord Lester of Herne Hill]

They are also applied for in private lawsuits.

[Lord Thomas of Gresford]

It is as my noble friend says. Lord Justice Jackson examined it and he came to the conclusion that the noble Lord, Lord Beecham, referred to. There is much more discussion to be had. I shall take my noble friend outside—as I once said in relation to one of the Ministers in the previous Government—and have a discussion with him there. For the moment, I withdraw this amendment.

Amendment 141 withdrawn.

Amendments 142 to 156AB not moved.

Clause 45 agreed.

Clause 46 : Recovery where body undertakes to meet costs liabilities

Amendments 156B and 156C not moved.

Clause 46 agreed.

Amendment 157 not moved.

Clauses 47 to 52 agreed.

Clause 53 : Payment of additional amount to successful claimant

Amendments 158 to 162 not moved.

Clause 53 agreed.

Amendment 163

Moved by

[Lord Thomas of Gresford]

163: After Clause 53, insert the following new Clause—
“Third party litigation funding
(1) A third party litigation funding agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of it being a third party litigation funding agreement; but any other third party litigation funding agreement shall be unenforceable.
(2) A third party litigation funding agreement is an agreement under which a third party (“the funder”) agrees to fund (in whole or in part) the provision of advocacy or litigation services to another person (“the litigant”) by a person other than the funder in exchange for remuneration.
(3) For the purposes of subsection (2), “remuneration” includes—
(a) a payment or any other transfer of value representing or calculated by reference to the value of a judgment or settlement; and(b) an assignment of the proceeds (in whole or in part) of any judgment or settlement.(4) The following conditions are applicable to a third party litigation funding agreement—
(a) it must be in writing;(b) it must not relate to—(i) proceedings which by virtue of section 58A(1) and (2) of the Courts and Legal Services Act 1990 cannot be the subject of an enforceable conditional fee agreement;(ii) a multi-party action, representative action or any proceedings which are the subject of a group litigation order; or(iii) any other proceedings of a description prescribed by the Lord Chancellor;(c) it must comply with such requirements as shall be prescribed by the Lord Chancellor.(5) Regulations under subsection (4)(c) may—
(a) require any person which enters into a third party funding agreement with a litigant to first obtain a license from a licensing body to be designated by the Lord Chancellor; and(b) set out conditions to be satisfied in order to obtain such a license.(6) In this section “advocacy services” and “litigation services” are as defined in section 119 of the Courts and Legal Services Act 1990.”

[Lord Thomas of Gresford]

My Lords, in June 2007, the Civil Justice Council—a body headed by the Master of the Rolls and comprising members of the judiciary, the legal professions, civil servants and lay people with knowledge of consumer affairs, CABs, businesses and employers—published advice to the Lord Chancellor recommending the proper regulation of third-party funding; that is, investment by an external party otherwise unconnected to a claim in a lawsuit in order to gain a maximum return upon its investment. In this country, it used to be called maintenance and champerty, and it was both a crime and a civil tort. In 1641, maintenance was described by the jurist Coke in his Institutes as:

“A taking in hand, a bearing up or upholding of quarrels or sides, to the disturbance of the common right”.

“Champerty” is the “maintenance” of a person in a lawsuit on condition that the subject matter of the action is to be shared with the maintainer. It was abolished as a crime in the United Kingdom in 1967 but as recently as July 2009 a solicitor in Hong Kong, where the offence still exists and carries a maximum sentence of seven years, was sent to prison for some 15 months. It remains illegal also in New Zealand but not in the United States.

As the practice has spread across the water into this country, specifically targeted at claim by small and medium business enterprises against large corporations, the Civil Justice Council formed a working party to consider the issue further. Consultations took place in February and July 2008 when a draft code of conduct for a third-party funding, which the working party had produced, was considered.

Following Lord Justice Jackson’s recommendations —he obviously considered this as well as conditional fee agreements—the draft code of conduct was revised. In February 2010, the Civil Justice Council held another stakeholder event to consider the revised code. The working party, under the chairmanship of the very eminent solicitor and Queen’s Counsel Michael Napier, chairman of Irwin Mitchell, which is essentially a leading claimants’ firm, produced a voluntary code of conduct for litigation funders, which was published on 23 November 2010. This voluntary code sets out standards of practice and behaviour to be observed by funders who are members of a newly founded Association of Litigation Funders of England and Wales. Without in any way impugning the very hard work of the members of the working party or the motivation of the new association, I am not at all content that this development in litigation funding should be subject to a voluntary code without any parliamentary debate, approval or control—of course I appreciate that it was put together under the auspices of the Civil Justice Council.

17:00

When Lord Justice Jackson considered this issue in his final report, he recommended that a satisfactory voluntary code to which all litigation funders would subscribe should be drawn up, and to that extent his preliminary recommendation is followed up by this code. But he went on to say that the code should contain “effective capital adequacy requirements” and should place appropriate restrictions on the ability of funders to withdraw support for ongoing litigation. His second recommendation was that,

“the question whether there should be statutory regulation of third party funders by the FSA ought to be revisited if and when the third party funding market expands”.

It is expanding and is continuing to do so and, as Lord Justice Jackson recommended, the question of whether there should be statutory regulation is the question I am raising in this debate.

His third recommendation is very important. He said that,

“third-party funders should be potentially liable for the full amount of adverse costs, subject to the discretion of the judge”.

In the voluntary code, which was published in November, there are manifest weaknesses. Rule 7(a) says that a funder will ensure that a litigant has received “independent advice” on the terms of the agreement, but then states specifically that such advice can be obtained,

“from the solicitor instructed in the dispute”—

the very lawyer who is to be funded by the funding arrangement. The conflict of interest is obvious in such a situation. Rule 8 says that the funder must state in the funding agreement whether he is undertaking “liability for adverse costs”. It certainly does not say that the funder must undertake such a liability. This is directly contrary to the third recommendation made by Lord Justice Jackson, which I made clear to your Lordships a moment ago. The funder could walk away and leave a small business to carry the costs of the other side, which would leave it completely broke. If a funder is to take a percentage of the damages awarded to its clients, which is the purpose of the funding agreement, the funder should bear the risk of paying the other side’s costs if he loses.

Rule 9 of the voluntary code provides that the funding agreement,

“shall state whether (and if so how) the Funder may … provide input to the Litigant’s decisions in relation to settlements”.

It further provides that the funder may terminate the agreement if he,

“ceases to be satisfied about the merits of the dispute;

(ii) reasonably believes that the dispute is no longer commercially viable”.

In other words, the funder may dictate to the litigant that a particular offer to settle must be accepted under the threat that he will withdraw his support. If there is to be fairness, the funder should continue to fund disputes until they are finally resolved. Further, a funder may dictate to counsel how to conduct a case, putting counsel in the particular case in the impossible position of having to choose between the interests of his client and the interests of the funder, who is actually paying his fees and the fees of his instructing solicitor. Rule 9 simply does not match the first of the Jackson recommendations. As I say, for the moment Lord Justice Jackson was prepared for there to be a voluntary code, but that it,

“should place appropriate restrictions upon funders’ ability to withdraw support for ongoing litigation”.

In the face of that recommendation, what does the voluntary code say? “Oh well, he can withdraw if he decides that the case is not going very well.” He can terminate it if he ceases to be satisfied about the merits of the dispute.

I have had a very constructive discussion with Mr Leslie Perrin, who facilitates litigation funding and is a former solicitor. I accept, as he has argued, that if a wrong is done to a business, it is very frequently a contractual wrong that hurts that business’s profitability, so that damages will include not only the cost of putting right the immediate damage but also the profits lost as a consequence of the wrong—it is a commercial situation. A commercial litigation claim could be said to be a business asset and tradable as such. But there are many areas of litigation where a wrong has been done, of which personal injuries is a prime example, where the litigation is not an asset and should not be traded as such. No speculative hedge fund looking for somewhere to get a good return on its money should have an interest, for example, in a share of the damages of a seriously brain-damaged claimant.

While as yet, so far as we can tell, litigation funding has not spread into personal injuries as it has into divorce litigation, there is nothing in the voluntary agreement of November last to prevent it. No categories of case are excluded. According to Mr Perrin, the industry asked the working party to limit the code and the association to commercial litigation but, for some reason that I do not understand, it did not agree to that, so it is wide open for third-party funding to be available in serious personal injury litigation where large sums of money are at stake. I do not regard this as assisting in access to justice; rather, it takes us back to the old days of maintenance and champerty—hence, my amendment.

I do not suggest in my amendment that third-party litigation funding should be banned, provided that it complies with conditions, some of which I set out and others to be prescribed by the Lord Chancellor and brought forward for proper parliamentary scrutiny. It is all very well having voluntary codes, but Parliament, which represents the people of this country, has absolutely no say in what goes into codes of that sort. Under my amendment, proceedings which cannot be the subject of a CFA under Section 58A(1) and (2) of the 1990 Act, which I refer to, are essentially criminal proceedings but they also include family proceedings for divorce, for adoption and for the welfare of children. Sometimes, large sums are at stake in divorce proceedings. That is not an appropriate area for litigation funding to intervene. My amendment also seeks to regulate funders by requiring them to obtain a licence from a designated licensing body so as not to be operating without any control.

Some of your Lordships may have received a letter from an American association. It is not that it wishes to spread the American type of litigation into this country; rather, it wants to prevent it, because it can see from its own experience what problems it can give rise to.

I concede that if in a commercial case a company wanted to give away a third or four-10ths of its damages to a funding firm of this sort, it could do so but, so far as other areas of the law are concerned, the barriers should remain up. I beg to move.

[Lord Davies of Stamford]

My Lords, I was not intending to intervene in this part of the debate, but I was absolutely fascinated by what the noble Lord, Lord Thomas, said. He has done a great service to the House and to the country by bringing forward this matter for parliamentary debate. I am going to disagree with what he actually said, but had he not taken the initiative, we would all have been the poorer. We would not have had to focus on this important subject in the way that we will now need to do.

My concern is quite simple. We are in the process in this Bill of restricting access to legal aid. We thereby reduce the scope for businesses or individuals, whether in a tort action or some other kind of action, to pursue their civil rights in court. I take it for granted that an individual who does not qualify for legal aid but is at the other end of the income spectrum, where he or she can easily afford the costs of pursuing cases and the risks of potentially paying defendants’ costs as well, will prefer to do that and would not want to go into any artificial risk-sharing arrangement with a third party or with lawyers by means of contingency fees or conditional fees. Those lucky enough to retain access to legal aid despite this Government’s restrictions on its access, who are perhaps in the bottom 5 per cent of the population in terms of income or capital levels, and the top 5 per cent of the population who are rich enough to consider litigating and hiring solicitors and barristers will continue to have access to civil justice. But there is an enormous problem for the 90 per cent of the population who will be between those two extremes. We should be concerned about them.

I know that lawyers always like to say that any individual who acts as a litigant in person is making a fundamental mistake—the old lawyers’ joke is that such a person has a fool for a client—and one can understand why lawyers like to put that about. Those people who may feel confident in taking a case forward themselves would probably rightly prefer to do so rather than go into some sort of risk-sharing arrangement with somebody else. Any such risk-sharing or cost-sharing arrangements involve a potential conflict of interest.

There is a conflict of interest in the case of hiring a lawyer on a conditional or contingency fee basis. Clearly, there may come a point when the lawyer himself does not think it worth pursuing the case because it is not a good risk from his point of view but his client wishes to continue to do so. There is that conflict, which the noble Lord, Lord Thomas, discussed with regard to other third-party funding in the case of classical contingent or conditional fee arrangements. But if we now say that such arrangements are not possible and we wish to make it a matter of law that certain types of third-party funding shall not be allowed, we further restrict access to justice.

I put it to the noble Lord and to the House that cases where one is brain damaged, has had a bad accident or suffered medical negligence have great resonance with all of us because they are horrible situations for anyone to find themselves in. Like other noble Lords who have served in the House of Commons, I have come across many cases of that kind. Clearly, any arrangement under which somebody else has a share in any potential damages seems at first sight to be obnoxious. But if the alternative is that one cannot get justice at all because one does not fall into the bottom 5 per cent or the top 5 per cent of the population as I have described, we are in an even worse position.

I accept that the amendment was conceived with the best possible motives and on the basis of considerable familiarity with civil justice, but the effect would be to exclude certain people from any chance of pursuing a case at all because they do not feel able to pursue the case as a litigant in person and they do not have the funds required to arrange a conventional civil action hiring lawyers in the classic fashion. Maybe no lawyer is willing to take them on on a contingency or conditional fee basis, because lawyers do not take a sufficiently optimistic view of the risks involved or the return involved in relation to the risk in particular case. However, some third-party entrepreneur or investor may be willing to do so. The noble Lord does not want to exclude such third-party funders in commercial cases, but he would exclude them in personal cases in a large number of circumstances. The House should think carefully before we exclude or shut off anybody from access to civil justice by any means. The important thing is that there should be full disclosure of the risks and full explanation by those who will undertake to invest in a case as to what the conditions are.

It may well be that there will be points along the line at which there will be a difference between the investor and the litigant as to whether it is worth pursuing the case. That can arise in the case of a commercial third-party investor, or of a friend or family member who is prepared to support a friend or relation in a case. When it comes to the question of a settlement offer, they may take a different view. It is in the interest of everybody that there should be a clear contractual basis, agreed at the outset, as to what happens in those circumstances. I do not think we should exclude anyone from coming to an arrangement that happens, with full disclosure and understanding on both sides, maybe in less than desirable circumstances, to best meet the needs of the case.

17:15

[Lord Boswell of Aynho]

My Lords, I rise in support of my noble friend Lord Thomas of Gresford’s amendment with considerable diffidence, as a layman tiptoeing for the first time into consideration of this legislation. As the noble Lord, Lord Davies of Stamford, has already reminded the Committee, the context is the further constriction of legal aid. I think the concern of all lay people, as well as practitioners, must be that this will in some way inhibit people’s access to justice unless they fall within narrow categories.

I do not wish to detain the Committee at length on personal cases, but I first had experience of this—as typically happens, by chance—in relation to a personal injury claim involving a member of my family, which took place in the 1970s. As it happened to take place on a British-registered ship, which was at that time within United States territorial waters, it gave rise to a certain interest in the forum. At that time there were no contingency fee arrangements at all within the United Kingdom. However, as it was possible to bring litigation within the United States, I was able to avail myself of such an arrangement. I will say no more about it other than that it did provide an opportunity that would otherwise not have been available to me.

Nobody wishes to make it impossible for individuals to pursue their personal injury claims or indeed for small and medium-sized enterprises to have redress for their commercial disputes with large multinational or well-funded companies or bodies. However, it has become clear recently that third-party litigation funding was growing in potential and was a growing practice—and, potentially, a growing problem across virtually all developed countries, broadly simultaneously. I have sought to inquire further into this by means of Parliamentary Question. I go along with my noble friend who moved this amendment very much in the spirit of inquiry to try to focus on the issue and see that it is properly handled. However, I am a little less optimistic than the noble Lord, Lord Davies of Stamford, as to whether arrangements that are based on transparency and the market solution will in fact work to the wishes of the public at large.

It seems that we need a fairly robust code. My noble friend has sketched such a code to manage this, with further details to be supplied in due course by the Lord Chancellor. Those who are practitioners in the field will accept that there has to be some boundary to it. My concerns are threefold. First—and my noble friend has already referred to this—the potential for conflicts of interest can be pretty explicit in the arrangements, where it may be in the interests of the funder to stop the case but not in the interests of the litigant. Secondly, there is the question of transparency. I do not spend my life reading court reports, but they have the names of counsel, the instructing solicitor and, obviously, the parties, so you do broadly know what is going on. However, in cases where people are operating behind that, with arrangements that are being concluded privately, it becomes less clear what is happening.

Thirdly—and I confess considerable distaste for the potential here—one can imagine a situation where it is not merely a matter of somebody taking on a particular venture but where these claims are warehoused, securitised or packaged in a bundle and sold on to third parties who have no interest in the interests of the litigant and probably no knowledge of who they are. It might simply become a kind of impersonal transaction. I feel myself very uncomfortable with that. If I go no further than members of my family who, unlike myself, happen to be lawyers, there is a certain resonance—even if they are not specialists in this area—in the concepts of maintenance and champerty. Those are enshrined in our traditions for a very good reason. We do not want to have a purely commercial interface in these matters. On the other hand, we do not want to stop access to justice or stop perfectly reasonable and above-board arrangements by responsible people operating within a framework.

I feel a welling-up of some disquiet in this area. I have a feeling that we need to set boundaries on it and a fear that there might be potential for some hard case or scandal that would excite public interest—and the public would then ask how we had slept on this. I look forward to the Minister’s reassurance that the Government are on the case and that it will be sensibly—not restrictively but properly—regulated and observed.

[Lord Mackay of Clashfern]

My Lords, the introduction of conditional fees into our system was an innovation in the rules against maintenance and champerty. Therefore, this is an area with which, at least some time ago, I had a certain degree of familiarity. It carries with it the risks recognised in these prohibitions that went back to the very beginnings of the system of common law.

When I sought to introduce the conditional fee, I tried to do it with a good deal of care as to the areas in which it would operate, as my noble friend Lord Thomas of Gresford reminded us. I was certainly of the view that it would be developed according to our experience of how it worked. On the whole it has worked in the sense in which I thought that it was likely to work when I proposed it. It was to deal with the area that the noble Lord mentioned of those who did not qualify for legal aid but were not sufficiently well resourced to undertake litigation on their own. It met quite a considerable degree of need in that area, and it has been allowed to develop.

Of course, changes were made. When I introduced the conditional fee, I did so on the principle that the defendant had no real responsibility for the relationship between the claimant and his lawyer and therefore that the arrangement by means of a conditional fee should not affect the liability of the defendant. Those of your Lordships who are old enough to remember the presence of Lord Simon of Glaisdale in this House will remember that very often, when anything about legal aid came up, he dealt with the development under which, if a party had legal aid, the defendant would not be allowed to recover costs without leave of the court. The contribution of the claimant with legal aid to the defendant’s costs was limited—often to zero. Lord Simon of Glaisdale thought that was completely unjust, and your Lordships may remember that it was not once that he said that. Ultimately, I began to understand the force of his argument. However, that remained the law on legal aid, and I suppose that it is still the law on legal aid.

When I was introducing the conditional fee I did not feel that it was the same thing as a statutory provision for the claimant which was provided by legal aid. It was a private arrangement between the solicitor or the lawyers involved and the claimant, so I did not have any such effect. In due course, my successor introduced effects on the defendant of that particular relationship and the result was, as we know, a considerable escalation in the cost of litigation, which Lord Justice Jackson analysed in a report that cannot be criticised for its brevity. The consideration was very detailed indeed, but I think that in the end he came to the conclusion that the system as it originally operated was more just than the new system. I, of course, therefore support Lord Justice Jackson's conclusion in that regard.

The noble Lord, Lord Bach, points out to me from time to time, when we have a chance to discuss this, that we are not just going back to my situation because legal aid was even more liberal in my time than it seems to be now. If this Bill is passed without any effect on the legal aid proposals, then it will continue to be so, but if the legal aid proposals are effected, there will probably be rather less legal aid than at the moment—certainly a good deal less than when I was dealing with these matters. To that extent it is a different situation, but from the point of view of the litigant in connection with conditional fees, what Lord Justice Jackson recommended was to go back to my system.

That was, as I said, an innovation on the rules against maintenance and champerty because the lawyer was given an interest in the outcome of the litigation, which on a strict view of these rules might not have been allowed. However, statute was able to allow it and there was no further question about that. Third-party funding is a further development, which goes into the area where these dangers had been seen for many years. I therefore respectfully suggest to your Lordships that that is an area in which a good deal of caution is required before we allow it. For example, in relation to the conditional fee we allowed it in certain areas but not in others. In particular, as my noble friend Lord Thomas reminded us, it was not allowed in the criminal area or in family law. If third-party funding is to become at all common in our courts, it needs to be subject to fairly careful control. Otherwise the dangers foreseen in the old law will occur.

I cannot think of a better way of doing that than by giving the Lord Chancellor power to regulate the situation. He can, of course, from time to time, alter these regulations as he sees the practice developing. For example, if some unforeseen difficulty arises he could restrict further. If on the other hand it seems to be successful, he could open the scope further. I strongly support the principle of the amendment moved by my noble friend Lord Thomas of Gresford. The detail of it will require to be worked out—primarily by regulation, I should have thought—and the question is whether the scope of this amendment is adequate to give sufficient power to the Lord Chancellor to control all aspects of the matter.

This seems to be a pretty thorough kind of amendment, but obviously I await the Minister’s comments on the matter. That regulation is required seems absolutely clear. A voluntary code, particularly one that falls short of Lord Justice Jackson’s recommendations on the matter, is not at all sufficient. This needs statutory control under regulation, particularly in relation to the costs that the third party will have to bear if the litigation is unsuccessful. For example, if the third party can get out of the contract before the case goes to full proof, is he thereby going to escape the costs of the litigation that he has taken responsibility for helping to start?

There are difficult issues connected to this that are dangerous to the justice of the system that we all prize. It therefore seems very wise that the matter should be the subject of statutory control by regulation in the hands of the Lord Chancellor.

17:30

[Lord Beecham]

My Lords, this has been a short but interesting debate. I shall not detain the House long. I very much welcome the contributions by my noble friend Lord Davies, the noble Lord, Lord Boswell, and in particular the noble and learned Lord, Lord Mackay. I have some sympathy with my noble friend’s approach; he sees in third-party funding arrangements an alternative source of funding for cases that might not otherwise be advanced because of other changes that are in hand. My problem with that is that in effect he is throwing a lifeline to the Government to pursue that very restriction, and that does not serve the cause of access to justice.

The noble Lord, Lord Boswell, rightly drew attention to the concerns about this matter, and the remarks by the noble and learned Lord, Lord Mackay, clearly constitute a significant degree of support for the case advanced by the noble Lord, Lord Thomas. It is clear that we are potentially seeing a sea change in the way that some litigation will be funded in a way that runs contrary to the traditions of justice in this country. I note that the noble Lord, Lord Thomas, referred to hedge funds, and I think he is right; there is a danger here of legal hedge funds, as it were, being created and a secondary market developing, and who knows whence the funding of those organisations will derive? Experience in the United States is not encouraging, as the noble Lord, Lord Boswell, reminded us. I understand that in America, particularly in divorce cases, huge sums are in play.

The noble Lord, Lord Thomas, has done the House a great service in identifying the issues here and in coming up with a viable framework that could be put in place in order to deal with the potential difficulties. I think that the view of the House, from those noble Lords who have spoken, is that a voluntary code simply will not suffice, however well intended the motivations of those who sought to produce one—and they clearly were well intended. There needs to be a more rigorous structure, and the reference by the noble and learned Lord, Lord Mackay, to the Lord Chancellor making regulations, coupled with the ideas set out in the noble Lord’s amendment, offer a way forward.

If at this stage the Minister cannot give a clear nod to the amendment, and I can understand if he cannot, then I hope at least that further discussions can be held on the matter and an agreed position put forward on Report. We do not want this genie getting out of the bottle, to which it could not be returned, by default. There are issues here of great significance and we hope the amendment will provide the basis for taking matters forward in a way that can be agreed across the House—I think there is a general interest across the House in this—to the advantage of litigants and the cause of justice itself.

[Lord McNally]

My Lords, in 1962—which is now, sadly, 50 years ago—part one of my degree course contained a subsidiary paper on English legal institutions. About the only thing I can remember from that course is the concept of champerty and maintenance. It therefore came as something of a shock to be told that it no longer applied, and indeed had not applied for some time.

[Lord Bach]

The Minister has been misleading us all along. He has played the role of a non-lawyer with immense skill during the debate. I have asked him many questions in our debates but now the truth is out—he is a lawyer.

[Lord McNally]

I have been trying to keep that quiet. The paper I mentioned was one of nine papers that I took in 1962 for my economics degree. The other day I found the statistics paper, which evidently I had passed. However, not only did I not know the answers to the questions, I could not understand the questions.

[Lord Dubs]

Nothing has changed.

[Lord McNally]

I think I had better get on to the brief.

[Lord Beecham]

Could the noble Lord offer his services to the Office for Budget Responsibility?

[Lord McNally]

My Lords, this has been an interesting and useful debate and I am grateful to my noble friend for outlining the matter with his usual thoroughness. Third-party litigation funding has developed and—to use the phrase deployed by the noble Lord, Lord Boswell—there is a welling up of disquiet about it. The noble Lord, Lord Davies of Stamford, takes what I would describe as the Robin Hood approach to this matter and views it rather optimistically as a way for the rich to help the poor. The noble Lord, Lord Boswell, was a little more sceptical about that scenario and drew on his American experience of how the process works. I think that people are a little worried when investors and investment opportunities are mentioned—the noble Lord, Lord Davies, mentioned that matter—when we are talking about the law.

I was delighted to hear the noble and learned Lord, Lord Mackay of Clashfern, mention Lord Simon of Glaisdale, who I remember speaking from the Cross Benches. You used to see the colour draining from a Minister’s face as he realised that Lord Simon of Glaisdale had thoroughly read and filleted the relevant Bill and knew exactly the contradiction in the government amendment that he was about to dissect. I experience that same feeling of foreboding whenever the noble and learned Lord, Lord Mackay, rises to speak. The noble and learned Lord said that Lord Justice Jackson could not be criticised for his brevity. All I can say to him is that Lord Justice Jackson is not alone among lawyers in that failing. I look at no one in this House in saying that.

Like other noble Lords, however, I take on board the noble and learned Lord’s point about the need to exercise caution in this matter. I think that the noble Lord, Lord Beecham, caught the mood of the House when he referred to the concept of legal hedge funds being established and cases being bundled up as investment opportunities as something that gives rise to rightful concern.

The code of conduct was drawn up with the specific requirement that the matter would be revisited if and when third-party funding expanded. It is a question of whether it has now expanded to a point where the matter should be revisited. As the noble Lord, Lord Thomas, explained, the Civil Justice Council published a voluntary code of conduct for litigation funders on 23 November. It was drawn up with the co-operation of the Association of Litigation Funders.

What I can say is that some serious points have been made during this debate, to which I have listened extremely carefully. My right honourable and learned friend the Lord Chancellor would like further time to reflect on these matters. They are serious, and some serious and worthwhile advice has been given. I see that the noble Lord, Lord Davies, is about to leap to his feet, and perhaps I may say that there was good and useful advice on both sides of the argument. I ask my noble friend to withdraw his amendment so that the Lord Chancellor can reflect on this issue. I shall not sit down if the noble Lord, Lord Davies, wishes to intervene.

[Lord Davies of Stamford]

The noble Lord is extremely kind. Does he agree that the best way of looking at this situation is to try to find the least undesirable possibility, or a less undesirable possibility, of a whole lot of very undesirable possibilities? Those are the only possibilities that exist. It would be lovely if legal aid was universally available for civil justice, and there were people in the 1940s who thought that that might happen. Sir Hartley Shawcross was saying at the time that he thought that legal aid could be turned into a kind of National Health Service equivalent for civil justice. We know that that is not financially conceivable.

The Government are engaged in further cutting back access to legal aid. I disapprove of that because it is an undesirable objective. We introduced conditional fees. I remember having a conversation with the noble and learned Lord, Lord Mackay, after I introduced an access to civil justice Bill in the House of Commons. He asked me not to take it any further because he was thinking of introducing conditional fees as a government initiative. I agreed with that at the time. He said that the Bill had certain inadequacies and did not cover all cases. However, when we introduced contingency fees, a lot of perversities were attached. I concede that, at first sight, investment in a tort case just as a commercial transaction seems unedifying and unattractive. However, I put it to the noble Lord that all these solutions are undesirable. The most undesirable solution of all might be further to restrict access to civil justice for whole categories of potentially meritorious cases.

[Lord McNally]

My Lords, I am sure that that postscript will be studied by the Lord Chancellor, and he will carefully study this debate. As I was saying in my concluding remarks, I thank my noble friend Lord Thomas for introducing this subject and noble Lords for expressing a variety of views on it. The Lord Chancellor would like further time to reflect and I ask my noble friend to withdraw the amendment.

[Lord Thomas of Gresford]

My Lords, I am most grateful to all noble Lords who have spoken. I accept that the opposing view, put forward by the noble Lord, Lord Davies, was certainly an arguable one. I have not suggested that third-party funding should be banned but that it should be subject to statutory regulation, as opposed to the voluntary code.

I could not help reflecting on my rugby days and the occasional game in which the leader of the forwards, an extremely formidable person, would observe the scrum-half dropping the ball and say to us in the pack, “Boys, they’ve had their chance. We’re not going to give it to them again”. Consequently, everything changed and we adopted a different tactic.

Here, a voluntary code has been brought in. They have had their chance. In formulating the voluntary code, they did not include what Lord Justice Jackson rightly set out as the essential needs of such a code. They decided not to do that. When approached by the industry to say that they should limit themselves to commercial litigation, they decided not to do that. A two-page code has been produced of nine clauses which gives the broadest possibilities to the funders for the way in which they operate. I am not satisfied with that. I am most grateful to the noble and learned Lord, Lord Mackay, and the noble Lord, Lord Boswell, for their support. There is a perception of a genuine problem arising.

I look forward to further discussion with my noble friend and, perhaps, the Lord Chancellor, and we will see whether we can take forward this matter for Report but, for the moment, I beg leave to withdraw the amendment.

Amendment 163 withdrawn.

17:45

Amendment 164

Moved by

[Lord Thomas of Gresford]

164: After Clause 53, insert the following new Clause—
“Third party’s insurance company
(1) A third party’s insurance company may not solicit a claimant who has a cause of action for personal injuries against its policy holder, to settle that cause of action where to the knowledge of the insurance company, the claimant is legally represented either under legal aid or a conditional fee agreement.
(2) A third party’s insurance company may not make an offer to settle in circumstances not prohibited by subsection (1), unless—
(a) it has obtained adequate medical evidence of the personal injury and has disclosed it to the claimant; and(b) the claimant is advised when the offer is made of his right to obtain legal advice; and(c) the offer is in full and final settlement of the cause of action.(3) Any settlement made in breach of subsections (1) and (2) shall be void.”

[Lord Thomas of Gresford]

I apologise for wearying your Lordships once more. The amendment would ban the practice of third-party capture life insurance companies. Third-party capture is something with which many people, including many insured people, will not be familiar, but I have heard about it. Frankly, it is a nefarious practice.

The amendment would ban an insurance company—we are talking about banning in this amendment, not regulation—from directly contacting third parties who have been involved in accidents. That is currently commonplace behaviour following road traffic accidents. An accident happens, two drivers exchange with their details, driver A submits full details to his or her insurer and that insurer contacts driver B and offers an early settlement, usually at a much lower rate than would be achieved through due legal process. Insurers frequently make offers to accident victims that are far lower than the claim is worth, denying a person who has suffered an injury caused by someone else the redress that they deserve. They frequently make settlement offers without proper medical examination to ascertain the full extent of the injury, again denying the accident victim real evidence-based representation.

In this way, insurers seek to close off a claim without offering accident victims the opportunity to seek independent legal advice. There is obviously a conflict of interest. Insurers are acting both for the defendant, their policyholder, and the accident victim. Given that the insurers’ primary objective is to minimise the level of payments, they have little interest in securing a fair deal for accident victims.

There is another, equally unpleasant practice carried out by insurance companies where they contact a third party who has been injured in an accident with one of their policyholders and suggests that he or she makes a personal injury claim through their legal services arm. Other insurers simply refer the case details on, at a price—we will be dealing with referral fees shortly—to an independent personal injury lawyer. That is a major revenue stream for insurance companies, but it overrides common sense and is a substantial conflict of interest for insurers.

Since I tabled the amendment, I have been approached by the Association of British Insurers. It has kindly sent me its code of practice. The ABI code of practice for third-party assistance occupies some 11 pages, unlike the two-page code I was referring to in the previous amendment, and presents advice for insurers on how to contact unrepresented claimants, what they are to say to them about the injuries that they have received, how they are to deal with the damage to their vehicles and how to hire other vehicles. A section headed “Managing the Relationship” says:

“This section sets out how the insurer will manage the relationship with the unrepresented claimant where they have agreed on a provision of services, and covers where a claimant goes from unrepresented to represented”.

It sets out the policy, how to arrange medical treatment and so on. I suppose that in one way this could be said to be good practice. If the insurer is to be allowed to interfere with the other side in this way and to make offers of settlement, it is good practice to advise him to get a proper medical report and so on, as the ABI code says. However, there is absolutely nothing to enforce it. An insurer—and there are many insurance companies—may have a copy of the ABI code of practice but there is nothing to require him to adhere to what it says. Therefore, not only can the insurer ignore the provisions of his own code of practice but he can directly approach the other side. That is what my amendment seeks to prevent. I beg to move.

[Lord Dubs]

My Lords, I should like to speak to Amendment 164ZA in my name and give my support to Amendment 164, which has just been moved by the noble Lord, Lord Thomas of Gresford.

The Bill contains a series of proposals that attempt to dent access to justice for people who have suffered harm. It reduces their damages quite dramatically by taking away the recoverability of success fees and “after the event” insurance premiums. The referral fee ban may go some way to curbing the abuses of some claims management companies, but it will also sweep up many organisations, including important victims’ charities and membership organisations, that do a lot of good hard work in ensuring access to justice, and it will do nothing to curb some of the abuses that have inhibited access to justice.

The noble Lord, Lord Thomas, referred to third-party capture. What is it and why is it so controversial? Perhaps I may quote from the Financial Services Authority’s guidelines on third-party capture:

“Third-party capture (or third-party assistance) is when an insurer deals directly with a person who has a potential claim against their policyholder, in order to investigate and settle the claim. Typically, an insurer offers a compensation payment to settle the claim directly to a third party, rather than settling through a legal representative for that party. This is mainly used for third-party motor claims. But sometimes it’s used in other types of insurance, such as employers’ liability.

Concerns have been raised by industry bodies and consumer groups that this practice could mean third parties do not receive fair and reasonable treatment and compensation.

The handling of all insurance claims by insurers—including third-party claims—is regulated under the Financial Services and Markets Act 2000. This means that an insurer’s conduct towards third parties must comply with our Principles for Businesses and, where relevant, the claims handling rules in chapter eight of our new Insurance Conduct of Business Sourcebook ... Complying with our Principles for Businesses includes acting with integrity, due skill, care and diligence and observing proper standards of market conduct”.

The trouble is that that is not how it works in practice, as the noble Lord, Lord Thomas of Gresford, has clearly shown.

The system is used by insurers, in their drive to maintain and increase profits, to collect premiums but reduce the amounts they pay out. In short, the insurers want to be their own judge and jury. The system should protect legitimate claimants who may have suffered great harm and be in great mental anguish and who are therefore susceptible to an approach that undermines their rights but ends the process quickly. They should receive what the law says they are entitled to, not what the insurance company says it is prepared to pay, and there is a big difference between the two. In the old days, it was not unusual for the same solicitor to represent both purchaser and vendor in a conveyancing transaction. Of course, there were clear conflicts of interest and major problems as a result. Thankfully, that practice no longer occurs.

Third-party capture has the same risks to consumers attached to it. The insurer, who has a responsibility for paying out on a claim, also decides how much to pay, more often than not on the basis of no, or inadequate, medical evidence and without the claimant having the benefit of legal advice. There could not be a clearer conflict of interest between a big insurance company playing the numbers and an unrepresented, unadvised claimant, but the great irony is that insurers end up actively encouraging claims with the direct approach of offering to settle quickly without the purported inconvenience of a medical examination.

A further irony is that the idea of putting forward a whiplash claim can be put in the mind of a claimant when they had not originally thought of claiming. Of course, the newspapers are full of such behaviour. The insurers are, in some respects, playing the numbers. They think that if they can buy off 10 whiplash cases for, say, £1,000 or so—even if some of them are, dare I say, fraudulent—it will cost them less than paying out the correct compensation to properly advised claimants on, say, four or five of them. That benefits insurers significantly. It can be no surprise that that has led to an increase in low-value whiplash claims and the undersettlement of more serious claims.

The insurance industry and the personal injury industry have been playing games for too long at each other’s expense. The result has been that genuine victims of harm lose out—and lose out significantly. Third-party capture is a damaging practice and I urge the Minister to accept either this amendment or the other one.

[Lord Neill of Bladen]

I support this amendment. The practice that it outlaws seems to be absolutely disgraceful, with an insurance company being paid by its own side—by the defendant—and then approaching the plaintiff to try to do a cheap deal with him for the benefit of the defendant. It seems to me that the conflict of interest is so gross that it ought not to be permitted at all. I am a little surprised by the words in the amendment, which mention knowing that the plaintiff is represented, because I am not quite sure how the amendment would cover a situation where the plaintiff had no representation. When thinking about how one would refine the language, I think one might consider taking out that qualification, because, with a general ban on this practice, your Lordships would simply agree with the amendment.

[Lord Bach]

My Lords, we welcome Amendment 164 in the name of the noble Lord, Lord Thomas of Gresford, and Amendment 164ZA in the name of my noble friend Lord Dubs. I also welcome the remarks of the noble Lord, Lord Neill of Bladen.

Amendment 164 is really about motor insurance and motor accidents. All Members of the Committee will agree that motor insurance is a social good. It is unique among financial service products in that it is not just necessary but carries with it the coercive powers of the law. As we all know, failure to insure a motor vehicle is a criminal offence with a fixed penalty of having the vehicle wheel-clamped, impounded or destroyed or facing a court prosecution and the imposition of a maximum fine.

That is all well and good and we all agree with that philosophy, but the private industry that delivers this social good is, as has already been said in this short debate, frankly deeply dysfunctional at present. That is perhaps an understatement. Its protagonist, the road traffic personal injuries sector, which comprises 75 per cent of all litigation, has developed deeply dysfunctional behaviours too. The arms race between road traffic personal injury lawyers and the insurance industry is completely dysfunctional.

The Transport Select Committee in another place has studied this twice in the past year. My right honourable friend Jack Straw has led a campaign to fix these structural issues in a market that is very flawed. We have seen the rise of an industrialised road traffic accident personal injury market, aggressively marketed as though it were a consumer good and operated a bit like a sweatshop, with non-lawyers hired at cheap rates to process hundreds of thousands of claims a year. This number is still growing at a startling rate.

18:00

Success fees, much criticised in our debates, are not to blame for the rise in the case load. We introduced an RTA portal that has operated for nearly two years. It compresses timelines, fixes costs and increases efficiency. It has done well. No less a figure than the Prime Minister commended it and wants to expand it to other areas of low-value claims. The portal has a maximum success fee of 12.5 per cent. The Association of British Insurers and Keogh and Co—well known lawyers in this field—told me and my colleagues in a recent meeting that ATE insurance is very low in this field: well below £100. However, the burden of litigation keeps increasing, despite the fact that the post-1999 regime of success fees and ATE simply does not exist in this area. Why does this happen? It is partly the result of decisions taken by the industries themselves, including the rise of aggressive marketing techniques, which we will debate shortly. The corollary to the personal injury market dysfunction has been the behaviour of the insurance industry itself, as the noble Lord, Lord Thomas of Gresford, said in his opening remarks.

The issue gives rise to the claim, believed by 83.6 per cent of the population, that we live in a compensation culture, when all the reports that have been received, including that of the noble Lord, Lord Young of Graffham, suggest that this is more of a perception than a reality. It gives a bad name to other, legitimate claims. For example, 5 per cent of claims are employers’ liability claims, often made by trade unions on behalf of their members. They get a bad name because they are meant to be part of a compensation culture, but they are not; for the most part they are legitimate claims. What are not legitimate are claims that are suggested, recommended and almost forced out of people who have been involved in road traffic accidents.

The insurance industry and those who push claimants toward getting money are colluding—that is not too strong a word—in damaging each other. As the Transport Select Committee in another place found, by loading charges such as expensive car hire and body shop bills on to each other, they try to damage each other's profitability. This mutual sadism would seem almost economically rational if it did not seem so irrational in every other way. The incidence of third-party capture, which we are debating, has risen. It is a technique whereby insurers get referral data, cold-call often genuine victims and try to get them to settle early—and cheaply, as has been said. They claim that they are doing so to lock out personal injury lawyers, and certainly that is the effect. However, people who have been genuinely injured and deserve compensation are often attracted by the thought of a lump sum up-front without knowing their rights to full restitution.

We need to address this all together. No doubt we agree on the basics. I hope that the Government are seriously thinking of putting down on Report the provisions of the Private Member’s Bill that my right honourable friend Jack Straw MP introduced. If they do, I suspect that they will have not only our support but that of practically the full House. The insurance industry is trapped in practices that drive up premium costs. I commend the noble Lord, Lord Thomas of Gresford, and my noble friend Lord Dubs on tabling their amendments and starting the debate in this House. The matter was discussed in the other place—perhaps not as well as it should have been—and the discussion must continue. We look forward very much to the Minister's reply.

[Lord McNally]

My Lords, I thank my noble friend Lord Thomas and the noble Lord, Lord Dubs, for introducing the matter. I also thank the noble Lords, Lord Neill and Lord Bach, for their contributions. Part of the latter's contribution was a warm-up for the further debate that we will have on referral fees, and I will make two points about his comments. First, he said that the insurance industry was trapped in practices that drive up premiums. That would be fine if the insurance industry paid the penalty for that merry-go-round, but the reason that there is so much indignation is that the cost falls on the poor consumer. That is why there seems not to be much incentive in the industry to deal with this; companies casually pass on increased costs to the consumer, as we have seen with the escalation of insurance premiums in this area. Secondly, I join my right honourable friend the Prime Minister in praising the road traffic accident portal, which is working extremely well and we are actively looking at where else it could be applied.

As my noble friend Lord Thomas and the noble Lord, Lord Dubs, explained, Amendments 164 and 164ZA would prohibit an insurer making an unsolicited approach to potential claimants in a personal injury case if the insurer was aware that the claimant had legal representation. The amendments also specify the requirements that must be met before an insurer may make an offer to settle such a claim where a claimant does not have, or is thought not to have, legal representation. This includes a requirement to obtain adequate medical evidence of the injury and to advise the claimant of their right to obtain full legal advice before accepting the offer, and to make it clear to the claimant that the offer to settle is full and final. In either of these cases, a failure on the part of the insurer to observe the provisions would render any settlement void.

Third-party contact is the practice by insurers of making an early settlement offer to a claimant or third party where the insurer's policyholder is at fault in a car accident. The Financial Services Authority regulates the insurance industry and requires that insurers treat their customers fairly at all times. This would cover third-party claimants. I should explain that apparently the industry prefers the term “third-party contact” to “third-party capture”. I will leave it to noble Lords to make their choice on that.

[Lord Clinton-Davis]

Speaking from years of experience in this field, I know that the term “full and final settlement” is often used by insurers at the very beginning of proceedings and negotiations, but I do not think that it is adhered to. It is often possible to obtain a better settlement, so the term is ignored.

[Lord McNally]

The noble Lord says he speaks from very long experience. As this Bill progresses, I have found that quite often noble Lords on all sides of the House who have more experience than me of the legal profession tell me that there is often a gap between what is written down and the reality of the day-to-day practice.

Third-party contact does not, in itself, cause detriment to consumers and may be to their advantage as a claim can often be resolved quickly. In addition, this practice can allow insurers to reduce the legal costs associated with handling a claim, and this in turn reduces costs for all policyholders. However, I am aware of concerns around the potential risk of conflict of interest and the need for the claimant to have independent legal advice before any settlement is agreed. The FSA undertook a review of third-party contact during 2009-10 and did not find conclusive evidence that unrepresented third parties could have achieved higher compensation had they obtained independent legal representation.

Following the FSA’s review, which was referred to by the noble Lord, Lord Thomas, the Association of British Insurers published a code of practice, to which he referred, in June 2010. The code contains specific guidance for insurers on contacting claimants. This limits unsolicited contact. For example:

“Insurers will not make unsolicited visits to an unrepresented claimant at their current address, including hospitals”.

I know we will be returning to some of this later. The code also requires that claimants are informed of their right to seek independent legal advice and of other options available to them to resolve their claim. As I have indicated, the practice was reviewed in 2009-10 but was not found, overall, to be disadvantageous to claimants.

In summary, most of the issues that these amendments seek to address in respect of the handling of third-party contact claims are already covered by existing regulation. The FSA rules require that insurers fully inform third-party claimants of their legal rights, including to independent legal advice, and of alternatives to settling directly with the insurer. In the light of this, we do not believe it is necessary to go along the lines of the noble Lord’s amendment, and I ask him to withdraw it.

[Lord Thomas of Gresford]

I am disappointed with that response. I do think it adequately addresses reality as it exists today in the approaches by insurers to accident victims.

In answer to the noble Lord, Lord Neill of Bladen, subsection (1) of my amendment prohibits the third party’s insurance company soliciting a claimant,

“where to the knowledge of the insurance company, the claimant is legally represented”.

Subsection (2) refers to a situation where that is not the case: the claimant is not legally represented or the insurance company does not know that he is legally represented. It sets out three terms: that the offer to settle can be made only when the insurance company,

“has obtained adequate medical evidence … and has disclosed it to the claimant; and … the claimant is advised when the offer is made of his right to obtain legal advice; and … the offer is in full and final settlement of the cause of action”.

The sanction that I have quite deliberately put into this amendment is not that it is an offence or anything of that sort but that a settlement made in breach of those subsections shall be void, which means, in effect, that if a person has been bought off for a small sum, he can reopen the matter without any problems. He can go to a solicitor, get proper advice, get a proper medical report and come back. To my mind, that appears to be the right way forward.

[Lord Neill of Bladen]

Another sanction would be that if a settlement has been made, the money is irrecoverable. Under a void agreement, insurers might get their money back again, but you could have a provision expressly about “money paid by way of settlement”, because a claimant may not find out until later that he has been swindled.

[Lord Thomas of Gresford]

I am very grateful to the noble Lord for that suggestion.

This problem will become more and more obvious as time goes on. As I said, I am disappointed with my noble friend’s reply, but for the moment, I beg leave to withdraw the amendment.

Amendment 164 withdrawn.

18:15

Amendment 164ZA not moved.

Clause 54 : Rules against referral fees

Amendment 164A

Moved by

[Lord Beecham]

164A: Clause 54, page 39, line 20, at end insert—
“and in either case, the regulated person and the person by or to whom the business is referred, each act in the course of a business carried on for profit”

[Lord Beecham]

My Lords, the amendments in this group refer to referral fees. Recent years have seen an explosion of growth among what might best be described as parasitic commercial organisations—claims management companies and the like—seeking to obtain part of the financial stream that flows when litigation occurs by charging for the referral of clients to lawyers. Paradoxically, it might be thought, some of this is fuelled by the very insurance companies that complain about the compensation culture and the costs of litigation. Clause 54 very properly seeks to prohibit referral fees to and by regulated persons, who will include claims management companies, lawyers, insurers and perhaps others. Perhaps slightly counterintuitively, for the purposes of the legislation a referral fee need not take the form of a payment, but could, for example, be an offer by a lawyer to take on work at a reduced rate or for no fee. However, the potential for abuse of the system is apparent, and the Bill seeks to address it.

The amendments tabled in my name and in the names of other noble Lords seek to improve the wording of the Bill. Perhaps I may briefly outline what they do. Amendment 164A would exempt not-for-profit organisations from the operation of the ban on referral fees. It would take them outside the category of regulated person for the purposes of the ban. Of course, there will be many membership organisations—charities, for example—that will come into that area. I understand that some charities refer people for legal and medical advice and any sums arising from those referrals go back into the work of the charity or the membership organisation. That seems a perfectly reasonable category to take out of the provisions of the Bill.

Amendment 164B is a consequential amendment making it clear that regulated persons would be businesses carried on for profit. It is a corollary of Amendment 164A, as is Amendment 164C, which is another consequential amendment. More substantively, Amendment 166 provides:

“A regulated person is not in breach of this section if … that person is a solicitor; and … the body to which the payment is made for the prescribed legal business is a registered charity that has been granted an exemption by the claims management regulation unit”.

Again, both the person making the payment—the solicitor—and the body receiving it—the charity—would be taken out of the scope of the provision.

We support Amendment 166ZA, tabled by the noble Lord, Lord Pannick. The noble Lord will of course address this matter, but the thrust of the amendment seems to be to except from the ban a referral from one solicitor to another. This can easily arise in the course of practice where a case, either from the outset or it becomes apparent, is somewhat beyond the experience and expertise of a particular firm but a good deal of work may have been done on it and in any event it is not unreasonable for a referral fee to be paid.

Perhaps more significant is Amendment 166ZB, in the names of the noble Lords, Lord Martin of Springburn and Lord Elystan-Morgan, and my noble friend Lord Collins of Highbury, which would take out of scope of the ban the relationship between trade unions and their members. I speak with long experience of these matters because I personally acted—the firm, for which I am now an unpaid consultant, continues to act— for a number of trade unions. The relationship there is not simply the passage of a name of a member but, as your Lordships will no doubt hear, one in which a good deal of administration is required and where the union is performing a service on the part of the member that will ultimately benefit the conduct of the case and therefore the solicitors involved in it. Again, it seems quite reasonable in that instance that a fee might become payable and it is unnecessary to bring that sort of relationship within scope.

Finally, Amendments 169 to 171 to Clause 56 are connected amendments. Instead of allowing the Treasury to make regulations enabling the Financial Services Authority to monitor and enforce compliance, they make this an obligation. Amendment 169 substitutes “shall” for “may” and Amendment 170 requires rather than enables the FSA to take action. Similarly, under Amendment 171 it would become a requirement for the Treasury to make rules outlining circumstances where payments are not to be treated as a referral fee. This echoes the Lord Chancellor’s powers proposed under Clause 55(8).

None of this seeks in any way to detract from the thrust of the Bill’s proposals but rather tailors them to the realities of the issues that the Bill seeks to address and to make better sense of what is in principle a sound proposal that the Opposition support. Accordingly, I beg to move.

[Lord Pannick]

My Lords, Amendment 166ZA in this group is in my name. I am grateful to the noble Lord, Lord Beecham, for expressing support for it.

The amendment would exempt solicitor-to-solicitor referral fees from statutory prohibition. I am puzzled as to why the Government think it is appropriate to impose a statutory prohibition on such referral fees. I am puzzled for two reasons. First, there is a public interest in solicitors having an incentive to transfer a case—with the consent of the client, of course—to another solicitor; for example, if the latter solicitor has greater expertise or if the former solicitor will not be able to deal with the case expeditiously. Secondly, any such referral fees from one solicitor to another are regulated by the SRA, which has ample powers to impose sanctions on either of the solicitors if there were any abuse of proper professional standards to the detriment of the consumer.

I ask the Minister—and it is a genuine inquiry—why, in the light of these factors, it is necessary or appropriate to regulate referral fees paid directly from one solicitor to another.

[Lord Clinton-Davis]

Does the noble Lord agree that it is common practice for one solicitor to transfer a case to a solicitor in another part of the country? Speaking from personal experience, I quite often had to deal with cases in London that were transferred from the north of England because it was more convenient to deal with the insurers in that way.

[Lord Pannick]

Yes, I agree. Of course, the Bill will not in any way prohibit such transfers; it will prohibit only payment. However, prohibiting payment will deter what may be a very sensible economic arrangement that provides an incentive to the first solicitor to transfer to the second solicitor a case which the second solicitor can deal with far more efficiently—in the interests of the client; that is the point. As I say, all these matters are properly regulated by the SRA. If the SRA is not properly regulating it is not doing its job. I ask the Minister why and also whether there is any evidence that the SRA is not doing its job properly in regulating referral fees in relation to transfers between solicitors.

[Lord Martin of Springburn]

My Lords, Amendment 166ZB is in my name and those of the noble Lords, Lord Elystan-Morgan and Lord Collins of Highbury. Of course, I am supportive of the other amendments that have been moved and spoken to.

I note that the other amendments mention payment to charities. When I signed up to the metal workers’ union as a young apprentice, it was regulated under the Friendly Societies Act. It was the same as the insurance companies such as the Co-op, the Salvation Army or the Wesleyan—they were charities. The trade union movement has always had a tradition of not only looking at wages and conditions within the factory but trying to go beyond that to help the member and his family. It knew that there was no point in just fighting for wages and conditions alone; there were many problems outside the place of work. Often that meant that, particularly when workers were involved in an accident, the unions had to get in touch with a solicitor who was willing to help, particularly in the bad old days.

Not so long ago in my native city of Glasgow, the Kelvingrove Art Gallery—which I would recommend anyone who visits Glasgow to go and see—had an exhibition of trade union banners. Trade union banners today tend to have big messages saying “Cameron out!”—and before that it was “Thatcher out!” or, even before that, “Heath out!”—but these old trade union banners were absolute works of art. They displayed exactly what the trade was all about. I remember the coach builders’ banner; one of the members had had an accident in the street and you saw the accident—the poor man had broken his leg—and another part of the banner showed him in bed and the officers of the branch turning up, and the caption underneath was, “When I was ill, you visited me”. My point is that there was always care within the trade union movement.

I know that many people, particularly in the media, can point to the salaries of the trade union leaders and make negative comments about them. But it must be remembered that the vast majority of people working in trade unions do so on a voluntary basis without any financial help.

18:29

As regards accidents in the workplace, some people would think that an engineering workshop is very dangerous but I know, through my work with the National Union of Public Employees, that a hospital kitchen can be a very dangerous place. A person can break a hand through a fall in a kitchen. Usually, the person who starts an inquiry is a shop steward who gets the information together. Then there is a visit from the full-time trade union officer who would need transport and an office from which to operate, with secretarial back-up, in order that the paperwork can be put together to send to the solicitor. It is only right and fitting to have a referral fee which can help with the ongoing costs of a trade union office. Again I go back to the point that most people think, when they join a trade union, that it is for wages and conditions, but this is another area of help that is given. There is a financial cost and it is right and fitting that the trade union should get a referral fee to offset those costs.

[Lord Collins of Highbury]

My Lords, I obviously have an interest in that I have put my name to Amendment 166ZB. First, I want to state clearly that, as a former full-time trade union official for what is now Unite, on this issue I have had its assistance and that of the solicitors with whom I worked over many years. I want to separate the principle of referral fees from what we have heard in terms of the scandalous behaviour of certain commercial operations, including insurance firms, in road traffic accidents. It is important to do that because, as I said at Second Reading, we are using a sledgehammer to crack a nut. I fear that a lot of deserving people will be adversely affected by these changes.

The consequences will be devastating on working people and their unions. It is important that I set out—I am sorry if I take up a bit of time in doing so—precisely the sort of help and package that most unions offer to their membership. I also draw attention to the Prime Minister’s remarks about the importance of the big society—that is, members helping themselves. We are talking about organisations of members for members who are, as the noble Lord, Lord Martin, said, regularly supporting their fellow members, very much in an unpaid capacity. No matter how much we have changed things, industrial accidents and diseases are still unfortunately far too common. We should be defending that principle of big society.

As a senior officer in the Transport and General Workers’ Union, I took considerable time in building a relationship with solicitors and in ensuring that we had a clear understanding about the sort of services that solicitors should provide to our members. Referral fees were not about extracting huge sums of money but about ensuring that we could build services for our members. More than 6 million people in the UK, and their families, can take advantage of those services. I was proud to build them.

We talk about representation in personal injury cases but we also provide free wills and free telephone legal advice help. The services go beyond employment matters to consumer rights, neighbour disputes and a whole host of issues and services. There is free personal injury cover for members injured at work, including devastating industrial diseases caused by exposure to asbestos and other dangerous chemicals. We provide free personal injury cover for members’ families if they are injured away from work, criminal law representation for work-related matters and criminal injury representation for members who are assaulted at work. As members of the Transport and General Workers’ Union, that was quite a common occurrence for bus drivers and conductors. I know that we do not have too many conductors now but there is still a huge problem. We do not hear about these issues in the newspapers and we certainly have not heard enough about these issues in this debate.

Representation, legal representation and relationships with solicitors are vital for working people. In an open and transparent way, referral fees have been used to build that relationship and to extend the services provided by specialist law firms. As I have said, that relationship is about building the quality of service. The union is able to monitor and regulate the relationship. Of course, unions are highly regulated and required to register all their finances and services with the certification officer.

This relationship is also able to provide appropriate complaint procedures and mitigation. If there are failures on the part of the solicitor, the union is able to intervene, which takes the burden away from other agencies. It is important that we are able to continue to do that work. The last figures I was able to get hold of were for 2010, when, for example, Unite, UNISON and the GMB’s legal services helped more than 25,000 members to win damages through industrial accidents and personal actions. That figure applies just to cases with damages and ignores the tens of thousands who got other services. When I left Unite, we had established the legal telephone helpline through the introduction of referral fees. Now, 25,000 people ring it every year for advice. I feel like ringing it at the moment because the draught coming through here is potentially hazardous to all our health. I will ring it when we have finished.

[Noble Lords]

Hear, hear.

[Lord Collins of Highbury]

I accept that there is no justification for excessive commercial referral fee arrangements, but we could establish criteria for these fees to ensure that they are reasonable in amount and provided wholly or mainly in services rather than in direct financial payments. We have talked about other organisations that are able to build legal services, and I am sure that other noble Lords will refer to campaigning and charitable organisations that rely on these services, particularly for work on industrial diseases. It may be an unintended consequence of this Bill, but that is why I want to stand up and be explicit about and proud of the sort of services that unions have been able to build up and give their members as a consequence of the arrangements they have made in an open and transparent way with solicitors.

I return to the point I made about road traffic offences in my Second Reading speech: this is a sledgehammer to crack a nut. My noble friend referred to the RTA portal and those arrangements. I wish that the department would not only build on that success, but also examine its impact. Maybe it needs to be improved, but not by introducing a piece of legislation that is going to hurt. After all, the statistics speak for themselves. Figures collected by Datamonitor and the Compensation Recovery Unit reveal that between 2007 and 2011, motor claims increased by 43 per cent to 799,000, but employer liability claims were down by 6.6 per cent to just under 81,500. Are we dealing with like for like here? Let us address the road traffic accident issue—but why damage the interests of ordinary working people? They need their own organisations to defend them, with the support of professional solicitors who those organisations work with and regulate. I ask the Minister to see whether the Government can pay attention when considering these amendments and look at the specifics rather than let them be drowned in the road traffic accident problem, to which I know we have a solution, and on which we could do more.

18:45

[Lord Alton of Liverpool]

My Lords, claims management companies are sometimes described in more popular language as “claims farmers”, and they are a real pest. Inasmuch as the Government are seeking to do something about the claims farmers, I am totally in support of them. However, I have added my name to Amendment 166 to which the noble Lord, Lord Beecham, has just spoken. As the noble Lord, Lord Collins, has rightly said, in these provisions are all the seeds of the law of unintended consequences. Just as the trade union organisations which do a superb job for some of their members will be caught by some of these provisions, so too will the campaigning charities, to which the noble Lord referred in his remarks. Amendment 166 suggests that a regulated person would not be in breach of the rules set out in Clause 54 if,

“(b) the body to which the payment is made for the prescribed legal business is a registered charity that has been granted an exemption by the claims management regulation unit”.

As my noble friend Lord Pannick said a few moments ago, they have been doing a pretty good job up until now, so why do we not have confidence in the work they undertake?

I want to return to an issue that I raised at an earlier sitting of the Committee: mesothelioma and asbestos victims. The example I want to give your Lordships is that of a charity that works specifically with the victims of asbestos exposure. I shall quote Mr John Flanagan, on behalf of the trustees of the Merseyside Asbestos Victim Support Group, who wrote to me to say that if the Bill goes through in its present form,

“it will have catastrophic results for us if it goes through without amendment”.

For that reason, I hope that noble Lords and the Government will look favourably on the amendment tabled by the noble Lord, Lord Beecham. The Merseyside Asbestos Victim Support Group was formed in 1992 and became a registered charity in 1993. The founding members were ordinary working people who had been struck down with asbestos-related diseases of the sort I have described. They and their families felt that there was a lack of help and assistance for those suffering from asbestos-related diseases and that the only way to solve this was by creating their own support unit for people in the same situation as themselves. Given the emphasis the Government rightly place on voluntary endeavour, encouraging people to get engaged in the big society, I would have thought that they would thoroughly approve of a group like this, which is made up of people who are trying to help themselves.

The work of the group is primarily that of visiting victims who have been diagnosed with an asbestos-related disease, including the terminal condition of mesothelioma. As I said during our last proceedings, the prognosis once the disease has been diagnosed normally means that the victim has nine months to live. Victims of asbestos in almost all cases have not contributed in any way to their condition and they were not informed of the associated dangers or presence of asbestos in their workplace by their former employers. The idea that such people could be vexatious litigants or that these are frivolous claims is patently absurd and I do not think that anyone would advance that in your Lordships’ House.

MAVS is supported by and works closely in association with local clinicians on Merseyside to provide a holistic support framework. It is an impressive community. Services are based locally and work is carried out with other voluntary organisations—at no cost to the patient or to the community. Clinicians give out leaflets to patients on diagnosis with the recommendation that they should contact the support group. Again, this is highly compatible with the plea that voluntary organisations should take up more of the burden. This is something that they are doing already, and yet they are going to be hit by the provisions in the Bill. A full range of advice and support is provided to patients and their families, including help with welfare benefits such as industrial injuries disablement benefit, pension credit, attendance allowance, disability living allowance and carer’s allowance. They assist with the completion of complex application forms and offer practical help and support, providing assistance wherever it is needed. Sometimes victims and their families just need the support of a friend at the end of the telephone who understands what they are going through when times are really hard or challenging. They also provide details of legal advice experts, thereby preventing victims from falling into the hands of the claims management companies that the Government say quite properly that they want to deal with. Other asbestos victim support groups around the United Kingdom work tirelessly to provide the same services.

The majority of the people who run MAVS are volunteers, just like those described by the noble Lord, Lord Collins, in the trade union movement. I might add that the volunteers include those who themselves have been diagnosed with asbestos-related diseases. The management body, the trustees, also includes patients diagnosed with an asbestos-related disease and family members whose loved ones have been lost through asbestos-related illnesses. The Merseyside group co-ordinates with the Cheshire Asbestos Victim Support Group to hold an annual Action Mesothelioma Day, which helps to bring about awareness among the general public of asbestos disease and serves as a memorial day to commemorate those who have died from this insidious disease. I gave the figures during our last proceedings, but I remind noble Lords that some 30,000 people have already died of this horrible malignant disease, and it is predicted that before the terrible legacy of industrial disinterest in the past ends, there will be another 60,000 fatalities. The day is also used to raise much-needed funds for the Mick Knighton Mesothelioma Research Fund and the June Hancock Mesothelioma Research Fund; both organisations are working to try to find a cure for the disease.

The majority of the individual asbestos victims’ groups’ charities within the United Kingdom attend the All-Party Parliamentary Group on Occupational Safety and Health’s sub-group on asbestos, thus providing invaluable expertise and insight on this disease and the situation of those who have been affected. The Merseyside group also gives talks to the local community, including the Liverpool Community College’s building and construction section, to warn and educate upcoming apprentices of the dangers of asbestos and how to deal with it when it is discovered in their workplace. The charity works on a global scale with organisations such as the International Ban Asbestos Secretariat, which works towards a global ban on the use of asbestos. This collaboration has already produced a ban on asbestos in many countries which took the lead from the European Union ban back in 1999.

The charity was successful in obtaining lottery funding in 1997 for three years. It made a further bid for continued funding but was unsuccessful, being told that it was in the envious position of being able to attract donations from the legal sector for the work that it undertook. It set up financial arrangements under the solicitors’ code of conduct with several asbestos-related disease specialist solicitors to ensure its continued funding and existence. It considered the term “referral fee” objectionable, as this funding from solicitors is in recognition of continuing work for and on behalf of victims and certainly not in the same context as payments made to claims farmers. This essential funding, together with donations from victims, is vital to its continuing existence.

Inasmuch as the Bill will scrap referral fees, particularly those payments to claims farmers, it is to be commended. However, there is an irony in that CMCs will set up alternative business structures—so-called ABSs—to avoid their demise and that the hounding of the public will continue unabated. They will find a lacuna; they will find a way around, as those groups who are about just making money invariably do. The people whom the Government want to catch will escape, while those who have been performing this extraordinary public service out of an altruistic spirit will be caught. Genuine charities such as MAVS will have their funding from expert lawyers specialising in asbestos-related diseases cut altogether. If ever there was a case of throwing out the baby with the bathwater, this is surely it.

The Government do not seem to realise the impact that the Bill will have if the amendment is not accepted. Terminally ill people do not have the energy to fight their own corner and are often beaten into psychological submission, especially when their mind is on what will happen to their family when they are no longer there. Surely it is the Government’s responsibility to ensure that those least able to defend themselves are not treated as collateral damage in this Bill. That is why the amendment of the noble Lord, Lord Beecham, is so important. Let us remember those words from John Flanagan, who said that, if the Bill is enacted,

“it will have catastrophic results for us if it goes through without amendment”.

That is an intolerable, unconscionable situation which I hope the Minister will take very seriously.

[Lord Monks]

My Lords, I support the amendments. I declare an interest as a non-executive director of Thompsons Solicitors, the largest company of trade union-related solicitors in the country. I am very pleased that noble Lords who have spoken before me have recognised the value and extent of trade union legal work—the noble Lord, Lord Collins, gave the figures. Looking at the government Benches just in the course of this debate, I have spotted distinguished barristers who have worked for trade union legal services and solicitors over the years. They include the noble and learned Lord, Lord Howe, the noble Lords, Lord Carlile, Lord Lester and Lord Hunt, who is with us at the moment, and the noble Lord, Lord Thomas. All of them have earned a few quid from the trade union movement in their time, looking after the interests of people who have hit hard times and need help.

The Minister referred movingly on Monday to a family illness that developed from one of the old ICI works. In a way, unions’ role in litigation is only a relatively small part of their work on health and safety; the majority of their work is preventive. If you go to anyone in the chemical industry in Britain today, where conditions have improved immeasurably since the days of ICI in the 1960s, they will pay full tribute to the role of the trade union movement.

As others have said previously, the number of personal injury cases generally is falling, with the huge exception of road traffic accidents, where we know that something is going on that needs to be stopped, as my noble friend Lord Bach said earlier. Unions are getting a dirty name because some in the media, and perhaps in the Government, too, believe that unions should somehow be lumped together with the shroud-waving, ambulance-chasing, daytime TV-advertising groups of lawyers who go around inciting claims all over the place.

The need to differentiate is clear. At the moment, we are not being differentiated in any way. We are losing on conditional fee agreements, on “after the event” insurance, on legal aid in tribunals and now on referral fees, which is the subject of this debate. These are all ways in which we are able to fund a substantial legal service and which will be much restricted if and when the Bill goes through in its present form. The different provisions impose major limitations on unions’ ability to run effective legal services. At a time when legal aid is being cut, a double whammy is being inflicted on many working people and a great victory is being enjoyed by the insurance industry.

Will the Minister and others in the Government give some recognition on Report to this imbalance? Not all aspects of trade union work are uncontroversial, but their legal services are widely appreciated and widely respected. They should be supported by the Government, not hit and curbed as they are in the Bill.

[Lord Elystan-Morgan]

My Lords, I join all those who have spoken in favour of the amendments, in particular Amendment 166ZB, to which I have appended my name with those of my noble friend Lord Martin and the noble Lord, Lord Collins.

If one were to ask whether Britain is an overlitigious society, the answer would be yes and no. There are massive abuses that we are all aware of; there have always been abuses in the law. A small percentage—a minority, I like to think—of the profession to which I belong, and I have belonged to both sides of it, belongs to that class that Dr Johnson spoke about when he said:

“The fell attorney prowls for prey”.

There have always been brethren who have been involved in that way, but they are, as I said, a very small minority.

The Government are absolutely right to aim their weapon at such malpractices, but the weapon that they are aiming, it seems to me, is a blunderbuss with a very wide barrel, throwing a huge cloud of shot many yards wide that will hit many targets, some of them worthy and some of them not. My appeal to the Minister who will reply to this debate is not to express a Molotovian no to these appeals, which have been so sincerely and so solidly made. It would be utterly wrong to allow many worthy referral schemes to be destroyed wantonly just because the Government may not be sufficiently imaginative to look at each and every one of these situations separately.

It was very proper of the noble Lord, Lord Collins, to remind the Committee of the primary origins of so many trade unions: friendly societies and societies of brethren, uniting in brotherhood to try to bring about a justice that society as a whole was not able to give them at that time. It is a very worthy history. Therefore on that basis, speaking with the experience of one who has been a solicitor, a barrister and for some 20 years a judge, I concur completely with everything that I have heard. These are deserving cases and it would be wrong, unjust and utterly unworthy of the Government to lump them all together and treat them as if they were pariahs to be attacked in this way.

19:00

[Lord McNally]

My Lords, we have heard some powerful speeches about the good work of trade unions and charities, but that is not what this debate is about; it is about the ban on referral fees. In their reports, both Lord Justice Jackson and the noble Lord, Lord Young of Graffham, supported the ban on referral fees. The Government believe that the current arrangements under which lawyers and others are able to pay and receive fees for referring personal injury claims have led to higher costs and the growth of an industry that pursues claims for profit.

Lord Justice Jackson recommended that referral fees should be banned as part of his comprehensive package of recommendations to make the costs of civil litigation more proportionate. The prohibition will be enforced by the appropriate regulators, for example the Solicitors Regulation Authority for the Law Society, the Bar Council, the Financial Services Authority or the claims management regulator. The regulators will also be responsible for taking appropriate action against “regulated persons” for any breaches. The Government believe that requiring regulators to enforce the ban is the most effective and proportionate response.

The noble Lord, Lord Alton, made a powerful case, as he did the other night, for help for those suffering from exposure to asbestos, but I do not believe that he should then link that deep concern to one form of fundraising for charity. Indeed, it is debatable whether it is any healthier for a charity than any other body to have such a dependency relationship with lawyers who are supposed to be providing a professional service, so we are not convinced that any exemption should be made for charities.

[Lord Alton of Liverpool]

My Lords, if there is a depletion of funds of charities such as the one that I described today, are the Government saying that if those charities cannot raise that through voluntary endeavour and voluntary giving, the Government themselves will fill their coffers?

[Lord McNally]

No, of course the Government cannot do that. There was one thing that I was interested in. I do not know this because it is always dangerous to think aloud at the Dispatch Box, but on the powerful case for aid for charity I do not see why wealthy solicitors’ firms or wealthy solicitors could not make donations to that charity as long as there was no link with the search for work. It is worrying to have a charity that is dependent on making referral fees to certain solicitors. I am more comfortable with our banning referral fees.

In a way, the same applies to what has been said about trade unions. I fully accept the point made by the noble Lords, Lord Collins and Lord Martin, about the services that trade unions offer working people in this country. My father worked for 47 years for ICI and was a lifetime member of the National Union of General and Municipal Workers. When I hear attacks on health and safety, I know the importance of health and safety in industry, but that should not be linked to a relationship with a professional service organisation.

[Lord Martin of Springburn]

I may have failed to declare an interest in that I am a member of Unite. It used to be the metalworkers’ union and then it became another union. When I looked today, it was still called Unite, but it might change its name tomorrow.

[Lord McNally]

It might. Some of them sound like coffee bars rather than trade unions these days, but perhaps that is part of the marketing. Certainly, the case of the trade unions was made very strongly by those who intervened. The service that trade unions provide their members no one gainsays—it is important—but we do not believe that that link between referrals and certain legal firms should be exempted from a general ban on referral fees. There must be those who have worked for trade unions who do not pay referral fees. I do not know. As a layman, I see referral fees as a distortion of the market, but there is nothing to stop trade unions having a good close working relationship with particular law firms. Some have had long-standing relationships. However, I cannot tell the House that we are willing to make an exception.

The noble Lords, Lord Pannick and Lord Clinton-Davis, referred to the payments by solicitors to other solicitors for the transfer of prescribed legal business, and we believe that that argument is rational and sensible. If for any reason a solicitor decides that a piece of business needs to be transferred, perhaps for the geographical reason that the noble Lord, Lord Clinton-Davis, gave or because the solicitor realises that it is beyond the competence of his or her firm, it would be perfectly reasonable to see a transfer. When the transfer is made, the solicitor concerned is able to claim an appropriate amount of money for the work dispersed before the transfer was made. We accept that logic. However the Government’s view is that reasonable payments of this type are not captured by the ban as long as they only cover the work undertaken by a firm in respect of the claim prior to it being transferred to a new firm. If there is a referral fee element to the payment, this would be subject to the referral fee prohibition and is a matter best dealt with by the regulator rather than by legislation.

Although I know that parts of this reply will disappoint noble Lords, we appreciate the widespread support for our ban on referral fees. We believe that this is the best way to lead our proposal to provide the most effective and proportionate way of preventing payment for personal injury claims and squeezing a bad practice out of the industry. We therefore invite noble Lords not to press their amendments.

[Lord Beecham]

My Lords, the noble Lord, Lord Hunt, has signified his support for the Government, but he is the only Member of your Lordships’ House who has done so in respect of these amendments. We have had some powerful speeches from a variety of people with an interest in and experience of litigation of this kind: distinguished lawyers such as the noble Lords, Lord Pannick and Lord Elystan-Morgan; people with direct experience of the shop floor, such as the noble Lord, Lord Martin; people with a lifetime in the trade union movement, assisting members and no doubt helping them to make their legitimate claims for compensation and advice, such as the noble Lords, Lord Collins and Lord Monks; and the noble Lord, Lord Alton, with his extensive experience of the voluntary sector. They have all made a very clear case for exempting trade unions and charities from the restrictions of this Bill.

We agree that there is a problem with the referral of claims and the industry that has grown up around them. That is commercial exploitation, which may well lead to expectations being aroused and cases perhaps being brought that should not be brought. That is why we support the thrust of the Government’s proposals. However, the Government and the noble Lord appear to be comfortable with third-party funding of litigation—subject, as we have heard and discussed in a previous debate, to possible regulation—but not at all comfortable with an arrangement by trade unions or charities for a referral fee for passing instructions, and no doubt assistance as well, to solicitors that they are recommending on behalf of their members. There is an element of quality assurance in that too. I do not understand, in this context, what the evil is that the Government’s proposals on referral fees are supposed to be curing. Who loses by the process that is being advocated in these amendments by those who support them? Where is the loss? There is no loss to the public purse, the insurance industry or defendants. There is no loser. It is not at all analogous to the commercial exploitation about which we spoke.

This curious matter, to which I referred in moving the amendments in the first place and which I will take a little further now, arises under Clause 54(8) , which provides that:

“Payment includes any form of consideration (but does not include the provision of hospitality that is reasonable in the circumstances)”.

You can take somebody for a drink but you cannot provide any other service. Page 47 of the Explanatory Notes says:

“Subsection (8) provides that a referral fee can be any form of consideration (which would include, for example, an offer by a solicitor to take on other work at a reduced rate or for no payment at all), other than normal hospitality”.

As part of my firm’s relationships with trade union clients, I used to offer a free will to a client for whom we acted after being referred to us by a trade union. We would offer free initial advice about other matters not connected with their personal injury claim, such as a matrimonial, employment or even a criminal matter. All of that would be caught by the Bill as it stands and as set out in these Explanatory Notes.

19:15

Perhaps I am being naive, but I cannot believe that the Government really intended those consequences, even though they appear to flow from the Bill as drafted. It means that the expectation that has developed over many years between trade unions and their solicitors—and I dare say the same applies to charities and the solicitors that they recommend as well—that a service would be offered, either free or at a lower charge than might otherwise have been the case because of that connection, would be prohibited by law. That would be the consequence of this Bill. I do not know whether the noble Lord has addressed his mind to that. I would not be surprised if it has not occurred to him, given all the other matters he has to address. However, I would urge him to look again at that aspect even if he is reluctant to look at the other aspects, to which we will undoubtedly have to return on Report. What is being suggested here is a gross interference with a relationship of many years’ standing, covering both the categories of organisation we have talked about. With all respect to the Minister, I do not understand—

[Lord Thomas of Gresford]

My Lords, before the noble Lord does what he is going to do with his amendment, I just make one comment. He said that the Minister was on his own. When I was a young solicitor, I would have given my eye teeth to secure some union work. I did some at the Bar, but it was very difficult in a small firm to compete with a large firm, as I am sure the noble Lord will agree. If I thought I had to pay money to the union to get their work, that would have made it considerably worse. The money that is paid to the union by the lawyer is ultimately reflected in the hourly rate that the lawyer charges to his client—it eventually falls on the client, or on another client. It is not just disappearing or being absorbed by the large firm.

[Lord Beecham]

Not all firms are large firms, and it will not surprise Members to know that my firm was not—and is not—a large one. However, we have had that kind of relationship. The profitability of firms conducting litigation of this kind is not high in any event, even without the question of referrals. I do not think that there are the kind of consequences that the noble Lord assumes to be the case. Equally, organisations with members seeking to derive the best service that they can for their members ought to be free to do that. I repeat that I do not think this Bill is at all on the right lines in what it is seeking to do. I again respectfully direct the Minister’s attention to the peculiar circumstances that subsection (8) proposes.

I was going to finish by commending again the amendment tabled by the noble Lord, Lord Pannick, about solicitor-to-solicitor arrangements. He made a very strong case there, and I regret that the Minister seems to have just dismissed it out of hand. Certainly—

[Lord McNally]

I ask the noble Lord to read Hansard tomorrow. We have made it extremely clear that we do not think that the kind of relationship outlined by the noble Lord, Lord Pannick, will be caught by this ban. It will be regulated by the Solicitors Regulation Authority, and I hope my statement from the Dispatch Box will give it some help in carrying out that duty. The Government do not believe that that kind of relationship, where a solicitor transfers business and takes a reasonable charge for the work already done, is covered by this ban.

[Lord Beecham]

I do not think it is necessary to confine the payment to precisely the basis that the noble Lord identifies.

[Lord Phillips of Sudbury]

In the new, highly commercial context within which soliciting is carried on today, and in an era when we have these alternative business structures where we can be owned by virtually anybody, does the noble Lord not think that there is a real risk that some of these new ABSs will, as a matter of business, solicit work if they can then pass it on subject to a substantial referral fee? I can see that in the offing.

[Lord Beecham]

I can see a case for regulating the fees. I am not an enthusiast for alternative business structures as the noble Lord has defined them. But in any event, we are not discussing soliciting as such—despite the noble Lord’s use of the phrase. We are talking ultimately about a system that has been used successfully from the point of view of trade unions, charities and their members, as well as the professions, for some time. The Bill is seeking to intervene because of a different set of circumstances and set of relationships, with different causes and consequences. If there is no movement on this we will have clearly have to return to the matter on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment 164A withdrawn.

Amendments 164B and 164C not moved.

Amendment 165

Moved by

[Lord Clement-Jones]

165: Clause 54, page 39, line 24, at end insert “, or
(c) arranges for another person to provide, for a fee, marketing services by unsolicited SMS text message, unsolicited telephone calls or any marketing in a hospital or other primary treatment centre.”

[Lord Clement-Jones]

My Lords, in moving Amendment 165, I shall speak to Amendments 167 and 168. We are still on Clauses 54 and 55, but we are dealing under these amendments with a rather different set of considerations. Both my noble friend the Minister and the noble Lord, Lord Bach, have mentioned the report from the noble Lord, Lord Young of Graffham, Common Sense, Common Safety. He was explicit in stating:

“The problem of the compensation culture prevalent in society today is, however, one of perception rather than reality”.

I suspect that a major reason for the public’s perception that a compensation culture exists has been driven by the actions of ambulance-chasing claims management companies. The existence of referral fees is another major cause of that perception. I very much support the Government’s attempt to solve the problem with Part 2 of the Bill, but legislation designed to end their influence must be watertight. In recent years, it is clear that there have been differing views on how to achieve this. Insurers allege that referral fees are directly responsible for the enormous increase in motor insurance premiums; others allege that insurers themselves have profited from receipt of referral fees for several years by selling details of their customers to panel solicitors or claims management companies. As we have heard from a number of noble Lords, Lord Justice Jackson in his review of legal costs, which reported in 2010, recommended that referral fees in personal injury cases should be banned. Others, however, such as the Association of Personal Injury Lawyers, fear that a ban will simply drive fears underground.

The insurance industry does not agree that transparency is sufficient and has welcomed the proposed ban. So too has the Law Society, of which I am a member, but it wants it extended beyond personal injury cases. Others, such as the right honourable Jack Straw, want to go further and make it a criminal offence—not just a matter of regulation—to solicit, offer or pay referral fees in road traffic accident claims. He proposed an amendment to the Bill to that effect last November. The Justice Select Committee, under the chairmanship of my right honourable friend Sir Alan Beith, believes that it should be punishable with a custodial sentence. This has been rightly resisted by the Government on the basis that circumstances could be very varied and complex and best dealt with by the regulator. I believe that the current provision strikes the right balance.

There are a number of issues, however, that arise in the course of consideration of the ban. First, the Legal Services Board highlighted the difficulty of defining referral fees. The Motor Accident Solicitors Society, in its evidence to the Transport Select Committee, highlighted the importance of a definition being wide enough to cover all potential commission fees, administrative costs, transfers and any other payments that may be disguised.

Secondly, the purpose of a ban on referral fees is to reduce insurance premiums in future. But how is that to be judged? The benefits derived from a ban may not necessarily be passed on to consumers. Indeed the impact assessment of the proposed ban admits that, overall, claimants might lose out from a ban on referral fees on personal injury cases, with individuals expected to be affected more than business. However, lawyers are apparently likely to incur no net additional costs.

Thirdly, are any other sectors in contemplation that could be activated by Clause 54(4)(b)? Last October, the House of Commons Justice Committee, to which I referred earlier, called for that ban to be extended for other types of case. My right honourable friend Sir Alan Beith, chair of the committee, said that it was “disappointing” that the Government had chosen to limit its enforcement capacity for the most serious cases of abuse of personal information. He added:

“It is likely that Ministers will have to return both to this issue and to the issue of referral fees in areas other than personal injury, where they are taking welcome action”.

It is important, however, that the ban extends to the full range of malpractices. They include nuisance marketing in personal injury, specifically advertising in hospitals, cold calling and spam texts; third-party capture, which was debated earlier; financial incentives to claim; selling of contact and case details of personal injury victims without their consent; auctioning claims to the highest bidder; and marketing that is not accompanied by a service to filter out spurious claims. This is the reason for Amendment 165. The amendment would ban nuisance marketing, which fuels perceptions of a compensation culture and impacts on the ability of genuine accident victims to obtain redress. It would have the benefit of driving the really unscrupulous operators out of the market.

Health Minister Mr Simon Burns recently told English NHS hospitals that it was not acceptable to display adverts for law firms that encouraged no-win no-fee compensation claims. Surely, however, any conflict with the Compensation Act 2006, which allows businesses to operate in NHS trusts with the approval of the facility’s management, must be resolved through primary legislation.

However, there must be clear exceptions. National Accident Helpline exists as a national brand for the marketing activities of more than 100 leading solicitors’ firms around the country. They have told us that this scale of marketing allows tens of thousands of people who would otherwise find it very difficult to access legal support to obtain legal representation and pursue legitimate claims, and that they—the NAH—strictly filter those who respond to marketing. Every year, it tells more than 150,000 people who contact it that they do not have a claim. The NAH contends that if such legitimate marketing, already regulated by the ASA and others, were to be banned, thousands of genuine accident victims would be left without legal representation. That is the reason for Amendment 167.

The ban on purely commercial referral fees must exclude provision of legitimate marketing services that enable innocent injury victims easily to access the requisite legal representation. The ban should also exclude other services under a scheme, such as sales, marketing, product development, vetting of clients, upholding solicitor standards and debt control. Amendment 168 would remove Clause 55(9), which is potentially very damaging to the ability of accident victims to obtain high-quality legal representation.

Some believe that the ban could also be read as banning or capping the legitimate costs of genuine, high-value services. These include the provision of necessary medical reports for clients, quality assurance for solicitor firms, sales and product development. To ban or limit those commercial activities would drastically restrict the ability of legal firms to offer the best advice to genuine claimants. My noble friend the Minister will, I hope, be able to give assurances that any cap excludes these legitimate services such as I have mentioned. I beg to move.

[Lord Hunt of Wirral]

My Lords, I shall speak to Amendments 166A and 166B, standing in my name on the Marshalled List, and to declare my interest as a partner for 44 years in the international commercial legal firm DAC Beachcroft LLP, and the other interests contained in the register.

This gives me an opportunity to respond to one or two comments in the earlier debate. In this important group of amendments we need to focus on the underlying problem of legal costs as much as on the problem of referral fees. As my noble friend Lord Clement-Jones just reminded us, the Government are implementing another of the main recommendations of Lord Justice Jackson’s review of civil litigation costs. Perhaps I should mention here my personal pride that one of my partners, Andrew Parker, was an assessor to Lord Justice Jackson's review.

19:30

The intention so clearly expressed is firmly to reduce disproportionate legal costs in our system. As I was able to say on Second Reading, and I make no apologies for repeating it, Sir Rupert Jackson was able to produce a report which balanced all the special pleading of the various vested interests and came up with recommendations which were firmly in the public interest. It is that balance which we have to keep in view throughout the passage of the Bill in this House, particularly on these clauses.

I fully support the Government's proposal to ban referral fees, and these amendments in my name are intended simply to clear up some points of relatively fine detail in the drafting because any ban implemented must work effectively and not allow easy ways around the ban. We are already aware that there is quite an industry out there now, which will be thinking of innovative ways of defeating the intention of both the Government and Lord Justice Jackson.

Amendment 166A makes a minor change to Clause 54(4)(a) by inserting,

“which consist of or include damages”,

so that the paragraph would be:

“the legal services relate to a claim or potential claim for damages which consist of or include damages for personal injuries or death”.

The point is that many injury claims include claims for other items such as motor repairs or hire charges. In my view, the current wording imposes the ban on payments for only the injury element, so we could get the unfortunate situation where the same referral fee is instead paid for the repair or hire claim, neatly sidestepping the Government's intentions. Better surely to pick up the whole of any claim where there is an injury element, as my wording is intended to do.

Amendment 166B inserts,

“whether received by the person referring prescribed legal business or not”,

into Clause 54(8). I fear there is a gap in the drafting which will be exploited by those business models in which the referral is made by a regulated person, but the payment for that referral is made back to an unregulated subsidiary. This amendment is intended to stop that. I understand entirely that the payment for that referral could be banned, but it is vital in my view that where both payment and receipt can be caught, that should be done. It is not just about balance or fairness, but about removing the incentives from the system. Speaking for one moment about incentives, this is as much about legal costs as about the rather distasteful practice of buying and selling people's injuries as some sort of commodity. Essentially the payment of referral fees demonstrates that, despite efforts to contain legal costs in low-value claims, solicitors acting for claimants can still afford to pay out over half their fees to a third party whose only role is to buy and sell on the details of an injured person.

I shall remind the Committee of some figures. This is not just about motor claims, but they illustrate the point clearly. We now have a system in which a solicitor can conduct a routine motor claim for personal injury, in which liability is not disputed, and be paid £1,200 profit costs by the defendant or the defendant’s insurer. We hear that out of that sum of £1,200, many solicitors are apparently content to pay up to £850 to a middleman—namely, a claims farmer. What do the claims farmers then go out and do? They go and pester more people to bring claims to them, so that they can farm more lots at £850 a time. This is what is driving the compensation culture today, in which it is now becoming evident that we have the weakest necks in Europe. It is not just about whiplash and road accidents; this is a real issue for those businesses and households struggling to pay insurance bills.

In conclusion, what this demonstrates beyond any reasonable doubt is that the claimants’ solicitors are being paid too much. In debates on this Bill in the House of Commons the Minister, Mr Djanogly, committed to consult on reducing that £1,200 fee but was unable then to give any commitment about timing or about the critical question of how much the reduction ought to be. The Government have also previously made it clear that they intend to extend the reduced fixed fees into employers’ liability and public liability claims. I look forward to hearing my noble friend the Minister clarify the Government's intentions and I hope that we will hear about plans for such extension, which is sorely needed to contain costs for business, for hospitals and for other public authorities, et cetera.

Only by removing the cost from the system can the Government achieve their objective of bringing down insurance premiums. Any ban will immediately be the subject of attempts to work around it, however watertight the drafting. The key to making Clauses 54 to 58 work is not just to get the drafting right, but to remove the incentive for referral and profit share by removing the excess from the system. While I am of course merely speaking to my amendments, I urge noble Lords to join me in calling for an £850 reduction to the fixed fees, because that would stop at source this practice of trading people’s claims.

[Lord Carlile of Berriew]

My Lords, I want to say a few words in support of these clauses and indeed of all the amendments that my noble friends have spoken to. One of the most unwelcome trends in litigation in recent years has been its commoditisation, and if this is not stopped I see the development of litigation futures as a commodity that will be traded, just like potato futures and metal futures.

I do not know whether any of your Lordships has had an experience like mine a few months ago. I was involved in a road traffic accident as a rear-seat passenger in a vehicle on a country road in Northern Ireland at about 11 o’clock one morning. I came back by air to Heathrow the same afternoon. I had not been injured in the accident, although it was quite unpleasant. As I was standing on the Heathrow Express platform, coming back into central London, I received a text message from a claims-farming business that referred to the accident I had had the same morning. Now if it happened to me, it must be happening to an awful lot of other people. I suggest that Amendment 165 nails this problem for that kind of activity. That kind of low-level claims farming, but on a very large scale, is putting up insurance premiums and the cost of litigation. Perhaps worst of all, it is encouraging people to make claims that they otherwise would not have made, and which may in the end cost them if not money, a great deal of anxiety.

[Lord Thomas of Gresford]

Does my noble friend not agree that in the instance that he described and in which he was involved there could have been an element of corruption with people being paid when they gave information about that accident?

[Lord Carlile of Berriew]

There is certainly that possibility.

I wanted to add something else about hospitals. When I was a Member of another place, I often visited a celebrated orthopaedic hospital in the next county. At that time—I cannot say whether it is the case now—at the end of a long corridor in that hospital there was a solicitor’s office. That was an unusual arrangement but one that no doubt brought some rent to the hospital. I have real reservations about that kind of arrangement. I am all in favour of general advertising and it is right that solicitors’ firms should be able to advertise in local and national newspapers so that people are aware of the kinds of specialist services that they provide. But we must take this opportunity to reject anything that smacks of ambulance-chasing.

[Lord Bach]

My Lords, the Committee seems to be at one in its attitude towards the amendments, and I include those of the noble Lord, Lord Hunt, as well as those in the name of the noble Lord, Lord Clement-Jones, who has spoken so persuasively. I hope that we are as one and that that includes the Minister. The amendments really cannot be argued against.

I intend to be pretty short in what I have to say as there is other business waiting to get on and we have had a long session today, but I have to say to the noble Lord, Lord Hunt, who talked about the Jackson report, that it is wrong to ally the Jackson conclusions with the conclusion that the Government have reached on his report. Lord Justice Jackson’s balance obviously appeals to the noble Lord and no doubt to many others, but it did not appeal to the Government, who have picked and mixed from Lord Justice Jackson’s findings.

In particular—I am afraid that I have used this example before and no doubt I will use it again—Lord Justice Jackson could not have been clearer that he did not believe that civil aid should be cut further, particularly with regard to clinical negligence. Indeed, when the Government decided that that was exactly what they were going to do, Lord Justice Jackson made his now quite famous Cambridge speech, which attacked—if that is the right word; a better word might be “criticised”—the Government for the stance that they have taken. So there is a difference between what Lord Justice Jackson said in his report and how the Government have responded. I am not saying that any other Government would have taken everything that Lord Justice Jackson said, although of course he saw it as a package. But I am saying that in this instance there is a difference.

On the question of claims management cases, I shall briefly mention that my right honourable friend Jack Straw, whose name has come up already in discussions today, gave the example in another place of a friend of his who, just like the noble Lord, Lord Carlile, was bombarded with texts and personal calls from claims management firms following a minor accident in which he suffered no injury. In that case, apparently, the details had been sold to the claims management firms by his own insurance company. I just wonder whether that might have been a possibility in the noble Lord’s case, although it may be that his insurance company did not know about the accident. Actually, there is no reason why it should have known as he suffered no injury and he was a back-seat passenger. It is interesting to consider exactly how the company found out in the time that it took for him to get back to Heathrow, but the point that he makes is clear.

Unsolicited spam, which we are talking about here too, is incredibly intrusive. Worse than that, it must be appalling to have a minor prang and find people trying to prey on you for, effectively, a quick buck. This is a real problem.

It is not as though whiplash does not exist; it does. There are genuine cases and it can cause real pain, discomfort and disruption in people’s lives. However, when ordinary people are encouraged or persuaded to exaggerate their symptoms, knowing that it is difficult for a doctor to diagnose the degree of impairment in a particular case, that is when the problem really shows itself. We support the amendments and hope that the Government can indicate today their intention to bring forward amendments on Report in these or similar terms.

Once again, I put to the Minister a question that—inadvertently, I am sure—he failed to answer on an earlier amendment but which is relevant now. Do the Government intend to move on Report the contents of the Private Member’s Bill that my right honourable friend Jack Straw moved in another place?

19:39

[Lord McNally]

My Lords, if I am wrong I will write to the noble Lord, but I do not think it is our intention to move that Bill on Report.

On the noble Lord’s final remarks about whiplash, my advisers’ hearts will sink but they knew this was coming at some point in this debate. I had personal experience of a minor bump, which at the time was settled by my saying, “Send me the bill and I’ll pay for it”. This somehow escalated over the next few weeks into a case handled by a solicitor’s firm 200 miles from where the accident happened, with a doctor’s verification of whiplash made in Manchester, 180 miles from where the accident happened. Worst of all, when I wrote to the insurance company and said, “This is a scam and a fraud, and we’re willing to give all kinds of evidence that it is”, I got a letter back saying that they would settle for £5,000. Presumably the doctor, the solicitor and the injured party with his whiplash all got a cut, but who paid for it? Not the insurance company but the payers of insurance—the customers.

A number of similar stories have been told around the House; there have been two or three today. To my mind this is rampant corruption, not just an abuse. Whether or not there actually is a compensation culture, the behaviour of these companies feeds the perception that there is because so many of our citizens have experience of this. That is reinforced by these companies’ adverts, which I asked Questions about over 10 years ago when I first came into the House. I had been off with a dose of flu and that was the first time I had been exposed to daytime television and advert after advert that looked almost like a lottery win, showing someone with a big cheque that they had won for some minor injury. That is where the idea of the compensation culture came from.

This has been a good debate. I say to my noble friend Lord Clement-Jones that the Government have sympathy with the intention behind Amendment 165. Unsolicited calls about personal injury are a nuisance at best, and at worst create precisely the impression of a compensation culture to which he referred. However, there is existing legislation on unsolicited calls. We will need to consider whether further legislation is needed and, if so, whether this is the right way forward, but the Government will consider the amendment further.

The intention behind Amendments 166A and 166B seems to be to make the ban more effective and harder to evade. The Government believe that the referral fee clauses as drafted should cover the concerns that the amendments seek to address, although of course we wish to ensure that the ban is as effective as possible. I therefore thank my noble friend Lord Hunt of Wirral for raising these two issues. We are sympathetic to the intention behind them and would like to consider them further. I am afraid that I cannot give him a more specific timeline about those considerations, but we take due note of the points that he made.

In response to Amendments 167 and 168 to Clause 55, I assure noble Lords that Clause 55 requires regulators to have arrangements in place to monitor and enforce the prohibition on the payment or receipt of referral fees. Under this clause, any payment can be treated as a referral fee unless the solicitor or other party can show that the payment was for the provision of a particular service. However, I noted my noble friend’s points on that. It will be up to the regulators to define that issue in a way that does not prohibit legitimate activity. However, the amendments tabled by my noble friends would alter the way in which legitimate payments for services are defined. Amendment 167 to Clause 55 would ensure that pooled marketing would be a service exempted from the ban. Amendment 168 would remove the Lord Chancellor’s powers to make regulations specifying the maximum amount that can be paid for those services.

Under our provisions, it will be for the relevant regulators to enforce the ban on referral fees and impose appropriate sanctions. The regulator will also have the power to require the regulated persons to show that payments for “marketing” do not include a referral fee—that is, that any marketing costs are reasonable and appropriate. The pooling of marketing resources—my noble friend Lord Clement-Jones referred to this—in our view does not in itself breach the prohibition on referral fees. However, it is important to understand that any potential breach will depend on how the information provided by the claimant is passed on by the organisation that holds it to the solicitor who takes on the claimant’s case.

The Government believe that the appropriate regulators are best placed to monitor and assess payments made in these circumstances, particularly in taking a view as to whether a breach has occurred. That said, the Lord Chancellor’s powers to make regulations are essential if the prohibition on referral fees is to be effective. The Government need to be able to respond to situations as they arise. I believe that these amendments are unnecessary and would serve only to hinder the Government and the appropriate regulators in enforcing the referral fee ban. In addition, the likely effect would be to encourage inflated marketing costs in order to get around the ban on referral fees. I therefore invite my noble friends not to press their amendments.

I am sorry to have delayed noble Lords who are due to speak in the pensions debate, which is the next business. If they can get the Chamber warmed up while we are away, we will be eternally grateful.

[Lord Clement-Jones]

My Lords, I thank the Minister for that reply. Apart from the metaphorical slap on the wrist at the end of his response, it was generally helpful. I thank those who have spoken to the amendments. The noble Lord, Lord Hunt, made some interesting contributions and it is good to hear that the Minister is looking favourably on those amendments. The phrase about removing the excess from the system is very powerful. My noble friend talked about commoditisation and the possibility of litigation futures. The lawyers are probably salivating at that prospect. A number of noble Lords have recounted their experiences in this area. I will not add to the list of those who have spoken on that. However, I have even received a text message when I have not had an accident, which just shows the assiduity with which these characters operate.

I enjoyed hearing the noble Lord, Lord Bach, going well off piste when discussing the Jackson report in responding to my humble reference to a single aspect of that report, which was then inflated into a general reference to the whole of the Jackson report.

[Lord Bach]

I say with the greatest respect to the noble Lord that of course I remember his comment on Lord Justice Jackson’s report, but in this instance I was referring to what the noble Lord, Lord Hunt, said about that report.

[Lord Clement-Jones]

It is very useful to explain it in that way.

I thank the Minister particularly for his sympathy for Amendment 165. I very much hope that he will carry that forward to Report. Having looked at the existing legislation, I think it would be extremely useful to signpost that measure explicitly in this legislation. I also thank him for his assurance about pooled marketing and legitimate activities on the part of those pooled marketing schemes. They perform a very useful service and it would be a retrograde step if they were not able to continue. I will read with great care what the Minister said about Clause 55(9). I beg leave to withdraw the amendment.

Amendment 165 withdrawn.

Amendments 166 to 166B not moved.

Clause 54 agreed.

Clause 55 : Effect of the rules against referral fees

Amendments 167 and 168 not moved.

Clause 55 agreed.

Clause 56 : Regulation by the FSA

Amendments 169 to 171 not moved.

Clause 56 agreed.

Clauses 57 and 58 agreed.

House resumed. Committee to begin again not before 8.56 pm.

Pensions: Occupational Pensions

Wednesday 1st February 2012 Lords Chamber

Question for Short Debate

19:57

Asked by

[Lord McFall of Alcluith]

To ask Her Majesty’s Government what steps they are taking to reinvigorate occupational pensions.

[Lord Shutt of Greetland]

My Lords, before the debate is introduced, I hope I may make the normal point that it is a timed debate. Apart from the mover and the responder, other noble Lords are limited to six minutes. The monitor is dark now but when it shows six, the six minutes are up.

[Lord McFall of Alcluith]

My Lords, I am delighted to introduce this debate on occupational pensions. Last year I was asked by the National Association of Pension Funds to set up a working party looking at occupational pensions. When the report was published, I mentioned that a golden sunset of pensions was giving way to a bleak dawn. Many millions of people will face poverty in retirement—some absolute poverty. That is the inauspicious background to this debate. People are saving less and less and there is less and less trust in the pensions system. In fact, the NAPF confidence index is presently at minus six—the lowest it has ever been since its inception.

I want to look at the issue of risk. The flight from defined benefit to defined contribution schemes means that all the risk is on the saver. In effect, the saver is often left to navigate through a pensions minefield which would puzzle the brain of Albert Einstein. The consumer is short-changed and the voice of that consumer is missing. We need to ensure that that voice and that presence is centre stage in pension provision. In the flight from defined benefits to defined contributions, it strikes me that it is not just the risk which has shifted from the employer to the employee but that the onus is on the employee—the individual—to make critical decisions about their pension which they are ill equipped to do. It is a fiendishly complex matter and they need help and reassurance from scheme trustees who promote good governance. We need good, strong, independent governance. That is central to good member outcomes. We can achieve that good governance only if we have an environment which is conducive to achieving that, and if we have proper structures. We need schemes which are of a sufficient size to enable them to reap the benefits of scale and produce low charges to ensure that we get good governance and high-quality communication.

At present, there are 54,000 separate DC schemes operated by tiny employers in this country. With the average worker now changing job 11 times, we see the proliferation of these tiny pension pots with no portability. These have two critical disadvantages. First, they lack the scale efficiencies of larger ones and have inadequate governance, and, secondly, they tend to deliver worse outcomes at higher costs. There are no compensating benefits whatever.

The Pensions Minister, Steve Webb, has put out a challenge on red tape, as he calls it. That is a welcome opportunity to reinvigorate the pensions landscape, not just by eliminating regulation but by ensuring that we have better and more appropriate regulation. The environment for employers should be one whereby they offer decent workplace pensions with a minimum fuss, while ensuring that members’ benefits are protected. A key area for government consideration is over the risk-sharing between employer and employee. The Government need to ensure that employers who want to assume some risk are incentivised to do so. The questions that need consideration are: how should the Government support and reinvigorate multiemployer- wide schemes? In what ways can they fiscally encourage employers and reward them for taking on some of the risks?

The third aspect is auto-enrolment and NEST. This is welcome because it has the potential to encourage between 5 million and 9 million people to save for retirement in addition to those who have not saved previously—largely those on a low income. First, the Government have to look at the state offering and establish a firm foundation for saving. It will not be worth while for people to save if that firm foundation is not in place. Secondly, I have a simple message for the Government: remove the shackles from NEST. Take the messages that its chief executive Tim Jones and chairman Lawrence Churchill gave to the DWP Select Committee a few months ago. The cap and transfer-in rule are preventing the best outcome for institutional savers and government. The rule stops consolidation of existing pension provision for employers into NEST, and the cap ensures that employers have to run more than one scheme—one for the lower paid and another for higher earners—if they choose NEST.

Lawrence Churchill’s remarks to the committee were telling. He said that 40 per cent of the lower paid are engaged by large employers, so already 40 per cent of those whom he called “our market” will not use NEST because of the restrictions. By impeding the volume of business for longer, the Government’s loan will take longer to be repaid. It is therefore wise for the Government to remove that contribution cap. By doing so, NEST would need £100 million less in taxpayers’ money. It should be remembered that the shackles were imposed because of a 2005 political settlement. Removing the restrictions would ensure efficient organisation, and auto-enrolment would incentivise industry to lower costs and charges.

On the issue of costs and charges, disclosure is inconsistent among schemes and providers. In fact, what is consistent is the opacity of disclosure. We need transparency on the cash impact on pension pots. I welcome the code of conduct that NAPF has established as a result of my committee’s proposals. Let us keep in mind that a 2 per cent fee over the lifetime of a pension, which is not out of line, swallows up 50 per cent of an individual’s pension pot. My message to the Government is: do not wait and see the impact on high charges; use regulatory powers to apply stakeholder charge-capped schemes that are eligible for auto-enrolment.

The UK has the largest annuities market globally—450,000 were purchased in 2009 with a total value of £11 billion, and that will increase in the years ahead. Research since 1957 indicates that for each year of life expectancy, annuity rates have fallen by 0.56 percentage points. What does that translate into? An individual with a £100,000 pension pot in 1957 could have secured a pension of £11,000. In 2009, a similar pot could have secured a pension of £6,200 and, in 2010, £5,200. As the Minister knows, the rates offered can also vary by more than 25 per cent for a similar individual and annuity type. Shopping around should therefore be the default position, and there is a long way to go in that area. The reason that it should be the default position is that it would allow more flexibility for the changing spending patterns in old age.

The issue of Europe has been brought to me through lobbying. Lobbying by companies is very relevant because of the negotiations on Solvency II. The Government have to be vigilant here because if we do not get the right outcome, we will see the death of defined benefit schemes in the United Kingdom.

Lastly, on stability, the pensions cycle is between 40 and 50 years. The political cycle is between four and five years. We are out of sync. Since 1996, there have been more than 800 changes to pensions legislation and regulation—the equivalent of one change per week. I say to the Minister that that does not add stability. What we need to do is think about taking the politics out of pensions. A standing advisory body on, say, longevity and state pension ages, would be a good start, but we need a pension policy that is stable, for the long term and based on political consensus. I therefore suggested in our report, and suggest again to the Minister, that an independent standing commission on pensions should be established to ensure that the interests of the saver are centre-stage for the long term. If we work together in harmony on these proposals, perhaps we can assist in averting a bleak dawn for pensioners in the future.

20:06

[Lord Freeman]

My Lords, I congratulate the noble Lord, Lord McFall, on securing this debate on a very important subject. I am bound to say that I agree with a great deal of what he has said, not only in the past but to your Lordships tonight. There is a wealth of experience from those who are to contribute to this debate. I see in his place the author of a very important report on the pensions industry, and we look forward to hearing the noble Lord, Lord Hutton.

My contribution comes from my experience as chairman of a very large pension fund, as referred to in the register. Although I speak for myself and not for my fellow trustees, my experience obviously comes from my business background and from looking at the impact of the problems of our pension fund, and indeed of other pension funds in the private sector, on the well-being of British industry.

The position is serious. The latest estimate of the actuarial deficit of British pension funds is of the order of £750 billion. It has got a lot worse in the past three to four months. For funds with an actuarial valuation date of 31 December, the position is that the stock market has fallen since the middle of the year, and due to quantitative easing, the yields on gilts and more generally have increased the liabilities because the discounting factor is much less than it would have been in the past. It is a very serious position for British industry.

As the noble Lord, Lord McFall, said, defined benefit schemes have been closed at an increasing rate. In the FTSE 100, not a single defined benefit scheme is open to future members—they are closed to new members. However, the deficits remain. The schemes may not be taking on new members but the historical legacy of the pension funds and the benefits—very generous benefits, in certain circumstances—have contributed to the serious deficits. I will quote only one example—not a FTSE 100 company. I believe that the Royal Mail is still in a 25-year recovery period to pay off the existing deficit. The introduction of mandatory indexing of the pensions of those still left in defined benefit schemes is understandable, but I should point out, as the Minister well knows, that indexing is capped in only one country—in Holland. That, of course, assists the viability of an existing pension fund.

From my personal experience I would like to congratulate the diligence, efficiency and helpfulness of the regulator, who has to look after the Pension Protection Fund. He is looking over his shoulder to make sure that not too many burdens are placed on that fund. However, the regulator’s willingness to consider longer recovery periods, and his understanding of the current problems of some pension funds, is to be applauded.

I have two concerns and will put two points to the Minister. If he does not have time to answer them in his winding-up speech, perhaps he will be kind enough to write to me. First, I echo what the noble Lord, Lord McFall, touched on: we need to increase the awareness of employees of the likely shortfall of proper provision in retirement. We need an awareness campaign, which I think only the Government, the Department for Work and Pensions, can lead. Clearly the regulator cannot do it alone. We need to appreciate that if you have a personal pension plan in addition to your defined benefit or defined contribution scheme, that may not provide enough in later life. For example, if in addition to your scheme, you save £100,000 over a lifetime of working, when it comes to drawing a pension, that may mean only £3,000 per annum. That gives you an example of what meagre addition might be entailed. We need an awareness campaign and, perhaps, even to relax the draw-down provisions in legislation to permit people to draw more money.

Finally—this is a rather radical proposal—we need to revisit trustee governance. That is an immensely complicated subject: the provision of pension funds and the advice that is given. In my experience, even with the training now provided in many pension funds for their trustees, it is becoming too complicated and we may need a new model, which is to permit trusts to wholly contract out advice. I look forward to hearing the contributions of more experienced Members than I around your Lordships' House.

20:12

[Lord Hutton of Furness]

My Lords, probably for as long as most of us in this House can remember, successive Governments in the United Kingdom have been wrestling with three unpalatable facts about occupational pensions. First, fewer and fewer people are saving for their retirement. When they are saving, they are almost certainly not saving enough to cover the extra years for which we are living. For perfectly good and understandable reasons, the previous Labour Government, of whom I was proud to be a member, introduced a series of reforms to the state basic pension which have served to make the system much more complicated and reliant on means-tested benefits. The consequence is that we might have done some damage to the principle of personal responsibility for saving.

So we have three very difficult problems to wrestle with. I endorse all the comments and concerns of my noble friend Lord McFall and many of those introduced to our debate by the noble Lord, Lord Freeman. If those are the three problems that we are wrestling with, I am glad to say that successive Governments have found within themselves the ability to reach a reasonable consensus about how we deal with them. The noble Lord, Lord Turner, did the country a huge favour in 2005 with his report which the previous Government took forward and the current Government are now taking forward in a sensible fashion.

My advice to the Minister is not to tinker with the framework. That has been one of the enduring problems with pension law and pension law reform; we have never allowed the dust to settle on any of the reforms that we have introduced. That has created the problem that both noble Lords have referred to: the lack of confidence and trust in our pensions saving system.

It is too early to judge whether these reforms are likely to be as successful as we all in this House and outside want them to be. We are heading for a very difficult place. It cannot be right that the price that our society pays for increasing longevity—rising life expectancy, which is a great prize in our community—is increasing levels of intolerable poverty among that rapidly growing age group. We have it in our grasp, with the reforms that the noble Lord, Lord Turner, outlined a few years ago, to prevent that outcome, but we have to guard against the law of unintended consequences. It was perfectly right to set the contribution levels for NEST as they were. It is a very big change for many employers, particularly smaller employers, now to have to make pension contributions, and we must guard against the consequences in our labour market of going too far and too fast. I think that we all understand that. We must be mindful that NEST, although a step in the right direction, could have negative consequences for existing saving products, particularly in the defined contribution sector.

There is a way out of this conundrum. Living longer does not have to mean the end of the world as we know it. On occupational pensions, I think that we have a reasonable direction of travel. I support what Ministers are trying to do with the state pension, which is to make it more generous and more universally available to get us out of this very difficult space we are in with the current means-tested rules around pension credit. If we can find a way to ensure that there is a decent platform on which people can save without worrying about whether it is in their interests or not to save—whether any of those extra savings will be clawed back through lost pension credit and so on—we will have done the country a big favour. We will have reinforced the principle of personal responsibility for saving, with which we must not interfere or blur. If we do that, we will leave future generations with bills that I very much doubt they will be able to pay.

Both noble Lords have basically raised all the points that I wanted to raise. That will not stop me from raising them in my own terms. We face two fundamental problems right now, given that, sadly, defined benefit schemes in the private sector are now clearly on the way out and are not coming back. That is a consequence of a number of factors of which we in this place and elsewhere will be very well aware. It means that defined contribution schemes will have to do most of the heavy lifting when it comes to breaking through into the sunnier uplands where more people are saving more for their retirement, allowing those savings to stretch for the extra years for which we know that people are living. We have to find a way through that.

The Pensions Regulator issued an important consultation document last year about reform of regulation for DC schemes. Like other noble Lords, I hope, I look forward to the outcome of the consultation. The regulator has identified many of the important issues to do with improvements in governance and oversight in DC schemes, which will not go away. We have to find a better way through to ensure that DC schemes produce better results for those who are saving in them than they are currently. I am not saying that regulation is the only way through; we must be mindful of the consequences of overregulation, but the Pensions Regulator has identified issues which, I hope, will result in more concrete proposals.

The second issue, which is of much greater concern, is what Europe is planning to do on defined benefit schemes. It is impossible to exaggerate—although we all exaggerate as a profession, as politicians—the danger that lurks behind the proposals from the European Commission. They would mean the end of defined benefit in the private sector. I want defined benefit schemes to continue in the public sector, and I believe that there is a way to do that, provided that reforms are made, but we should not sit back and welcome the demise of DB in the private sector, because that is what will happen if we move to Basel III-type insolvency regulatory frameworks for DB. That is the wrong regulatory tool. I understand why the European Commission wants to guard against the dangers and hazards, but good intentions do not always make good regulation. The Government are right to resist those proposals very strongly, because they would be a step backwards.

20:18

[Lord Stoneham of Droxford]

My Lords, I am pleased to take part in the debate initiated by the noble Lord, Lord McFall, whose work on the Workplace Retirement Income Commission was timely. I thank him for his immensely valuable input to this debate. I agree with pretty much everything that has been said by the previous speakers. That underlines that real progress on pensions comes when there is genuine cross-party co-operation. The work of the Pensions Commission and actions initiated by the previous Labour Government and now taken on by the coalition, are the ones that will have lasting value.

I hope that this generation, benefiting from the last of the direct benefit pensions, will help prepare the next generation for the pension problems that they will have. Clearly, over the next five years we will have to concentrate on the introduction of auto-enrolment and NEST to attract the 6 million to 8 million people whom we want to bring into pension coverage. I think that it was the noble Lord, Lord Hutton, who said that stability is now absolutely essential. The one opportunity that this big change will give is that it will raise the profile of pensions and the need for us to make the case for people to save for them. It is important that we concentrate on doing this well, but there remain a number of ongoing problems that we need to look at for the future.

The pensions system remains incredibly complex with the two-tier state pension and all the constraints and conditions of auto-enrolment—the phasing in and the exclusions. Initially these will not help; they will confuse people, and we are going to have to work very hard to explain them. I hope that the Government will progress with their proposal for a single higher-rate basic pension, not least because 9 million to 10 million people will miss out on auto-enrolment. There has to be a greater understanding of the need for people to provide more for their retirement. We must plan ahead for the review of auto-enrolment in order to simplify it once it has settled in—removing the caps, looking at the thresholds and easing the transfers into NEST.

One fundamental problem with the system that we are going into is that the contributions are simply too low to provide adequate pensions for people entering retirement. We will soon have to examine ways of gradually raising, through phased increases, an auto-escalation of the contribution rates. We cannot do this initially but it will be important for the future.

Another problem is that we are introducing this at a very bad time. The impact of the recession, all the changes associated with student loans and the ability to raise the deposit for a house will all delay saving for retirement and make it much more difficult for people to prepare for their retirement. As a result, we are going to require far greater experimentation and flexibility in relation to savings vehicles to encourage flexible saving to support pension provision.

Governance and risk in occupational pensions is one area that we will need to look at very carefully. We can argue about what has caused the death of the defined pension scheme but the consequence is that it has weakened, and will continue to weaken, employer interest in pension provision. It is already having the effect of weakening contributions. I suspect that it is going to weaken interest in the governance of defined contribution schemes, and there is going to be less joint employer/employee interest in these schemes. Employers will be outsourcing it, if they can.

It will be very important for the Government to do everything they can to encourage experimentation with pension schemes. The end of the defined benefit scheme has meant that we have become very polarised: now, the employer is not prepared to take any risk and has handed it all to the employee. In some respects, that polarisation has gone too far. We need to move back to a middle way of experimentation where there is a sharing of risk in pensions.

The role of employers remains terribly important in pensions. Certainly, they have to provide a countervailing power if we want to get competitive rates for annuities, if we want to get the general level of charges down and if we want to take advantage of the benefits of scale in pensions. The role and interest of employers in the management of pensions is absolutely essential. We must not downgrade the importance of the employer.

Finally, there is the outstanding issue of tax incentives. I am sure that there will be an ongoing debate about reducing the inequities of the current tax incentives, which see the majority of the £28 billion of tax relief going largely to higher earners. There is an inequity here which certainly Liberal Democrats have been committed to ending. Some of this money could be better used in attracting more lower earners to the idea of starting the habit of saving for retirement, as well as paying for the higher state pension.

20:24

[Baroness Drake]

My Lords, my first involvement with NEST is a matter of record. I thank my noble friend Lord McFall for securing this debate and I give recognition to his work on pensions.

Active membership of workplace pension schemes is now at its lowest level since the 1950s. Although I am relieved that the revised timetable for auto-enrolment has been published, I desperately hope that there will be no further delay. In fact, I plead with the Government that there should be no further delay.

For workers to persist in saving for their pension, they have to have trust and confidence. Auto-enrolment will mean that millions of workers begin saving through the capital markets, and the fiduciary duties and behaviour of those managing their assets are going to be of great importance. Trustees have a duty to act in the best and sole interests of the beneficiaries, but the auto-enrolled world coincides with an increasing move to contract-based provision, where fiduciary duty, managing conflicts of interest and governance standards are more ambiguous. To quote the Secretary of State, Vince Cable, in the foreword to A Long-Term Focus for Corporate Britain, returns can be,

“captured by a small number of intermediaries at the expense of the many who provide the capital”.'

A powerful, much needed benefit of establishing NEST as a not-for-profit trust is that it has already started to drive up standards in the industry. Otto Thoresen, the director-general of the ABI, recently acknowledged at the Work and Pensions Select Committee the role of NEST in driving a higher standard of behaviour in the market. Downward pressure on charges and upward pressure on standards of governance—these are the early impacts that NEST is having.

No one who has seen NEST’s approach to governance or investment strategy can doubt the absolute focus on delivering a product for ordinary people. It has transformed thinking around the design of default funds. However, NEST’s influence on the market has to be strong and sustained over a long time. The product restrictions on NEST, the transfer ban and the contributions cap must not be allowed to undermine that influence as the 2012 pensions market, with extensive contract provision, starts to take shape.

The potential cost-efficiency of NEST should not be inhibited. As these restrictions play out in practice, we are now finding that they add complexity to the NEST product rather than simplicity to the employer experience. They may force employers to make multiple-tier provision or sign up for a scheme that does not offer some workers best value.

The transfer restriction also prevents NEST acting as an aggregator of pension pots. With automatic enrolment and job churn, there will be millions of small pots in the system which will be vulnerable to high charges and neglect if they are not steered into a safer harbour.

The Government have acknowledged that the case for reform is clear. That reform must include a role for NEST, which must be fit for purpose in protecting the pension pots of ordinary people.

The importance of NEST in driving up standards in the pension industry should be neither underestimated nor undermined. On the eve of auto-enrolment, we see emerging issues, such as providers selling short-service refunds as a propositional benefit to employers, with the consequential loss of up to two years’ pension saving for the worker. There is also the establishment of multi-employer “master trust” schemes by providers with senior executives in trustee roles. How do they manage conflicts of interest? Will such trustees be able to sack underperforming fund managers if they sit within the same corporate entity?

The Secretary of State has reserved powers to set charge caps and I hope that he will monitor closely the emerging evidence. Low charges are essential to the public credibility of automatic enrolment. I also hope that the Government take the opportunity of the Financial Services Bill to strengthen the requirement on regulated bodies to have a duty of care and to act responsibly in the interests of the consumer.

There is increasing recognition of the importance of the alignment of interests between pension scheme governance and the member. NEST has this alignment at the core of its governance. Indeed, it was heartening to see Otto Thoresen at the Work and Pensions Select Committee arguing forcefully that the industry has really got it in terms of the need to make pensions work for the saver. It was equally heartening to hear him accept that some would be cynical of this claim, based on the industry's past behaviour in this area.

I urge the Government unequivocally to confirm that they accept that a successful and thriving NEST has an essential role to play in driving up standards in the industry, in pension provision and in the interests of all those workers who will be auto-enrolled in saving for their pensions. I urge them to take such steps as are necessary to ensure that the role that NEST will perform in raising the standards in the market place is maintained, including removing restrictions to allow it to continue to do that.

20:30

[Lord Myners]

My Lords, I congratulate my noble friend Lord McFall of Alcluith on securing this opportunity for the House to revisit this important area of workplace occupational pension schemes. I declare an interest as a partner in an investment management firm and also as chairman of the Personal Accounts Delivery Authority, the predecessor to NEST.

I am a member of a defined benefit pension scheme. My wife, my children and I draw security from the fact that we have an assured income which will track inflation. My father was a fisherman and then a small shopkeeper. He had no workplace pension; he worked at sea. My teenage children will not have a defined benefit pension scheme. This is a single generational phenomenon. Perhaps it cost too much; perhaps it was not valued sufficiently by those who were members of the schemes in the early stages of their lives; and perhaps we in Parliament put too much pressure on this beast and burdened it with all manner of additional requirements. We sought to de-risk it and we sought to provide additional protections. We have destroyed something which I think we all know was a rather good development and whatever succeeds it will not be as good. I fear that that is an irreversible decision.

I congratulate my noble friend Lord McFall on his work on the Workplace Retirement Income Commission. That work focused in particular on some of the problems that arise with the successor arrangement, the defined contribution scheme. Contribution rates are simply too low to deliver the sort of benefits that people believe they will need and expect on retirement. There is a huge mismatch here which the Government constantly need to remind people about in order to encourage higher rates of contribution. Costs are also far too high. Costs are the one manageable element here. If the contribution is fixed and investment returns are outwith the control of the subscriber or the arranger of the plan, then costs is the one area where you can secure some improvement in the benefit that is acquired through contributions.

My noble friend Lord McFall also highlighted the absence of competition in the annuity market. I referred to this in a report that I produced for the Treasury in 2001. This continues to be a very serious problem, particularly for people with only modest amounts to acquire annuities. I would like to suggest to the Minister that the Debt Management Office seriously considers offering annuities. It is another form of funding. It has different features from lending, but essentially a capital sum accrues to Government and a rate of return is paid to the subscriber of that capital. Therefore, it is not unlike a gilt-edged security. The Government have no concerns about operating in the fixed-income issuance market, so why should they not also be funding themselves through annuities? At least they could examine that as a force for change and better value from the private sector.

I believe that NEST is being unreasonably hindered by its inability to act as an aggregator for small funds. That is something that the Government can do. Quite frankly, the private sector is not very interested in aggregation of small balances, so there is no obvious market for that. It is very much a seller’s market in terms of pricing. As my noble friend Lady Drake has already reminded us, NEST has clearly played a very important role in improving the governance of pension schemes and improving the pricing of the pensions product. I pay great tribute here to Tim Jones, the chief executive of NEST, and his leadership. I hope that the Government will see NEST as something that they should champion and promote as a really effective force in this area, as it is important to so many people’s lives.

My final observation relates to occupational pension schemes as owners of companies. There has been a complete failure of institutional ownership, which lies at the heart of so many of the problems that we have in the private sector, including the hot potato of bonuses, with which I see the coalition Government struggling, and which reminds me of my own days in trying to resolve that issue. There has been a dilution of ownership and a dilution of a sense of responsibility on the part of investors. NEST is seeking to correct that, but the Minister, as a former investment banker, must be very well informed on these issues. In the past, organisations such as the National Association of Pension Funds with Mr David Paterson and the Association of British Insurers with Mr Peter Montagnon have done sterling work in governance and stewardship, but their effectiveness is being diminished by the fact that the pension schemes now represent a much smaller part of the ownership of UK companies. There is a major lacuna there in the economy.

I was disappointed that the Secretary of State for Business’s Statement recently on bonuses and pay did not say a great deal about making shareholders more effective in the performance of their duties as owners. I hope that the Kay review, which is due to publish an interim report in the next few days, will, as the noble Baroness, Lady Wilcox, assured us yesterday, address the issue of shareowners as responsible owners, including putting them at the fore in an active way in choosing boards of directors and sitting on nominations committees.

20:37

[Lord McKenzie of Luton]

My Lords, like all noble Lords who have spoken, I am grateful to my noble friend Lord McFall for initiating the debate and especially for his role in chairing the Workplace Retirement Income Commission. In six minutes it is impossible to do justice to its recommendations or the subject of our debate. This is an important piece of work which builds on the earlier deliberations of the Pensions Commission, although the noble Lord is right to highlight the change in circumstances in the few years since the commission reported.

Clearly, the economic environment has changed for the worst—a bleak dawn, as my noble friend called it—where real incomes have fallen, confidence in long-term savings is low and real interest rates are negative. At the same time, people continue to live longer. There is both an imperative to save and an expectation that consumers will do their bit to sustain GDP. Low interest rates have pushed up the value of liabilities of DB schemes, making funding more difficult with greater risks on employers. The noble Lord, Lord Freeman, spoke on that. For the DC environment, low interest rates have meant lower annuity rates and slower build up of capital, with the risks falling on individual savers. So it is little wonder that we have seen the number of employees in private sector workplace schemes continuing to decline, with most private sector DB schemes closed to new members and many to existing members. That is before taking account of the threats from the EU, to which my noble friend Lord Hutton referred.

The need to sustain and reinvigorate pensions is clear and the proposition to do this via occupational schemes is to be supported but we would be cautious about how employers should be engaging with employees on pensions and other savings, as this was certainly a bone of contention when auto-enrolment was planned with a distinction between giving advice and providing information. As the noble Lord's commission identified, although not a panacea, the recommendations of the Pensions Commission provided the foundation for reinvigorating occupational pensions. The components are well known, if complex, as the noble Lord, Lord Stoneham, said: a more generous state pension, flat-rating of S2P and the introduction of auto-enrolment. However, as we heard, things have moved on and we now have the coalition Government's proposals for a simpler, single-tier pension to consolidate the two components of the state pension and resources from pension credit. A higher state entitlement and the squeezing out of at least some means testing will clearly provide a platform to encourage further saving, but the proposition is not without its technical challenges. Perhaps the Minister will give us an update on the current plans. What work streams are under way to achieve this and what is the planned phasing of the introduction?

The Government are to be congratulated on sticking with auto-enrolment, although we express our disappointment at the deferred start date for smaller companies and at the fact that it will not be until 2018 that the full employer rate of 3 per cent comes into effect. A number of noble Lords identified that the 8 per cent would have to increase over time. Because the Government are raising the earnings figure, now heading north of £8,000, yet more people will miss out.

Like my noble friend Lady Drake, I urge the Minister to confirm that there will be no further delay in the implementation of auto-enrolment. It has the potential to change the occupational pension landscape, although, as my noble friend Lord Hutton said, it is too early to judge. This is linked to the success of NEST, which has the clear remit of delivering a national scheme with low charges. It has been constrained in its construct as part of the consensus that underpins the Pensions Commission's reforms. The removal in due course of the prohibition on transfers in, and of limits to annual contributions, argued for by my noble friends Lord Myners, Lord McFall and Lady Drake, will certainly be right.

A range of other technical issues would help encourage pension savings. New rules facilitating the cashing in of small pension pots—which would give special help to women—tackling short-service refunds, and changing the rules on enhanced transfer values, will all help. We will support the Government as they tackle these measures. We were promised a bonfire of regulations—from the trivial to the huge—by the Pensions Minister. Perhaps the Minister will give us a clue to what is included in the “huge” category, and how this will help to invigorate pension saving.

There is a lot in place or coming on stream that can make a difference, but we agree with my noble friend that there is much that the industry also must do to address fee levels and structures, and secure greater transparency and a more flexible annuity market. The Minister was given novel suggestion by my noble friend Lord Myners. All the measures are vital, particularly if DC schemes are to take the strain of a challenged DB regime. They are also vital if reputations are to be enhanced and confidence generated. The Workplace Retirement Income Commission stressed the need to develop products for DC schemes that mitigated the risk for individual members. This raises issues of collective DC, hybrid schemes and potentially many more, including the consolidation of a range of smaller schemes. Of course, it depends on whether the risk to be shared is the investment risk or the longevity risk. The development of such products and the complexity that they might bring sharpen the need to address the governance of DC schemes.

In conclusion, I congratulate my noble friend Lord McFall again on the work of his commission and on stimulating the debate tonight. As the report says, pension policy needs to be considered in a long-term context of 40 to 50 years—certainly longer than the routine political cycle. An independent pension commission would help sustain the changes that are needed.

20:44

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I join other noble Lords in paying tribute to the noble Lord, Lord McFall, and congratulating him on securing this important debate on reinvigorating occupational pensions. I am sure that noble Lords will join me in thanking him also for the skill and diligence that he showed as chairman of the Workplace Retirement Income Commission. The report was a fascinating read. It proposed recommendations on how industry, employers and the Government can strengthen workplace retirement saving. More importantly, I am relieved to see that in most of these areas the noble Lord and I are in much the same place.

The pensions landscape, which is always fluid, will see a huge change again in 2012 with the introduction of auto-enrolment, which presents a once-in-a-lifetime opportunity to transform our savings culture. However, if we are looking to reinvigorate occupational pensions, we need to go further than this. We need to build public confidence that such pensions are value for money; increase employee engagement in retirement saving; and motivate employers to provide good pension vehicles. None of these goals is easy, and they have become a lot more difficult recently.

In the past 25 years, life expectancy at 65 has increased by six years for men and five years for women. That is great news generally, but poses serious financial questions. Saving is in sad decline. In 2010, 13 million jobs had no pension provision—an increase of 2.5 million on 1997. The noble Lord, Lord Myners, uttered a lament for the occupational pension. We have seen falling annuity rates, increased longevity and a fall in the rate of return on equities. My personal belief is that some of us in this generation had a free ride because of the discovery of equity returns in the 1950s, 1960s and 1970s. I suspect that those returns were a one-off. We also saw the abolition of payable tax credits. As a result, UK pensions are no longer the gold standard that they were.

Only one in three private sector workers is contributing to a workplace pension. Other noble Lords cited different figures but basically, if one wants a £15,000 pension, it will require £300,000 of capital outlay to fund. That brings home very starkly the challenge of getting people to invest in a pension.

[Lord Myners]

Not bankers!

[Lord Freud]

Not at the moment, but their remuneration is going down quite a bit.

First, we must change attitudes towards pensions as a whole. Many people find pensions too complex, the incentives to save unclear and the expected retirement incomes unknown. For these reasons, the state pension needs to be reformed to provide a simpler, clearer foundation to support those saving for retirement. That is what the proposals in the Green Paper A State Pension for the 21st Century outlined: a simpler, single-tier pension set above the basic level of the means test as the primary option. I can update the noble Lord, Lord McKenzie of Luton, that, should we decide to proceed, we will set out further details as part of a White Paper in accordance with the usual process.

Nevertheless, around 7 million people are not saving enough to deliver the pension income they are likely to want, or expect, in retirement. With automatic enrolment, we will start to see a behavioural change requiring all employers to enrol all eligible workers into a workplace pension scheme. I welcome the introduction of the National Employment Savings Trust as a simple, low-cost pension scheme designed to fill a gap in the market for employees on low to moderate earnings. We are already seeing NEST acting as a beacon of best practice to other providers and encouraging high standards of governance, responsible investment, effective communications and low charges. A number of noble Lords raised the issue of the shackles on NEST. We will keep that balance between competition and choice very much under review. In response to my noble friend Lord Freeman, I am pleased to report that last week the department began its communication campaign to alert individuals and employers to the reforms and to ensure that tailored information is received by those affected.

On top of this, we must restore public faith in the concept of pension saving and, behind this, pension charges are key. Individuals who perceive their charges to be high are less inclined to save, so I welcome efforts by the National Association of Pension Funds to bring the pensions industry together to improve transparency of charges information for customers and employers. My department will offer its support to ensure that real improvements are made. It is also worth bearing in mind that since departmental research places the average annual management charge in default funds at between 0.4 per cent and 0.6 per cent, with none found higher than 0.9 per cent, the case for rushing into a charge cap without due consideration carries less weight. This is especially as new entrants into the market, such as Now pensions, are offering similarly low charges. Nevertheless, I can assure noble Lords that the Government will not hesitate to deploy a cap if individuals’ pensions savings are at risk from excessive charges.

As noble Lords have pointed out, there are a lot of small pension pots. There are more than 1 million small pension pots valued at less than £2,000, and automatic enrolment will clearly increase that number further. This is a serious hazard for individuals who want to build up their pension saving. Small pots are easy to lose track of and difficult to aggregate due to the cost and complexity of transferring pension schemes. In December 2011, the Government released the consultation paper Meeting Future Workplace Pension Challenges: Improving Transfers and Dealing with Small Pots, in which potential solutions are set out to address this issue. These include radical proposals such as an automatic transfer system in which pension pots could move with the individual from job to job or be consolidated in one or more aggregator schemes.

Individuals also need to get best-value outcomes. The Government believe that individuals are likely to get the best deal by shopping around on the open market and exploring options from a range of providers before purchasing an annuity. We have been working with consumer groups, industry representatives and other government bodies to bolster the current right to the open-market option by developing a default open-market option. The Association of British Insurers is currently consulting on a new draft code of conduct which supports this aim.

One area where standards must improve is on incentivised transfer, where members of perfectly sound defined benefit schemes are being offered cash incentives to transfer out of, or modify, their existing pension arrangements. It often results in members receiving less generous arrangements and thus lower retirement incomes. We are therefore working with the Pensions Regulator and the Financial Services Authority to develop an industry-wide code of practice which will cover all forms of incentivised transfers to ensure that these practices, when appropriate, are done fairly and transparently and are communicated to the member in a balanced and easily understandable manner.

We need to make it easier for employers to provide good-quality pension provision for their workers. To help deliver this, we aim to make it easier for employers to restructure their pension arrangements without requiring the employer to pay the difference between its assets and the cost of buying out the scheme’s pensions.

The department’s private pensions legislation will also be the focus of the red tape challenge. In response to the noble Lord, Lord McKenzie, I say that this is a cross-government initiative that seeks to revoke or simplify as much legislation as possible to ease the burdens on employers and business. We will use this opportunity to look objectively at pensions policy and consider whether the legislation as it stands reflects the department’s priorities and is fit for purpose.

The Pensions Regulator has set out its principles for what a good defined contribution scheme looks like, to establish standards for design and governance of defined contribution schemes and ensure that the pensions industry is best placed to support automatic enrolment.

Looking further ahead, we need to build on the good work that the consensus of previous years has achieved. We should consider the role for government in determining scale and ask ourselves whether the high fragmentation of the UK pensions market offers good value, or whether a smaller number of larger schemes could offer lower charges and higher governance, to the advantage of members.

As defined benefit continues to wane, we must take opportunities to study alternative risk-sharing arrangements, such as systems that I might term “defined ambition”. Here the schemes aspire to a set level of benefits, rather than making a firm promise as our defined benefit schemes currently do.

We must also consider how to encourage automatically enrolled individuals to save more where they can. The minimum 8 per cent contribution should be considered as it is described—a minimum. Options such as automatic escalation, in which pension contributions increase in line with member salaries, have merit and are worthy of close examination.

I feel confident that 2012 represents a step change in how pensions in particular, and saving in general, are perceived by the public. I thank again the noble Lord, Lord McFall, and I hope noble Lords will join me in acknowledging that we have taken great strides in reinvigorating our pension system for the future.

Legal Aid, Sentencing and Punishment of Offenders Bill

Wednesday 1st February 2012 Lords Chamber

Committee (7th Day) (Continued)

20:56

Amendment 171A

Moved by

[Lord Pannick]

171A: After Clause 58, insert the following new Clause—
“Payments in respect of pro bono representation
In section 194(10) of the Legal Services Act 2007, after ““civil court” means”, add “the Supreme Court,”.”

[Lord Pannick]

My Lords, Amendment 171A is surely the least controversial of all the many amendments to this Bill that are being debated. It proposes an amendment to Section 194 of the Legal Services Act 2007. Section 194 is a very useful provision. It recognises that members of the Bar and solicitors frequently act pro bono for clients in legal proceedings—they charge no fee. This is of course to their great credit and to the enormous benefit of the legal system as a whole, as well as of their fortunate clients.

Some of our debates on this Bill have involved criticism of lawyers, some of it justified. We should take a moment to note that many lawyers act regularly in a wholly creditable manner by providing people with legal assistance when there is no funding, and without that pro bono assistance justice would simply not be done. One inevitable consequence of this Bill will be an increase in the demand for pro bono assistance from lawyers. When the pro bono lawyer succeeds for the claimant or the defendant, the unsuccessful other party cannot be ordered to pay the costs of the proceedings because the successful litigant has no costs, or limited costs, having received pro bono assistance. The losing side would gain an unfair benefit and indeed an unfair advantage in the litigation.

Section 194 addresses this situation. It confers power on the court in civil cases to order a person, normally the unsuccessful party, to pay a sum in respect of the notional costs to a charity prescribed by the Lord Chancellor. The charity prescribed is the Access to Justice Foundation, which distributes the funds paid to it to voluntary organisations providing free legal support for individuals and communities.

21:00

Section 194 of the Legal Services Act 2007 was promoted by the efforts of the noble and learned Lord, Lord Goldsmith, who I am delighted to see in his place. As Her Majesty’s Attorney-General, he promoted this valuable provision. He is now chairman of the Access to Justice Foundation and I pay tribute to his considerable efforts in encouraging and supporting pro bono work done by lawyers.

Section 194 has one small defect; it applies to the county courts, the High Court and the Court of Appeal but it does not apply to the Supreme Court. There is no sensible reason for not conferring this valuable power on the Supreme Court to make orders for payments to the prescribed charity in appropriate cases. Indeed, many cases in which lawyers act pro bono are the Supreme Court.

Justices of the Supreme Court and the Supreme Court users group have expressed the view that Section 194 should apply to the Supreme Court as it does to other courts. I hope that the Minister will be able to tell the Committee tonight that this omission will now be rectified. I beg to move.

[Lord Goldsmith]

My Lords, I very much welcome this amendment and thank the noble Lord, Lord Pannick, for having taken the opportunity to move and to promote it. He has already explained my particular interest as the now chairman of the charity that receives money made under these orders, which I prefer to call pro bono cost orders rather than Section 194 orders, because that is what they are. They are cost orders in the same way as the court grants costs in any other case. It is just that they do not go to the lawyers; they go to this charity which then distributes them. I should also declare an interest as the non-executive president of the Bar Pro Bono Unit and patron of the National Pro Bono Centre, two organisations that might—one of them certainly has—receive some of the grant money.

As the noble Lord has explained, the reason for these orders is the so-called “indemnity principle” in our costs regime. The indemnity principle means, first, that the court can order one party to pay the other party’s costs but only if that party is liable for those costs. In pro bono cases, the body is not liable for costs. That has several consequences, one of which is that you do not have the normal result at the end of the case where often the successful party receives costs. That results in the oddity—this is where I first saw the anomaly—of the unsuccessful party, the undeserving party if your Lordships will, receiving the benefit of the pro bono services, perhaps of some advocate as distinguished and able as the noble Lord, Lord Pannick. That cannot be right.

Secondly, there is no incentive to settle cases, which there often is in English cases, when there is a possible liability to costs at the end of the day. We have seen in a number of cases how that affects whether cases are settled; insurance companies and corporations will pay to a deserving claimant because they know that at the end of the day they will have to bear some costs if they do not.

Thirdly, it has proved to be a very valuable source of additional money for voluntary organisations providing pro bono services. I am very grateful to the noble Lord, Lord Pannick, for paying tribute to the lawyers—solicitors, barristers and legal executives—who do this for free and without payment. When I established the Bar Pro Bono Unit, I asked whether members of the Bar would be prepared to commit to three days of free unpaid work a year, and straightaway I had an overwhelming response. People are prepared to do this, and that is a great credit to them.

I have one thing to say to the Minister, which I always say when talking about this subject: this is not a substitute for a properly funded legal aid service but an adjunct to it, and a very valuable one. However generous a system might be, and we hope very much that the noble Lord will produce a more generous system at the end of the Bill, there will still be a need for this unit. However, as the noble Lord, Lord Pannick, has explained, there is a gap in that the House of Lords is not covered—

[A noble Lord]

The Supreme Court.

[Lord Goldsmith]

I am sorry, the Supreme Court—how outdated I am. To fill that gap would be very valuable. My understanding, like that of the noble Lord, is that the Supreme Court would welcome this. That is not surprising because the president of the Supreme Court is the noble and learned Lord, Lord Phillips of Worth Matravers, who, when he was Master of the Rolls in the Court of Appeal, was instrumental in passing the earlier Bill, but no doubt the Minister can confirm that. If not, his unsleeping department will be able check it instantly. I strongly support the amendment and hope that the Government will be able to accept it.

[Lord Bach]

My Lords, very briefly, we support the amendment. The expression “no brainer” has been used on a number of occasions. It is not an attractive expression, but it is surely one that applies to this amendment.

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

My Lords, I am grateful to the noble Lord, Lord Bach, for his intervention, and to the two noble Lords who contributed to the debate. The role of the Ministry of Justice in pro bono work is undertaken in partnership with the Attorney-General to endorse, support and facilitate pro bono initiatives. The Attorney-General carries policy responsibility for pro bono work within the Government, presumably following the initiative of the noble and learned Lord, Lord Goldsmith. I certainly pay tribute to the work that he has done for the Access to Justice Foundation. I understand that the foundation runs an awareness-raising campaign, Unlock Funds for Justice, while on the other side the MoJ is providing funds for LawWorks over the next 18 months to fund two specific projects. LawWorks is the primary referral agency for legal help provided pro bono by solicitors. Although he is not in his place at the moment, I know that my noble friend Lord Phillips of Sudbury has played a big part in promoting the agency.

Let me say first that the Government recognise the valuable contribution made by the legal profession in providing advice through pro bono work. The pro bono contribution made by the legal profession is made alongside publicly funded legal assistance. It is an adjunct to, not a substitute for, such assistance. I think that these speaking notes must have been left over from one of the briefs of the noble and learned Lord, Lord Goldsmith.

[Lord Goldsmith]

I am happy that the noble Lord read them too.

[Lord McNally]

My Lords, Section 194 of the Legal Services Act 2007 allows courts to make an order for costs against a losing party in pro bono represented cases, with the moneys recovered going to a prescribed charity, the Access to Justice Foundation. The Ministry of Justice works with the Attorney-General who, as I have said, has policy responsibility for this work. The legislation reduces the disadvantage to parties represented pro bono by levelling the financial risks of litigation for both sides. It has also provided a new source of funding for the strategic support and promotion of pro bono work.

I am extremely grateful to the noble Lord, Lord Pannick, for highlighting this issue. The amendment, though, is one that the Lord Chancellor would like to consider further. Perhaps I may say that considering it further does not mean kicking it into the long grass or even making it a no-brainer, but it is one that needs proper consideration, and he has asked that, in that respect, he be given time to give it that consideration. I hope that the indications of support given in the Chamber tonight, the general direction of travel of this reply and my desire to make this a full house in terms of saying nice things about amendments that the noble Lord, Lord Pannick, has introduced today will give him confidence that what I have said is not a way of putting this matter into the long grass but of asking, as my briefing note does, that the Lord Chancellor be given time to give full consideration to this important matter. I see both the noble and learned Lord and the noble Lord coming for me.

[Lord Goldsmith]

One issue that we have looked at is whether it would be necessary to have any orders or consequential provisions made as a result of this change. I understand that, because of the existing Supreme Court rules, which can follow the rules in the other courts, it would not be a burden on officials. That might help the consideration to which the Minister has referred.

[Lord McNally]

The wonderful thing about this House is that you get free legal advice. I will certainly take that back to the Lord Chancellor with the weight of the advice of the noble and learned Lord, Lord Goldsmith, behind it. With that further steer, I would be grateful if the noble Lord, Lord Pannick, withdrew the amendment.

[Lord Pannick]

I am very grateful to the Minister. I will of course withdraw the amendment. I am very grateful to the noble and learned Lord, Lord Goldsmith, for his support, as I am to the noble Lord, Lord Bach, for his. It would indeed be churlish of me not to understand and accept the indications given by the Minister in respect of the amendment, which is plainly receiving far warmer consideration than some of the other amendments that we have discussed. I have to say that I cannot understand what further consideration is necessary in relation to an amendment of this sort in the light of the factors to which this debate has drawn attention, but on the understanding that this matter is receiving proper attention, in the hope that the Government will be able to bring forward an amendment in appropriate terms on Report and in thanking the Minister, I beg leave to withdraw the amendment.

Amendment 171A withdrawn.

Clause 59 : Costs in criminal cases

Amendment 172 had been withdrawn from the Marshalled List.

Clause 59 agreed.

Schedules 7 and 8 agreed.

Clause 60 agreed.

Clause 61 : Duty to give reasons for and to explain effect of sentence

Amendment 172A

Moved by

[Lord Ponsonby of Shulbrede]

172A: Clause 61, page 43, line 32, at end insert—
“(1A) The court may order that the prosecution should inform the victim of the court’s decision and the consequences thereof.”

[Lord Ponsonby of Shulbrede]

My Lords, the amendment would give all victims the right to be told about sentences passed in the courts. Yesterday, the Government launched a consultation document called Getting it Right for Victims and Witnesses. In the opening sentence, the Lord Chancellor states:

“Proper protection and support for victims of crime is fundamental to my vision of a reformed criminal justice system”.

In paragraphs 72 and 73, he makes it clear that it is his intention to opt in to a new EU directive on rights and support for victims of crime. He states also that he believes that victims are entitled to be treated with dignity and respect, and, crucially, that victims should receive information. That is the crux of the amendment. I have no doubt about the Government’s good intentions in this matter.

At present, once a case has been concluded, either in the courts or in an out-of-court settlement, there is no guarantee—and certainly no formal mechanism—to ensure that that the victim of a crime, if they so wish, is informed of the outcome of the case. In the Crown Court, there is a duty on the probation service to contact victims and their families after someone has been imprisoned for 12 months or more for a sexual or violent crime, but there is no obligation for less serious offences. I felt that it would make sense to put this new duty on the prosecuting agency on behalf of the victim rather than on the Courts Service itself. I did that because the prosecuting agency will already have the contact details on its files, and of course it already informs victims of the progress of their cases as they come to court.

21:15

The current situation can be remedied by the introduction of a victim information order where a sentencing Bench can order the prosecuting agency to give victims information concerning the sentence itself, the reasons for that sentence, if it is a community order what they are likely to carry out within that order, the commencement and completion of that order and any compensation that may be paid. At present, the victim's views in court are part of something called the victim impact statement. Victim impact statements are a valuable source of information for any sentencing Bench but they are, in my experience, rare. I have been a magistrate for six years and I have read an impact statement only about four or five times, so they are not used very much. They should be used more and they could be used to request a victim information order. Through that mechanism, the victim could ask the court to make sure that they are told about the outcome of the sentence.

Whether a victim impact order is made should ultimately be at the discretion of the court, and the court should of course have regard to any cost of making such an order. The only possible objection that I can see to my amendment is the likely cost of making such an order. I would be interested if the Minister could give any information about the likely cost of such an order given the Government’s expressed intent to put victims at the heart of the criminal justice system.

All noble Lords taking part in the Bill will know that there are many organisations representing victims. I have been contacted by a number of them, as I am sure have other noble Lords. They all essentially make the same point, which is that the lack of contact between victims and agencies such as the police, the courts, the prosecution services or the probation service is very often perceived as a lack of action by those agencies. In many cases that is the wrong perception but, even if it is wrong, it clearly undermines the criminal justice system itself. That is no doubt why we hear this admirable ambition of the Government to put victims at the heart of the criminal justice system. My amendment goes further towards achieving the Government’s aims and I beg to move.

[Baroness Quin]

Amendment 172B is in my name and that of the noble Lords, Lord Ramsbotham and Lord Wigley, and relates to Clause 61. I tabled two more amendments in the same group with the support of the noble Lord, Lord Wigley, Amendments 178ZA and 178ZB, which are similar to the first amendment and relate to Clauses 86 and 95. Even though my noble friend spoke on a slightly different aspect, I associate myself with his comments and with his concern for victims.

Although I do not have a financial interest to declare, I was prompted to table this amendment by some work that I did some years ago with the Prison Reform Trust. We were part of a project called No One Knows, which looked at the experience of people with learning difficulties and learning disabilities in the criminal justice system. I chaired the project’s advisory group, which brought together people with knowledge of issues from various spheres, including members from Mencap, healthcare professionals, people involved in social care and learning and skills, and various practitioners and academics. We were also helped in that work by the Working for Justice Group, a group of people who have direct experience of the system and whose first-hand knowledge was invaluable to us.

The project produced what I hope was an authoritative report, Prisoners’ Voices, which was well received by Ministers at the time, who undertook to look at our recommendations. I am pleased to say that both the previous Government and this one have taken some action on those recommendations; in particular, we are about to have more of a proper screening programme in the prison system to identify people with learning difficulties and disabilities. There have been improvements in the training of prison officers in this respect, and the very welcome recent development of some offender behaviour programmes recognising these particular issues. In addition, the Easyread system is being adopted in various parts of the criminal justice system, to increasingly good effect.

However, I believe strongly that further improvements and commitments in this area are necessary, certainly as far as the courts are concerned, which explains the tabling of these amendments. I am very grateful to the noble Lords, Lord Ramsbotham and Lord Wigley, for their support, particularly on an issue such as this, where I recognise their keen interest and experience. I am also grateful to the noble Lord, Lord Wigley, for signing the other two amendments that I mentioned. It is perhaps particularly appropriate because I know that the Prison Reform Trust’s report, Prisoners’ Voices, has been taken very seriously in Wales. The previous Health Minister in Wales, Edwina Hart, was part of the launch in Wales of the report and the measures that we wanted to see adopted.

I am also aware that Mencap and the noble Lord, Lord Rix, had very similar concerns about this part of the Bill to the ones that are reflected in these amendments. I say to the Government that these are, at this stage, obviously probing amendments, but with the plea that the Government look at our concerns with a view to try to change the wording of the Bill to reflect their importance.

We know that a very large number of offenders have learning difficulties and learning disabilities. Obviously it all depends on the definition that you use. If you use a very wide definition of learning difficulty, you could make the case that the majority of people in the prison system are affected. The work and research that has been done suggests that a core of, say, 20 to 30 per cent of offenders and people in the criminal justice system are affected by learning difficulties and learning disabilities. If you have a prison population of 80,000, that means anything between 16,000 and 24,000 people; so we are talking about a considerable number of people that we need to be aware of.

The figures for young people are even more serious. Research by Professor Karen Bryan and others seems to indicate that more than half of children who offend have speech and language communications difficulties. About half this group have very poor skills indeed. It is important for all parts of the criminal justice system to be aware of this, but it is particularly important in the initial stages, when people charged come into contact with the system. The Bill refers to ordinary language, which is welcome as far as it goes, but I find it somewhat vague. What may seem ordinary to a well qualified and educated lawyer may be way out of the ordinary to a young offender with learning difficulties or learning disabilities. As the Prison Reform Trust puts it:

“The term ‘ordinary language’ is imprecise; what is ‘ordinary’ to a magistrate or a judge may not be ‘ordinary’ to the individual offender”.

In the course of our work, we came across some very interesting examples. For example, one young person was asked in court whether he was remorseful about the crime that he had committed. Since he did not know what the word “remorseful” meant and was rather distrustful of it, he said no. Even such words as “victim” or “breach” are sometimes sufficient to confuse or mislead someone in that position. Indeed, Mencap makes the point that almost a quarter of prisoners under 18 have a learning disability or difficulty, with a 78 per cent reoffence rate among those at risk. That reoffence rate is an important part of our concern that we have the ability to make sure that we communicate properly with such people, as that can help to avoid some of the later difficulties that we are all keen to avoid.

I am aware, in conclusion, that an amendment trying to do what I seek to do here was tabled in another place by my honourable friend Helen Goodman, and I accept what the Minister Crispin Blunt said in reply on that occasion—that that particular amendment was defective and could have resulted in omitting some valuable elements from the Bill. However, my amendment, in trying simply to insert some wording, seeks to rectify that, and for that reason I hope that the three amendments that I have tabled can find favour and that we can find a better wording than the imprecise and unsatisfactory current wording of the Bill. I do not believe that there is a difference of substance or principle here; it is really simply a concern that we get the wording right so that the desired result is achieved.

[Lord Ramsbotham]

I rise to speak in support of Amendment 172B, to speak to Amendment 174, and to speak to Amendments 173, 177, 181, 182, 183, 184 and 185 both on behalf and in support of my noble friend Lord Rix, who would have declared his interest as president of the Royal Mencap Society had he been able to be in the House.

I speak first to Amendment 172B. I must declare an interest as chairman of the All-Party Group on Speech and Language Difficulties. As the noble Baroness, Lady Quin, has already pointed out, more than half the children who offend have some form of learning difficulty. The inability to communicate is the scourge of the 21st century, about which I have spoken many times in this House, most recently in the context of the Health and Social Care Bill. Regrettably, except in Northern Ireland, there is currently no routine screening to identify children with communication difficulties or learning disabilities. Until and unless there is, and early remedial action is taken, these children will be unable to understand or participate in the judicial process without effective support, which in turn must be related to their abilities or lack of them. This is yet another example of a need, identified in this Bill, being inhibited by lack of provision in another Bill. I hope that the Minister will speak to the Department of Health before Report so that we can consider how best to proceed with this amendment.

Amendments 173, 177 and 181 to 185, to which I speak on behalf of my noble friend, who much regrets that he cannot be present, are all based on the principle of safeguarding vulnerable people in the criminal justice system. They also reflect demands that the system should be sufficiently flexible to achieve the delicate balancing act of protecting offenders with additional needs while prosecuting them. Of course, perpetrators must face the consequences of their actions, but they should not be denied the support that they may require in order to understand and participate in the judicial process.

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A wide spectrum of individuals is affected by these amendments: those with speech or language difficulties; those for whom English is not their first language; and those with a learning disability. According to the Prison Reform Trust report published in 2007, to which the noble Baroness, Lady Quin, referred, between 20 per cent and 30 per cent of offenders have learning difficulties or disabilities that interfere with their ability to cope within the criminal justice system. On top of this, there is ample evidence of current deficiencies within the system over meeting these additional needs, which vary from poor flagging of individual needs to inappropriate diversion schemes and insufficient adjustments being made in the interests of fairness. That flies in the face of the principles of justice, from which they are at risk of being disproportionately disadvantaged by the system.

Amendments 173, 177 and 183 to 185 are about the availability of accessible information at all stages of the judicial process. I appreciate that the Bill provides for the use of ordinary language when, for example, giving reasons and explaining outcomes. However, as my noble friends Lord Rix and Lord Wigley and I mentioned to the Minister when he kindly agreed to meet us, this does not go far enough. Ordinary language, however simplified, may not be sufficient to explain complex concepts or terminologies which could elude the comprehension of some individuals. For example, people with a learning disability may require easy-read formats, which include pictorial aids. What I am therefore seeking in the Bill is an acceptance that, to ensure that all aspects of the judicial process are fully understood by those with particular needs, different forms of communication above and beyond ordinary language must be employed, determined by what is most appropriate for the recipient.

I have a very real concern over one particular proposal in the Bill; namely, that conditional cautions could be issued without the involvement of the Crown Prosecution Service. If authorised persons such as police officers are to be allowed to offer such cautions, it is of paramount importance that they do so in a way that ensures that individuals with additional needs are aware of the conditions attached. Without this safeguard, miscomprehension could result in someone being unaware of what they are admitting to or what conditions they risk breaking, resulting in their suffering greater sanctions as a result. What is more, options for disposal, such as offender management courses, must be available in appropriate forms before they are attached as conditions to avoid people being set up to breach. That is one reason why the amendment calls for the use of appropriate adults, who are an invaluable resource for all vulnerable groups because they provide impartial advice in what can be very stressful situations. In this connection, I hope that there will be a greater obligation on authorities to make more use of them.

Amendments 181 and 182 relate to employment provision in prisons. Here I must declare another interest as vice-president of the Centre for Mental Health which, for the past five years, has been studying the employment of those with mental health problems, including learning disabilities. I fully endorse the positive role that employment can play in prisons, particularly with regard to the teaching of employment skills which can be utilised outside custody. However, government figures suggest that fewer than 7 per cent of people with a learning disability known to social services are in any form of paid employment and, regrettably, the significant barriers to work that they face already, including employer prejudice, are likely to be increased as a result of the stigma attached to a conviction.

Inevitably, people with learning difficulties have high support needs, and I echo Mencap’s concerns that without that support many of them will be unable to participate in the ethos of working prisons that the Government seek to implement. That could leave them isolated and unable to integrate into prison life on top of their vulnerability to targeted harassment and abuse. Furthermore, if financial penalties are now to be associated with a failure to carry out work-related activities, people with a learning disability stand to be disproportionately affected unless effective and adequate employment support mechanisms are put in place.

This group of amendments is designed to provide vital safeguards for certain vulnerable groups as they make their way through the criminal justice system. Just because their needs present an additional challenge does not mean that they should be overlooked. On the contrary, ignoring them is likely to lead to future interventions being needed following more serious offences, which in turn will be more expensive to provide.

I turn to Amendment 174, which is also linked to amendments that I have tabled later in the Bill. It is designed to emphasise the point that although imprisonment is a punishment awarded by the courts and prisons are places in which that punishment is served, if the public are to be protected by the prevention of reoffending, rehabilitation must be a key component of all prison sentences.

[Lord Wigley]

My Lords, in earlier debates on the Bill we discussed the need to ensure equality of arms before the law and the wider principles surrounding access to justice. I support Amendment 172B, to which the noble Baroness, Lady Quin, has spoken so effectively, and the linked amendments, all of which promote a particular aspect of access to justice—that is, the need to ensure that people of all abilities are able to understand the criminal justice system, be they the victims or the perpetrators of crime. I warmly support the points made by the noble Lord, Lord Ramsbotham, and we are all indebted to him for bringing his wealth of experience to our debates on these matters.

Amendments 172B and 173 would amend Clause 61, which places a duty on courts to give reasons for, and explain the effect of, sentences that they hand down to perpetrators. The clause outlines a duty on the court to explain in “ordinary language” the court’s rationale for arriving at a particular sentence. “Ordinary” is a relative term. The amendments add that the language should be,

“appropriate to the intellectual ability and understanding of the individual offender”—

that is, to ensure that the court recognises the need to adapt its means of explanation in cases where an offender has a disability or learning difficulties. I should declare my interest as a patron of Mencap Cymru.

Our justice system should be both accessible and comprehensible, and steps should be taken to ensure that victims and perpetrators of crimes understand the implications and the gravity of the crime committed. If this is not done, there is every risk that the perpetrators in question may not be amenable to successful rehabilitation and will regress into committing similar crimes in future.

Amendment 178ZA would amend Clause 86 of the Bill, which makes provision for a court to impose conditions on a child who it has remanded to local authority accommodation. The clause also states that the court may impose certain requirements on the child if they are being granted bail, including, in some cases, electronic monitoring. Under subsection (7), it is stated that when a court imposes conditions on a child or varies those conditions, the court must explain the rationale behind this in “ordinary language”. There again, that troublesome phrase crops up. Amendment 178ZA would clarify that the language needs to be appropriate to the intellectual ability and understanding of the individual child. The necessity of using appropriate language is surely overwhelming when considering situations that hinge on the well-being and the education of impressionable children.

Amendments 181 and 182 centre on a related, though slightly different, issue. They would amend Clause 118, which itself makes amendments to the Prison Act 1952 in respect of the employment and payment of people in prison and those detained in remand centres, secure training centres and young offender institutions. Subsection (2) provides that the Secretary of State may continue to make rules about the employment of persons who are detained in secure training centres or young offender institutions. Subsection (4) inserts a new section into the 1952 Act which similarly confers new powers on the Secretary of State to make rules about the employment of prisoners.

Perhaps not enough attention is always focused on the importance of employment in prison. Society is still divided on the purpose that prisons fulfil. However, if we are to take steps to ensure that prison is anything other than an expensive means of giving society a break from criminals, we must invest time and effort in ensuring that those incarcerated use that time constructively to learn about the benefits of a life without crime and to understand the implications of the crimes they have committed. This avenue should be available to all prisoners. That is why Amendments 181 and 182 seek to add further paragraphs to this clause to ensure that the Secretary of State must also make rules about,

“(c) the availability of support to carry out employment; and

(d) the availability of support to understand the terms of employment in prison”.

These amendments, if accepted, would go towards certifying that all those incarcerated in our criminal justice system have the same opportunity for rehabilitation regardless of ability.

Finally, Amendments 184 and 185 seek to amend Clause 124, which sets out the anatomy of youth cautions. Clause 124 repeals Sections 65 and 66 of the Crime and Disorder Act 1998, hence abolishing the final warning scheme. It instead inserts new Section 66ZA, which establishes a new out-of-court disposal for young offenders—the youth caution. New Section 66ZA sets out that a constable may give a child or young person a youth caution if the youth has admitted to committing an offence and if the constable decides that the youth should not be prosecuted. The section outlines that if a constable gives a youth caution, they must ensure that the implications of the youth caution, and the reasons for issuing it, are explained in—once again—“ordinary language” to the person or, if they are 17 or younger, the appropriate adult accompanying them.

Amendment 184 would leave out “ordinary language” and insert instead:

“in an accessible way that may include, but will not be limited to, simple use of language”.

The amendment therefore has the effect of ensuring that most disabilities are catered for. Amendment 185 also ensures that the constable would have a duty to explain the reasons for issuing the caution, as well as the implications of the caution, to an appropriate adult not only if the child is younger than 17 but if the child,

“requires support to communicate or understand the process”.

This would make sure that children who have a disability or impairment which would hinder their understanding of the process would not be left disfranchised by the criminal justice system simply because of their age.

Taken together, these amendments succeed in widening access to justice and expanding the clarity of our justice system for people with disabilities. It is only common sense that they should be taken on board. In no way do they undermine the objectives of the Government in the Bill. I urge the Minister to accept them or, at the very least, to undertake to consider them between now and Report to see how these objectives can best be achieved.

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[Lord Dholakia]

My Lords, my Amendment 172C is grouped with Amendment 172A, among others. I agree very much with almost all of what noble Lords have said on these amendments. I particularly thank the noble Lord, Lord Ponsonby of Shulbrede, for rightly seeking to put the victim very much at the centre of the process; victims must be informed about what has happened.

The purpose of my amendment is not to miss out a very important element in the sentencing process. It would retain the duty on courts passing custodial sentences to give reasons explaining why they consider it necessary to pass a sentence of imprisonment. It would not take away any powers from the courts to prescribe a custodial sentence. The intention is to provide an explanation which informs people about the purpose of passing a custodial sentence.

My amendment goes further than Amendment 176ZB, tabled by my noble friends Lady Linklater and Lord Thomas of Gresford. Their amendment, which I also support, is limited to sentences of less than six months, whereas mine would go further and apply to sentences of six months or more. Let me explain why.

In general, I welcome Clause 61. It replaces the current complicated requirements on courts to explain the implications of and reasons for their sentences with a simple requirement that they should explain the sentence in ordinary language—a point made by many noble Lords. This is a welcome simplification of the court’s duties at the sentencing stage.

However, I have one concern about this change—namely that it abolishes the requirement for courts passing prison sentences to explain why they consider that the offence requires a custodial sentence. Depriving offenders of their liberty by passing a custodial sentence is a uniquely serious decision that is in a different category from imposing even the most intensive community sentence. A prison sentence often means that an offender loses his or her accommodation. Many offenders sentenced to custody lose their jobs. Others have their education disrupted. All too often, custodial sentences contribute to the break-up of families. Community sentences, even intensive community sentences with significant restrictions on the offender's liberty, do not produce those results. I submit that a court should have to explain its reasons for concluding that, despite those negative consequences, it nevertheless believes that only a custodial sentence can be justified.

Although I support my noble friends’ Amendment 176ZB, I consider that this duty to give reasons should also apply to sentences of six months or longer. There are often occasions on which courts decide that it is more productive to impose a community sentence with, say, a drug rehabilitation requirement or a sex offender treatment programme than to pass a one-year or even a two-year custodial sentence. A one-year or two-year sentence means that the offender actually spends six months or a year in custody before release. He or she then returns to the community, usually without having been through a treatment programme that could help to reduce reoffending. In these cases, too, courts should have to exercise the discipline of giving reasons for their conclusion that only a custodial sentence can be justified. The discipline of having to give reasons for passing a custodial sentence helps to concentrate sentencers’ minds on the gravity of their decision. This is designed to help ensure that custodial sentences are imposed only when there is no reasonable alternative.

I therefore hope that the Government will think again and decide to retain this important requirement. My amendment and that of the noble Lord, Lord Ponsonby, bring transparency to the sentencing process, and I am sure that the Minister will, on reflection, consider this to be a sound case.

[Lord Goldsmith]

My Lords, this group of amendments touches on a number of important issues. I have great sympathy with what my noble friend Lady Quin and the noble Lords, Lord Ramsbotham and Lord Wigley, said on those issues. I shall not touch on those matters as the noble Lords have greater experience. I was slightly alarmed to hear what the noble Lord, Lord Ramsbotham, said about the intention to take away prosecutors from conditional cautions. We will consider that issue later in the Bill and I look forward to hearing just what the proposal is and the justification for it.

I want to spend a moment or two on the amendment moved by the noble Lord, Lord Ponsonby of Shulbrede, which does a great service to the Committee by focusing attention on the need for the victim to know in appropriate ways what the outcome of the case has been. The victim, although not like a plaintiff in a civil action, is after all still the person to whom the offence happened, and it is right that the victim should therefore be told what happened, and told appropriately. I also very much agree with the noble Lord that generally that duty should be on the prosecution.

It is important that the public and victims see that prosecutors are there to some extent as an interface between them and the court and justice system, and that prosecutors focus on the needs of victims—as well, obviously, as on the professional requirements of their job to bring and prosecute cases fairly.

My question about the amendment, while fully supporting the spirit and intent behind it, is whether it is necessary for that to be dealt with by way of imposition of a duty and a new form of order. I say that because I would have hoped that, by now, prosecutors would know that they have that responsibility. I will be interested to hear in due course from the Minister and the noble Lord, Lord Ponsonby, who has promoted the amendment, whether it is believed that prosecutors are not doing that.

There are one or two reasons why a duty may give rise to difficulties. The prosecution may not always be a professional prosecutor. Sometimes the prosecutor may be a private prosecutor. It may be inappropriate for a number of reasons to impose the same duty on a private prosecutor—a neighbour in a neighbour dispute, for example—as on a professional prosecutor. There may also be victims who need particular care in explaining to them the outcome of the case, and that may need professional skills.

I am also concerned that, by imposing a particular duty of information on prosecutors, we do not take away the need for them to provide other information. Reference has already been made in this short debate to the need for prosecutors to keep victims informed of the progress of cases. In my day, we attempted to deal with that and provide flexibility by creating a victims’ charter, which was intended for prosecutors to sign up to under the guidance—or, indeed, direction—of the Attorney-General, which would cover progress of the case and, as the noble Lord, Lord Ponsonby, said, its outcome. That may be a better system to achieve what he wants.

As I said, I look forward to hearing what the Minister has to say. I entirely agree with the fundamental point that the victim should be informed of the outcome appropriately and that the prosecution should have a duty to do so.

[Lord Bach]

My Lords, this is the first debate of many, I suspect, on Part 3. Part 3 is entitled “Sentencing and Punishment of Offenders”, and Chapter 1 is entitled “Sentencing”. Luckily, there does not seem to be a part entitled “Punishment of Offenders”, but we know that that was a late introduction to the Title of the Bill many months ago.

I shall be very brief indeed. The Committee has been lucky enough to hear speeches from many noble Lords, all of whom have great experience of the criminal justice system in the best possible way—by being either magistrates or experts for many years in the work of the system. We are very lucky in the Committee and the House to have them to give us the benefit of their wisdom on it.

Part 3 is very important. The Opposition certainly do not intend to be difficult in any way about this part. If we think the reforms are wrong, we will say so; if we think they are right, we will happily agree with the Government. We know from our experience of government that this is not an easy area to deal with. Sometimes Governments have to be tough in the face of what seem overwhelming arguments from Parliament; and sometimes Governments can be too tough and not take note of sensible recommendations made.

From listening to what has been said on the various amendments tonight, some sensible suggestions have been made—none of them revolutionary or radical—to change the system. Clause 61 is liked; the noble Lord, Lord Dholakia, said that he approved of it, and I suspect that that is true of others around the Committee.

The only point that I will make concerns victims. I think that the Statement made by the right honourable gentleman the Lord Chancellor in another place on Monday regarding the Criminal Injuries Compensation Authority, as it is now known, and the change of policy on some of the tariffs may have been quite disappointing for some victims and victim groups. I am sure that does not mean that this Government are in any way less committed to looking after victims’ interests than were the Government of whom I was a member. I know that all those who talk about fair play for offenders—making sure that the system includes rehabilitation for them and a chance to do better—have exactly the same feeling about victims as the rest of us.

I do not want to go into any of these amendments tonight, and I am quite sure that the Committee is with me on that. However, I do want to hear the Minister’s response to the points that have been made. I hope that he is sympathetic to these amendments. I am sure that none of them will be pushed tonight but some important points have been made and we look forward to his reply.

[Lord McNally]

My Lords, I thank the noble Lord, Lord Bach, for the constructive way in which he has responded. I hope that Part 3 of the Bill can draw on the experience and expertise around this House. I see a number of old friends and familiar faces in this area of policy. I am also grateful to a number of noble Lords for having the chance to discuss these issues in advance of them reaching the Committee. That has been of great help in understanding where they are coming from with their amendments.

Before I turn to the amendments, it may assist the Committee if I explain what Clause 61 intends to do. It replaces the current Section 174 of the Criminal Justice Act 2003 with a revised section that simplifies the existing duty to give reasons for, and explain, the sentence.

In response to the consultation paper Breaking the Cycle, the judiciary, among others, said that the current statutory requirements are overly prescriptive and have become increasingly complex as additional requirements have been added. As a result, the current legislation is difficult to find and difficult to understand, and in the day-to-day operation of the court can simply become impractical. The Government wanted to address these problems, which is why we created in Clause 61 a replacement Section 174. It has been simplified and shortened and consolidates the various changes made to the section since 2003. In doing so, however, we have retained the important statutory requirement placed on courts to explain the effectiveness of the sentence and, crucially, the duty to state in open court and in ordinary language, in general terms, the court’s reasons for deciding on the sentence. This means that not only the offender but victims, witnesses and the public can see that justice is being done.

A balancing act is required here. On the one hand, we need to ensure that courts make very clear why a sentence is being imposed and what the effect of the sentence is. On the other hand, we need to avoid burdening courts with unnecessary and prescriptive provisions that are very often irrelevant in particular cases and which, rather than clarifying the position, simply confuse victims, witnesses and offenders.

I turn to the details of the amendments and begin with Amendment 172A in the name of the noble Lord, Lord Ponsonby. I start by saying that I take the point made by the noble and learned Lord, Lord Goldsmith, about greater transparency. He will remember that when he was Attorney-General there was an obligation on victim care units jointly run by the CPS and the police to explain sentences, regardless of whether the case was brought by the CPS or was a private prosecution. The Ministry of Justice has also embarked on a transparency programme, publishing data about the outcomes of court cases. We hope that being able to see the progress and outcome of cases will give people confidence.

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Our approach to the amendment in the name of the noble Lord, Lord Ponsonby, is that we do not believe that it is necessary. First, we would not want legislation to suggest that a court could simply avoid its own obligation to give reasons for the sentence in open court by delegating this to the prosecution. Secondly, and more importantly, there is already an obligation on witness care units, which are run jointly by the police and the CPS, to inform and explain sentences to victims under the victims’ code. The victims’ code is very clear. Paragraph 6.8 says,

“The joint police/CPS Witness Care Units must explain to victims the meaning and effect of the sentence given to the offender in their case, and respond to any questions the victim may have”.

I turn now to Amendment 172B in the name of the noble Baroness, Lady Quin, and Amendment 173 from the noble Lord, Lord Rix. I was grateful for the opportunity to meet the noble Lord in advance of this Committee and to benefit from his expertise and that of Mencap in issues affecting people with learning difficulties. I understand the thinking behind these amendments. My concern, however, is to make this duty on courts as simple and as practical as possible for the million-plus sentencing decisions made each year. I want to avoid the problem of overly prescribing in legislation how courts should go about explaining the reasons for, and the effect of, a sentence. With that in mind, I do not think it is necessary to complicate the wording of the duties in the new Section 174.

The use of the phrase “ordinary language” is lifted directly from the Criminal Justice Act 2003 and is, by definition, meant to include language that most people can understand. However, I understand the point made by the noble Baroness, Lady Quin, about people’s comprehension of even ordinary language. I heard a programme the other day about training apprentices in Stockport, my old stamping ground, and the difficulties of 16 and 17 year-olds in training who did not understand what “catalyst” meant. There are some worrying things in that respect and I am sure that that happens even more in the courts.

The current duty requires that the explanation, as a minimum, should be in ordinary language. It does not therefore stop the court going further where required. So I hope the noble Lord will accept that we should retain that minimum standard, which should apply in the vast majority of cases, while allowing discretion to go further if required. I very much appreciate the advice that Mencap provided on the various techniques that could be used to explain a sentence to people with learning difficulties. That will be used in the training of judges and magistrates, and I intend to pass that on to the bodies responsible for that training.

Amendment 172C, from my noble friend Lord Dholakia, would reinsert into the revised Section 174 a requirement on a sentencer, when imposing a custodial sentence, to refer back to Section 152 of the Criminal Justice Act 2003. That is one of the requirements that the simplified version of Section 174 has removed because we believe that it is unnecessary and complicates the duty on sentencers. The revised duty to give reasons simplifies the provision, but it does not mean that a sentencer does not have to say why they have imposed a custodial sentence. That duty remains.

On Amendment 174, in the name of the noble Lord, Lord Ramsbotham, I understand where the noble Lord comes from, particularly about rehabilitation. I share his enthusiasm for rehabilitation. Unless we successfully build rehabilitation into our criminal justice system, we condemn ourselves to an ever-upward lift in prison population, a prison population that will be warehoused and that will leave us with the problems of reoffending and no improvement in the situation. Certainly we must build rehabilitation into the policy. However, for many people punishment, public protection or reparation will be important, so we do not think it helpful to pick out one purpose of sentencing for special attention when explaining a sentence. Some sentences will not have a particularly strong rehabilitative element: for example, a fine for a minor traffic offence. Therefore, while I recognise the intention behind the amendment, it is not necessary.

Amendment 177 would place a duty on a public body imposing requirements in community orders to take all reasonable steps to explain the terms of the requirements to the offender. I understand the intent of the amendment, but again I question whether it is necessary. Any offender sentenced to a community order will have the effect of the sentence explained by the court. The explanation will include what can happen if they do not comply with the order. The legal representative of the offender is also likely to explain the implications of the sentence. Finally, the probation service will always explain at the outset what the sentence is and what is required by the offender.

I went recently to observe Isleworth Crown Court for a day. One case that came up was that of a young man with learning difficulties. I was massively impressed by the care taken by the judge to make sure that the young man fully understood what was happening to him, why it was happening and what would happen next. Many concerns expressed today have much more to do with judicial training and the training of staff, and building awareness of this into the system. The comprehension issue and making sure that people with learning difficulties are not left behind are very much part of what we are trying to do. Where we disagree with part of the House is on whether all this should be written into a Bill.

I will mention briefly the other amendments that relate to later clauses on youth remand, prison work and conditional cautions. Again, we believe that they are unnecessary. Youth court judges, prison officers, probation staff and the police are well versed and trained to deal with a range of offenders. Amendments 178ZA and 178ZB concern youth remand. Every court that deals with a child or young person who is brought before it has a duty not only to have regard to the principal aim of the youth justice system, which is to prevent offending or reoffending by a person under 18, but to have regard to the welfare of the child. These duties must include a duty for the court to explain its decisions not just in ordinary language but in language that can be understood by the young person.

Amendments 183, 184 and 185 cover cautions. It is as crucial to the integrity and fairness of out-of-court justice as it is to sentencing that individuals fully understand the meaning and implications of receiving a caution. Operational guidelines rather than legislation are the right place for such safeguards. A constable cautioning an offender who is accompanied by an appropriate adult because they need support to understand or communicate will also explain the effect to the appropriate adult. On that basis, again, we do not consider the amendment necessary.

Finally, Amendments 181 and 182 concern prison work. Existing guidelines already contain sufficient safeguards to ensure that the needs of prisoners with disabilities are met. The Prison Service instruction Ensuring Equality makes it clear that all managers and staff must ensure that efforts are made to identify whether a prisoner has a mental or physical problem of any form. Governors must consider what prisoners within a range of disabilities might reasonably need, and must ensure that reasonable adjustments are made for disabled prisoners.

I cannot accept any of these amendments. However, I can say that the debate was useful. As I said, I can make no promises, but I will look at the points raised in this debate to see whether there are any parts of the concerns on which we can give satisfaction, either by the statements I make from this Box, in guidance and training to the various authorities within the criminal justice system or even by amendment. On those terms, I hope the noble Lord will agree to withdraw his amendment.

[Lord Ponsonby of Shulbrede]

My Lords, I thank noble Lords who supported my amendment, including my noble friend Lady Quin, my noble and learned friend Lord Goldsmith and the noble Lord, Lord Dholakia.

Regarding what my noble and learned friend Lord Goldsmith said, my understanding is that there are currently ad hoc arrangements post conviction about whether victims should be supported, and there are various organisations that do that. There is also the witness service and the code of practice for victims of crime. However, they are ad hoc and not a comprehensive system.

As usual, the noble Lord, Lord McNally, was more accommodating when he was extemporising than when he was reading from his notes. What he read out regarding my amendment was that I was seeking to avoid the obligation on the courts to explain sentences. That is not remotely the case, as I am sure he realises. Nevertheless, I take his extempore comments as a positive sign that he is willing to look at all these amendments to see what can be done. In that spirit, I beg leave to withdraw the amendment.

Amendment 172A withdrawn.

Amendments 172B to 174 not moved.

House resumed.

House adjourned at 10.13 pm.