Grand Committee
(11 years, 11 months ago)
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Arrangement of Business
(11 years, 11 months ago)
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The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.
Contracting Out (Local Authorities Social Services Functions) (England) (Amendment) Order 2012
(11 years, 11 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, in 2011 an order was passed by noble Lords under the Deregulation and Contracting Out Act 1994 to allow local authorities taking part in two pilot schemes to contract out to outside organisations certain adult social service functions. The order under discussion today amends the original order to allow local authorities to continue this contracting out activity in respect of the pilot programmes beyond the period provided by the original order. The pilots are, first, adult social work practices pilots and, secondly, Right to Control pilots.
The social work practice pilots are testing various models of social worker-led organisations undertaking adult social care functions for which local authorities are currently statutorily responsible. The Right to Control pilots are testing the rights of disabled people to manage some of the state support they receive to live their daily lives. As these are established pilots, I will briefly outline each pilot programme before describing the rationale behind the extensions.
The social work practice pilots were announced in 2010 and the programme has been running for more than a year. The scheme has seen the creation of seven social worker-led organisations that discharge the functions of the local authority in providing adult social care services. On a day-to-day basis, the pilots are independent of the local authority but work closely with it and in partnership with other providers. The local authority pays for the services but maintains its strategic and corporate responsibilities through its contract with the social work practices. We are looking at the pilot sites to test the potential benefits of the social work practices, and whether the innovative approaches improve outcomes and experiences for the people who use them.
The programme aims to bring people who need health and care support closer to those who provide the services they need by reducing bureaucracy, encouraging innovation and increasing the personalisation of services. The Department of Health has provided funding of £1.1 million to help the pilots get up and running and to provide initial support. The pilots are an opportunity to test different models to see what works well. They will be fully evaluated throughout the pilot period, with the final report planned for winter 2013. In considering the need to extend the pilots we listened to the advice of the social work practice working group, which incorporates the sites themselves, and representatives from ADASS, SCIE, the Department of Health and the independent evaluators.
There are two main reasons why we seek an extension to the social work practice pilots from their planned end in summer 2013 to 31 March 2014. First, it has taken longer than we anticipated for many of the sites to become established and begin providing services. This point was highlighted in the recent interim report on the pilots published by SCIE. The proposed extension will ensure that the pilot sites have an increased opportunity to feed into the independent evaluation planned to report in winter 2013.
Secondly, my department must own up to the fact that, in planning the scheme, it did not take into consideration that there would be a gap between the pilots ending and the evaluation reporting. Therefore, extending the pilots to 31 March 2014 will ensure that no pilots will need to end before the evaluation has reported, and that users will continue to be able to access the service. The local authority in each pilot area will have the final say on whether sites are extended. This order creates the opportunity to do so.
The Right to Control, introduced by the previous Government in the Welfare Reform Act 2009 and launched in 2010, gives disabled adults greater choice and control over certain state support they receive to meet their individual needs and ambitions. Disabled adults in the pilot areas are able to combine the support they receive from six different funding sources and then decide how best to spend this to meet their needs. The pilot is due to end in December this year and my honourable friend the Minister for Disabled People intends to extend the pilots by a further 12 months to gain more evidence of the benefits during the pilot programme. A public consultation seeking views on the plans to extend the Right to Control pilot ended on 21 September and among those who commented there was solid support for the extension for a further 12 months.
The Right to Control pilots are being tested in seven trail-blazing areas in England. These trail-blazers, funded by the Department for Work and Pensions, are testing the best ways to implement the right and the results will be used to inform decisions about options on the right in future. Since Right to Control was introduced in 2010, a great deal of progress has been made and over 34,000 people have benefited from it. The interim evaluation of the pilot scheme concluded that there was insufficient evidence on which to make an informed decision about the long-term future of Right to Control. The Government concluded therefore that the best solution was to extend the pilot scheme by a further 12 months to enable us to gather more evidence of what works best, both for disabled people and for the local authorities delivering the Right to Control.
One of the authorities delivering the Right to Control has also been testing delegation of its statutory duty to review social care assessments to third parties, such as user-led organisations. Disabled people have often told us that having their support arrangements reviewed by fellow service users leads to greater satisfaction with the outcome and that the support of their peers gives them greater confidence to request a direct payment and to take control of their own support arrangements. The proposed extension will allow the trail-blazers to continue to test the delegation of this statutory duty. In conclusion, we see the proposed extension in the order as a continued commitment to the developing world of personalisation and one that fully supports the aims set out in the recent care and support White Paper and draft Bill.
This order has the support of councils and their representatives, as well as service users and their carers. It will allow the continuation of new and innovative ways of working to the benefit of individuals and their communities as a whole. More importantly, it will also maximise the evidence and outcomes available to the independent evaluation in both programmes. I commend the order to the House.
Lord Hunt of Kings Heath
My Lords, I thank the noble Earl, Lord Howe, for his full explanation of the order before us this afternoon. I find the contents to be unexceptional and it is right to avoid a hiatus in the pilots’ evaluation. The people affected should not have to go back to an old system before knowing whether the Government have decided that they should be extended, so the logic of the order is clear. I will ask the Minister about a couple of points. He mentioned evaluation. In relation to the trail-blazers pilots, he referred to the interim evaluation which, as he said, found the Right to Control had not been extended to a sufficient number of people to provide evidence to inform a decision about the future of the Right to Control approach. Will he say more about the emerging findings as to the impact on disabled people? He made a few comments about that and suggested that the signs so far are encouraging, with some positive outcomes. Could I tempt him into explaining a little more to the Committee?
I also ask the Minister about potential links between the Right to Control trail-blazers and initiatives taking place on public health. Following the debate when the order was first brought before your Lordships’ House in 2011, the noble Earl wrote to Members who had spoken to the order to say that the Right to Control trail-blazer pilot was intended to be run simultaneously with the public health budget pilots. In particular, he mentioned Manchester, where he said that there was one in-depth public health budget site—Manchester—alongside a Right to Control trail-blazer site. I wonder whether he could report anything on that. I also ask the noble Earl what feedback there has been from users of the service on Right to Control pilots.
On the adult social work practice pilots, I understand that the evaluation has been carried out by King’s College London. I have yet to track down any KCL publication on any emerging findings from those pilots. Perhaps the noble Earl could confirm whether anything has been published so far. I understand, however, that the Department for Education has published an evaluation report by King’s College London and the University of Central Lancashire on the original pilots for children and young people in care, in September 2012. That might be of interest in comparing those pilots with the pilots that are now being undertaken. That evaluation, I understand, found mixed views as to whether the pilots performed better than their local authority counterparts, or whether they represented good value for money. Would the noble Earl be prepared to comment on that? Overall, though, we of course support the extension of the pilots.
Baroness Barker
My Lords, I very much welcome the extension of these pilots. I am not quite sure why the order has to come back to the House; that seems rather strange.
I say that I welcome the extension as somebody who has been consistently critical of the premature way in which the previous Government seized upon the then interim findings of the IBSEN report into personal budgets for social care and proceeded to extend that away from the original client group on the flimsiest of evidence. I am therefore extremely pleased that the present Government are going to take a lot more time and care over these pilots. A lot is changing. A great deal has changed since 2009 when these pilots began, but there is massive, rapid and in-depth change going on in social care. I was talking the other week to a colleague who works for a major national charity and who has done some forward projections of the funding of services of some of the organisations with which she works. Believe me, if people are worried about the American economy and the cliff edge that it is coming to, they really ought to look at voluntary sector funding for the next two years. That is important and relevant, because many of the generic sources of advice to which people in need of social care go are currently under threat. In addition, health and well-being boards are in the process of being set up. That is a major change in the health and social care landscape in which these pilots are taking place. It would be advantageous if the Government were to extend, at least until 2014, its analysis of how these are working.
Lord Beecham
My Lords, I apologise for my late arrival at this debate; I had my calendar wrongly set. I thought that this session began at 3.30 pm. Eighteen months ago I sat where my noble friend now sits. I was then the junior health spokesman for the Opposition and he, of course, is the spokesman for the Opposition. I raised some queries at that time about the pilots while welcoming the principle. Indeed, I entirely endorse what my noble friend has said in continuing to support the concept of the pilots. Some of those questions touched on the point made or implied by the noble Baroness, Lady Barker, in relation to the changing landscape of the health service, with which we are all too familiar. The question now arises of what impact, if any, those changes have for the operation of these pilots. Will they, for example, now come within the remit of the health and well-being boards’ assessment of the joint strategic needs? Will the role of commissioning groups now be embedded in the process? Previously, of course, the PCT would have had responsibility for the health input into these arrangements. The PCTs are virtually defunct and will be over the cliff edge to which the noble Baroness referred very shortly.
I think that I also raised evaluation on the previous occasion. The document that we then considered said that the trail-blazers,
“will evaluate the best ways to implement the Right to Control”,
in relation to that aspect. The question arises as to whether that evaluation, while obviously being sensible for the trail-blazers to undertake, will be the only evaluation? Will there be a collective evaluation of the experience nationally? Will local authority health scrutiny committees be encouraged to report—I suppose that they could in any event, of their own volition—on what is happening locally in order to feed back to the department on progress? It would help to know something about that.
One other aspect of the landscape has of course changed dramatically in the past year. We now have a situation in which local authorities—social services authorities—face dramatic reductions in their budgets. My own authority, Newcastle, will have to find, over the next three years, £90 million a year, which is just over a third of its current budget. Similar positions will be found no doubt in many other social services authorities up and down the country. For all the good intentions of this pilot, it does not seem possible that these new approaches can necessarily be financed to the degree that was originally intended. Does the Minister have any thoughts about the financial position?
The noble Baroness talked about funding the voluntary sector. However, the voluntary sector will also inevitably suffer from cuts across a range of services that the sector has helped to provide, sometimes in very innovative and useful ways. Although I welcome the extension—it is obviously a sensible move—there are clearly question marks about some of the details of the operation, particularly about how this project will stand in the context of the very significant cuts, from which it will be impossible to shield all the social services provision that local authorities would wish to make.
Earl Howe
My Lords, I am grateful to all noble Lords who have spoken. In particular, I thank the noble Lord, Lord Hunt, for his welcome of the order and its content. I shall do my best to answer as many questions as I can and follow up those I am not able to answer in writing, copying to all speakers.
I begin with the trail-blazers and the Right to Control, which is where the noble Lord, Lord Hunt, began. He asked in particular about the evaluation of the programme. The interim evaluation was published in February this year and showed that disabled people are benefiting but that there is simply not enough evidence to make a decision on wider rollout. Clearly, an extension of the kind that we seek will give us more evidence. The early signs are positive but that does not provide the basis for a robust decision on permanent arrangements.
The noble Lord asked about the trail-blazer programme in Manchester and its link to public health. Officials in the Department for Work and Pensions and in my own department are working closely to ensure that the lessons from both pilots are gathered and shared. If I can provide him with any further information on that I would be happy to do so in writing. In general, we expect that the extension will provide further management information and case studies that can illustrate the potential efficiencies and the difference that the Right to Control has made to disabled people. We will also be able to capture more lessons learnt during the extension period.
The noble Baroness, Lady Barker, asked about having a control group against which to compare the results from trail-blazers. I will write to her on that point also. However, the main source of evidence will be from the service users themselves, some of whom will have experienced care under normal arrangements. It is on their feedback on the benefits that they see from the Right to Control that we will take decisions.
Turning to the social work practice pilots, the interim report was published on 2 November this year and is available on the Social Care Institute for Excellence website for all to see. It is perhaps worth outlining what we hope success will look like under these pilots: better quality of service; greater work satisfaction for staff; greater satisfaction for service users and their carers through better outcomes; greater community involvement on the part of service users, both individually and through partnership with user-led organisations; greater community cohesion through more joined-up services, because we see the SWP acting as a catalyst to encourage wider partnerships within a locality; more opportunities for volunteering; less bureaucracy and greater efficiency in systems and procedures; and integration of services. If we can capture all those benefits, the pilots will have proved their worth.
On the evaluation of SWP, the social care workforce research unit at King’s College London is independently evaluating the programme for the department. The evaluation is making good progress, with interviews with practitioners almost completed. To date, 47 participants have been interviewed from across the seven sites, including: leads from host local authorities, managers, social workers and other staff in pilots; consultants employed to assist the development of pilots; and local NHS and voluntary sector stakeholder organisation representatives. The next steps include collating evidence on user outcomes and satisfaction and data on finance processes of the SWPs. As I have already said, the final evaluation report is due to be completed towards the end of next year.
The noble Baroness, Lady Barker, asked me whether the evaluation of SWP would extend beyond the range of services that are normally encompassed. Certainly, the evaluation will also cover the effect of SWP on social workers and other practitioners, as well as on users and carers, and how the features of SWP differ from the usual practice control group. Again, if I can elaborate on that in writing, I will.
The noble Baroness also asked about other local authority services. Access to these is agreed between the local authority and the SWP as part of their contract. The SWP’s budget will reflect a proportionate transfer of funding, including corporate costs, so the SWP will be expected to make its own arrangements for support services and placements. It may also make arrangements to access those specialist services that the local authority may provide that have not been included in the funding transfer—for example, sensory impairment or HIV/AIDs—and this type of arrangement would be set out in the contract.
The noble Lord, Lord Beecham, asked about the relationship with the local authority particularly in the “new world” as we are moving to health and well-being boards. In general, both now and into the future, the local authority needs to maintain a close relationship with the SWP as it retains ultimate responsibility for the services delivered and the actions taken by the SWP, but it also needs to allow the SWP scope to innovate and make decisions about the best packages of support and services for the people in the SWP, and how to provide these. We expect the local authority to monitor the outcomes of the SWP, identifying issues early and providing support, while allowing the SWP sufficient autonomy to decide how best to meet the needs of the people with whom it works. It could well be that in many cases it will be appropriate for the SWP to engage with the emerging clinical commissioning groups to ensure that both health and social care provided to service users is joined up. We would certainly expect that to take place in appropriate instances.
Housing Act 1996 (Additional Preference for Armed Forces) (England) Regulations 2012
(11 years, 11 months ago)
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Baroness Hanham
That the Grand Committee do report to the House that it has considered the Housing Act 1996 (Additional Preference for Armed Forces) (England) Regulations 2012.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, these regulations, which were laid before the House on 18 October, will ensure that members of the Regular and Reserve Armed Forces and bereaved spouses and partners of service personnel are given priority for social housing if they need it when serving or after they have left the Armed Forces. If approved by this House and the other place, the regulations would come into effect later this month.
The Government are determined to help current and former members of the Armed Forces to gain the housing that they deserve. We have already put in place a raft of measures to deliver on our commitment. For instance, we have already made sure that serving members of the Armed Forces have top priority for all government-funded home ownership schemes, including the FirstBuy scheme, which help families to get a foot on the housing ladder. Former service personnel also have priority for FirstBuy for up to a year after active service and, if they die in service, this priority can be transferred to a bereaved spouse or civil partner. Forces personnel are already benefiting from FirstBuy, with 143 members of the Armed Forces having already been helped to buy a home. In addition, a further 5,500 service personnel have been approved for government support to buy their own home through FirstBuy, shared ownership and the Ministry of Defence’s Armed Forces home ownership scheme.
We are providing support for wounded service personnel through increased funding for home adaptations so that those who are injured or disabled on active duty can live independently or with support in their own homes. Preventing and tackling homelessness among veterans has been one of the priorities of the Ministerial Working Group on Homelessness. However, we are also determined to ensure that service families are not disadvantaged by their service requirements and that they are given proper priority for social housing if they need it. That is why we have already changed the law by regulation to ensure that, when local authorities set the rules that decide who qualifies to go on their waiting list, they cannot apply local connection criteria to disqualify service personnel. This is in recognition of the fact that a local connection rule can disadvantage forces personnel, because the nature of their service requires them to be mobile and often not to have a permanent address. These regulations came into force on 24 August.
The law already ensures that anyone, including service men and women, who has an identified housing need—for example because they are homeless or have medical needs—is given “reasonable preference” for social housing. The statutory reasonable preference categories make certain that, overall, priority for social housing is given to those who need it most and that local authorities take a consistent approach to housing need. Nevertheless, the pressure on social housing in many parts of the country means that even those who have reasonable preference may have to wait for some time before suitable housing becomes available. The regulations before us today will go further and require that, where former and serving members of the Armed Forces are identified as having an urgent need for social housing, they are always given the highest priority—so-called “additional preference”. For other people in urgent housing need, local authorities will continue to have a power to give them high priority but will not be required to do so.
We consulted on proposals to give additional preference to those who had previously served in the Regular Forces and who were identified as having an urgent need for social housing. The consultation closed at the end of March this year. The response to the consultation was supportive of the proposed regulations, but it highlighted the housing needs of those who are still serving but who may have been seriously injured on active service and those of bereaved families. We have decided, therefore, to extend these regulations to apply to: serving members of the Regular Armed Forces who are suffering from a serious injury, illness or disability as a result of their service; bereaved spouses and civil partners of service personnel when they have to leave service family accommodation following the death of their spouse or civil partner; and serving and former members of the Reserve Forces who are suffering from a serious illness, injury or disability as a result of their service
We set out our intention to broaden the scope of the regulations in this way in the summary analysis of responses to the consultation that we published at the end of June. We think that it is right to extend this additional priority to wounded service men and women—not just to those who have left the forces—as we recognise that they may need to move out of military accommodation to suitably adapted social housing before they complete their service. It is also right that we recognise the part that members of our Reserve Forces play, many of whom serve on the front line alongside Regular Forces. I am glad to say that most reservists return safely to civilian life. However, if they are injured on active service, they may find that their current accommodation is no longer suitable for their needs or no longer affordable, or they may have to move to access care or support.
Where members of the Armed Forces have made the ultimate sacrifice for their country, we must ensure that we continue to support their bereaved spouse or partner when they are required to leave military accommodation, just as they have given support to their spouse and partner by giving up their independence to accompany them from base to base.
Our service men and women are practical, resilient and resourceful. The vast majority of those who leave the Armed Forces will have made arrangements to meet their housing needs, often long before their service comes to an end. Nevertheless, there will continue to be some who, for whatever reason, have no home to go to when they leave. They will often be the most vulnerable. I need hardly say that we all owe a huge debt to those brave men and women in the Regular and Reserve Forces who lay their lives on the line for their country and to those who have lost their loved ones serving on the front line. We must ensure that, when they urgently need a place to live, social housing is available for them. These regulations are intended to do just that. I commend them to the House.
Lord Beecham
My Lords, all Members of your Lordships’ House would welcome any steps taken to realise the aspirations of the military covenant and to support members of the Armed Forces and their families, who do so much for us all, often in conditions of great danger and often with unhappy results in terms of their own health and well-being. To that extent, of course, we join the Minister in supporting these provisions. They build, to a degree, on actions taken by the preceding Government, who for the first time accorded equality of priority to members of the Armed Forces for housing allocation.
I cannot resist the slight temptation, however, to point out that the Localism Act 2011, which freed councils to determine who should have priority, has to a degree been superseded in this case. I do not dissent from the judgment on that through a requirement that the military should indeed receive the highest priority, but it puts the repeated assertions of the virtues of the Localism Act in a slightly different perspective. However, I suspect that that will not much interest those who will benefit from these provisions.
Housing is a major concern of the military community. There has been a study by the Army Families Federation, from which it would appear that housing remains the most significant issue for members of the military and their families. I cannot forbear to point out that the Government have reduced their budget for providing their own direct accommodation.
Of course, as the noble Baroness has pointed out, there is a great demand for social housing. I repeat that it is right that the military should come top of the list. The fundamental problem, of course, is simply that we do not have sufficient social or affordable housing. Other measures that the previous Government introduced, in conjunction with those that the present Government have adopted, have perhaps made some impact on the access to housing and the various ways in which houses might be purchased. However, affordable housing has very much slipped down the Government’s housing agenda. It looks as though it is going to slip further, because from the recent announcements about the building programme and so on it seems that the builders will not be required to maintain the same proportion—many of us frankly thought that it was too low in any event, even under the preceding Government—of new build in the affordable category, let alone in the affordable rented category. I therefore have some concerns that, valuable though this provision is, against the context of the diminished social housing and affordable housing pools there will be greater stress on those requiring accommodation. I therefore argue for a substantial expansion of affordable housing provision, particularly in the rented sector.
Housing is a key issue for members of the military and their families, but it is not the only issue; I am sure that the Minister would agree with that. Unhappily, veterans are found in greater numbers among those who come before the courts and who suffer from post-traumatic stress and other mental health disorders. In addition to providing adequate, proper social housing places in which people who have served their country in this way want to live, we need to provide the other services that will help them to reintegrate into the community and lead the normal life to which they would aspire.
My authority, on behalf of the Association of North East Councils—I was not personally involved in this—produced a report last year about the position of veterans in relation to health services and other matters. I will ensure that the Minister receives a copy of that. It is not just a matter for her department; it clearly extends to other departments, notably, but not exclusively, the Department of Health. A more holistic approach would complement the priority that these regulations justly provide for those in the community to whom we all owe a great deal.
Lord Palmer of Childs Hill
My Lords, first, I apologise to my noble friend the Minister for missing the beginning of what she said. I was contributing to the debate on the Statement in the Chamber, so I hope that I will be forgiven for being a few minutes late. I declare an interest because I am still a councillor for the London Borough of Barnet, and my comments will take that into account. Of course, I echo the comments about the debt that we owe our veterans. Speaking on defence, as I do, I make these comments about our Armed Forces very often from another angle.
The point that I want to explore is whether local authorities and housing associations are really going to be aware of these provisions. Yes, they will be told, but my experience of local authorities is that there are all sorts of provisions and my guess is that these will not figure very highly unless they are very much promoted with all those local authorities.
How will these provisions affect those local authorities that have little housing stock? Only this week I have been dealing with someone who has a brain tumour, three children and a husband partially in work, and they have been graded only at grade 2 rather than grade 1; they were evicted on Monday and I have been concerned with finding them some accommodation. I use that as an example of how in the London boroughs, certainly in north-west London, there is a great lack of housing, and to put this additional strain on them is going to make it even more difficult for people such as this woman. I think that I have got her into a house, but they are still dealing with the void and getting it into a state for her to go there. It has taken me since March, knowing that she was going to be evicted, to do this. How do we house the veterans and people whom we need to?
Another point is how the claimants decide in which geographical area to seek to exercise their claim. If you have been in Germany or Afghanistan or wherever and you do not really have a base other than a military base at, say, Colchester, where do you go to exercise your claim on a local authority? There are some places in the UK where there is spare housing but, in the places that I know, this does not apply.
Have the Government consulted veterans’ associations? Our veterans’ associations in the UK are nothing like the veterans’ associations in the United States. There is a good argument for consulting them and perhaps trying to tie in with these regulations previous debates that we have had on the Armed Forces covenant over how we deal with housing for members of the Armed Forces. With the return of service personnel from Germany and Afghanistan, and the fact that they are going to be based more permanently in garrison towns, there was talk during consideration of the Armed Forces Bill of encouraging members of the Armed Forces to purchase property in the area in which they would now live more permanently—previously they were not living permanently anywhere—so that when they retired or were invalided out there would be a house or a flat nearby that they owned. We are trying to encompass within social housing a large group of people for whom there is not enough social housing. I hope that when the Government consider this they will think outside the box about how, looking in the longer term, we can encourage people in the forces to acquire properties in their own right that they can then live in in their retirement or disablement, rather than trying to squash people into an area of social housing that does not exist in many parts, particularly in London.
Baroness Hanham
My Lords, I thank the two noble Lords for their contributions. To start with the noble Lord, Lord Palmer, the veterans’ associations have been consulted. It was largely because of their response that the changes were made following that consultation to ensure that the Reserve Forces were included in this, and also serving members. When the regulations started, they were for those who had left the Army and were not serving at the time. These changes have been made as a result of that.
I appreciate that the noble Lords, Lord Beecham and Lord Palmer, said that there is not a huge excess—if I can put it that way—of social housing. These regulations are very specific and put to the top of the pile those who have been injured and have to leave their place in their barracks, or wherever they are, and who have nowhere else to go and need adapted or new property. It is not clear at the moment how many this will amount to. However, it is perfectly clear that the able-bodied who are leaving the service will either have made their own provision, which I suggested they would have done before they leave, or will have to make it subsequently—they will not be at that top priority level. We are looking particularly at those who are most vulnerable. Members of the Armed Forces are of course already within the top priority for housing as far as regulations are concerned. This just takes them out of that top priority and puts them one higher. Local authorities have always had to have some form of priority and, although the noble Lord, Lord Beecham, is right about localism, I think that they will accept this as an edict that they will not complain too much about.
As for guidance and whether anybody will know anything about it, we have produced new guidance that has made it clear that these regulations are being put forward. We will also be writing to local authorities when the regulations finally come into force to draw their attention to that. I am sure that the noble Lord’s authority will be well aware of them; if not, I am sure that he will draw them to its attention.
It will be up to anybody claiming a local connection to decide where they want to go. If somebody comes back wounded from Afghanistan in need of housing accommodation and decides that they want to go and live in Sheffield, to Sheffield they will go and they will go to the top of the list. If they want to come to the noble Lord’s borough, they will do the same. The local connection, which applies to practically every housing matter other than this, including homelessness, does not apply.
Those are the main points. I am not going to open up the debate on affordable housing, as I think the noble Lord, Lord Beecham, was tempting me to do. I will say only that he and I know that great efforts are being made to ensure that there is more affordable housing. If we can get the Ministry of Defence to release quite a lot of its property and land, we may be able to move that on. I hope that, with those explanations, noble Lords are happy for these regulations to be agreed.
Legal Services Act 2007 (The Law Society) (Modification of Functions) (Amendment) Order 2012
(11 years, 11 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Legal Services Act 2007 (The Law Society) (Modification of Functions) (Amendment) Order 2012.
Relevant document: 8th Report from the Joint Committee on Statutory Instruments.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the purpose of this order is to remove the provisions of the schedule to the Legal Services Act 2007 (The Law Society and The Council for Licensed Conveyancers) (Modification of Functions) Order 2011 which bring to an end the Law Society’s powers to make compensation arrangements for licensed bodies on 31 December this year. The Legal Services Act 2007 sets out a framework for the regulation of legal services in England and Wales. Part 5 of the 2007 Act sets out arrangements under which licensing authorities, which are legal service regulators that have been designated for this purpose under the 2007 Act, may license firms which are partly or wholly owned or controlled by non-lawyers, to provide legal services or a mixture of legal and non-legal services. Such firms are known as licensed bodies and are sometimes referred to as “alternative business structures”.
The Law Society was designated as a licensing authority under the Legal Services Act 2007 on 23 December last year. Under the 2007 Act, Section 83 requires all licensing authorities to have compensation arrangements in place to protect consumers of licensed bodies. Noble Lords may remember that one of the provisions of the 2011 order was to extend the Law Society’s existing powers in relation to compensation arrangements under the Solicitors Act 1974 to allow it to make rules about compensation arrangements for licensed bodies. However, this extension of powers was to apply only for a transitional period, which will end on 31 December this year.
During the Committee debate on the 2011 order, I mentioned that the sunset clause was included in the 2011 order. This was because the Solicitors Regulation Authority, the regulatory arm of the Law Society, had announced during the drafting stages of the 2011 order that it was undertaking a review of its compensation fund and expected that new long-term compensation arrangements would be in place by the end of December 2012 for all types of solicitors, including ABS bodies, following the conclusion of the review. The SRA only issued its first ABS licences in March 2012, which was later than had originally been envisaged at the time the 2011 order was laid, and sufficient information is not yet available. The SRA therefore asked that the current arrangements be extended and asked for a further Section 69 order to be made. Following discussion with the Legal Services Board, the oversight regulator for legal services, the LSB consulted on the issue in June 2012 and made its recommendations to the Lord Chancellor in August. Having considered the responses to that consultation, it recommended that the sunset clause should be removed. A new sunset clause has not been included under this order so as to avoid imposing an artificial deadline on the development of alternative compensation proposals which may not be in the best interests of consumers or practitioners.
Although the SRA has committed to review the current compensation arrangements over the next two years, that review may result in changes to the current arrangements. Without knowing what those arrangements will be, it is difficult to estimate how long any changes may take to implement. The Legal Services Board will monitor the review and expects the SRA to provide public indications of its progress.
I am sure that noble Lords will appreciate the importance of enabling the existing compensation arrangements set out in the 2011 order to remain in place beyond the end of this year. That will ensure that the Law Society, a statutory body that requires a statutory basis for its compensation fund, can continue to comply with the requirement to have licensing rules about compensation arrangements and, critically, ensure that consumers of ABS firms have continuous access to compensation. I therefore commend this draft order to the Committee and I beg to move.
Lord Beecham
My Lords, I ought to declare an interest as a member of the Law Society and as a virtually non-practising solicitor, who in his professional career has no doubt contributed significantly to the assets of the compensation fund without, as I recall, having to draw down from it, no doubt to the satisfaction of my former clients.
The Solicitors Regulation Authority makes the Circumlocution Office look like a model of efficiency, to judge by the delays in its approach to this matter. It does not seem to have thoroughly mastered the implications of the complex structure that has been created as a result of the formation of alternative business structures, to use the jargon that the Minister referred to. Many of us have reservations about these new bodies but, be that as it may, they are with us and they certainly have to be regulated—in particular, there has to be proper provision for compensation where things go wrong.
It appears that the SRA is to review these compensation arrangements as part of what it calls a root-and-branch review in two years’ time. The Law Society concedes that it would be sensible to extend the time during which the present arrangements continue, but it is far from certain that the SRA has the necessary resources to conduct that review thoroughly and properly. Perhaps the Minister could indicate what assurances he has received about the resources and the timeframe and whether the MoJ will be in regular contact with the SRA to try to ensure that a timetable is agreed and kept to. It is clearly important, given the likely growth of these new structures and the potential for claims to arise in the mean time, that the system is improved as rapidly as possible. As I say, it is not clear—to the Law Society, at any rate—that the SRA is in a position to do that. There are other problems with the SRA, with which the Minister is no doubt familiar, but those are not a matter for discussion today.
In the Law Society’s view, there is also a case for looking at the compensation fund as a whole. The society has for some time been calling for a review to look at the impact of the new structures and whether it is still appropriate for there to be a single fund covering both types of practice—traditional solicitors’ practices and those of the new structures. The new structures will, of course, embrace non-solicitors as well as some solicitors and they may reach out into areas other than traditional legal practice, so there is a question whether the scheme would apply to non-legal activity and so on. All this seems to be somewhat vague at the moment.
The Law Society also points to the need to consider the impact of a recent decision by the authority to transfer the cover for non-applied firms from a risk pool to the compensation fund. That apparently exposes the fund to a new type of claim relating to negligence and negligent actions.
There is also a question of whether the present management arrangements are up to dealing with these complex new positions. I acknowledge that none of this is the direct responsibility of the department, but given that the department, under the previous Government and now under the current Government, is establishing the framework, it is surely necessary for the department to take an active interest to ensure that a satisfactory position is achieved. We do not want a position in which either the legal profession is paid, as it were, for the possible errors of the new structures, or in which people find it difficult to obtain compensation when they should have it. While it is obviously necessary for this extension to take place, I urge the Minister to indicate that his department will be conscious of the need to ensure, as far as it can, that the SRA carries out what is expected of it within that timescale and no later and that it has adequate professional and technical resources to do the job.
Lord McNally
My Lords, I thank the noble Lord, Lord Beecham, for that response. I am aware of his long and detailed knowledge of the solicitors’ profession, so I was trembling a little that I was going to be baffled by professional science. He indicated, I must say, a slight irritation on my part that one looks pretty silly when one puts in a sunset clause then has to come back and say, “Please, lift it”. The intention was good—it being thought that the presence of a sunset clause would produce a sense of urgency in the Solicitors Regulation Authority—but that was, perhaps, overoptimistic. Not putting in another sunset clause is common sense—better that we tell them to get on with it—and I fully take his point that my department should take a close interest in the matter. The review is primarily a matter for the SRA and details of the review will be in its strategic plan. However, the Legal Services Board, the oversight regulator of the legal services framework, has indicated that it expects the SRA to report on progress. I assure the noble Lord that I will keep an eye on progress, because I do not want to come back here to tell him that there has been none.
The SRA has assured us that it is now in a better position to complete a fundamental review of its compensation arrangements, which will determine the best solution for the compensation arrangements, not only for ABSs, but for traditional firms. It is therefore too early at this stage to get any views to dictate the outcome of the review. The SRA will note the irritation from all bodies—the Law Society, the LSB, the MoJ and the Official Opposition—and I hope that that, even more than a sunset clause, will spur it to action. Work on the review has started and the detailed scope of the project has been developed. The SRA held a meeting with the LSB to discuss and agree the detailed scope and the project scope and methodology has been approved by the financial protection committee, a sub-committee of the SRA board. A summary of the scope and methodology will be published on the SRA website in December 2012.
The project has now entered a research phase and initial meetings with stakeholders are being held. The SRA is committed to transparency of research in this area and has undertaken to publish information and research findings throughout the project. The SRA was able to dedicate policy resources to the compensation arrangement review from June 2012. However, data-gathering started earlier, in spring 2012. I can assure the Committee that work is now under way, and I and the MoJ will continue to keep a very close interest in progress.
Producer Responsibility Obligations (Packaging Waste) (Amendment) Regulations 2012
(11 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord De Mauley
That the Grand Committee do report to the House that it has considered the Producer Responsibility Obligations (Packaging Waste) (Amendment) Regulations 2012.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, these regulations seek to set new recovery and recycling targets for packaging waste for 2013 to 2017.
Packaging performs an important role. Last year 11 million tonnes of packaging were used in the United Kingdom to get products from where they were produced to where they were consumed with minimal damage and wastage. However, once packaging has fulfilled its purpose, the question becomes: what should be done with it? Reusing packaging would be ideal but as this is not possible in many cases, recycling is usually the best option for recovering the value—in both economic and environmental terms.
The Government want the UK to move towards a zero-waste economy. Rather than an economy where no waste at all is produced, we envisage one where resources are fully valued. We want to see material resources reused, recycled or recovered wherever possible, and only disposed of as a last resort. The targets before the Committee today will play an important part in achieving this vision. They will help the UK go further in recovering the value of discarded packaging materials and help tackle the wasteful practice of burying them in landfill.
Furthermore, like other EU countries, the UK is required by the EU directive on packaging and packaging waste to recover each year a minimum 60% of all packaging waste, of which 55% must be recycled. Within this overall target, there are also recycling targets for individual packaging material types, including metal, paper, glass, plastic and wood. The UK achieves these targets through the producer responsibility system we have put in place, established by the Producer Responsibility Obligations (Packaging Waste) Regulations 2007.
The existing regulations set recycling targets for packaging producers until the end of 2012. We now need to put measures in place to ensure that the UK continues to meet the EU packaging recycling targets in future years, and to ensure packaging waste continues to be recycled. If we do not, this will result in the removal of important financial support for the recycling system in this country, and we can expect current recycling rates to drop. Furthermore, we can expect costly infraction proceedings for failing to implement the EU directive. However, there is a more important reason for these targets. As valuable resources for our industries get scarcer and more expensive, we need processes in place to recycle properly and recover them to maintain as much of their value as we can in the economy. The proposed targets for the period 2013-17 will maintain the current levels of recycling of paper, wood and glass. They will also set a trajectory for increased recycling of aluminium, which we want to see increase by 3 percentage points per year; plastic, by 5 percentage points per year; and steel, by 1 percentage point per year.
Lord Jenkin of Roding
My Lords, I am grateful to my noble friend for explaining so clearly the purpose of these regulations. I suspect that over the past couple of weeks he has had to undergo something of a crash course in recycling and the associated functions that go with it. Later I will refer in more detail to a meeting that he was able to hold with me and with representatives of the plastics industry as recently as 8 November, which is less than two weeks ago. I have to say that there has been a huge amount of activity since then.
Perhaps I may take a moment to rehearse the earlier history. I should declare an interest in that for some 13 years I worked in the plastics industry, although it was a very long time ago. However, I am familiar with some of the materials we have been discussing. On 1 May, I was approached by representatives of the two main trade associations, the British Plastics Federation and the Packaging and Films Association—films meaning bags rather than movies—who came with very clear messages. They said that they had been seeking to discuss these matters with officials in Defra, but were given the clear impression that they simply were not listening. They had asked to see a Minister, but were told firmly that that would be wholly inappropriate. They then sought my help.
My first move was to approach my noble friend’s predecessor, my noble friend Lord Taylor of Holbeach, for whom I have very high regard. After some hesitation his private office said that no, a meeting would be quite inappropriate. I have never discovered why, although I have made inquiries. I then said to his office, “Look, the noble Lord cannot refuse to see me”. That is par for the course since he really is obliged to do so, and eventually we were able to fix a date on 25 June. However, nearly two months had now gone by since my first approach. I put the case to my noble friend in his capacity as the former Minister, who said, “Yes, of course I can agree. The difficulty has been removed”. But I am afraid that I never understood what the difficulty was—I have a horrid suspicion that the difficulty may be sitting behind the Minister now, but that is a different matter to which I shall come later.
It took a month before the Minister’s private office came up with a date. I saw him on 25 June, and on 25 July his officials said, “The Minister will be pleased to see your deputation on 23 October”, by which time four months would have gone by. I asked why the meeting had to be as late as that, and was told that the Summer Recess was coming up and that it would not be possible to meet the deputation during that time. This is a matter of no criticism whatever either of the department or of the present Minister, who on 23 October was faced with having to deal with the Statement on badgers. I have said to many people that, in his position, I would have done exactly the same. I would have said, “Clear my diary. This Statement is going to be difficult to handle”, and that is inevitably what happened. So, in the end, we had the reshuffle and the Minister changed. I welcomed very warmly my noble friend Lord De Mauley’s readiness to hear the case, and the meeting was fixed for 8 November.
The industry put its case very clearly and in some detail as to why it felt that these targets were wrong. Its main message was that they are unachievable. It made the point, and I made it myself, that there really is no point in Governments setting targets that they are told by the people who are going to have to deliver them are unachievable. No doubt my noble friend will confirm this, but I got the impression that he was impressed by the strength and detail of the industry’s case. He turned to his officials and said, “Surely the right thing here is for the two sides to get together and find a compromise”. We were all rather shattered when the senior official present answered blandly, “Well it is just too late—the order’s been laid and we can’t change it now”. They had been talking for an hour before the Minister was told that there was no point in listening because it could not be changed. The industry was very angry, as I am sure noble Lords will understand, and the meeting broke up in some tension.
I had a few words with the Minister afterwards when he very kindly agreed to stay and he has moved very quickly since then. There was an immediate invitation to the industry to set out the details of its objections to the order in writing. A meeting took place in the department and officials were instructed to respond to those objections point by point. A paper setting out the arguments would then be submitted to my noble friend for his approval, which was then to be sent to me. That is, in fact, what happened, and I duly got the paper last Friday. It consisted of 14 closely typed pages of print, including point and counterpoint, which, with the benefit of computers, I was able to forward immediately to the industry. It goes into a great deal of detail and I do not propose to weary the Grand Committee with that now. However, the immediate reaction of the industry, which I found very interesting, is in a quote that it sent me by e-mail:
“It is the first time they have responded in detail to our concerns”.
This was as a result of my noble friend’s initiative, which we very much welcomed. At the meeting, the industry had continually asked where the department’s evidence was to support what it had put into the order and why officials had so far taken no notice of the concerns that the industry had first voiced during the consultation period earlier in the year. At least now, they had to answer the points, which are in that 14-page paper.
I asked the industry for its comments over the weekend and I got them late on Sunday night. This time, it was 15 pages of very detailed analysis of Defra’s answers. However, the industry was still dismayed that there was absolutely no sign of the department recognising the validity of its concerns. As I have said, my very first reaction to all this was to ask why this was not all done months ago, why all these exchanges— 29 pages of exchanges—did not happen before and why we had to wait for my noble friend the Minister to intervene before his officials were prepared to answer the industry’s concerns.
The essence of the industry’s case has been, from the beginning, that it has no quarrel whatever with the department’s objective of increasing the collection and recycling of plastic waste. Indeed, its own objective—to which it has given the title, Plastics 2020 Challenge—is to ensure that no plastic goes to landfill by 2020, and that the maximum amount should be recycled and reused. This is something I would have thought the Government would have accepted. The department’s objective, which my noble friend spelled out, was that the policy should go further and faster than that, and indeed further and faster than was required by the EU directive of some years ago. Again, I will not go into the details of that, but it is a fact: the department is going faster than the EU directive requires.
The Earl of Lindsay
My Lords, I, too, thank my noble friend for introducing these draft regulations and setting out the objectives that he and his department seek to achieve. I preface my remarks by declaring an interest as a non-executive director of British Polythene Industries, Europe’s largest manufacturer and recycler of polythene products. BPI has production and recycling operations in the UK, the European Union, North America and China.
I wholly associate myself with the remarks of my noble friend Lord Jenkin of Roding. I have had access to much of the same documentation and analysis from the industry that he has had, in addition to the analysis and forecasting that is available to companies such as BPI. There are, as my noble friend set out, a very large number of detailed concerns about the substance and detail of what these proposed regulations seek to implement. I do not intend to go into the depth of those details, nor do I intend to dwell on the real unhappiness that many in the industry feel about so many of the issues that relate to the process that culminated in these proposed regulations. Once again, my noble friend has set out some of the specific concerns related to that process—indeed, the unhappiness is manifest and deals with many more points than any of us would be comfortable about.
The nature of the discussions between the industry and the department has left many in the industry very upset. The extent to which the industry has felt that its input and advice has not been efficiently, effectively or actively sought, welcomed or understood is another source of unhappiness. My noble friend mentioned the difficulties the industry has had in being able to engage with the relevant Minister. The extent to which the department is felt by many in the industry to have based the case on evidence that it has been assembling has caused serious unhappiness, given the very late hour at which that evidence became evident to the industry.
For the purposes of this debate, suffice it to say that we are where we are. The main focus should therefore be on how we move forward from these draft regulations, and perhaps look at that more than how we arrived at this unhappy state of affairs. It is in that spirit that I echo my noble friend Lord Jenkin of Roding in stressing that the industry remains ready and willing to engage positively in whatever is the best way forward.
Lord Knight of Weymouth
My Lords, given the debate so far, the Minister might be pleased to know that we support these regulations which build on the 2007 regulations brought in by the last Government. Obviously we are mindful of the impact assessment on the estimate that £400 million-worth of overall benefits have derived from them, so it is good that there are occasions when this Government believe that statutory targets and regulation can bring an economic benefit. That is not always the message we hear. However, I note the comments that have been made by the noble Lord, Lord Jenkin, and the noble Earl, Lord Lindsay. Given the first question put by the noble Earl, I am also concerned about the timing of the regulations. Should the Minister listen to our debate and decide that, unlikely as it may seem, it might be best to withdraw the regulations and think again, there would not be time to bring forward new regulations before those currently in force will run out at the end of the year. We would then be in a very awkward position.
In effect, there is a fait accompli in respect of these regulations. I do not think that that is desirable and it is not good, transparent law-making. Indeed, the sorry tale of lack of engagement with the industry related by the noble Lord also suggests that there are some in Defra who perhaps need to smell the coffee in terms of how good law-making is conducted. The days of “Whitehall knows best” are over so far as the public are concerned, and we need to ensure that there is proper engagement—even with those who you know are going to oppose the laws we are making—so as to ensure that the best possible compromise between the competing interests is arrived at. I think that the estimate in the impact analysis was that there would be losses of just over £22 million to business as a result of these regulations. There are going to be losers as well as those who will benefit from the jobs and economic activity that attaches to recycling. I want to make those points of sympathy, even though we are on different sides of the argument in respect of these regulations, for the comments of the noble Lord, Lord Jenkin, and the noble Earl, Lord Lindsay.
The only questions I have for the Minister are to try better to understand what criteria he used in setting these new levels. We have heard figures like three percentage points a year for aluminium, five for plastics, one for steel, while glass is being held on the assumption that the target will be split by end use. There are other targets for paper, wood and so on. The department must have carried out a sensitivity analysis of what is the right level of increase that is sustainable for the packaging industry and in terms of capacity in the recycling industry. Even if he cannot give us a detailed assessment now, it would be interesting if he could either point to where the analysis is in the Explanatory Notes—if it is there, I have lost it—or if he would drop us a note to let us know. I am sure that that transparency will be useful as the ongoing discussions take place.
My second question is asked in part on behalf of my noble friend Lord Haskel, who was hoping to speak in the debate, but while he has been able to move in and out of it, unfortunately he missed the opening speeches and so feels unable to contribute. He, too, is critical of these regulations. One question that he was going to ask—it is in his speaking note, which I have seen—concerns the adequacy of local collection services, and what analysis the department has made of the capacity of the services to deliver on these regulations. Clearly, if the recycling cannot be collected, the system will not work very well. Any answer on that for my noble friend and for me would be gratefully received.
Finally, I am interested in the Minister’s views on what will happen after 2017 when the regulations run out. I am sure that if he is sympathetic to the notion of a mid-term review, which he has been asked about, we would be interested to hear that, too. Does he think that continuing with targets is the right way forward post 2017, or is this a measure to extend the existing approach while he thinks about a new one? What is his view on whether the infrastructure is broadly right, and whether it will remain stable and go beyond 2017? Any indication on that would be well received by the interested parties who will be listening carefully to his comments as the responsible Minister. I know that often he has to respond for other Ministers in the department, but in this case we are hearing the words direct from the Minister’s mouth, and anything he can give us to elucidate these matters will be warmly received. As I said, I am broadly supportive of the regulations.
Lord Jenkin of Roding
Perhaps I may remind the noble Lord that the policy produced by the industry—the Plastics 2020 Challenge—continues to 2020. The industry would ensure by then that nothing will go to landfill.
Lord Knight of Weymouth
In making that comment, the noble Lord reinforces his point that engagement with the industry is a wise course, alongside engagement with the recycling industry, which stands to gain more business and more employment as a result of these regulations.
Lord De Mauley
My Lords, I start by thanking noble Lords for taking the time to get into this very complicated subject and to debate these important issues today. I listened very carefully to the points made, including to very specific concerns about aspects of the regulations, and will try to answer as many of them as I can. Before I respond to the points about targets, I will address concerns raised about the process of developing the regulations.
First, I assure the Committee that all responses received to the consultation were given due consideration, and that information presented was taken into account when building the evidence. I can only apologise sincerely to my noble friend Lord Jenkin for the time it took him to get a meeting. I will add that I hear clearly the message of my noble friend Lord Lindsay. As part of the consultation process, my department considered carefully the advice of the Advisory Committee on Packaging. This is an important body that represents most of the packaging chain.
My noble friend Lord Jenkin suggested that the Explanatory Memorandum accompanying the regulation did not provide an accurate summary of the consultation responses received, and that opposition to the plastics targets was not properly represented. The memorandum states that overall, taken as a whole, respondents to the consultation were supportive of increasing the targets. However, it acknowledged that there was some concern about the level of increase for certain materials, notably plastics. I ask my noble friend to accept that this reflected the fact that the plastics producers who opposed the preferred option on the grounds that it was unachievable represented between 10% and 15% of the total obligated tonnage for plastics. The majority of respondents who expressed a preference supported the higher targets; only a minority expressly opposed them.
Lord Jenkin of Roding
Does the Minister think that the two trade associations whose representatives he met, the British Plastics Federation and the Packaging and Films Association, represent only a small part of the industry? That is not the impression they gave me.
Lord De Mauley
My Lords, the calculations I have been given indicate what I have just stated. Furthermore, I understand that there were opposing views even among the members of those associations who responded to the consultation. I do not argue with the fact that there has been opposition and that it is important to consider it. Indeed, I have and am considering it.
Lord Knight of Weymouth
I have a question about the Advisory Committee on Packaging. It used to be an arm’s-length body, but after the review it was taken into Defra. I think that this Committee would find it valuable to know what opposition was expressed within that committee. Is the Minister willing to publish the minutes of the advisory committee’s meetings to see how the debate was represented?
Lord De Mauley
If I may, I shall come to the advisory committee later in the debate.
My noble friend Lord Jenkin referred to his concerns about the achievability of the targets. I shall go into some detail on that because I think it will be helpful to noble Lords. The 42% recycling rate was consulted on and, as I said, the majority of the consultation responses supported the proposal. I acknowledge that the target is challenging and we will monitor progress closely, calling on the expertise of the Advisory Committee on Packaging. In responding to the consultation, waste companies, reprocessors and local authorities felt that the infrastructure was sufficient to deal with demand and that further infrastructure would come on stream by 2017 to cope with increased supply and demand—I think that that is the question to which the noble Lord, Lord Knight, referred. The quality of recyclates is also something that the Government take seriously. My officials are working on an action plan, to which my noble friend referred, to address the quality of recyclates, and it will be published shortly.
I turn now to the targets themselves. As I say, it might be helpful to noble Lords if I go into a little detail on these. Defra has conducted a full analysis of how the targets can be achieved. As with any projections, assumptions have been made. That is why we exposed our analysis to scrutiny through public consultation and we asked industry if we had got it right. Most of the organisations that will be required to collect, sort and reprocess the additional material thought that the higher targets would be achievable. However, as we heard today, some in the plastics manufacturing industry remain concerned about the achievability of the plastics targets. Officials have met representatives of the industry and, as my noble friend said, I myself have met them. I have carefully reviewed the concerns raised and the evidence provided.
I will take the different targets in turn, starting with plastic bottles. The lion’s share of hitting this target will fall to bottle recycling. Good progress has been made, with the UK now recycling just over half of the bottles that are thrown away. However, around 240,000 tonnes of household plastic bottles that are disposed of in households with access to plastic bottle recycling collection points still end up in landfill. This makes no sense. The material has a value of at least £18 million. We must get it out of landfill and into recycling. This can be done relatively cheaply because the infrastructure is already in place. Nearly every local authority in the country is collecting bottles, while the sorting and reprocessing infrastructure is well established and the end markets are thriving. The key to capturing thousands more tonnes of plastic bottles is communication. I want to see industry and local authorities working together to communicate to the householder. For example, the plastics industry could follow the model adopted by the metal packaging and reprocessing industry under its “Metal Matters” campaign, which has increased householder participation in recycling schemes by up to 40%.
The other source of plastic packaging we expect to make a major contribution to achieving the targets is from the commercial and industrial sector. Our estimates suggest that a significant tonnage is currently being recycled but is not being counted by the PRN system. Indeed, in 2005 almost 350,000 tonnes of commercial and industrial plastic packaging was collected for recycling compared with apparently less than 280,000 tonnes in 2010. We believe that the disappearance of 70,000 tonnes was largely because there was no need for the material to be counted towards meeting the recycling targets, but that it actually continues to be recycled outside the PRN system.
Lord Jenkin of Roding
Does the Minister not recognise that with that additional amount put in, it will simply be a question of counting it? It will not get any more, because it is very nearly complete. A vast quantity of the commercial and industrial plastic weight is already being dealt with. Therefore, how can there possibly be a substantial amount still to go to meet the targets? I am sorry; the argument simply does not stand up.
Lord De Mauley
All I am suggesting is that, as a contributor to the target, there is 70,000 tonnes or thereabouts available which is not currently being counted.
Lord De Mauley
It is happening, but it is not counted in the current targets: that is the point. Of course, we will need to look at other plastics streams.
Lord De Mauley
This includes recycling more plastic pots, tubs and trays and more plastic films. We recognise that increasing the collection and recycling of these types of plastic represents a challenge, but we are seeing some encouraging trends. For example, in the past four years more than 100 local authorities have introduced collections for pots, tubs and trays. This has seen the recycling rate for these items more than treble over the past five years from 5% in 2008 to 18% now. To meet the proposed plastic recycling target we are looking for the recycling rate to increase from the current 18% to 28% over the next five years. There is also a range of planned waste policies that will encourage local authorities to collect a wider range of plastics for recycling. In particular, WRAP is investing £5 million, through its mixed plastics loan fund, by which it means to deliver, by 2015, a further 100,000 tonnes of recycled pots, tubs and trays—double the 50,000 tonnes we anticipate will be needed from this stream to meet the overall target.
Of course, the higher packaging recycling target being debated today will help provide extra stimulus for local authorities to roll out collections and for MRF operators to invest in new sorting technology to handle a wider range of plastics. Other waste policies will encourage greater collection of plastics. These include the landfill tax, which is set on an increasing scale, making disposal of these items less economically attractive, and the revised waste framework directive, with its focus on separate collection of plastics and other dry recyclates by 2015.
We recognise that there are concerns about infrastructure capacity. However, I understand that most new sorting facilities, or MRFs, are being designed to handle mixed plastics or will have suitable capacity to add additional materials at a later date to support changes to local authority collection services. Furthermore, the Environmental Services Association, the main trade body for waste management companies, has stated that there are plans for an additional 6.6 million tonnes of MRF capacity to come on stream between 2013 and 2017. On that basis, the 50,000 tonnes of additional plastic anticipated should be manageable.
My noble friend Lord Jenkin referred to glass and asked about meetings. There was recently a meeting with British Glass to discuss the targets for 2012. I am not aware of wider requests for meetings from the glass sector. It is important to recognise that the glass targets before your Lordships today are flat and only slightly above the minimum 60% necessary to achieve the target set in the EU directive.
I listened carefully to concerns about the costs of the new regulations on certain business sectors. I ask noble Lords to accept that this needs to be seen in the context of the overwhelming benefit to the economy as a whole, including the UK’s recycling and reprocessing industry. Most businesses on which the obligation to meet the proposed targets will fall are in favour of them. In setting them, we sought to balance the costs to businesses, and we did not increase them unless there was a sound business case for doing so.
My noble friend Lord Jenkin asked about exports. I am fully supportive of the need for a level playing field. As part of the ongoing review of the packaging regulations, we are exploring the issue and considering options for how it may be addressed. I believe that there is significant scope for growth in domestic demand for recovered plastic. Security of feedstock has been cited as discouraging some reprocessors from entering the market. We believe that the proposed targets will provide greater confidence in supply, plus the financial support to enable investment in increasing domestic reprocessing capacity.
My noble friend Lord Jenkin referred to the Advisory Committee on Packaging suggesting lower plastic targets in its report of work carried out in 2010-11. The ACP’s response to the consultations actually supported the Government’s preferred option of higher plastic packaging recycling targets. Its report of work in 2011-12, published earlier this year, confirmed its advice that the higher plastic packaging targets suggested by the Government would be achievable provided that there was an increase in the provision of collection infrastructure and that participation rates increased. Furthermore, more new infrastructure is, as I have said, coming on stream to cope with supply and demand.
My noble friends Lord Jenkin and Lord Lindsay asked for a mid-term formal review. I think that I can go further than that. I assure the Committee that my department will monitor progress throughout the period in question and will take appropriate action if needed. The ACP has a standing agenda item at its quarterly meeting to review packaging recycling achievement data and to advise Defra on trends and impacts on achievability going forward. I will keep a close eye on that. I am also happy, as my noble friend requested, for discussions to continue between those he represents and my officials.
My noble friend Lord Lindsay suggested—perhaps I am paraphrasing him unfairly—that Defra used its own evidence. Defra used a range of evidence sources, including WRAP research on collection costs, industry data on waste from groups such as PackFlow and the ACP, as well as evidence submitted as part of the consultation.
The Earl of Lindsay
My Lords, I will clarify what I said because the paraphrase did not quite catch the point that I was trying to make, which was that the evidence that the department used to underpin the regulations currently before us was not seen by key players in the industry until such a late stage of the process that, while they had reservations and doubts about some of it, there was no time to properly discuss it with the department before it became a fait accompli.
Lord De Mauley
I accept that, my Lords. I apologise to my noble friend. I hope that I have covered the point quite extensively in the debate.
The noble Lord, Lord Knight, asked what would happen beyond 2017. That is some way in the future. I am clearly not in a position to answer it now. It is one of the things that will be taken into account as we move forward. I referred to the review process that will be going on. I hope that that helps him.
The noble Lord asked for the publication of the ACP minutes. I would need to talk to the committee. Perhaps I cannot go quite so far as to commit to doing so in this Committee, but I will certainly look into the possibility. He also asked about the criteria used to set the different targets for different materials. There was a comprehensive cost-benefit analysis. If it would be helpful to noble Lords who have participated in the debate, I am happy to send them documentation to support that.
Lord McAvoy
Before the noble Lord sits down, his noble friends Lord Lindsay and Lord Jenkin of Roding were quite critical of the civil servants in his department. Even my noble friend Lord Knight of Weymouth mentioned that Whitehall did not have all the answers, was not in total charge and did not hold the same sway that it had previously. Despite the Minister’s excellent job of answering all these questions, he did not fully answer the points about the behaviour of his department. I remind him that a former Conservative Prime Minister said that “advisers advise, Ministers decide”. How much responsibility do Ministers take for the behaviour that the two noble Lords criticised? I do not include the noble Lord because he was not there, but how much responsibility belongs to Ministers and the Government, rather than to civil servants who cannot answer for themselves?
District Electoral Areas Commissioner (Northern Ireland) Order 2012
(11 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Randerson
That the Grand Committee do report to the House that it has considered the District Electoral Areas Commissioner (Northern Ireland) Order 2012.
Relevant document: 8th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson)
My Lords, I beg to move that the draft District Electoral Areas Commissioner (Northern Ireland) Order 2012, which was laid before the House on 15 October 2012, be approved. This is a relatively simple but important order that makes provision for the appointment of a district electoral areas commissioner in Northern Ireland. By way of background, local government itself, including local government boundaries, is a devolved matter for the Northern Ireland Executive, but elections to local government are an excepted matter for the UK Government. In 2008 a local government boundaries commissioner was appointed by the Northern Ireland Department of the Environment to make recommendations regarding the boundaries, names and wards of the new 11 local government districts, reducing the number from the current 26. Once established, the wards in those districts need grouping into electoral areas so that elections can take place using the STV form of proportional representation. The Secretary of State appoints a district electoral areas commissioner, who is independent of government, to carry out this important task.
In 2009, the then Secretary of State appointed Dick Mackenzie as the DEAC for a period of one year. This was done in the expectation that the Northern Ireland Executive would move forward with local government reorganisation in time to hold the 2011 local elections on the new 11-council model. Mr Mackenzie did a considerable amount of work on the district electoral areas during his period of appointment but unfortunately was not able to complete his task. This was because the Executive at that time were not able to move forward with the local government reorganisation before his term of office expired. It was of course not possible to set electoral areas before ward boundaries had been agreed. Local elections in 2011 were therefore held on the basis of the 26-council model.
I am delighted that the Northern Ireland Executive and the Northern Ireland Assembly have now agreed to move forward with local government reorganisation and that an order setting out the boundaries and wards for the 11 new councils has been agreed by the Northern Ireland Assembly. The order is expected to be made by the Northern Ireland Department of the Environment before the end of November.
As for the order itself, we now need to move forward with the next part of the process. Since the district electoral areas commissioner appointment has come to an end, there is no legal basis on which to reappoint someone to the same task, so a new order is needed. The order before us, in summary, makes provision for the appointment of a district electoral areas commissioner following the 2008 local government boundary review and amends the District Electoral Areas Commissioner (Northern Ireland) Order 1984.
Article 2 provides for the appointment of a replacement commissioner when the district electoral areas commissioner’s appointment has come to an end before he has completed his task. This provision will be used for the current process. Article 2 also makes amendments to the timing of future appointments, providing greater flexibility for the Secretary of State on when to make the appointments. It allows the Secretary of State to appoint a district electoral areas commissioner at any time after a local government boundaries commissioner’s appointment. However, he or she will not be required to do so until an order has been made by the Northern Ireland Executive establishing the new local government boundaries.
Article 3 makes specific provision for the timing of the appointment following the current review. It provides that the Secretary of State must appoint a replacement district electoral areas commissioner “as soon as practicable” after this order comes into force. It also provides that the commissioner must submit his report as soon as practicable after his appointment if the local government boundaries order is made before this order comes into force, which may well be the case.
In conclusion, I hope that noble Lords will endorse this statutory instrument, which ensures that the process of local government reorganisation in Northern Ireland, as agreed by the Assembly, can continue. I commend the District Electoral Areas Commissioner (Northern Ireland) Order 2012 to the Committee.
Lord McAvoy
My Lords, first, I welcome the noble Baroness, Lady Randerson, to the post dealing with Northern Ireland. As I am sure she will pick up very quickly, boundaries are of great interest to all political parties in Northern Ireland, perhaps even more so than in the rest of the United Kingdom. I am not quite sure whether she is a veteran of the debates on the Parliamentary Voting System and Constituencies Bill but that was certainly a very interesting time and I thoroughly enjoyed my part in it.
Can the Minister tell us whether there have been any objections to the delay in making this appointment and putting this order through, and whether there were any objections to any part of the process? We take the view—and my honourable friend Vernon Coaker has always made it quite plain—that these matters that are devolved to Northern Ireland must be dealt with in Northern Ireland. Especially when it comes to boundaries, we will work closely with all the parties in Northern Ireland to make sure that they are accepted.
However, there are one or two questions. This post is likely to be controversial and I wonder what the Government’s response is to any controversy that has arisen over this post, which is quite a significant one. Perhaps the Minister can answer those questions when she responds. I reserve the right to perhaps come in again if any comments require a response from me.
Lord Kilclooney
My Lords, I welcome the order and will certainly not be speaking at any considerable length on the subject. However, I am greatly encouraged that the Minister thinks that local government reform in Northern Ireland is “relatively simple”, which I think was her opening phrase. As a Minister in 1972 introducing the reform of local government in Northern Ireland, I did not find it relatively simple—it was very controversial indeed. It is nice to know that after 40 years what I did at that time has existed with some success. It is even nicer to find that it is considered to be a relatively simple affair in Northern Ireland today, although I think that the noble Lord who has just spoken was hinting that it can also be controversial in Northern Ireland.
It is a difficult subject for the Committee. As the Minister said, some of the items are really for the devolved institutions and some are for our national Parliament here in Westminster. I am wondering what speed we are going to work at. We were to have a local government election in 2011, but that has been extended because the boundaries were not agreed. Have we got a target date now for the next local elections or has it simply been extended without a target date? There needs to be clarification, not just for the Committee but for the public generally in Northern Ireland, as to where we are going and at what speed. I notice in the order, for example, that the district electoral area commissioner will be appointed “as soon as practicable”. What does that really mean? How soon will it be? It is time that we moved ahead with local government reform in Northern Ireland.
I personally welcome the idea of the 26 councils in Northern Ireland, which I introduced in 1972, being reduced to 11. That itself is a controversial subject in Northern Ireland, even within some of the political parties, never mind among them. You can never please everyone. For example, in my former constituency of Strangford, the borough of Castlereagh is now being linked in many respects with the borough of Lisburn. I find that very difficult to understand but accept the recommendation that there should be 11 councils in Northern Ireland.
Within each council area—here we are talking about boundaries and the number of councillors—I assume that there will be a councillor for each ward. We are discussing the joining together of various wards in an electoral area. If three wards are joined together, I assume that there will be three councillors. If four wards are joined together, I assume that there will be four councillors. I hope that that will be clarified. Will there be a minimum number of wards that can be joined together, and a maximum number? For example, if a new council boundary encloses 11 wards, is it possible that all 11 wards will be in one district electoral area? I would not have thought so; there must be a minimum and maximum, and I would like to know what they are.
Otherwise, I have no objections to the order. It is the way forward for Northern Ireland. Some of the councils in Northern Ireland are ridiculously small in population, yet have the same powers as some of the very large district councils. It is good to see this reorganisation, I wish it godspeed and I look forward to the Minister’s reply.
Lord Empey
My Lords, as the noble Lord, Lord Kilclooney, said, the statutory instrument before us is fairly straightforward. However, it would not be possible for me not to comment on its timing because of the delay that has taken place. This phase of local government reform began in 2001, when the first Executive decided to reform local government. I welcome the Minister to her new duties. She is a former devolved Minister in Wales. I am a lifelong supporter of devolution, but I have to say that the performance of devolution in the area of local government has not been its finest hour.
We started this in 2001. Of course, the Executive ceased in 2002 when direct rule came back in. I think that it was Secretary of State Hain who, in a blaze of glory, announced his proposals for the reform of local government, with a proposal for seven councils. Then devolution came back in and the then Executive did not agree with that. We proceeded to a new process and Mr Mackenzie was appointed in 2008. He made his final report on 22 June 2009, which is getting on for three and a half years ago. The last we heard, local government elections were to be held for shadow councils in 2014, but these would not take power until 2015.
By any stretch of the imagination, that is not a good timetable. The effect has been to leave local councils in some cases without chief executives, and not knowing whether they are coming or going. The powers that they were to get, which started off substantial but are very small in the current process, have gradually eroded. There has been a lot of confusion, and councils have had acting chief executives and various other things, so it has not been a happy time.
On the timing of the order, I, too, would be interested to know when the commissioner will be appointed. A significant process will have to take place. When the wards are grouped together to form district electoral areas, I understand that current legislation will permit either five or seven to be allowed for. The noble Lord, Lord Kilclooney, who occupied a place in local government, will know that most local government districts had five, six or seven councillors.
I do not know whether that will be amended, but when the draft boundaries come out, they will have to be subject to public consultation. The commissioner has to take evidence and seek public comment, so even if the person were to be appointed this side of Christmas, it is inconceivable that the report would be ready by the summer of next year. If the local elections were to be held in 2014 to coincide with the European elections, that leaves the political parties very little time to select their candidates and get things sorted out. I would be very interested to hear the answer to that question.
While it is not strictly relevant to this order, the Minister referred to local government, of which I have had some experience. The fact is that a lot of good work has been done there. It kept democracy alive in the dark days when there was no alternative to local government. Councillors have actually made the supreme sacrifice for their participation in local government. They have been attacked and assassinated, and sadly that still continues. Councillors take a risk, so we would all wish to commend them on their efforts in trying to maintain the democratic process.
I am very disappointed so far as the 11-area model is concerned and some of the proposals are barking mad. Indeed, it is the only proposal for local government that I can recall where the participants, the people and indeed the commissioner were legally prohibited from taking into account local identity, which is the whole purpose of local government. To say that the commissioner was prohibited from drawing up the boundaries and taking into consideration local identity seems most bizarre.
So far as the proposal for the city of Belfast is concerned, in my opinion it is nothing short of a gerrymander, and I deeply regret that. Nevertheless, the proposal is here and I think it has to be proceeded with. But perhaps I may make a comment to the noble Lord, Lord McAvoy, in response to what he said about boundaries being problematical in Northern Ireland. Of course they can be problematical, but when I came into your Lordships’ House not very long ago, we were debating the constituencies Bill. If he thinks that boundaries do not matter in here, I can assure him that when boundaries were being discussed then, what I saw looked like hungry dogs fighting over a bone. The matter was being discussed with passion at that stage. I think the noble Lord will find that when boundaries and people’s constituencies were being discussed in your Lordships’ House, it was evident to me that it mattered.
Lord McAvoy
I agree with my noble friend for the purposes of this debate. “Mad dog” is perhaps the best description of me when it comes to the towns of Rutherglen and Cambuslang being incorporated into a Glasgow constituency. He has mentioned the boundaries—
The Deputy Chairman of Committees (Lord Colwyn)
I think that the noble Lord should not make another speech at this stage. Perhaps we could hear from other speakers and then from the Minister. He can interrupt on points of clarification then. It is not correct to speak twice in these debates.
Lord Empey
My Lords, I note what the noble Lord, Lord McAvoy, says, but the lesson is that wherever you are in the United Kingdom, boundaries matter. As the noble Lord, Lord Kilclooney, said, it is encouraging that we can have a debate and discuss these issues in Northern Ireland without, thank God, the consequences that once might have been the case. It is a more mature discussion. While I have big problems with what is being proposed, decisions have been taken and they must be respected. This order is the natural outcome of those proposals.
Perhaps the Minister will give us some idea of the timing. Of course, the Northern Ireland Office can only respond to the devolved Administration—it cannot initiate the process; it has to wait—but if elections are to take place in 2014 as apparently proposed, the timetable for this operation is vital. If the appointment is made shortly, it will be the middle of next year before any proposal can be implemented. That is leaving things very short. This process has gone on since 2001. When those new local councils take power in 2015 it will have taken 14 years to reform local government for 1.8 million people.
You could not make it up if it was anywhere else in the world—and we are supposed to be lecturing people on the democratic process and how they conduct themselves. In fact, we have been so slow with this that the whole scene in local government will be out of date before we get it going. If this commissioner is not able to do his or her work in the first half of next year, the opportunity to hold those local elections will have been lost, and they will be postponed once again. I, too, would be interested to hear the Minister’s response.
Lord Browne of Belmont
My Lords, I welcome the order. It is important that the commissioner is in place as soon as possible, to move forward quickly and to have the mechanism to allow the establishment of the 11 new councils and, particularly, to group the new wards in the appropriate councils. The 11 new councils will be more efficient and cost-effective, and prove better value for the rate-payers of Northern Ireland. However, like the noble Lord, Lord Empey, I am concerned about the timeframe. Is the Minister satisfied that the timeframe that will be afforded to the commissioner will be sufficient to allow local elections to proceed in 2014? Finally, is any appeal process available to those who object to the commissioner’s findings?
Lord Morrow
My Lords, I will make a few remarks on the reform of local government. As one who has been in local government from 1973 to the present day, what strikes me is that when local government was first reformed under the recommendations of the Macrory report—I heard what the noble Lord, Lord Kilclooney, said: that this happened under his watch—it was a straight-across change. There were no shadow councils put in place then. It was one way today and a different way tomorrow; that was just the way it happened. There was no learning process, there was no settling in and there was no getting to know the ropes. You just landed on your feet; at least, that is the way that I had to do it. I suspect that no one else did any differently.
We had an election in 2011. I think it has been implied that there was no election then. Well, I stood in an election in 2011 so there was one, and there is another now proposed for 2014. Generally, I support the principles of what has been outlined here today. We have 26 district councils. I am not going to comment on whether they have been good, bad or indifferent. There have been deficiencies, all right. However, I agree with noble Lords when they say that it was the only form of government, of elected representation, there for some 40 years. It is right that we should pay tribute to those who unfortunately had to pay the ultimate sacrifice, for whatever reason. Indeed, some are being asked to do that to this very day.
If we are going to reform local government, and it has taken some time to bring it to this stage, we would do better to get it right than to do it quickly. I do not think that we in Northern Ireland could ever be accused of doing anything too quickly. We take an inordinate amount of time going through this process, but it is an important process for a number of reasons. I support the concept of 11 councils. Quite frankly, Northern Ireland is much too small to have 26 district councils, 108 MLAs, 18 MPs and three MEPs. We are oversubscribed in relation to public representatives, and it is right that change should come quickly.
Having made those observations, I generally and basically agree with what is outlined here today.
Baroness Randerson
My Lords, this has been a very interesting debate and I thank all noble Lords who have contributed to it. Some very important points have been made. I will do my best to reply to all the substantive issues that have been raised but will of course review the record afterwards and write to noble Lords if I feel I have not had the opportunity to do so.
The noble Lord, Lord McAvoy, asked whether there had been any objections to the delay in laying the order or to any part of the process. Of course, the timing of this is entirely a result of the processes followed by the devolved Administration—the Assembly and the Northern Ireland Executive—and it is for them to choose the speed at which we travel. We have responded to their work in the most timely manner possible but the timescale is a result of their discussions and deliberations. To our knowledge, there have been no objections to the role of the Northern Ireland Office in this matter, although there has been considerable debate, some of which has been reflected here today, on the nature of the boundaries and precisely what they should be.
The noble Lord, Lord Kilclooney, set out for us the road that has been travelled in Northern Ireland and it is important that we bear in mind when we discuss issues such as timing and delay that we have travelled a very long and significant road. He is right to point out that there are still considerable sensitivities surrounding these issues.
On the future speed of travel, the target date is that the Northern Ireland Executive hope to hold the next elections, for a shadow set of 11 authorities, in 2014. Noble Lords will be aware that the 2011 elections were held on the old boundaries, for the 26 authorities. If we are to have the new boundaries in place and shadow elections in 2014 for councils that will come into their full powers in 2015, the DEAC needs to do his or her work in time for those elections, and for the setting up and selection of candidates and the role that political parties have to play in all this. The Northern Ireland Executive are ambitious to achieve this timetable and we are anxious to support and enable them to do so.
The noble Lord also asked about the size of the districts. The 1984 order set out a five-to-seven-ward model, with each ward represented by one councillor. If you have a district of five wards, you have five councillors and if you have a district of seven wards, you have seven councillors. It would seem that this is the likely model that will be followed in future.
The noble Lord, Lord Empey, also expressed concern about the delay in the local government elections, particularly the impact that this delay and uncertainty has had on local councils. He rightly points out the important role of councils in maintaining democracy in Northern Ireland, even at the most difficult times. Councils in Northern Ireland should be commended for that role. He is also absolutely correct in pointing out that time is short if there are to be elections to the shadow councils in 2014. It might help if I point out that the DEAC’s work and the process to be gone through will include a public consultation and potentially 11 separate inquiries—one for each of the new council areas. Once the DEAC has been appointed, it may take up to a year to complete this work. Therefore, I agree that the appointment needs to be done promptly, although there is scope to reduce that time if the uncompleted work of the previous DEAC could be utilised, at least in part. We are clear that the work needs to be completed as soon as possible; certainly in good time for the scheduled elections.
Lord Empey
To be clear, if the former commissioner happened to be reappointed, I can see how one could compress that. However, if there is an appointment process, someone else is appointed and that takes a year, are we saying that parties would have only three or four months to react and for candidates to come into the picture? All that would have to be done. That is a ridiculously short amount of time. I could argue that it is nearly worse than police and crime commissioners.
Baroness Randerson
I must agree with the noble Lord that time is short. The timescale can only be met with the goodwill and support of the political parties. Of course, once the DEAC is appointed and the inquiries start, it will come as no surprise to local political parties that the elections are on the horizon, so it may be possible for them to prepare in advance. The noble Lord is right to say that the targets here are ambitious, but I emphasise that they are not set down by the Northern Ireland Office. We are following the timescales set by the Executive in Northern Ireland and we are anxious to support them in their ambition to introduce reforms in local government in time for 2015, when councils have their powers fully conferred on them.
We accept that our success in this depends on joint work with the Northern Ireland Executive. We are working closely with them. Our role is to make arrangements on the election administration and the Executive will need to bring in legislation on the operation of the shadow councils.
I referred to the process that the DEAC will have to fulfil in order to achieve his or her work. I emphasise that the work of deciding electoral areas is of fundamental importance to the election process. Although timescales may be tight, it is important, for reasons that have been amply illustrated today, that the work should be done carefully, fully and correctly, because it is potentially controversial.
The noble Lord, Lord Empey, addressed the proposals on boundaries and the apparent prohibition on taking into account local identity. This is a matter for the Northern Ireland Executive. The issues are devolved and it would be entirely wrong for me to intrude on them in my response.
The noble Lords, Lord Browne and Lord Morrow, both stressed their support for the new model of 11 local councils. It is important that we emphasise that across the piece there has been support for local democracy in Northern Ireland, and for the new model. I assure noble Lords that the Northern Ireland Office will do everything it can to help the Northern Ireland Executive move forward.
Any local government reorganisation in any part of the United Kingdom is a sensitive issue. I speak as someone who went through it once as a local councillor. The issue cannot be rushed. It is important for strengthening democracy, and this is an important part of strengthening Northern Ireland and its democratic future.
Child Support Management of Payments and Arrears (Amendment) Regulations 2012
(11 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Stowell of Beeston
That the Grand Committee do report to the House that it has considered the Child Support Management of Payments and Arrears (Amendment) Regulations 2012.
Relevant document: 8th Report from the Joint Committee on Statutory Instruments.
Baroness Stowell of Beeston
My Lords, these regulations were laid before both Houses on 15 October and will implement powers inserted into the Child Support Act 1991 by the Child Maintenance and Other Payments Act 2008, which was introduced by the previous Administration. A correction slip was published on 5 November, but the change was purely technical to correct a simple typing error in draft Regulation 3 concerning the amendment to the Child Support Information Regulations 2008.
I shall move on to the detail of the regulations in a moment, but first I will assure the Committee that the Government are determined to get to grips with the long-standing issue of child maintenance arrears. More and more parents are paying child maintenance, but we must ensure that those who do not are compelled to meet their financial responsibilities for their children and pay what they owe. To this end, we will shortly publish an arrears strategy, setting out our approach to preventing their accumulation and to collecting and enforcing them in future.
There are, however, some cases where child maintenance arrears are very unlikely ever to be collected in full, where we have no legal power to enforce them, or where they are no longer wanted by the parent with care. It is only these cases that the regulations we are debating today look to address. The regulations provide the ability for the department to accept a part payment in satisfaction of a child maintenance debt in full. When these regulations are introduced, the department will use them only in response to part-payment offers received from clients and will not take a proactive approach. Only once we are satisfied that we have a robust process in place will we consider how and when a proactive approach could be taken.
Where the department has exhausted all appropriate enforcement measures but has been unable to enforce the full amount owed, and where both parties are in agreement to a lesser amount being paid, this power will enable the department to bring cases to an acceptable resolution for clients. It is intended that the ability to accept such lower amounts will enable money to flow to children in cases where it may otherwise not have done and incentivise non-resident parents to come to agreements in respect of their arrears. As part of maintaining this principle of providing a real incentive for non-resident parents to pay, where a part-payment offer is made and the non-resident parent pays maintenance to more than one parent with care, they will have the ability to specify which parent they want the money paid to.
In plain English, what that means is that if the non-resident parent—for these purposes, let us assume that it is a man—is paying maintenance to two different parents with care—for these purposes, let us assume that they are both women—he will be able to choose which mother and child he makes the part payment to. However, I shall come on to a very important point about any parents to whom a part payment is not made. We will be clear with the non-resident parent that the arrears will remain owed in full and will be subject to enforcement. To make that absolutely clear, if a part payment is made to one parent with care—one woman—and there is another woman to whom the non-resident parent is paying maintenance, the other woman will not be in any way affected by this decision.
Where a part-payment offer is made, the department will consider on a case by case basis whether the offer made by the non-resident parent is reasonable, taking into account the probability of collecting all the arrears due and the non-resident parent’s employment status and income. The department will also obtain written consent from the parent with care in every case and will not accept any part-payment offer to which they have not given their explicit consent. So if the parent with care does not agree, it will not be forced upon them. This will continue to be the case if, in future, a more proactive approach is taken by the department in relation to part payment.
When the part-payment powers are introduced, they will only allow part payments to be made by non-resident parents in one lump sum. However, following the views of stakeholders in response to the public consultation, the department will introduce further regulations in future that will allow part payments to be made by instalments, once the required system changes have been made to accommodate them.
Moving on, the regulations also provide the power to write off some arrears of child maintenance, but only in the explicit circumstances set out in the draft regulations. The provisions of the 2008 Act limit those regulations to circumstances where it would be “unfair or otherwise inappropriate” to pursue enforcement of the arrears. An example of where arrears can be written off under these regulations is where the parent with care has explicitly informed the department that they do not want the arrears collected. Where this is the case, the department will ask the parent with care to confirm this in writing and ensure that it provides all the information necessary to enable them to make a fully informed decision.
In other circumstances covered by the regulations, such as where the non-resident parent has died and we cannot recover from their estate, there is no way of ever collecting the arrears. In such cases, where the arrears will never be collected, it is not sensible to allow them to remain outstanding. It is better to be open and transparent and write off the arrears. Where the department is considering writing off arrears it will inform both clients of this if they are still alive and, where appropriate, will give them 30 days to make representations. As my honourable friend pointed out in the other place, this period has been extended from 14 days following responses received to the public consultation on these regulations.
The department will then consider those representations and inform both clients of the decision on whether to write off the arrears. Cases will always be considered on their own merits and the views and information provided by clients will always be taken into account. All arrears written off under the write-off and part-payment powers will be carefully and fully recorded. Clients will be kept informed of what is happening in their case and why. Where appropriate, their consent will always be sought.
In summary, these powers are intended to address a minority of cases. They will be used only where the department is unlikely ever to collect the arrears in full, where all enforcement measures have either been exhausted or are not appropriate, and where clients have either been informed or, where appropriate, have given their consent. The department will continue to collect arrears whenever a parent with care wishes and it is appropriate and possible to do so.
I am satisfied that this statutory instrument is compatible with the European Convention on Human Rights, and I commend it to the Committee.
Lord McKenzie of Luton
My Lords, I thank the Minister for introducing these regulations in a comprehensive way. As she said, they derive from the provisions of the Child Maintenance and Other Payments Acts 2008. It was legislation of the previous Government, so we clearly support its thrust and that of the regulations. Incidentally, the “Other Payments” bit of the Act, as the noble Lord, Lord Kirkwood, will remember, was the no-fault scheme of compensation for sufferers of mesothelioma.
We have a few questions. One was prompted in particular by the Minister’s introduction, when she referred to the arrears strategy that will be published shortly. Can she give us a rough idea of what “shortly” means?
On the write-off of arrears, the Minister in the other place was clear, as was the noble Baroness, that the intent was that the power would be used only where the arrears were no longer wanted or where there was no legal way of enforcing the arrears owed. As example of the latter circumstance, the Minister instanced the PWC or NRP having died, or there having been an interim maintenance assessment. We have no questions on interim assessments, which were a mechanism designed to get some sort of payments out of non-resident parents who were not co-operating with the system. However, the new regulations also include circumstances, at paragraph 13G(f), where,
“the non-resident parent has been informed by the Secretary of State that no further action would ever be undertaken to recover those arrears”.
I am unclear whether this a separate circumstance rather than just an administrative requirement of the others. If it is not, what are the circumstances in which that would apply?
The death of the PWC raises the question—I cannot remember the answer although I asked it in the past—of whether the debt due from the non-resident parent is technically a debt due to the parent with care or to the CSA, or CMEC as it is now, which has a corresponding liability to the PWC. If the latter, is there any reason why it should die with the PWC? Even if the former, would it not be an asset of the estate—to the extent that it is collectable, of course? Presumably, if someone else takes on responsibility for caring for the child when the PWC dies, a new child maintenance assessment is potentially in point, unless a voluntary arrangement can be agreed. A similar power—which was referred to—applies when the NRP died before 25 January 2010, or where there is no further action which can be taken with regard to the NRP’s estate.
I presume that the January 2010 date is the relevant date under Section 43A, which was introduced to enable recovery from a deceased person’s estate. Will the Minister remind us of the status of such debts when the estate has insufficient funds to meet all outstanding debts and obligations? What will be the approach to compromising, or otherwise, on that which is owed under child maintenance arrangements? Before accepting part payment it is obviously important that the full rigour of the enforcement procedures available has been deployed. Doubtless the Minister will be aware of the considerable range of powers in the 2008 legislation. These include disqualification from holding or obtaining travel authorisation, curfew orders and disqualification from driving. Can we have an update on which of Sections 20 to 30 of the 2008 Act have been brought into force and when any remaining provisions are to commence?
Where part payment of arrears is to be accepted, whether or not appropriate consent is required, as I understand it, depends on the extent, if at all, that the amounts are due to the Secretary of State or to the PWC. It reasonably follows that where the amount of any payment is due to the Secretary of State—presumably for benefit recovery—then appropriate consent is not required for accepting a smaller sum in settlement. Will the Minister explain what safeguards are to be in the system to prevent any amounts being accepted as part payment in such a way as to leave the amounts which are collected due to, or disproportionately due to, the Secretary of State? If it is accepted that there must be a written agreement involving the PWC, what guidance and support will be available for them to make a judgment in these matters? Will amounts accepted in part payment always maximise the amounts due to the PWC, with the Secretary of State picking up any residue? Is there scope for the NRP to disagree with any allocation between the Secretary of State and the parent with care?
These regulations will presumably be applicable to the charging regime in due course. Again, what safeguards will be in the system to prioritise moneys for the PWC? As discussed in another place, the Explanatory Note envisages acceptance of part payment being by way of a lump sum—the noble Baroness referred to this in her introduction. However, it has been accepted that the primary legislation does not limit arrangements to lump sums. Nor, it would seem, does the order. The noble Baroness referred to bringing forward further regulations in due course. I am not clear, from these regulations, why that would be necessary and why the regulations cannot operate to cover a series of payments when the systems can cope with it.
If it is the intention to limit settlements to lump sums, this would appear to be a more limiting facility than is necessary. Would it not be the case that more NRPs are likely to be able to enter into some form of settlement if there were some prospect of spreading payments than if the compromise could only be by way of a lump sum? Indeed, it begs the question: if the NRP can make a payment in settlement of the arrears, what is defective in the enforcement powers that otherwise prevents these sums from being collected in the normal way?
We have followed the exchanges in another place concerning circumstances where the NRP may be obligated to make maintenance payments in respect of children in more than one family. Giving the NRP the right to allocate any settlement moneys is not an easy matter, but we see the thrust of the Government’s position on that, particularly as reinforced by the Minister’s comments in respect of the other parent whose arrears remain fully due and collectable.
As I said, we support the regulations. We are aware that they could be applied in a positive way to help move more money quickly for more children, but also in a negative way—the latter to avoid the grind of using to the full the extensive enforcement powers, with the temptation offered to PWCs to have the promise of some early money even if it is not their full entitlement. However, we note the assurances given by the Minister in the other place that the Government will only be reactive in the initial stages of using these powers, which again was reinforced by the Minister this afternoon. Nevertheless, when considering an offer from an NRP, what kind of assurances will be sought concerning full disclosure of the NRP’s current financial status? All in all, we are prepared to give the Government the benefit of the doubt, but we seek assurances on the monitoring of these provisions and regular reporting to Parliament.
Lord Kirkwood of Kirkhope
My Lords, it is a pleasure to follow the noble Lord, Lord McKenzie, on this important set of regulations. I should say at the outset that, like him, I have no objections to the technical provisions therein contained. I recognise the genuine progress that the Child Maintenance and Enforcement Commission in the current set-up, which will eventually morph into the Child Maintenance Service, has made in some areas over recent years.
That does not deny that a huge amount of work is now going to unfold, starting from next year with the closing down of all existing CSA cases. The department has the job of getting to grips with the mountains of child maintenance debt that have accumulated over the past 19 years. It is reassuring to hear the Minister say that we will soon be able to see the child maintenance arrears strategy. It was supposed to be published by the end of this calendar year, so I hope that we will still see it within that timeframe. Although the regulations are important, they are relatively small scale compared to the longer-term problems that we may face.
Like the noble Lord, Lord McKenzie, I have a list of elucidatory questions to ask. I do not think that it will be possible for the Minister sensibly to answer them all in the time available this evening, so I am perfectly happy to take some written guidance if that is found to be convenient to the Committee and the Minister. Although the regulations are important, they merely tidy up some peripheral areas. However, the context behind the whole policy or subject area is complicated and concerning and it bears some examination before we approve the regulations.
I start with the position taken by the Comptroller and Auditor-General on the last client fund accounts published by the Child Maintenance and Enforcement Commission. I accept that they are historic; the last audited figures we have are for 2008-09 and 2009-10. These suggest that at 31 March 2010 the commission regarded that total maintenance arrears amounted to £3.7 billion, and I believe that that figure will have increased by now. At that stage the commission took the view that only 28% of it was potentially collectable. That is just about £1 billion, and of that only about £0.5 billion, 13% of the total reported arrears, was likely to be collected. That is the size of the mountain we are setting out to climb next year, and we know that it is against a background of inaccurate maintenance assessments, processing errors, overstatements and understatements in the reported accounts, the arrears being available only at financial statement level, not at the individual case level, and arrears collection targets consistently missed year after year, year in, year out. On the basis of the information presented in the last audited client fund accounts, the Auditor-General concluded that,
“the scale, age and collectability of the outstanding maintenance balances which have accumulated since the inception of the statutory child maintenance schemes, mean that the Commission continues to face a significant challenge to collect a large proportion of these arrears”.
That continues to be the case. The regulations we are discussing are a constructive step forward, but only a small step.
The Public Accounts Committee, responding to the opinion of the Comptroller and Auditor-General, took the view that the department had to do more to communicate positively and constructively with the parents involved, particularly the parents with care. In the Government’s response to the PAC’s conclusions, they said they would make a determined attempt to collect the £2.7 billion deemed, according to the C&AG’s report, not to be collectable. They would do that by undertaking a trial with a small number of clients to try and improve communication with parents with care to keep them au fait with what is happening in their individual cases. I understand that this trial has started. It would be of great benefit to us all to learn more about it. I think it started in June. I would like to know how many cases it has covered and whether there has been any evaluation of its success in terms of improving communication.
The work has significance for the future prospects of collection in the longer term and I would certainly like an assurance that when it is completed it will be published in full so we can see exactly what difference it can make by notifying parents of what action is planned to recover the sums owing to them. It should also tell customers of any debt it believes is too costly to pursue rather than leaving parents in limbo, which has been the case in the past. The DWP and new Child Maintenance Service understand that we need to work harder to make sure that the unvarnished truth is made available at every opportunity to the parents with care. If we had some assurances about that and the pilot scheme works well, then I hope we will seize the opportunity to make improvements in that direction.
I have a couple of other questions and, again, a written response is perfectly acceptable because some of these things get quite complicated. I want to ask about the validation of cases. When the CSA closes down a case, the DWP always separately undertakes a validation of the debt before it is transferred. I understand that only validated CSA arrears will be transferred into the new IT system; that is, those amounts that have been properly validated. In passing, I hear that the computer system being used at the moment is incapable of fully dealing with part payments. That may be a temporary situation, but if it is true, there is a long history, which I remember as well as anybody, of glitches in IT systems costing the system dear and contributing to accumulating arrears. If the new IT system is fully capable of taking part payments, particularly if they are used extensively in the future, that would be good.
However, we have a validation system which will almost inevitably mean that the number of individual cases will be reduced. I would like a reassurance that if and when that happens, there will be a full exchange with the parents with care as to what has happened, what the write-off has been, and a full explanation of the validation process and how it will affect their casework. These draft regulations provide for an arrears write-off, as the Minister has said, where a parent with care no longer wants the arrears. As part of the case closure process, will parents with care be asked whether they still want the arrears and, if so, at what stage? I would like to understand better the validation process as applied to these regulations, how it will be handled and how this work will unfold during the case closure process.
I turn briefly to the deprioritisation of older cases. It is stated Government policy, and the new Child Maintenance Service has made it explicitly clear in a way that has caused a great deal of concern, that the existing arrears in older cases—cases that are out of payment because the children are beyond the age of minority or have gone on to university—will not get the same priority to be chased down as those of parents with care for children who are of the age group which is currently eligible to accrue payments from non-resident parents. I have real concerns about this. This issue obviously goes wider than these regulations. I shall lay down a marker that when the Child Maintenance Service arrears strategy is published in full later in the year or whenever it comes, I hope that serious consideration will be given to what steps will taken. If older cases are not prioritised, what will happen to them? They cannot just be left because that is an abrogation of responsibility by the department and the Child Maintenance Service. It is effectively giving a green light to non-resident parents who have successfully evaded their responsibilities so far. That needs further and better consideration.
Penultimately, I raise the question of compensation. There will be some cases in these regulations where there will be a prima facie case where maladministration within the CSA or CMEC in the past has demonstrably led to arrears being greater than they normally would have been. I do not know exactly what the policy is at the moment but in the intimation of any such set of circumstances where the arrears are judged to be no longer collectable and there is a bona fide case to be made that the Child Support Agency contributed to that, compensation should be offered. We should be clear about what those compensation details are for the cases that they affect. They will not only affect these regulations, but the whole childcare arrears strategy in the longer term.
Finally, under the new statutory child maintenance schemes, cases will be admitted to the new child maintenance collection service only once a direct payment arrangement has actually broken down. That means that all the new cases that are assumed will come with arrears. The future strategy that is yet to be published needs to take a clear hold of that and deal with it, otherwise, we will end up in five or 10 years’ time dealing with new cases with uncollected arrears. If that was allowed to happen, we would not have learnt the lessons of the past. That would be very disappointing and regrettable. What I am really asking for—as did, I think, the noble Lord, Lord McKenzie—is an early clarification of some of the wider policy intentions of the Child Maintenance Service in relation to outstanding arrears.
We will monitor these regulations carefully. The questions the noble Lord, Lord McKenzie, and I have raised deserve some response, but I am content to rest on what has been suggested and watch the future policy roll out. The Government can be sure that we will be watching very carefully to see whether these regulations are implemented properly and effectively so that child maintenance flows to the children that it seeks to serve.
Baroness Stowell of Beeston
My Lords, I am very grateful for the support I have received from the noble Lords, Lord McKenzie and Lord Kirkwood. I will endeavour to respond to the various detailed questions that have been put. I note the generous offer made by the noble Lord, Lord Kirkwood, that he will accept responses in writing to any questions that I am not able to address today. Of course, if that is necessary, I will ensure that I follow up in that way, although I hope that I can get through most of the points raised.
To try to make this manageable—for myself if no one else—I will take this in three chunks. I will start with what I would categorise as general queries, then move on to the small number of points made on the write-off part of the regulations, and finally I will deal with part-payment, on which I think most of the points were raised.
On the general questions, both noble Lords asked about the new arrears strategy. I can confirm that that will be published shortly and certainly in line with the deadline that the noble Lord, Lord Kirkwood, mentioned, which was this side of Christmas. The noble Lord, Lord McKenzie, asked about the commencement of the full range of enforcement provided for in previous Acts. As I think I have made clear, our primary focus is the delivery of the new scheme. We will consider what additional enforcement powers should be brought into effect after the new scheme is introduced. We have introduced deduction orders and are using them widely, so they are already in operation.
The noble Lord, Lord Kirkwood, asked how the exploration of a new means of reporting arrears was going—apparently a previous Minister referred to this. Following the recommendation of the independent arrears panel, we have begun a trial of the reclassification of arrears, based on an approach undertaken in Australia. This trial is still under way but once it is complete and we have undertaken a full evaluation of its results, the department will take a view as to whether the approach should be rolled out across the case load. That is something that is still ongoing.
I am new to the DWP but I am getting the impression that IT is a general theme, so I have put it under “general issues”. The noble Lord, Lord Kirkwood, asked whether the computer system can cope with part-payment. The answer is: yes, but not part-payment by instalments yet, hence the system changes that we are making. That is something that we acknowledge but are dealing with.
I will move on to write-off, although there are some things that I want to come back to. The noble Lord, Lord McKenzie, asked about the date under Section 43A and the deceased’s estate where a non-resident parent has died before January 2010. This is the coming into force date of the powers relating to recovery from a deceased’s estate. I apologise but I cannot quite remember the question the noble Lord put to me.
Lord McKenzie of Luton
I think that the noble Baroness has answered the question. Could she just confirm that that is the date from which recovery could be made against a deceased person’s estate? Prior to the 2008 Act, there was no facility for that. I seek confirmation only because it is the first time I have seen the date.
Baroness Stowell of Beeston
Yes, it is the coming into force date of the recovery from the deceased estate powers.
The noble Lord, Lord McKenzie, asked whether debt is due to the parent with care or to CMEC or the CSA, or should a debt die with the parent with care. The debt is due to the parent with care. Where the parent with care has died, we will try to find the executor of the estate, who may have an entitlement to the money. If we cannot find the executor, the debt cannot be collected. The reason I am hesitating here is that I am wondering if we have “parent with care” and “non-resident parent” in the right place in this answer.
The debt is due to the parent with care. Where the parent with care has died, we will try to find the executor of the estate, who may have an entitlement to the money. If we cannot find the executor, the debt cannot be collected. We have got to identify the person who would be legally entitled to that debt. We cannot collect on behalf of someone we have not been able to identify.
I shall move on to part payment and the various questions that were raised. Perhaps I may start with the points put by the noble Lord, Lord McKenzie—
Lord McKenzie of Luton
I am sorry to interrupt, but just so that we can tick the points off as we go along: in terms of write-offs, there is the issue around paragraph 13G(f) and whether that is an additional provision relating to write-offs and the circumstances in which that would apply.
Baroness Stowell of Beeston
This may be something I would prefer to write to the noble Lord about.
Again, moving on to part-payment, the noble Lord, Lord McKenzie, asked about safeguards and what guidance and support would be provided to the parent with care. The department will make an assessment of whether an offer is reasonable before passing it on to the parent with care. We will certainly not pass on an offer if we do not think that it is reasonable. In response to a later point raised by the noble Lord, Lord Kirkwood, in making that assessment, the agency will want to be clear about the status of the non-resident parent in terms of their current employment and so on.
The noble Lord, Lord McKenzie, asked how we will measure the success of these powers. The department will record all instances where a debt is extinguished as the result of a part payment agreement or under the explicit circumstances in the regulations which allow write-off. We will monitor the results carefully to ensure that the powers are being used correctly, effectively and only in appropriate circumstances. This information will be made publicly available as and when it is requested, for example in the usual way via a Parliamentary Question, and the department will be happy to answer any questions and to respond as we progress.
I was also asked in what circumstances the CSA has advised a non-resident parent that their arrears will never be collected. Advising non-resident parents that their arrears will never be collected is not standard practice in the CSA. We are, however, aware that this has happened on occasion. Where the non-resident parent can provide evidence to support their claim, it would be very unlikely that the department would be successful in enforcing a liability through the court in the future. The non-resident parent has been given a legitimate expectation that this would not happen and therefore the arrears should be considered for write-off.
Lord McKenzie of Luton
I think that deals with the point I raised earlier that the Minister was going to write to us about. There is a specific provision that says,
“the non-resident parent has been informed by the Secretary of State that no further action would ever be taken to recover those arrears”.
If that refers to what has happened in the past occasionally, that deals precisely with my query.
Baroness Stowell of Beeston
I am grateful to the noble Lord—he is demonstrating his experience in this area. That is one fewer letter for us to have to commission and I am sure that my friends behind me will be grateful for that. The noble Lord asked if there is scope for the non-resident parent to disagree between allocations to the Secretary of State and the parent with care. We will give the parent with care’s debt the priority and both clients will be informed of this. The non-resident parent can specify which parent with care, as I explained in my opening remarks, but the department will decide the priority hierarchy after that. Obviously, we will give the parent with care priority over the Secretary of State.
The noble Lord asked what was defective about the enforcement powers that might lead us to this arrangement for part-payment. The enforcement powers are not defective, but there are circumstances in which there is no suitable action to take; for example, where a non-resident parent is self-employed and has no assets. In this example, there is often no way of collecting the debt in full—I think that might address one of the points of the noble Lord, Lord Kirkwood, as well.
The noble Lord, Lord McKenzie, asked about the lump sum of part-payments and clarified why instalments have to be regulated for at a later date. This is one of those technical answers. If we regulated to allow for that now but could not facilitate it in practice I am advised that we could face legal challenge. We can therefore only introduce the legal power once we know that we can deliver it in practice. So we would if we could, but we cannot.
Baroness Stowell of Beeston
I shall ignore the remarks of the noble Lord from a sedentary position and keep moving on.
The noble Lord, Lord McKenzie, also asked how the department will stop non-resident parents using the part-payment powers to play the system—“Where are the risks?”. The noble Lord may not have used that phrase, but I think he was asking where the risks were in this. If a non-resident parent enters into a part-payment agreement and subsequently defaults, the legislation provides that the commission may cancel the agreement and pursue the non-resident parent for the total amount of the arrears that they owe. Both parents would be notified of this before entering into a part-payment agreement with the commission. A non-resident parent will therefore have an incentive to remain compliant with their part-payment agreement.
The noble Lord, Lord Kirkwood, talked about older cases and asked whether arrears in these cases will get the same priority as more recent ones. The strategy to which we have already referred, and which is due for publication soon, will set out what we plan to do to stem the growth of arrears and manage arrears in all types of cases. It is an issue that we recognise and it will be addressed. He also asked about any arrears that have built up on the existing schemes once a case has been closed. This subject will be brought before the House for debate next year—I look forward to debating it at that time and I will ensure that I am fully equipped to answer the noble Lord then. Arrears of maintenance accrued under existing schemes will continue to be owed to the parent with care unless that parent requests that it not be collected.
I have covered the points raised by the noble Lord, Lord Kirkwood, and I believe that I have done the same for the noble Lord, Lord McKenzie. I will conclude by restating my thanks to the noble Lords for their support for these regulations.
House of Lords
(11 years, 11 months ago)
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First World War: Centenary
(11 years, 11 months ago)
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Lord Clark of Windermere
To ask Her Majesty’s Government what plans they have to commemorate the centenary of the First World War.
Lord Wallace of Saltaire
My Lords, on 11 October this year the Prime Minister announced a series of measures to commemorate the centenary of the First World War. The Government’s preparations will include national commemorations for key events, including for the outbreak of the war on 4 August 2014. Key partners in this include the Imperial War Museum, the Commonwealth War Graves Commission and local groups and schools across the country.
Lord Clark of Windermere
I thank the Minister for that Answer and the Government for the way in which they are approaching this very delicate commemoration. As it is so delicate, is the Minister aware that it could be easily sidetracked? The Government seem to share the view of most of us that the aim of the commemoration in this country is to recognise the extraordinary bravery, courage, heroism and gallantry of the millions of conscripts and volunteers who came forward to do their patriotic duty before returning to civilian jobs. Will he therefore be vigilant that nobody seeks to sidetrack this commemoration into other purposes, such as glorifying militarism?
Lord Wallace of Saltaire
I entirely share the noble Lord’s concerns. The Prime Minister in his speech at the Imperial War Museum to launch this said that the important elements that the Government wanted to see in this process of commemoration, which will last about five years, are remembrance, youth and education. This huge series of events in our history and in the history of a large number of other countries included an awful lot of civilian and industrial issues. It transformed the role of women. The Bradford Industrial Museum will be among those leading a recollection of what happened in the transformation of the industrial base of that northern city. So we will be commemorating a great deal which is not simply about the Armed Forces.
Lord Howell of Guildford
What part will be played by the Commonwealth in this commemoration, since so many Commonwealth or imperial troops died in that war?
Lord Wallace of Saltaire
My Lords, the Australians and Canadians are ahead of us in their plans. I have read the extensive Australian report on what they plan. The variation between different Commonwealth countries as to how much they want to be engaged is marked at the moment. For example, the South Africans want, among other things, to remember the South African Native Labour Corps and in particular the sinking of a ship in the English Channel carrying 800 members of the South African Native Labour Corps from which, sadly, no one was rescued. So there are a number of sensitivities, including about the Indian army, which we are well aware of and which we are already actively discussing with other Commonwealth countries.
Lord Dannatt
Will the Minister expand on the educative aspect of what he said, on the basis that mistakes were clearly made in the run-up to 1914, and that future generations must understand that the failures of diplomacy and politics at that time must be avoided in future?
Lord Wallace of Saltaire
My Lords, this is aimed at secondary schools. Of the £50 million allocated for the commemorations, £5 million has been targeted at secondary schools, with the intention that every secondary school in England will be supported in sending two students and one teacher to Commonwealth cemeteries on the continent associated with the local communities from which they are drawn. I should perhaps add that the advisory board which has now been set up for the commemoration of World War I is about to hold its first meeting in support of the Secretary of State for Culture, Media and Sport. It includes eight Members of the current House, including the noble Lord and me.
Baroness Bonham-Carter of Yarnbury
My Lords, can I make a suggestion rather than ask a question?
Baroness Bonham-Carter of Yarnbury
I suggest that we use this opportunity to commemorate the women who played such a vital role in the First World War, working in the fire service, the police service and factories.
Lord Wallace of Saltaire
That is absolutely part of what we intend to do. To illustrate what we are thinking of, the Commonwealth War Graves Commission has suggested that on 4 August commemorations might take place at two of its cemeteries. The first is Brookwood Cemetery in England where a number of nurses who served in France are buried, as are soldiers from most Commonwealth countries who died in England while suffering from their wounds. The second is Saint Symphorien Cemetery outside Mons, which was established as a German war cemetery where the Germans buried the first British soldier killed in the First World War and where the last British soldier killed in the First World War was buried just after the Armistice was signed.
Lord Morgan
My Lords, should we not recognise—I think that the Minister wisely does—that the First World War was a very important chapter in our social and cultural as well as our military history? Should we not therefore focus on aspects such as the role of women, the centrality of trade unions in our life and the sensibilities of war poets, who were disgusted by that obscene episode? Should we not focus on that rather than, as I fear Remembrance Sunday is becoming, a celebration of militarism?
Lord Wallace of Saltaire
My Lords, this year I watched the Remembrance Sunday commemoration very closely from the Foreign Office and I did not think that it had become more militaristic. I was also struck and encouraged that a number of veterans from other countries were marching in the parade. That is also highly desirable. It is not entirely, therefore, a national or nationalistic occasion.
On the question of the wider social context, that is absolutely part of what we will do. In my area, the Saltaire History Club and the Bradford World War One Group—there is one—are already discussing how they will look at the impact on the mill in Saltaire, which turned over to producing khaki cloth and all the other dimensions. A large number of its workforce ended up being women.
Lord Cormack
My Lords, can we make 4 August 2014 a day of national reflection, with all the shops closed and with a proper opportunity for everyone to consider precisely what terrible things happened in a war on which, on the very last day, when the Armistice was signed, twice as many people were killed as have been killed in Afghanistan?
Lord Wallace of Saltaire
My Lords, 4 August is not the easiest day in the year to ask people to reflect solemnly on anything. One of the questions with which the Government are currently concerned is: which is the most appropriate day, and what to do? Perhaps I might also add that while the British wish to commemorate the beginning of the war, the Somme battle and the end of the war, many of our Commonwealth partners and allies will want to commemorate other dates: Vimy Ridge for the Canadians, Gallipoli for the Australians and New Zealanders. There is therefore quite a lot of delicate negotiation about how we manage all this. Finally, among the great expertise in this House, the noble Baroness, Lady Henig, has given me a copy of her volume, in Chinese, on the origins of the First World War, which I am very happy to lend anyone who would like to read it.
Employment: Science and Technology
(11 years, 11 months ago)
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Lord Cotter
To ask Her Majesty’s Government what plans they have to encourage young people to pursue careers in the science and technology based industries, and in manufacturing.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Marland)
My Lords, the Government have a range of activities aimed at encouraging young people into science and technology careers. This includes funding the Science Technology Engineering and Mathematics Ambassadors programme and the finals of the National Science and Engineering Competition at the Big Bang Fair. We also support the Careers Profession Alliance to improve training for careers professionals to ensure that young people have access to high-quality guidance.
Lord Cotter
I thank the Minister for that Answer. There is still a very big issue here when it comes to young people and careers advice and guidance. Does the Minister agree that we should have far more face-to-face help for young people? Many need encouraging to go into manufacturing and technology. Would he agree that this Government need to emphasise this face to face, rather than by looking at computers?
Lord Marland
I naturally agree with the noble Lord that face-to-face careers advice is very important. That is why we have started the careers advice programme and why we have these ambassadors throughout the country. However, we have to start at the very bottom. I am very grateful to my noble friend Lord Baker of Dorking, who started the university technical colleges, 50 of which are about to be rolled out in the next five years. It is an incredibly exciting new endeavour, focusing particularly on skills from the engineering and mechanical training point of view, which has not been done for many years.
Lord Wigley
My Lords, is it not ironic that at a time of such high unemployment, and we in Wales have the highest level of youth unemployment of any country in Britain, many of our manufacturing concerns have to look overseas to recruit people with science and technology capabilities, whereas so many of our own graduates and others with science skills are enticed away from industry into financial institutions in the City and elsewhere? What do the Government have in mind in order to try and ensure that there is adequate information available for young people and, indeed, that enough young people go into science and technology in order to meet the demands?
Lord Marland
The noble Lord makes a very good point. That is why we have commissioned the Perkins review to look at this, which will be reporting towards the end of this year. We will publish the review in December. We have a significant undersupply in this particular area, as the noble Lord has rightly said. I am looking forward to seeing the recommendations in the Perkins review, which we will take very seriously. However, we are doing a number of other things. We have See Inside Manufacturing, which allows schools to go into manufacturing. As I said earlier, we have the STEM ambassadors—for example, Rolls-Royce has 580 ambassadors going out and encouraging people to come into manufacturing, and British Aerospace has 500. The National Careers Service will help people under 18 through our Directgov website. This is a critical point, though, and I acknowledge it.
Lord Baker of Dorking
I thank the Minister for mentioning the technical colleges. Is he aware that only a fortnight ago the Royal Academy of Engineering said that our country will be short of 100,000 qualified engineers by 2020 and a million technicians? The only educational institutions in our country that are seeking to fill this gap are the university technology colleges, which I am glad to say have all-party support. They are employer-led, university-supported colleges for 14 to 18 year-olds. Will he do everything he can to ensure that we have more than the 33 that have been approved and the 20 that are applying? We need several hundred of these.
Lord Marland
There is no doubt about it; the noble Lord is completely right. We are scratching at the surface. We will probably end up, with the current budget, with 30,000 people at the marvellous UTCs. It is a new project that the noble Lord is starting with great energy, if I may say so. It has full support from this House and, indeed, the Government.
Baroness Turner of Camden
Would it not be a good idea to revise the WISE campaign—women into science and engineering—with which the EOC had considerable success many years ago? If we could get the WISE campaign reorganised, it is quite possible that we would have some assistance from the TUC because it would certainly be interested in increasing the number of women interested in science and technology.
Lord Marland
The noble Baroness quite rightly says that there is an undersupply of women in engineering and, particularly, in manufacturing. I talk to my daughters and they all seem to want to go into fashion, which probably means that they have an alternative career. It is important that we get women into these areas, and there is no barrier to entry for women getting into them. We must encourage them, as we must in all areas.
Lord Avebury
My Lords, what consultations have the Government held with the engineering institutions on how to encourage more young people into engineering?
Lord Marland
Naturally, we have been talking with the Royal Academy of Engineering and the Royal Society on this issue. We are having a very keen dialogue with them.
Lord Young of Norwood Green
My Lords, we welcome the efforts of the university technical colleges, careers advisory and others, but what we really need for young people is more apprenticeships. That has to be the focus. I have looked at the figures in this area, and they are rising but slightly. There is one area where the Government could make a positive contribution, and that is in public procurement contracts. We still have a Government who will not insist that, every time a public procurement contract is let, those who get it have to indicate how many apprentices they will take on. Will the Minister explain why the Government will not move on this issue? After all, this would be a case of them leading by example.
Lord Marland
We have inherited a scheme that carries that out. Obviously, we are going to look at it because this Government’s single aim is to get people back into manufacturing and work. Indeed, this morning we announced an increase in the employer ownership pilot grant to £150 million. We are encouraging businesses to upskill and invest in R&D. The Government have committed £150 million to it. There is a range of things that we are doing to improve the workforce and to diversify our country back from a financial service centre to a broader base, but that takes time; it does not happen overnight.
International Law: Use of Drones
(11 years, 11 months ago)
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Baroness Falkner of Margravine
To ask Her Majesty’s Government what is their assessment of the legal and diplomatic implications of the use of drones across national boundaries.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, the British Government’s position is that the use of unmanned aerial vehicles against targets is a matter for the states involved. We expect all concerned to act in accordance with international law, including taking all feasible precautions to avoid civilian casualties when conducting military operations.
Baroness Falkner of Margravine
I thank my noble friend for that reply. She will be aware that international human rights law permits the intentional use of lethal force only when necessary to protect against a threat to life and where there are no other means, such as capture, available. Targeted killings are not lawful as the action has to be strictly necessary and proportionate. Given that the use of armed drones engages four major UN conventions as well as Article 51 of the UN charter, will she tell the House what measures the UK is taking to abide by international law and to encourage allies, such as the United States, to do the same?
Baroness Warsi
In all our discussions when these matters are raised, we expect all states concerned to act in accordance with international law and to take all feasible precautions to avoid civilian casualties. We understand that the UN special rapporteur for human rights and countering terrorism intends to give consideration to these issues of drone strikes in a future report to the UN General Assembly.
Lord Anderson of Swansea
The use of drones may be effective or ineffective, productive or counterproductive, but is there any difference in principle between the use of drones and the use in armed conflict of rockets or artillery across national frontiers?
Baroness Warsi
My Lords, I can comment only upon the actions of the United Kingdom and I assure the noble Lord that the Government are mindful of all their obligations under international law when they engage in military activity.
Lord Hamilton of Epsom
My Lords, does my noble friend accept that if a drone can remain poised for some hours above a target, it is less likely to create collateral damage than almost any other form of shelling, or the missiles to which the noble Lord referred, or any other form of trying to kill people?
Baroness Warsi
My noble friend is probably more of an expert on these matters than I am. I cannot answer that question; I am not familiar enough with the practice of how drones would operate over lengthy periods.
The Lord Bishop of Bath and Wells
My Lords, in the light of the unknown number of civilian casualties as a result of drone attacks in Pakistan, when no armed conflict has been declared and the United States is not at war, does the Minister agree that such attacks are illegal under international humanitarian law and that there is now a need for an enhanced arms limitation treaty?
Baroness Warsi
The right reverend Prelate raises an important point. I can confirm to the House that the UK has not used armed drones against targets in Pakistan. It is a matter for individual states engaged in those practices to discuss those matters.
Lord Judd
Does the Minister not agree that there is great urgency in this situation? There is a real danger that we could slip into an age of political assassination, targeted killing and the condoning of extra-judicial murder. Is there not also a danger that, if this trend continues without careful international deliberation about its implications, we could slip into an age in which war becomes an easier management option as distinct from a really grave step to take after everything else has been tried?
Baroness Warsi
The noble Lord is right to raise the matter; this is an important issue and an important debate. In fact, it was on the front page of the Times today and has been on the front pages of many of our newspapers over time. He will be aware of parliamentary interest in both this House and the other place. In relation to the UK’s conduct, specifically in Pakistan, I can confirm that we do not use armed drones against targets there. We do use unmanned air systems—drones—in Afghanistan, predominantly for surveillance and recognisance tasks.
Lord Alderdice
My Lords, in addition to the method of technology described already, we now have the possibility of attacks not only by land, sea, air and space but in cyberspace. This is highly complex and had the Stuxnet attack on Iran taken place in any of the other four media, it would have been regarded as a declaration of war. It is no longer clear what a declaration of war amounts to when it is in cyberspace. Will my noble friend the Minister describe what work the Government are doing legally and diplomatically to clarify declarations of war in this new medium?
Baroness Warsi
I am not sure what specific work is ongoing in relation to that, but I can write to the noble Lord to confirm. Of course this is a highly difficult issue; there are emotions and views on both sides of this argument. However, using unmanned air systems in Afghanistan provides vital intelligence for us in support of our forces on the ground.
Lord Triesman
My Lords, I wholly understand the Minister making the point that we have not used our armed drones in Pakistan or in many other settings. She plainly cannot be pressed for whether we believe it was legal or not because, on that basis, it is legal. Can she tell the House what will be the character of the evidence that we might give to the UN special rapporteur? Will it be made available to the House through the Library, so that we can get a full appreciation of the circumstances in which we use drones and make an assessment for ourselves?
Baroness Warsi
The noble Lord will be aware that there is an ongoing legal matter—a judicial review—in relation to some of the questions that he raises. In relation to the specific evidence and discussions that we will be having with the special rapporteur, I will certainly consider that and, if appropriate, report back to the House.
Banking: Offshore Accounts
(11 years, 11 months ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government what estimate HM Revenue and Customs has made of the value of offshore accounts held by British citizens in the Channel Islands; and what steps are being taken to investigate them.
Lord Newby
My Lords, HMRC estimates that UK citizens hold approximately £19 billion in bank deposits situated in Jersey, Guernsey and the Isle of Man together. The UK has double-taxation agreements with Jersey and Guernsey, and uses these in support of its work in investigating tax evasion. HMRC will also be using the more recent tax information exchange agreements in a similar way. Through the establishment of a specialist offshore co-ordination unit, HMRC continues to enhance its capacity in combating all offshore tax evasion.
Baroness Williams of Crosby
My Lords, my noble friend will know that Jersey is one of the most secretive tax havens in the world. In a tax haven, neither corporate profits nor other profits of a corporate nature are taxed, nor are capital gains. Will he say whether there is any way in which those large, wealthy corporations which make their profits out of the UK consumer in this country can be persuaded or cajoled by HMRC into paying the taxes that they should? Secondly, can any steps be taken to prevent illegal profits—I am referring to those from, for example, fraud and theft, including Mr Paulo Maluf of Brazil—from being placed in secret accounts in a way that enables such people to escape international justice altogether?
Lord Newby
My Lords, I do not think that I will be able to help the noble Baroness in the case of Mr Maluf, who is a Brazilian citizen. We are not in a position to comment on his case. In respect of international corporations, the key thing is the extent to which we can extend international co-operation in that respect, which is why the recent announcement of the UK Chancellor and the German Finance Minister, following a G20 Finance Ministers’ meeting in Mexico, was very important. We are now looking at concerted international co-operation to strengthen international tax standards. However, at the moment, it may mean that international companies can pay less tax than they would otherwise owe. We are trying to catch up with new forms of commerce and to make sure that tax is paid in proportion to where people are undertaking their business.
Lord Barnett
My Lords, I declare a past interest as a senior partner in an accountancy practice. Does the Minister recall that the advice best given is the thickness of a prison wall between tax avoidance and tax evasion? We all welcome everything that the Government are doing to try to deal with the evasion side. However, does the Minister accept that there is a serious problem on the avoidance side in that there is a danger that an accountant could be held in abuse of his work and could be sued for negligence if he does not give advice on the best form of tax avoidance?
Lord Newby
My Lords, when it comes to tax avoidance, it is important that we begin to tilt the balance towards what is considered acceptable behaviour. That is one of the reasons why we will be introducing in next year’s Budget, or Finance Bill, a general anti-abuse rule. Those, including accountants, who undertake tax schemes, the principle purpose of which is to avoid tax, will find themselves subject to the rigour of that rule.
Lord Soley
The noble Lord mentioned talks with Germany. Is he able to tell us how many companies of European origin, or individuals of European origin, are also involved in the Channel Islands as, if you like, tax exiles? Bearing in mind the disgraceful evidence we saw in the House of Commons the other week from Google, Amazon and Starbucks, should this be addressed at a European level? If that is happening—one of the countries involved was Holland and I would guess that the Channel Islands are probably involved as well—we really should address this issue at a European level because what has been happening is absolutely unacceptable.
Lord Newby
I obviously agree with the noble Lord’s latter statement. Many recent examples clearly are unacceptable, which is why we have taken a great interest in, and are looking forward to hearing more about, the initiative that the EU Commission has taken this week in terms of reformulating what constitutes a tax haven. He is right that we can do a certain amount ourselves but we are going to deal with this international issue only through international co-operation.
Lord Forsyth of Drumlean
My Lords, will my noble friend clarify the position, as I genuinely do not know the answer to the question? Are we able to deal with companies such as Google and Starbucks and others which are not paying the tax that they should pay in this country or are we constrained by European law from being prevented from doing so?
Lord Newby
I can reassure the noble Lord that we are being constrained not by European Law but by international accounting standards. There is no suggestion that Starbucks and the other companies are breaking the law but the accounting standards allow them to manipulate the point at which they take a tax charge on revenues that they raise.
Lord Hamilton of Epsom
My Lords, would it be possible to stop Google paying the minimal amount of tax as it is an international global company in whatever part of the world where the tax is the lowest?
Lord Newby
This is why we need increased international co-operation and why the G20 initiative is so important. Obviously if people can just shift off all their revenues to a low tax jurisdiction, some companies are going to do so. We are working very hard with our international partners on this because we have a common interest in making sure that these companies pay a fair share of tax.
Lord Tunnicliffe
My Lords, the Minister mentioned £19 billion that is tied up in Jersey related to UK citizens—a very precise figure. Does this mean that there is sufficient transparency, and that we have a sufficient viewing, of what is happening in Jersey? Do we have sufficient HMRC resources addressing that? And if the answer to both of those is yes, does he have a feel for the amount of money that the UK Exchequer could expect out of these people if we were better able to get hold of that money through agreement?
Lord Newby
My Lords, in terms of resources, the Government have committed an extra £917 million over the current period to combat tax avoidance and evasion. That money is now being redirected with HMRC. It has led already to several convictions involving overseas tax evasion. The fact that £19 billion of funds is held by UK citizens in Jersey does not mean that £19 billion is improperly held in Jersey. A very large proportion of that money is there perfectly properly. We have to understand that simply because you have a bank account in Jersey does not of itself mean that you are a crook.
Enterprise and Regulatory Reform Bill
(11 years, 11 months ago)
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Lord Marland
That it be an instruction to the Grand Committee to which the Enterprise and Regulatory Reform Bill has been committed that they consider the Bill in the following order:
Clauses 1 to 7, Schedule 1, Clause 8, Schedule 2, Clauses 9 to 14, Schedule 3, Clauses 15 to 20, Schedule 4, Clause 21, Schedules 5 and 6, Clauses 22 to 24, Schedule 7, Clauses 25 and 26, Schedule 8, Clauses 27 and 28, Schedule 9, Clause 29, Schedule 10, Clause 30, Schedule 11, Clauses 31 and 32, Schedule 12, Clauses 33 to 35, Schedule 13, Clauses 36 to 45, Schedule 14, Clauses 46 to 49, Schedule 15, Clauses 50 to 52, Schedule 16, Clauses 53 to 55, Schedule 17, Clauses 56 to 63, Schedules 18 and 19, Clause 64, Schedule 20, Clauses 65 to 68, Schedule 21, Clauses 69 to 80.
Motion agreed.
Crime and Courts Bill [HL]
(11 years, 11 months ago)
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Lord Taylor of Holbeach
That the amendments for the Report stage be marshalled and considered in the following order:
Clause 1, Schedule 1, Clauses 2 to 4, Schedule 2, Clause 5, Schedule 3, Clauses 6 to 8, Schedule 4, Clause 9, Schedule 5, Clauses 10 and 11, Schedule 6, Clause 12, Schedule 7, Clauses 13 to 15, Schedule 8, Clauses 16 and 17, Schedules 9 to 11, Clause 18, Schedule 12, Clause 19, Schedule 13, Clauses 20 to 24, Schedule 16, Clause 25, Schedule 17, Clauses 26 to 28, Schedule 14, Clause 29, Schedule 15, Clause 30, Schedule 18, Clauses 31 to 33.
Caravan Sites Bill [HL]
(11 years, 11 months ago)
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Lord Avebury
My Lords, I understand that no amendments have been set down on this Bill and that no noble Lords have indicated that they wish to move a manuscript amendment or to speak in Committee. Unless therefore any noble Lord objects, I beg to move that the order of commitment be discharged.
Middle East: Gaza and Syria
(11 years, 11 months ago)
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The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend the Foreign Secretary earlier in the other place. The Statement is as follows:
“Mr Speaker, with permission, I will make a Statement on Gaza, the Middle East peace process and Syria.
The whole House will be united in concern both at the intolerable situation for the residents of southern Israel, and at the grave loss of life and humanitarian suffering in Gaza, including the particular impact on children.
On 14 November, the Israeli Defence Forces began air strikes against the Gaza Strip in response to a sharp increase in rocket fire. Hamas and other militant groups responded with rocket fire, although these attacks have been reduced in the past two days. As of today, three Israeli citizens have been killed, including one woman and one child, and at least 109 Palestinians have been killed, including 11 women and 26 children.
Although we have made it clear that Hamas bears principal responsibility for the start of the current crisis, we are also clear that all sides have responsibilities. We quickly called on Israel to seek every opportunity to de-escalate its military response and to observe international humanitarian law and avoid civilian casualties. At the meeting I attended in Brussels yesterday, EU Foreign Ministers condemned the rocket attacks on Israel and called for an urgent de-escalation and cessation of hostilities. We have also warned that a ground invasion of Gaza could lengthen the conflict, sharply increase civilian casualties, and erode international support for Israel’s position.
We wish to see an agreed ceasefire that stops the rocket attacks against Israel and ends Israeli military operations. Efforts to agree a ceasefire are continuing as I speak, and the United Nations Security Council will continue discussions on the situation today. More open access in and out of Gaza is part of any longer term solution. We pay tribute to the efforts of the Egyptian Government and the United Nations Secretary-General to secure an agreed ceasefire, and have supported these efforts over the past few days. I discussed these with my European colleagues yesterday, and with the Egyptian, Israeli and Turkish Foreign Ministers over the weekend, as my right honourable friend the Prime Minister did with Prime Minister Netanyahu and President Morsi. My honourable friend the Member for North East Bedfordshire, the Under-Secretary of State, is in Ramallah today, where he will meet President Abbas, after visiting southern Israel yesterday.
There is no military solution to the crisis in Gaza or to the Israeli-Palestinian conflict. Peace becomes harder to achieve with each military confrontation, each loss of life, and the creation of facts on the ground. The only way to give the Palestinian people the state that they need and deserve and the Israeli people the security and peace they are entitled to, is through a negotiated two-state solution, and time for this is now running out. This requires Israelis and Palestinians to return to negotiations, Israel to stop illegal settlement building, Palestinian factions to reconcile with each other and the international community, led by the United States and supported by European nations, to make a huge effort to push the peace process forward as a matter of urgency.
While there is any chance of achieving a return to talks in the coming months, we continue to advise President Abbas against attempts to win Palestinian observer state status at the United Nations through a vote in the UN General Assembly. We judge that this would make it harder to secure a return to negotiations and could have very serious consequences for the Palestinian authorities.
Our collective goal must be a two-state solution based on 1967 borders with agreed land swaps, Jerusalem as the capital of both states, and a just settlement for refugees. So while we support Palestinian aspirations and understand the pressures on President Abbas, we urge him to lead the Palestinians into negotiations and not to risk paralysing the process. But we also urge Israel, equally, to make every effort to restart negotiations before the window for a two-state solution closes altogether.
The urgency is underlined by the conflict in Syria. The whole House will join me in condemning the barbaric violence by the Assad regime, which continues its aerial warfare against Aleppo, Homs and Damascus itself. Thirty thousand people have died already, and more than 100 are still being killed each day. Countless homes, clinics, hospitals and essential infrastructure such as water and sanitation systems have been destroyed or severely damaged. Between 1 million and 3 million people have been displaced from their homes. There are appalling reports of rape and sexual violence by government forces and militia, and as a form of torture in regime detention centres, which the United Nations Human Rights Council-mandated Commission of Inquiry has said could be prosecuted as crimes against humanity. There are now well over 400,000 refugees in neighbouring countries. The impact on young Syrians is particularly acute, since 50% of all Syrian internally displaced people and refugees are children.
We are increasing our humanitarian assistance as the crisis grows and winter approaches, and our appeals to other members of the international community to give far more to UN relief efforts. Our £53.5 million in humanitarian assistance so far includes £9.7 million to the World Food Programme to feed 80,000 people inside Syria each month; £4 million to the UN Refugee Agency to provide shelter and other basic relief items; and £9.7 million to other relief agencies for medical services and supplies, food parcels, water and sanitation services, distribution of blankets, and hygiene kits. In neighbouring countries, we have given £10 million to the UN Refugee Agency to provide shelter, protection, registration, and water and sanitation services to refugees; £5 million to the World Food Programme to feed 20,000 refugees; and £6 million to UNICEF to provide education and trauma support for children, and water and sanitation services for refugees. In Cairo last week, I called on other countries to increase their contribution to the relief effort, which the UN has described recently as “critically underfunded”.
However, what is urgently needed is a political transition to a new and legitimate leadership that reflects the will of the Syrian people and that can end the violence and begin to rebuild the country with regional and international support. On 11 November there was a major breakthrough in Doha, with the establishment of the National Coalition of Syrian Revolutionary and Opposition Forces, which has been welcomed by many Syrians.
Last Friday, I met the president and two of the vice-presidents of the national council on their first visit to Europe. I sought assurances from them in three areas. First, I urged them to commit themselves to developing their political structures, widening their support among all sections of Syrian society, and agreeing a detailed political transition plan for Syria. Secondly, I encouraged them to use the next Friends of Syria meeting, which we hope will be held in Morocco next month, to set out a plan for Syria’s future in detail. Thirdly, I urged them to show a clear commitment to human rights and international humanitarian law, including the protection of all religious communities and unfettered and safe access for humanitarian agencies.
In response, the national coalition’s leaders stressed their determination to build on the Doha agreement and to leave the door open to other opposition groups to join them. They spoke of their intention to win the trust of Syrians from all communities, to be a moderate political force committed to democracy, and not to repeat the abuses of the Assad regime. They told me that their priority was protecting the civilian population against attack and focusing on achieving a political transition. It would be for the people of Syria, they told me, to approve a future government. These are important and encouraging statements by the national coalition. It has much to do to win the support of the Syrian people and co-ordinate opposition efforts more effectively, but it is strongly in the interests of Syria, of the wider region and of the United Kingdom that we support it and deny space to extremist groups.
On the basis of the assurances I received and my consultation with European partners yesterday, Her Majesty’s Government have decided to recognise the National Coalition of Syrian Revolutionary and Opposition Forces as the sole legitimate representative of the Syrian people. As the president of the national coalition said to me on Friday, recognition imposes responsibilities on the coalition, and we will continue to press it to uphold its commitments.
I can also announce a significant increase in practical support for the Syrian opposition by the United Kingdom. First, we will invite the coalition to appoint a political representative to the UK, and we will offer support to it as it sets up its political and humanitarian structures. Secondly, we will provide a £1 million package of communications support, which could, for instance, include mobile internet hubs and satellite phones to improve the coalition’s ability to communicate inside Syria. Thirdly, we will urgently deploy a stabilisation response team to the region to work with the coalition to develop its plan to meet people’s basic needs in opposition-held areas. The team will draw up recommendations for areas for further UK assistance.
Fourthly, and separately, my right honourable friend the Secretary of State for International Development is looking at increasing our assistance to Syrians affected by the conflict. This could include increasing our humanitarian medical assistance for wounded Syrian civilians who need access to treatment by providing UK funding for hospitals and mobile clinics, and training for health workers. We intend to launch new work to build on our existing work to support victims of sexual violence in Syria.
This new package of UK support amounts to around £2 million of immediate commitments, and we will look to expand this considerably in the coming months. This comes on top of the training that we have already provided for citizen journalists, human rights advocates, doctors and Syrian activists, and the generators, communications equipment and water purification kits for unarmed opposition groups and civil society organisations that I announced during the summer.
Alongside that increased political and practical support, we are pressing the EU to increase its support to civil society in Syria, and I raised this at the Foreign Affairs Council yesterday. We will continue to increase the pressure on Assad and those who support him through EU sanctions, including seeking accountability through the United Nations commission of inquiry process.
We also expect there to be discussions in NATO in the coming days about supporting the security of Turkey, and we will continue to work with all of Syria’s neighbours to help them mitigate the effects of the crisis. We will step up our support for political transition and our planning for the day after Assad.
Finally, we will continue to support the work of the UN and Arab League envoy Lakhdar Brahimi, and renew our efforts to persuade Russia and China to work with us at the United Nations Security Council. I will take every opportunity to urge my Russian and Chinese colleagues to support a political and diplomatic solution to the conflict in Syria. Without such a solution, everything that they and we most fear is coming closer, including ever greater loss of life, instability in neighbouring countries and an opportunity for extremists to pursue their own ends.
The basis for such a political settlement is clear. A credible alternative to the Assad regime is emerging that has the growing support of the Arab League, the European Union, the United States and an increasing number of other countries, and we have an agreed basis for a transition in the form of the Geneva communiqué, which all permanent members of the United Nations Security Council signed up to in June. In the absence of that political and diplomatic solution, we will not rule out any option in accordance with international law that might save innocent lives in Syria and prevent the destabilisation of a region that remains critical to the security of the United Kingdom and the peace of the whole world”.
My Lords, that concludes the Statement.
Lord Triesman
My Lords, I thank the noble Minister for repeating the Statement made in another place. It is right that the Statement should include in its title the “Middle East peace process” and bridge a number of issues, although I wish later in my remarks to comment on whether there is such a process. However, allow me to start with Gaza.
This outbreak of hostilities is a tragedy for the entire region. If ever there were a day for calm minds, calm reflection and a self-denying ordnance on our part about blame focused on any one side, that is surely today. Today’s task is the achievement of a durable ceasefire and to thank and encourage the Egyptians for their efforts in arriving at that conclusion. All of us will feel the deepest dismay and abhor the acts of violence that are causing a loss of lives on a great scale, and we have witnessed this mounting calamity day by day. Since Operation Pillar of Defense began last Wednesday, as the Minister has reported to us, more than 100 Palestinians and three Israelis have died, mostly civilians.
It was in response to rocket attacks from Gaza that Israel launched its military response four years ago. The express goal of destroying the apparatus of terror, as they said at the time, left 13 Israelis and 1,400 or more Palestinians dead. Yet, despite that, over 1,000 rockets have been launched in the past year and, as we know, some of them can now reach Tel Aviv and the outskirts of Jerusalem. The certainty of a greater loss of life in any ground assault should make the objective of the international community and the United Kingdom the immediate cessation of violence and the urgent negotiation of a durable ceasefire.
We support the call by the United Kingdom Government for no extension of the conflict through a ground offensive. We welcome the decision of the Israeli Government not to launch such an offensive at this stage but we also urge that diplomacy is given a chance under Egyptian and United Nations stewardship, and urge all parties not to insist on any artificial deadlines. Experience shows that heightened tension, rather than a desire that propels people towards peace, tends to follow an artificial deadline when a viable negotiation is in play. The rocket attacks on southern Israel are wholly unacceptable. No Government, least of all the Government of this country, would tolerate the targeting of its citizens. The failure over many decades to achieve a two-state solution continues to lie at the heart of the problem.
I join the Minister and her noble friend the Foreign Secretary in saying that this cannot be resolved by military means—it requires a political solution. Do the Government have a view on the steps that they should take to advance the negotiations should a ceasefire be achieved—the ceasefire for which we all earnestly hope? What assistance will the Government give to the quartet and its envoy Mr Blair, who are plainly working hard in the region? Does the Minister agree that steps are imperative to assist the Palestinian Authority if it is to play any truly significant role? Would she agree that leaving Hamas in the key role without the full engagement of the Palestinian Authority would be an ill judged step in this circumstance?
Without a cessation of violence, the concept of the peace process is doomed, and a ceasefire is not the only urgent issue. Those who have seen civilians—men, women and many tiny and terrified kids—in the overstretched hospitals of Gaza will know that the hospitals already lacked many of the basic resources that they needed to treat their patients and they now face even greater burdens. What steps can Her Majesty’s Government take to ensure that medical and humanitarian personnel and the material resources that they require have unrestricted access to Gaza?
The inward flow of those resources is as vital as stopping the inward flow of arms, especially of Iranian rockets, a longstanding objective of the quartet. What discussions are we having with the Egyptians to intercept the rockets that detonated this current crisis? My right honourable friend Douglas Alexander in another place rightly said today of the peace process that there is no peace and there is no process. Mr Hague’s Statement sounds, if anything, a touch optimistic, despite the seriousness and the gravity which he has injected into it. I worry about the realism with which he talks of a peace process involving President Abbas when it is clear that President Abbas’s position is being weakened by the day.
We have called for a full United Nations diplomatic initiative and we welcome the engagement of Ban Ki-Moon in that. As a permanent member of the Security Council, what are the Government’s priorities in discussions with the United Nations? Does the Minister agree that outbursts of military action have never produced a lasting peace, whoever started the action, including those firing the rockets? Does the Minister agree that a key barrier to peace negotiations is the expansion of illegal settlements that undermine the prospects of a contiguous Palestinian state and set back almost any realistic prospects?
The Opposition believe that an enhanced status for the Palestinians should be discussed at the United Nations’ General Assembly and should be supported by the United Kingdom as an aid to negotiations. In the absence of peace negotiations, and because the process is paralysed, an initiative is urgent. It is hard to believe that the two-state proposition can survive the current impasse for very long. We believe that the Foreign Secretary does not have the balance right when considering the status of the Palestinians. What will our stance be on this issue at the General Assembly?
I turn to Syria, briefly but not with any implication that it is secondary. On the contrary, I have had the opportunity at this Dispatch Box to say how seriously I believe we should all take the crisis in Syria. I have said in your Lordships’ House that this murderous regime, venting unspeakable violence and terror on its citizens, is an affront to the entire civilised world, and all parties in the Security Council should long since have recognised that fact. It is clear that the different communities in Syria are ever more estranged and hostile to one another, and that the prospects of an agreed solution are becoming ever more remote. The likelihood of events intruding into other countries in what is already a febrile region becomes ever more likely and, for those reasons, continuously more dangerous to us all.
In our judgment, the Security Council has failed the United Nations and, perhaps even more significantly, it has failed the people of Syria. Some members have argued that all that this does is reflect the divisions in the Syrian opposition. However, we are now in new terrain that in my judgment the Russians cannot ignore. On 11 November in Doha, agreement was reached on the first vital steps to establish a new Syrian national coalition. These are early steps but they are very encouraging steps; I share that view with the Minister. The Labour Party has called on the Government to recognise the coalition, and for those reasons we strongly welcome today the announcement that they do so. That is a great encouragement.
If this coalition is to be a unifying force, what will Her Majesty’s Government do to ensure that it is well resourced with peaceful materiel? Will the Government say today that they will sustain the European arms embargo in order to make clear the distinction between peaceful materiel and non-peaceful materiel? I say, with genuine respect, that the £1 million worth of communications equipment is unlikely to do the job of sustaining the initiative; it is not the significant amount that is needed to do so.
Among the peaceful needs lies the need for humanitarian aid, as the noble Baroness has said in repeating the Statement. What proposals do the Government have to increase substantially the flow of that aid, which is now so desperately needed? What steps will the United Kingdom take in New York to encourage the Russians to shift from a candidly disastrous position? Even now, perhaps especially now, Russia could add its weight to diplomacy rather than to protecting Assad’s repression. What role do the Government believe NATO can play in this current crisis? It is quite right to emphasise Turkey’s security and, as a member of the alliance, Turkey will no doubt be focused on that. What are we adding to the argument?
I look forward to hearing from all sides of the House the same degree of concern about Syria that is often reserved for others in the region. It is a porous region with porous borders and levels of aggression that are, on occasion, enormous, not least as a result of the Syrian dictatorship, which poses massive risks to us. The detonator in this region could go off anywhere. Syria is a loose cannon. It is essential for us to deal with that fact as with any other if we are to see an overarching peace in the Middle East.
Baroness Warsi
My Lords, first, I apologise on a personal level. Unfortunately I suffer from migraines which, among other things, impair my speech. I apologise in advance if I do not sound completely coherent today.
The noble Lord makes some very important points and there are very few with which I would disagree. He says that my right honourable friend the Foreign Secretary and I are optimistic about what can be achieved in relation to the current crisis; I would argue that we have no option. For too long the international community has failed in relation to the Middle East peace process and our overriding objective now is to ensure that we secure an agreed ceasefire on both sides and, in the mean time, to avoid civilian casualties. We must also call for both sides to abide by international and humanitarian law while the crisis continues.
I can assure noble Lords that, almost on an hour-by-hour basis, we are engaged with discussions about the region. The Prime Minister has spoken with the Prime Minister of Israel and with President Morsi of Egypt, which is playing an important and constructive role in this matter. My right honourable friend the Foreign Secretary is in touch with his opposite interlocutors and the Parliamentary Under-Secretary of State, the Minister responsible for the Middle East, is in the region. We engaged with our EU colleagues at the Foreign Affairs Committee yesterday and all efforts are being made to try to achieve a ceasefire. There is some hope but we cannot say what the outcome of those ongoing discussions will be; we are however hopeful and optimistic at this stage.
We have also made it absolutely clear that an escalation of this matter, a ground invasion, is not the way forward. Huge international condemnation would follow. The noble Lord is right, however, when he asks where the peace process will be taken thereafter. Let me assure him that no decision has been made about how the United Kingdom would vote at the General Assembly. We recognise the pressure that President Abbas is under but we are trying to encourage him and all sides to continue to give a negotiated peace agreement another opportunity. We are running out of time; many Ministers have stood at this Dispatch Box and said that this is a vital moment. Let me say, this is a vital moment. I think we have a year, the next year, to make real progress on this matter. It is why we are stressing to our colleagues in the United States that they must take a leading role in this and why we are making all efforts to ensure this matter is raised in their minds.
On Syria, it was right for us to increase our support to the opposition as it became more coherent. Noble Lords would accept, I think, that our support has been on a stepped basis as we have engaged and encouraged the various factions within the opposition to come together. We now have some specific assurances and it is upon those assurances that we can give the more specific support.
Embargo and licensing of arms is an ongoing matter. We will keep under constant review what we can and cannot give and sell to nations around the world. Resourcing has to be there and I hope the noble Lord will accept from what I said in my opening statement that this is the case. We have ensured that we are playing our part but we are encouraging the wider community to play its part also. It is important, for financial and political reasons, that there is broad-based resourcing and we are encouraging other nations to play their part.
My right honourable friend the Prime Minister made clear his views on how the United Nations Security Council had failed Syria. I do not think he could have been any clearer in the words that he used at his address to the General Assembly. We are using all opportunities during discussions with Russia and China; indeed my own discussions with the Russian ambassador were very much focused on movement that we hope they can accept over time.
Baroness Ramsay of Cartvale
My Lords, does the Minister agree that Israel has the right to defend its citizens from rocket attacks from Gaza and to try to destroy Hamas’s arsenals? Does she further agree that the international community must now focus on de-escalation and finding a sustainable ceasefire—with emphasis on “sustainable”—because a temporary ceasefire will do no one much good; on finding a political solution to the present Gaza crisis; and on reviving the Middle East peace process, which has been allowed to go dormant but is not dead? Does the Minister agree that the peace process is still the best show in town and the only hope for achieving a two-state solution, which is surely the answer to a lot of the problems?
Baroness Warsi
The reality check for the region is in the matter raised by the noble Baroness—that is, that the window of opportunity for a two-state solution is quickly closing. We are stressing that in our discussions with both Israel and the Palestinian Authority. It is in their interests, as it is in ours, for there to be a negotiated solution. We are also stressing that in our discussions with the United States. That is why we think that, at this stage, it would be better to encourage the Palestinian authorities to move down the path of a settled solution as opposed to a vote. We have also made it clear that we have not made a decision in relation to that vote, and whatever decisions are taken are not permanent decisions.
Baroness Falkner of Margravine
My Lords, I am slightly surprised at the tone of the Statement. It seems to imply that the United Kingdom Government have ruled out support for a UN vote and yet, on the same hand, the noble Baroness said that she thinks there is only about a year left in the peace process. Does that mean that if the Palestinians come to us at the end of a year and ask for our support, we will give them a positive assurance that we will support them? Hoping against hope for talks to result in a peace process may well be overoptimistic. On Syria, we heard on 15 November that the Security Council was looking at options and I notice that a stabilising response team is now going to be deployed to the region. Can the noble Baroness assure the House that if further materiel is given to the Syrian coalition forces, all safeguards will be put in place to ensure that it does not get into the wrong hands?
Baroness Warsi
My Lords, yes, I can absolutely give my noble friend an assurance on the second part of her question: these matters are being looked at extremely carefully. That is why we have a stepped approach in relation to support. I can assure my noble friend that these are ongoing discussions. The immediate crisis is at the forefront of our minds and it must be dealt with now. I can assure her that the decision on the United Nations General Assembly vote has not been taken. We are using our relationships and all efforts to make sure that the ultimate aim of a negotiated two-state solution is achieved, and we keep reminding people of the best way of achieving that.
Lord Hannay of Chiswick
My Lords, I thank the Minister for her repeated assurances that no decision has been taken about the vote in the General Assembly on the status of Palestine. However, does she not recognise that the way in which the Statement was cast was highly negative in that effect and that the reference to the possibility that a voting of a resolution might paralyse the peace process is, frankly, a travesty? The peace process is paralysed by the position of the Prime Minister of Israel, who has been refusing to enter negotiations with President Abbas for a very long time. The idea that some action of the United Nations—which would, in any case, not involve recognising Palestine as a member of the United Nations but would be an intermediate status—could not possibly be said therefore to paralyse something that is already paralysed. Does she not further recognise that the consequences of Britain’s negative vote in those circumstances could be quite serious and would be very damaging to the position of President Abbas, who is already in great enough difficulties as it is?
Baroness Warsi
That is exactly why it is important for these Statements to be repeated in this House. It is important that the views of this House are taken on board. I and officials who are listening will make sure that this is taken back. We make it very clear in all our discussions with Israel that time is running out for a negotiated two-state solution. We have made it clear that of course they have to make progress in relation to the building of illegal settlements and in getting back to the negotiating table. As I said in the Statement, we use the same approach in relation to President Abbas. We encourage him to take the necessary steps to ensure that this matter is resolved through negotiation.
Lord Judd
My Lords, the missiles into Israel are wrong and they are totally counterproductive. That cannot be said too strongly. But the settlements, with all their security arrangements, roadblocks and the rest, are wrong and totally counterproductive in the irritation and humiliation that they cause every day to ordinary Palestinian people. So, also, was the prolonged blockade that was undermining the whole economic, educational and health infrastructure of Gaza.
Both sides have been strengthening the intransigent and extremist arguments on either side. As friends of both, we cannot overemphasise the counterproductivity too strongly. But will the Minister agree that any lasting peace has to belong to the people of the region and cannot be imposed? In that sense, talks must be as inclusive as possible. If they are not inclusive—as we learnt in Northern Ireland, it is a matter of talking to people with whom it is not very comfortable to talk—the danger again is that one is strengthening the extremists and the militants.
Baroness Warsi
The noble Lord raises some important points. I think he would agree that success in the challenge of getting to the negotiating table those who do not even accept the basic principles laid out by the Quartet is probably much further away. But the challenge we have at the moment is that we are finding it difficult to engage those who do abide by the Quartet principles. Therefore, what is needed more than ever is political will on the part of those who, as the noble Lord says, consider themselves to be friends of both the Palestinians and the Israelis. That political opportunity is now: the United States has had its elections and the President is in his second term; and Israel is in election mode, with its elections being concluded by early next year. This provides an opportunity when, as I have said many times now, the window of opportunity is shrinking.
The Lord Bishop of Bath and Wells
My Lords, I welcome the Statement from the Minister today. The experience of peacemakers in all situations is that there are certain defining moments. From what she has said, she believes that there have been a number of defining moments in these two conflicts—in Israel/Palestine and Syria. For a peace process to be effective, it has to be managed on a multilayered level, not just from a political perspective but from a community perspective as well. In what ways can Her Majesty's Government encourage and nurture that process both in Syria and in Israel/Palestine to build that kind of construct so that there can be, as it were, a cohesive approach to this peacemaking task?
Baroness Warsi
The situation is slightly different in relation to the two areas. In Syria, in terms of the immediate violence, we have been dealing with a crisis over a lengthy period. However, as I said in my Statement, we have through the DfID programme been funding a number of individuals including journalists and human rights activists who are logging and recording information. If you send out a clear message that there will not be a culture of impunity in these matters, that starts to build the reconciliation process.
On Israel, Gaza and the West Bank, there are a number of programmes of which I am sure the right reverend Prelate will be aware. Some are based on religious grounds, where religious leaders have come together to build peace, and some are being done through educational projects and through the voluntary and charity sector. I had the privilege of seeing a sports project when I visited. I agree that peace cannot just be imposed from the top down; it has also to be built from the bottom up. However, in a situation such as this, I fundamentally believe that real progress will be made when we start showing real political will.
Lord Wallace of Saltaire
My Lords, I think that it is now this side’s turn and then perhaps those on the opposite side who are trying to come in might stand up in a queue, so to speak.
Baroness Morris of Bolton
My Lords, perhaps I may pick up on a point made by the noble Lord, Lord Triesman, and, in doing so, declare an interest as president of Medical Aid for Palestinians. What is being done to address the critical shortages faced by hospitals in Gaza, where 40% of essential medicines and 60% of medical disposals were already at zero stock before the escalation, because of the blockade?
Baroness Warsi
I know that my noble friend works tirelessly for the region and is deeply knowledgeable on the area. The humanitarian situation is extremely fragile, as she is aware, and has been exacerbated by events of recent days. Our assessment is that there is not at this stage a humanitarian crisis, because aid continues to flow from Egypt through the Rafah crossing and, intermittently, from Israel. A convoy of medical supplies managed to get to Gaza on Sunday, and food distribution is functioning—we understand that there is probably about 30 days’ worth of food stock—but I absolutely take my noble friend’s point on the base from which we started.
Baroness Symons of Vernham Dean
My Lords, the Minister’s Statement was very full and I am sure that the whole House thanks her for that. I should also like to thank her right honourable friend Mr Alistair Burt for all the work that he is doing—I think that he is an excellent Minister for the Middle East.
My noble friend Lord Triesman asked whether there is a Middle East peace process and the noble Lord, Lord Hannay, emphasised that the process is in effect paralysed—a dreadful word to use but, alas, an accurate one at the moment. Does the Minister really believe that a two-state solution is still possible? She said that time was running out; she has given it a year. Yet Israeli settlements continue to be built and, on the other hand, there is a hopelessly split leadership in Palestine between Fatah and Hamas. The demographics in Palestine tell their own story about the Palestinians simply waiting for time to deliver the solution that they want.
Can the Minister also tell us what more we can do to help address Syrian violence when the United Nations is hopelessly split on what is going on in Syria? Syria is a client state of Russia. We have to face up to that and the United Nations process seems, again, to have become paralysed. This weekend in the United States, all the newspapers were talking about war—a terrible word to use. Will the Minister please continue to give us briefings in this House? In this time of acute danger, will she arrange for regular briefings—they need not necessarily be on the Floor of the House—so that those of us who are interested in these issues can be fully updated?
Baroness Warsi
I can of course ensure that that briefing happens, whether it is from me or the specific Minister in charge. It is absolutely right that noble Lords, many of whom have so much experience and expertise in this matter, are kept up to date and that we hear their views. I do not think that there is any option other than still to have hope and a commitment to the two-state solution, which is the only way in which we can give the Palestinian people the state that they need and deserve and the Israeli people the security and peace that have eluded that region for so long. The priority is now for the United States to lead a major push to restart negotiations, and we have made this clear to the Obama Administration. It appears to be the right time for a newly elected President in a second term to take this initiative. That offers the best opportunity of progress towards the ultimate goal of a two-state solution. I am optimistic but also realistic so, even with that optimism, I have said that time is running out.
Lord Elystan-Morgan
My Lords, I congratulate Her Majesty’s Government on their recognition of the coalition Opposition in Syria. It is an act of wise diplomacy, entirely in kilter with the most basic rules of public international law. Can the Minister tell the House whether there are prospects of other countries, particularly other members of the Security Council, taking the same role? Am I right in thinking that up until now the only other member of the Security Council to have recognised this regime is France?
Baroness Warsi
These discussions are ongoing. I know that there are specific discussions with a number of states, including the United States, on how progress can be made. It is up to individual nations to go through that process but what has been important in recent weeks is the way in which the various opposition forces have managed to come together to form some sort of coherence as to initial progress and what can be done in the immediate future. It was right that while we built that relationship and before we formally recognised it, we sought specific assurances in this House. Many noble Lords have raised concerns about human rights abuses that have been committed in Syria on all sides. If Her Majesty’s Government are to be engaged with a recognised Opposition, it is right that they seek some specific assurances beforehand.
Lord Palmer of Childs Hill
My Lords, I thank my noble friend for the Statement that she read. I have only one small point and I will not take too long to make it. Can the Government not look on this disastrous situation as an opportunity? Opportunities come out of disasters and this is an opportunity to get not only the Americans to act, as the Minister suggested, but the Arab League. There was an Arab League initiative to bring both parties to the negotiating table without any preconditions whatever. The noble Lord, Lord Hannay, said it was Prime Minister Netanyahu who has refused to come to the negotiating table. Some of us would disagree with that. Let us put it to the test by getting the Americans and the Arab League to get people to come to the negotiating table now, to talk about not truces and ceasefires but a durable situation where there is a genuine cessation of hostilities.
Baroness Warsi
The noble Lord raises an important point. There is a famous saying in Urdu which loosely translates as, “It rarely rains when the fires are raging”. To try to reach final agreement on these matters when there is a crisis is difficult. It is important to have the agreed ceasefire. Foreign Ministers from the Arab League have been meeting in the region. Egypt and Turkey have been playing an extremely important role in trying to negotiate that. As part of that initial discussion to resolve the current crisis, discussions are ongoing in relation to a long-term solution.
Lord Anderson of Swansea
My Lords, part of any ceasefire agreement will surely include international monitoring to ensure compliance. Are we and our allies ready, if the call comes, to comply with military personnel to do just that, remembering that Israel will be very cautious because of its experiences of UNIFIL in Lebanon and the time when it left Gaza, with its effect on that frontier? On Syria, how can we properly call the coalition legitimate when it has been subject to no election to ensure its legitimacy? We are apparently prepared to receive a political representative, whereas France calls that representative an ambassador. Why the difference?
Baroness Warsi
In relation to the noble Lord’s suggestion about observers, we will respond to that situation as and when it arises. In relation to recognition, I think he would accept that it would be impossible to expect the Syrian opposition factions to be holding elections in Syria at the moment and to try to obtain legitimacy through the ballot box. We are trying to work with the various groups that have come forward in setting their own priorities. As they themselves say, this is a transitional council. Eventually, it is for the people of Syria to decide their future Government.
Financial Services Bill
(11 years, 11 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Deputy Speaker (Lord Skelmersdale)
My Lords, before calling the first amendment, I must remind noble Lords that the House has agreed to treat amendments in the first group as if it were in Committee. This means that if noble Lords feel that they must speak again, they may speak again but only for those amendments numbered in the first group.
Clause 7 : Extension of scope of regulation
Amendment 70
Lord Sassoon
(b) the setting of a specified benchmark.”
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, I feel that I should warn you that my remarks on this group will be longer and more detailed than usual, because this group of amendments relates to Martin Wheatley’s review of LIBOR. This is a new area for this House’s consideration in the context of the Bill, as well as being vitally important.
LIBOR—the London interbank offered rate—is the most frequently utilised benchmark for interest rates globally. At the end of June this year, it was revealed that LIBOR had been subject to repeated attempts at manipulation over a number of years. The Government have been absolutely clear that any attempt to manipulate that important international benchmark is unacceptable.
Although misconduct was not confined to London, as banks and interbank benchmarks in a number of jurisdictions have also been implicated, the Government have moved quickly to restore the credibility of LIBOR, which is a key component of our financial infrastructure. It is vital that those who use and rely on LIBOR can continue to have confidence in its integrity.
One week after the revelations emerged, my right honourable friend the Chancellor of the Exchequer asked Martin Wheatley, chief executive-designate of the FCA, to consider immediate reforms to the framework for setting LIBOR. Mr Wheatley reported his findings and made his recommendations at the end of September.
LIBOR is the most important interest rate benchmark globally, as it is used in a multitude of contracts, including bilateral and syndicated loans, interest rate derivatives, mortgages and variable-coupon bonds. Indeed, the Wheatley review estimated that at least $300 trillion-worth of contracts reference LIBOR. For that reason, it is imperative that LIBOR is comprehensively reformed with the minimum of disruption to international financial markets. The Wheatley review provides a 10-point plan to reform LIBOR, including recommendations to both Government and market participants. The Government welcome and endorse the Wheatley review recommendations in full, and are determined that they should be implemented by all parties involved without delay.
Accordingly, I have tabled three sets of amendments. First, Amendments 70 to 73 enable benchmark activities such as LIBOR and, potentially, any other benchmarks to be brought within the scope of statutory regulation under FiSMA. Secondly, Amendments 108 to 114 create a series of new offences designed to tackle misconduct in the financial sector, including a new distinct criminal offence for making false or misleading submissions in connection with the determination of a benchmark. Thirdly, Amendment 80 provides the FCA with a new rule-making power to require banks to submit to LIBOR and other appropriate benchmarks.
These amendments complement other market-led reforms to LIBOR as recommended by the Wheatley review, including the replacement of the BBA as the rate administrator, through an open tender process; the requirement for banks to make explicit and clear use of transaction data to corroborate LIBOR submissions; and a number of technical changes, designed to reduce the ability and incentives to manipulate LIBOR.
I will now explain the amendments in more detail. Martin Wheatley made an express recommendation to the Government that the submission to, and administering of, LIBOR become regulated activities. Amendments 70 to 73 enable benchmark-related activities to be specified as regulated activities under FiSMA. Amendment 70 inserts,
“the setting of a specified benchmark”
as a class of activity which is able to become a regulated activity under FiSMA. Amendment 71 defines “benchmark” as an “index, rate or price”, which is defined from time to time by reference to the state of the market, and is used for the purposes of determining sums due under contracts, determining the value of investments, or measuring the performance of investments. A benchmark will be capable of being regulated only if it meets this definition, but the definition has been drafted in such a way as to be able to capture many possible benchmarks, potentially including inter bank interest rate benchmarks such as LIBOR, equity or bond price indices, commodity benchmarks, and so on. Amendment 73 sets out the scope of activities related to the setting of benchmarks that may become regulated activities. The activities covered include, among other things, the determination of a benchmark, the provision of information to a benchmark and the administration of a benchmark.
The precise activities and the range of benchmarks which will be brought within regulation will be specified in secondary legislation. Regulation of these activities will enhance and strengthen the FCA’s ability to make rules on benchmark-setting as well as the regulator’s ability to supervise directly and take regulatory action against persons involved in benchmark-setting processes.
The Wheatley review recommended that banks, including those not currently contributing to LIBOR, should be encouraged to participate as widely as possible in the LIBOR compilation process. Participation in LIBOR is currently voluntary; at present a total of 23 banks are members of different LIBOR currency panels. It is important that banks continue to play an active role in the process of submitting to LIBOR. In the absence of banks’ submissions, LIBOR would lack sufficient evidence to be an accurate reflection of bank borrowing costs and could eventually cease to be an authoritative benchmark. In an extreme scenario, the rate may not be able to be published. The failure or absence of LIBOR—given the vast number and variety of contracts that reference the benchmark—would lead to severely disruptive implications for banks, other institutions and international financial markets. While the benefits of LIBOR are enjoyed by all banks, only a small number of banks contribute to LIBOR. Some large banks do not currently submit to LIBOR.
While it may not be necessary for the FCA to use this power immediately—if at all—should the number of LIBOR-contributing banks fall, then the use of this power could be considered. To that end, the power outlined in Amendment 80 allows the FCA to impose requirements on authorised persons to participate in a benchmark, including by reference to any code or other document published by the person responsible for the setting of the benchmark, such as the benchmark administrator. This ensures that the precise detail of what information is required to be provided—in what format, to whom and at what time—can be determined by the administrator through their code, and not directly by the FCA.
At this point I would like to thank the noble Baroness, Lady Hayter of Kentish Town, for her eagle-eyed attention to the detail on this, and particularly to the version of the amendments we published in draft in October, which referred to a “code of practice”. As the noble Baroness suggested, this was not quite right in this context. The codes we are talking about here are not going to be confined to procedural or practical matters, so I agree with her that “code of practice” is not an appropriate description. It is a point with which I agreed, and I sought to amend the draft amendments before tabling them to refer simply to a “code”. The reference to a “code of practice” in subsection (2) of proposed new Section 137DA of the Financial Services and Markets Act was amended, but the reference to a “code of practice” in subsection (3) was overlooked, for which I apologise, but not by the noble Baroness, who has correctly spotted a drafting inconsistency. I am grateful for her pointing that out and can confirm if she presses Amendment 80B in due course, I fully intend to accept it. There may not be many other concessions today, but I thought I would get it in early. There is always one, so far.
The Wheatley review recommended the creation of a new criminal offence to provide an appropriate sanction for those who attempt to manipulate benchmarks, such as LIBOR. While such attempts to manipulate LIBOR could constitute a criminal offence under legislation other than FiSMA, the FSA, and subsequently the FCA, are not in a position to investigate and effectively prosecute such conduct. The Government agree with the conclusion of the Wheatley review that there is a strong case that the body responsible for supervising the conduct of firms in the financial services sector—that is, the FCA—should be able to investigate and prosecute misconduct in this area. Furthermore, the Wheatley review also recommended that the Government review the workability of the existing offences under Section 397 of FiSMA.
To this end, the proposed amendments repeal the existing Section 397 and create provisions for three separate criminal offences. In particular, Amendment 114 repeals Section 397, and Amendments 108 to 110 create the new criminal offences. Amendment 108 recreates the existing offence of making a false or misleading statement in Section 397(2), with modernised language because that offence originally dates back to 1939.
Amendment 109 widens the existing offence in Section 397(3) of misleading practices to include creating a false or misleading impression as to the market in, or price or value of, an investment for the purposes of making a profit or avoiding a loss. Amendment 110 creates a new criminal offence related to misleading statements and practices in respect of specified benchmarks, such as LIBOR. Amendment 111 deals with penalties for the new offences and replicates the penalties for existing offences under Section 397; that is, a person found guilty of these offences may face a prison sentence of up to seven years and an unlimited fine.
The other amendments in this group are related consequential amendments dealing with matters such as interpretation, procedure for the relevant secondary legislation that specifies to which investments and benchmarks the offences apply and references to Section 397 which, as I have explained, is being repealed.
The detail of the activities which are to be regulated under FiSMA and the investments, activities and benchmarks to which the new criminal offences apply need to be set out in secondary legislation. This secondary legislation will be subject to the draft affirmative procedure, so the prior approval of this House and another place will be required.
The Government’s current thinking is that LIBOR should be the only benchmark specified for the purposes of regulation and the new benchmark offence. The Treasury will begin a public consultation on these proposals shortly and, having considered the consultation responses, will seek to lay the orders in draft before Parliament as soon as the parliamentary timetable allows next year. This legislation has been designed so that additional activities and benchmarks can be specified as regulated as well as to allow the addition of further benchmarks for which the proposed criminal offence apply, should this be deemed necessary.
Indeed, the Wheatley review discussed the impact of the review’s conclusions on other financial benchmarks and recommended that international regulatory bodies, such as IOSCO and the FSB, develop international principles or guidance for the provision and use of benchmarks. Should these international initiatives conclude that regulation is required to other benchmarks, that is possible through amendments to secondary legislation.
I conclude by restating that it is imperative that LIBOR is both swiftly and comprehensively reformed, not only to restore and maintain credibility in the rate for the $300 trillion worth of contracts that reference it, but also to demonstrate that, in this country, such behaviour by individuals in the banking sector will not be tolerated. This Government believe that these amendments, alongside market-led reform of LIBOR, will restore global confidence in the rate. I beg to move.
Lord Eatwell
My Lords, we on this side of the House broadly support the conclusions of the Wheatley report and commend Mr Wheatley and his team for the prompt delivery of such a comprehensive document. I say “broadly” because there are a number of details that we believe are not quite right and which require careful consideration in these—let us call them—quasi-Committee proceedings.
The grouping of all the amendments relating to LIBOR into a single group is exceedingly unwieldy and not conducive to constructive scrutiny. After all, as the noble Lord himself pointed out, there are three distinct elements within this group: first, the amendments designed to bring the setting of benchmarks within the compass of regulated activities under FiSMA; secondly, the rules requiring participation in the process of establishing the benchmark; and, thirdly, the establishment of criminal penalties for abuses of the process of setting a benchmark. Each of these three elements merits separate discussion. Rolling them all into one group just because they carry the label “LIBOR” is, to put the matter politely, extremely unhelpful.
For the purposes of this debate, at least, let us degroup the cumbersome group 1 into group 1A, definition of a benchmark; group 1B, establishing the benchmark; and group 1C, criminal offences. Group 1A encompasses Amendments 70 and 71. Amendment 72 is simply consequential. Amendment 70, which incorporates benchmarks into the order-making process, requires some clarification in that, as far as I can read through the existing FiSMA, an affirmative resolution of both Houses will be required for that order to be made. I think I heard the noble Lord say that in his speech, but he said so many other things as well that I hope he can confirm that incorporating any new benchmark into this process will require an affirmative resolution of both Houses.
Moving on to Amendment 71, which is the definition of a benchmark chosen by the Treasury, I disagree with what the noble Lord said. He asserted that this proposed new subsection would also cover commodity benchmarks and he was probably thinking of the recent scandals in the gas market and the accusations levelled at Barclays by the US authorities over the manipulation of the electricity market in California. These particular benchmarks were not specifically involved with investment, but would really come under the heading of trading. Amendment 71 refers to “relating to investments”. All the qualifications are in proposed new subsection (6)(c). Proposed new subsection (6)(c)(i) refers to,
“the interest payable, or other sums due, under loan agreements or under other contracts relating to investments”.
Proposed new subsection (6)(c)(ii) refers to,
“the price at which investments may be bought or sold”.
Proposed new subsection (6)(c)(iii) measures “the performance of investments”.
The scandal in the gas market was to do with trading, not investment. Similarly, I believe the problems in the Californian electricity market are to do with trading, not investment. Unless the noble Lord is extending the meaning of the word “investment” to include all trading activities, which, I suggest, is an abuse of language, then the commodity benchmarks are not included, as he asserted, in Amendment 71. Moreover, if this were true and what the noble Lord says is correct, why did the Financial Secretary to the Treasury make the following statement? He declared:
“The recommendation to consider the use of benchmarks in other financial and commodities markets will be taken forward through the relevant international bodies”.—[Official Report, Commons, 17/10//12; col. 25WS.]
If commodities markets were already included, why did the Financial Secretary say that there was to be a process to take them forward through international bodies? Given the rather lackadaisical attitude displayed by the Financial Secretary, which was quite out of tune with the repeated arguments for the necessity of speed that peppered the noble Lord’s remarks, why are the Government, with respect to these other benchmarks, taking the long, slow route through the international institutions when the revelations about commodity benchmark manipulation have been made over the past few weeks? After all, commodity market trading manipulation has just the same scale of impact, if not a greater impact, on ordinary households, as does the manipulation of LIBOR. Perhaps I may suggest to the noble Lord that if we look for clarity instead of the abuse of language, it would be worthwhile for the Government at Third Reading to extend the scope of the new subsection put forward in Amendment 71 to include trading as well as investment.
Group 1B, as I call it, comprises Amendment 70 moved by the Government and Amendments 80A to 80C, 80CA and 80D tabled by my noble friend Lady Hayter and me. Amendment 80 is the key to the Government’s approach to setting out the rules requiring participation in the benchmark. That participation involves two distinct types of legal person: first, those providing information for the setting of the benchmark and, secondly, the legal person charged with setting the benchmark. A peculiarity of this legislation is that it has an enormous amount to say about the former and virtually nothing to say about the latter.
Proposed new Section 137DA, as inserted by government Amendment 80, refers to,
“the setting by a specified person of a specified benchmark”.
But as regards who this specified person might be or even what might be the process by which they are specified, who has the responsibility for specifying them and with what characteristics they are endowed, on all these matters the Bill and the government amendments are entirely silent. Mystified, our team asked the Bill team for the answers to those questions. Following a long and what we interpreted to be a somewhat embarrassed silence, the answer was that all this was to be left to later. That is not good enough.
Mr Wheatley’s report suggests that the responsibility for LIBOR be taken from the BBA, which anyway does not want it any more, and given to another body determined by tender. Here we part company with Mr Wheatley. It is not clear that a private organisation that has the experience and the expertise to set a benchmark will not also have serious conflicts of interest. It is especially not clear because the Government have so far failed to publish the criteria which they believe any successful tender should fulfil. All we know is that a committee has been established under the noble Baroness, Lady Hogg, to define the criteria and to establish the tender process. Before examining the tender process, will the Minister tell us why the Government did not consider establishing an independent body to set LIBOR? After all, one of the most important benchmarks in this country was for many years set by such a body, the Retail Prices Index Advisory Committee. Why was that model not followed in this case? Why is there this putting out to tender?
Turning to the route chosen by the Treasury, why, given the continually professed urgency of LIBOR legislation, does the committee to be chaired by the noble Baroness, Lady Hogg, still have no membership other than the noble Baroness herself? What brief is the noble Baroness working to, what criteria is she expected to work to in establishing a tender process and what characteristics is she expected to seek in the specified person? Why is the Bill totally silent on these matters?
The fact that these serious matters are, to quote the email we received, being left for later not only suggests complacency on the part of the Government—they are putting on a show of doing something rather about the LIBOR scandal than actually doing something—but it also places a number of serious question marks over the legislation as drafted.
The amendments in my name and that of my noble friend Lady Hayter in group 1B address some of these deficiencies, though I confess that more time and more careful scrutiny would probably not only allow us to prepare more focused amendments but would also reveal other deficiencies in the current drafting.
Amendment 80A refers to the,
“code or other document published by the person responsible for the setting of the benchmark”.
The responsibility for setting the code, like so much in the LIBOR amendments, is rather amorphous. We suggest that the Financial Reporting Council might be included as a possible institution for setting and regulating the code. The reason is obvious to anyone who has worked with the FRC or studied its activities. The FRC is the only body in the UK that has general oversight over such codes of conduct in the financial services industry. For example, the FRC oversees the codes produced by the professional bodies—the Institute of Actuaries, the Institute of Chartered Accountants and so on—ensuring that their codes are appropriate to the needs of the organisation. It oversees supervision in enforcement.
Of probably even greater importance, though, the FRC includes independent persons in its council. This means that it is not just the actuaries who agree their code or the accountants who agree their code. So we have introduced the FRC into the Bill at this point—remarkably, the only point in the entire Bill at which it might be mentioned—in order to stimulate the Minister to say that, in setting a code to control behaviour of those participating in the setting of the benchmark, the responsibility will not be given to insiders—to the bankers—to establish their own code. There must be the same sort of external oversight as that practised by the FRC to ensure that the code is objective, effective and enforced. How will the Treasury ensure that that is the case?
Amendment 80B, which the Minister has already referred to, tabled by my noble friend Lady Hayter, would clear up a drafting error in the Government’s amendment, establishing consistency in references to the code. I asked my noble friend what would happen if she decided not to move it, and I think the answer is that the Government would be embarrassed—but there we go.
Amendment 80C addresses a serious deficiency in what we believe is the Government’s proposal with respect to the specified person responsible for setting the benchmark. We understand that the committee—as yet not established under the chairmanship of the noble Baroness, Lady Hogg—will devise procedures and rules for a tender process to select the specified person.
First, what if that person does not perform satisfactorily? What if there is another scandal with LIBOR or some other specified benchmark? Who then steps in to clean up the mess? At the moment it has been the Treasury and the FSA/FCA, but this is in circumstances in which the BBA wishes to give up its role. What if the specified person is underperforming but does not wish to give up the role? Moreover, it is not clear at the moment whether the award of a tender is to be time-limited or whether it might be subject to some sort of review. We need to be clear. Who is responsible on an ongoing basis for awarding and revoking the tender?
Secondly, what happens if there is an interregnum? There might be a delay in awarding the contract, or it may be that the specified person runs into difficulties—goes bankrupt, for example, or simply wishes to resign. Who picks up the reins then?
The purpose of Amendment 80C is to ensure that the credibility of the benchmark is sustained by its continuity. The FCA, in our amendment, has that fallback responsibility. The amendment is suitably general so that the FCA may decide to deal with the difficulties in the way “it deems necessary”, but at least the amendment ensures that someone is ultimately responsible, not simply for regulating the setting of the benchmark but for ensuring that one is actually in place.
Baroness Kramer
My Lords, this is an important piece of legislation, and I very much welcome it. I think that this House, along with the rest of the country, was shocked at the manipulation of LIBOR. It may have had the silver lining of at last persuading the banks that they had to take reform seriously, but certainly it was a stain on the reputation of the City and it put further in danger the economic recovery and the financial services industry in this country; so it was significant.
I think that in this House generally, and certainly among my colleagues, we very much welcome the Wheatley review. I was able to be at the launch of that document in the City. There were many present who were from outside the UK, and the consensus in the room was, “He has basically cracked it”; that Wheatley had found the mechanism and a series of reforms that could give us a LIBOR measurement that was clean, that would be respected and that could contribute to the purpose that LIBOR has served in rate-setting for many documents, instruments, investments and loans across the globe. I think that the attempts to put the necessary legislative pieces in place are well reflected in the document that we have in front of us today.
I have just a few questions for the Minister. Like others, I am somewhat concerned about the breadth of the general statement on benchmarks. LIBOR is not mentioned specifically anywhere in these amendments, so in breadth and scope it has about it a certain air of ambiguity. We suffer, of course, because this comes late in the process of legislation and therefore is not accompanied by the notes that would have been available and would have provided much further discussion had this been part of the original document. There are many issues. As the noble Lord, Lord Eatwell, said, some people will look at the manipulation of the gas market and wonder whether that can be encompassed by this legislation; others will wonder whether the FTSE 100, which is an index used in a number of investments, could be encompassed. One could go through a fairly long list. Would the Minister be willing to put in the Library, through a letter or a note, some record that gives us a grasp of the scope of the use of benchmarks in the context of this document? That would be extremely helpful for everybody, and there would be something in the official record that we could turn to.
Unintended consequences are a feature of legislation, and in this area I think that we have had too many unintended consequences of various people’s actions. So it is important that it does not happen in the context of this piece of legislation.
I am very glad that we have language in here that gives the FCA the power to deal with, in effect, the freeloaders—those who benefit from the setting of the LIBOR rate but who, because they wish to keep their own particular credit standing secret, do not participate in the rate-setting process. I wonder whether there is any further guidance or if the Minister can help us understand what he would see as the scope for the FCA to identify those potential freeloaders. Are we continuing to look only at major institutions? Perhaps there might be some reassurance to minor institutions that would be a little nervous of being caught within this net.
Another issue that has been raised is how we cope with European legislation or directives coming down the track. We are all aware that Monsieur Barnier is looking at these matters, but I did not quite understand—and perhaps the Minister could clarify—whether or not secondary legislation will be delayed until there is some clarity on the issues that Barnier is raising, or whether we will proceed with secondary legislation with the idea that it can then be amended if there turns out to be a significant gulf between the secondary legislation that we put forward and the rules emerging from the European Union. In this context, LIBOR is a significant international benchmark which needs international respect. It should not become a football or subject of a battle between the UK and the EU that is driven by other issues. It is important that it serves the broad purposes of the financial services industry, and I therefore see no shame in encompassing the concerns and thoughts of those outside the UK in shaping LIBOR as we go forward.
All of us in this House will be absolutely delighted that there is finally an offence for which people can be investigated, prosecuted and serve time, as well as be fined. There was shock throughout the House that the manipulation of LIBOR was not subject to prosecution under existing statutes on fraud and the consequent penalties. I congratulate the Government on making sure that that part of the Wheatley review has been well incorporated into this process.
I wish to make a couple of comments to the noble Lord, Lord Eatwell. I, too, am interested in the tender process that will lead to an administrator for the LIBOR-setting process, but he asked why it should not be a public body. I remind him that Barclays noticeably prayed in aid its conversations with the Bank of England in the attempt to justify the LIBOR manipulation. It is important that whichever body is involved in rate setting should be very clearly at a distance from the regulator and from any political body in order that we avoid a repetition of that attempted contamination. I have therefore been supportive of the idea that this will be a tender to a private entity. The noble Lord is quite right to say that we have to understand whether or not there are conflicts of interest because there is the thought that the most likely parties to tender for such a process might also be very involved in producing financial instruments on the other side, but not necessarily so. I also understand the need for flexibility in this issue. The complexity of making sure that the use of LIBOR in many existing documents is not disrupted by the changes we make is absolutely crucial. That is surely a level of granularity that cannot possibly be dealt with in primary legislation and has to be left to the flexibility of both the rule-maker and secondary legislation.
I very much welcome the legislation in front of us. Let us hope that this is the beginning of the end of a very unfortunate experience in the history of financial services in the UK.
Lord Barnett
My Lords, this debate began with the clear statement that we should abide by Committee-stage rules. I am sure that noble Lords will be as surprised as I am at the definition of Committee-stage rules in this debate. I thought we were debating a Second Reading, but forgive me if I misunderstood. I, like my noble friend Lord Eatwell, very much agree with the Government on wanting to introduce Wheatley. That review was excellent and well deserved our support. What I am worried about is the way that the Government have decided to implement it.
Lord Barnett
That is apart from my noble friend Lady Hayter. I am not a lawyer, but even if I were what would worry me about the whole thing is that, at the end of the day, I still could not be sure that this new Bill, created by way of amendments, has got it right. We will know whether it is right only when the lawyers finish dealing with the law in the courts. For the moment, I have grave doubts about whether this way of doing things is right. I apologise to the House for this Committee stage speech, but this is a very unsatisfactory situation.
Lord Peston
My Lords, my contribution is also entirely interrogative. I have a lot of questions. I shall put the matter in context. Before we started today's proceedings, I thought that this was all very straightforward and simple but I now realise that I did not understand any of it at all. I am not certain that I am alone in not understanding it. I shall go through my questions and give some examples to elucidate them. First, I may have missed the noble Lord, Lord Sassoon, making the relevant statement, but can noble Lords assume that everything in these amendments has been agreed by Mr Wheatley and that he also agrees that they do every single thing that he wanted done? That was not said, but I assume that perhaps we are to take that for granted. My second question, which was not in my original notes, but I listened to what was said, is: do these amendments go well beyond what is in the Wheatley report? I would like an answer to that. My third question is: why are we talking about benchmarks? That was the first thing I scribbled when I saw the amendment. Why are we using this expression? It is so broad that it seems to me to cover all sorts of things that have nothing to do with LIBOR. My main puzzle is that I thought that this was all about LIBOR, exactly LIBOR, no more than LIBOR and no less than LIBOR, but it seems to me that it is about 101 other things.
In order to elucidate that, perhaps I may give some examples. I am sticking to the investment paragraphs, whereas my noble friend Lord Eatwell rightly says that benchmarks are used for all sorts of contracts, not just investment contracts. Let us stick with investment contracts. Suppose a firm issues a long-term bond which is specified in the following way: “This firm agrees to pay the holders of this bond 5% interest over its life”, say 25 years, “plus the rate of rise of the GDP deflator”. That seems to me to be a good way of issuing a bond and raising money. Does the GDP deflator, and do all those who set the GDP deflator, come into the scope of this Bill? I can see nothing that stops them coming into the scope of the Bill, but those people are the Office for National Statistics and if the Government manipulate the GDP deflator by subsidising certain key elements of it, the Government may face criminal charges. I have seen nothing in this Bill to stop that happening. I mention that because the GDP deflator happens to be my favourite price index as compared with the CPI and the RPI, but it would apply just as well to them.
Let us go further. In order to produce stability in its enterprise, suppose a firm says, “I will pay you 3% per annum over the lifetime of this contract, which we wish to last for five years, plus the rate of rise of the GDP deflator. Will you agree to that?”. That relates to a question that occurred in your Lordships' House yesterday. It is the kind of wage contract many of us would like to see used in order to stabilise the economy but I can see nothing that prevents such a contract coming under the scope of this Bill. To my noble friend Lord Eatwell, I say that it is not just a matter of commodities trading, but it seems to me there is nothing in the Bill that prevents almost anything that is index linked coming under its scope. Am I right that this goes well beyond LIBOR? I would take the view that it should not; that is not what we are here for.
Those are my contributions, they are all interrogative and I am perfectly happy to be told that I have misunderstood everything that is going on here. I do however agree with my noble friend Lord Barnett that I may misunderstand it, but the lawyers involved in this kind of activity will not and they are going to look for trouble. Has the Minister asked his officials to guarantee that no trouble can arise in that way within this part of the Bill?
Baroness Noakes
My Lords, I ask my noble friend a simple question, for which I apologise for not having given him notice. It is a question I had intended to raise in respect of an earlier amendment but for various reasons I was not here when that amendment was dealt with. It relates to the definition of financial crime. The FCA has, as one of its integrity objectives, the financial system not being used for a purpose connected with financial crime, and financial crime is defined in new Section 1H. An amendment moved by my noble friend earlier was to include terrorism financing in the definition of financial crime. It seems to me that the definition as it stands does not automatically include the new offences that are created in this rather large group of amendments, which we can shorthand as the LIBOR offences, because it would not otherwise have been within the remit of the FCA. I would be grateful if my noble friend would answer that point.
Lord Sassoon
My Lords, I was rather getting into the swing of this. I have never had so many questions in such a short time and I was waiting for more to come. Noble Lords know that I usually try to group my answers together in some coherent way, but the questions have come so thick and fast that I fear that in answering as many as I can the answers may not be grouped together quite as efficiently as I would like.
Let me start with the definitional issues around what we are trying to cover here. First, to the noble Lord, Lord Barnett, benchmark may be defined by Chambers Dictionary, on Google and in many other places, but it has never before been defined in FSMA and I think it is necessary to have a FSMA definition. I am sorry the noble Lord went to all these other sources and did not look at the very particular definition in the Bill, but that is where these amendments start. The noble Lord, Lord Eatwell, asked if the definition was wide enough and the noble Lord, Lord Peston, takes the view we should only be talking about LIBOR so the definition may be too wide.
Lord Peston
All I was saying was I thought that the Bill team, when we met them, told us that these amendments dealt with LIBOR, end of story. I am asking whether they deal with lots of other things. I am not saying it is wrong to do so, I am simply asking.
Lord Sassoon
I tried to make that clear in my opening remarks, but let me have another go. We have a serious LIBOR problem which needs dealing with. These clauses put in place a framework within which the Wheatley recommendations for dealing with the LIBOR problem can be dealt with. Many of the issues I have set out and will come back to will be dealt with in secondary legislation, which I can confirm will be by draft affirmative order. The consultation on the secondary legislation will start very shortly, as I said, with a view to that secondary legislation being laid as early in the new year as the parliamentary timetable permits. So, on LIBOR, we will have a framework and secondary legislation to bolt down much of the detail in the normal way.
There are a considerable number of other benchmarks out there. It is entirely possible that, because of the way in which the framework within these amendments has been constructed, other benchmarks, through affirmative orders and secondary legislation, could at some point in the future be included. My noble friend Lady Kramer asked for clarification in this area but I crave her indulgence for a couple of weeks or so until the consultation document comes out so that, rather than receiving a half-hearted letter from me, the consultation document will deal with the issue. The LIBOR problem needs to be addressed immediately. There are other benchmarks that people may, now or in the future, wish to be covered and the framework is sufficiently flexible and future-proof in this respect. If and when a case is made for other benchmarks to be treated in the same way as LIBOR, this framework will allow for that. However, it will have to come through the appropriate secondary legislation.
Lord Eatwell
My Lords, I was waiting to deal with the scope of Amendment 71. I entirely understand that the particular benchmarks to be included will be determined by subsequent order—and that is fine—but Amendment 71 confines the category of benchmarks to an index, rate or price that has something to do with investments. Can the Minister explain?
Lord Sassoon
The noble Lord, Lord Eatwell, asked the question very clearly earlier. If he would give me another minute or two I will get to his important point. He asked a lot of questions, as did other noble Lords, but it is the next point that I shall come to.
The noble Lord identified something that is consciously in the drafting: it sets a line between purely physical commodity markets where there are other provisions in place which cover price setting. In energy markets, if we are talking about a purely physical commodity price setting, Ofgem is the regulator and has the investigative and enforcement powers for the manipulation of physical markets under the so-called remit legislation. I appreciate that the line drawn raises the questions that the noble Lord has quite rightly asked. With pure commodities that are consciously dealt with in other legislation, Ofgem would be the principal regulator. However, gas, oil and other commodity benchmarks may well be referenced by derivatives or other financial instruments, in which case they are included in this definition. So, pure commodities are not included, but if they are referenced by derivatives or other financial instruments, that is covered in this definition of investment.
Lord Eatwell
That is very helpful. But I still think that the language is not clear. A derivative instrument may essentially be a traded instrument and there is no reason to define it as an investment. An investment is something on which one expects to receive a return either in terms of capital gain or a coupon. But you could easily conceive of a derivative instrument that is simply used as a hedge in a trading operation, which is not then an investment. This is a misuse of the word. I think that it is entirely appropriate that such instruments should be included under the broad definition that could be incorporated into subsequent law by order, but the Government should achieve clarity on this matter by specifying with greater precision exactly what they are doing.
I understand that precision can be a trap—you risk leaving so many things out when you are trying to be too precise. I understand that. But there is a bit of special pleading here, particularly because the Financial Secretary to the Treasury said that financial and other commodities markets were going to be referred to other international bodies and were not in the Government’s acceptance of the Wheatley report. So what did the Financial Secretary mean about referring this on to discussions with international organisations?
I want to press the Minister for clarity here. Take the manipulation of the gas market revealed last week. Would that benchmark be included in consideration under Amendment 71? Would it be accessible to an order made under Amendment 71 or not? Would the benchmark of the manipulation of the California electricity market also be susceptible to being included under an order expressed under Amendment 71?
Lord Sassoon
Again, to an extent the noble Lord, Lord Eatwell, pre-empts what I was going to say. First, let me deal with this question about the international situation, which I believe I addressed in my opening remarks. We have identified a clear problem with a critical benchmark, LIBOR. We intend to fix it. Work is going on in the international arena to look at questions of benchmarks more generally. As and when there is a conclusion, that will then be factored in as to whether within this framework there is more to be done to regulate other benchmarks. Of course, if through applicable international rules there were some change to the framework required, which we do not anticipate, we could also change the framework through primary legislation.
In the mean time, having identified LIBOR, we will have a consultation. That will be an opportunity to people to give their views about what other benchmarks, if any, should be regulated. I do not see any contradiction in my remarks with my right honourable friend the Financial Secretary’s remarks at all. We will see what the international community comes up with as IOSCO and the FSB look at these matters.
The noble Lord, Lord Eatwell, is of course right that the definition here is one of the more difficult ones. I will have a look again to see whether anything of the sort that he suggests might be missed out is not covered. Although clear understanding is that the word “investment” as taken sometimes in a common- sense way does not necessarily fit with some of the examples that he gave, I will take it away and have a look at it again to make sure that it does cover everything.
On the series of petroleum-related examples that the noble Lord gave, I am not going to say whether the manipulation of the Californian electricity market would fit within the regulations because that is beyond the scope of what we are talking about, but let me talk about the gas market. I do not want to pre-empt the specifics of the gas market review, but I am quite clear that, between the provisions that we are putting in place in this Bill, and those to which I have already drawn attention and the powers of Ofgem, we will be covered.
Also in this definitional area, one or two questions were asked about GDP and RPI. In particular, the noble Lord, Lord Peston, asked about references to the GDP deflator. Since the GDP deflator is not set by reference to the state of a market but is wholly different, I do not see that coming within the scope of what we are looking at here. GDP is clearly a matter for the ONS; it is not derived from the markets in the sense that we are talking about here.
Lord Peston
The answer is that it is. It is a price index, and all price indexes are derived from markets because markets set prices. There is no question that it is not an index. I think that this is a matter of language and we hope that the Minister will clarify it for us. Will he also point to where in any amendment that he has put down the acronym LIBOR appears?
Lord Sassoon
The definition of “benchmark”, as we have already been through, has a number of legs to it, the first of which is that it is set by reference to the state of the market. Even if for the moment we park that one, we then come to the investment-related test, for which the GDP deflator would not apply. I know that in the example which the noble Lord gave it was part of something else, but the mere fact that it is part of something else does not mean that the GDP deflator is covered by the definition here.
On why LIBOR is not mentioned anywhere, which it is not, it is precisely because we are putting in place a framework. The secondary legislation, which will be preceded by a consultation coming very shortly, will be around what the first regulated benchmark should be. The Government will propose that it should be LIBOR and at this stage only LIBOR, but we will ask whether anything else should be covered. That is why LIBOR is not mentioned in the Bill; it will come in the secondary legislation.
Lord Peston
Am I right, therefore, that anybody looking at the Bill would not know that it had anything to do with LIBOR? I am pretty sure that I must be. They will know now, because the Minister has told us, but why does he not then put it in his amendments? What we are discussing is a badly drafted Bill that could be improved if it merely contained the sentence, “The object of all of this is to deal with the LIBOR problem”, and he could then deal with it via secondary legislation. No one would have known about any of that until we had this debate in your Lordships’ House—which is why we are here, I suppose.
Lord Sassoon
My Lords, the problem that we are trying to deal with is that it has been revealed this summer that benchmarks are open to the sorts of abuse that need to be dealt with. We are putting in place a framework that enables abuse or potential abuse of benchmarks to be dealt with. There was never any intention to put in LIBOR. I expended about 1,900 words explaining why we were doing this and I probably mentioned LIBOR a dozen times. I hope that the noble Lord is now clearer. I see that he is; I am grateful. That probably deals with the main definitional and scope questions.
Baroness Noakes
I am sorry to interrupt my noble friend. I know he wants to get on to the rest of the interesting questions that he has been asked but I want to come back to this definition of investment. “Investment” is defined in Amendment 112 for the purposes of the offences but it does not appear to be defined for the purposes of defining “Benchmark” at the beginning of this group. I have spent some of the past 30 minutes or so using my iPad to see whether FiSMA already had an equivalent definition in it and I cannot find it. That does not mean it is not there but I cannot find it.
Lord Sassoon
As I said in response to the noble Lord, Lord Eatwell, I will look again. I believe that, as I have set it out, everything that is intended to be covered is covered. I am grateful to my noble friend for pointing out that,
“‘Investment’ includes any asset, right or interest”,
for this purpose. That points to the wide scope of the definition. I will take away these points and make sure that it all knits together in the way intended. If it does not, I will write and seek to put matters right at Third Reading.
Let me move on to some other questions that have been asked. I can assure the noble Lord, Lord Peston, that this group of amendments does what Mr Wheatley intended and that he and, on his behalf, his FSA team have rightly crawled all over it. I just want to be clear that it does not go beyond Wheatley except in the sense that we are future-proofing it for other possible benchmarks, which is entirely consistent with what Mr Wheatley wanted. While I am dealing with one or two of these questions, I can also confirm to my noble friend Lady Noakes that the definition of financial crime catches the new offences. The definition in proposed new Section 1H(3) provides that,
“‘Financial crime’ includes any offence”,
and the list of offences is not exhaustive, so the answer to my noble friend is yes.
I see the noble Baroness, Lady Hogg, in her place. It is good to see her here. There were various questions about the process for appointing the administrator. I can assure noble Lords that the noble Baroness, to whom I am very grateful for taking on this responsibility, will be taking this forward in a measured way, as your Lordships would expect. That process will take place over the next few months. My understanding is that considerable interest has already been shown in the opportunity to be the administrator. It would have been inappropriate to have an independent body setting LIBOR. As we know, it has been set by the BBA. That has presented all sorts of difficulties and conflicts of interest. Independence was weak. The BBA is handing over to the new administrator but, critically, the oversight of that new administrator will be the responsibility of the FCA. The behaviour of the new administrator will be regulated, not just the behaviour of the banks supplying the information.
Lord Eatwell
As we are in Committee, it might be helpful to take questions as we go along. It would be enormously helpful to the House to understand how the specified person who will be the administrator will act and what sort of person they might be. Given that there has been considerable interest in the position, perhaps the noble Lord could give us a flavour of the sort of organisations that might be interested—not by naming any names, which I am not suggesting at all. That would help us understand how the system might work.
The Minister said that an independent body is not appropriate. Why not? I referred to the previous advisory committee on the retail prices index, which was entirely independent. It included a number of users of the index, a number of professional statisticians and academics, and representatives of the CBI and the TUC. It was an independent committee which looked at the whole structure of the index. That was a crucial benchmark in British public life. After all, it affects uprating of benefits and all sorts of things, although it is now being superseded by CPI. There was an independent body which did the job and was highly respected. Why, in the Minister’s words, would such a body be inappropriate?
Lord Sassoon
My Lords, we risk comparing two totally different sorts of animal here. The measurement of prices, which of course now comes under the Office for National Statistics and is clearly wholly independent of government or anybody else, is an index that is currently under significant review. It relates wholly to UK activity, whereas, as we have seen, the LIBOR index does not. The LIBOR index relates to daily movements in markets, whereas RPI is a different sort of exercise that measures the monthly movement in prices. In comparing a market index such as LIBOR, however important, with the key measurement of retail prices which, under the framework that all countries buy into, should be independently set by a national statistics agency, we are talking about two different animals.
The draft criteria for the administrator of LIBOR were outlined in the Wheatley review. When the committee moves to the next stage of tendering for the role of administrator, it will be for it to set out the detailed criteria. If the noble Lord wants to see the outline criteria, they are set out in the Wheatley review. He can draw his own conclusions as to whether it would be accountants or others who might be interested in doing it. I am not privy to the specific names, nor do I need to be aware of who the people are. However, I have made inquiries, because it is relevant to one of the amendments that I will come to that there has been considerable interest, even at this early stage, before the full rules of the competition have been set out. There will be details of all that to follow.
Lord Barnett
I am sorry to interrupt, but I am trying very hard to understand where we are getting to. I understand that we will finish up with regulations on top of all this, which will finally decide the matter. However, I am still unclear about it. We had the note earlier from the Minister’s officials, which set it out very clearly. We are talking about not trivial sums here but global sums of $300 trillion. These are mind-boggling figures. It is not $300 million or $300 billion but $300 trillion. What we are deciding in considering this Bill clearly has major global interest. Have there been serious discussions on a global scale?
Earlier, my noble friend asked the Minister—wrongly, I think—whether his legal officials had given him a guarantee that they had got the wording right. Nobody is going to give him a guarantee; I assure my noble friend of that. It is a question which cannot be answered, because they will not give it; how can they? How can anyone? The noble Lord, Lord Sassoon, cannot give us a guarantee that the Bill has got it right now. My noble friend Lady Hayter found one lot that was wrong. It would not surprise me if she found something else wrong, if she were to look further, because it is a very complex matter. We will now have complex secondary legislation on top of all this shambles. I very much hope that this will be successful, but I am sorry to say that the way it has all worked out, I certainly could not guarantee it.
Lord Sassoon
My Lords, there has been consultation on these clauses already. These clauses, which were published last month, have not been put forward in some huge rush; they have been put forward with due speed to reflect the seriousness of the situation that the LIBOR scandal revealed. Yes, there are hundreds of billions of dollars-worth of contracts relying on LIBOR, but many other very important equity market and other indices, in the UK and around the world, have functioned successfully for many decades. I have no doubt that as well as accounting firms and others, people who provide indices in other contexts—those who provide market data and who support market infrastructure—would be the sorts of entities that would be well suited to be the administrator of this important benchmark. There are many other critical functions of price discovery out there which are wholly run by private sector entities, albeit regulated under FiSMA in the UK, so we should not make a great drama out of this. The FCA will be regulating this activity, including the performance of the specified person.
The noble Lord, Lord Eatwell, asked perfectly reasonably about what happens if somebody is not performing and does not want to give it up. Because the administration is proposed, subject to the secondary legislation passing, the administration of LIBOR will come within regulation. If the administrator is not performing, therefore, the regulator—namely, the FCA—can take regulatory action in appropriate cases, which could include removing permission to act, if appropriate.
Lord Eatwell
That is very helpful and I am grateful to the Minister. What would happen then when the administrator is not performing adequately and the FCA decides that it will take it away? Let me give another example so that I do not have to ask two questions; we can roll these in together. The second example is that the administrator goes bankrupt and is therefore unable to continue the activity. What happens then?
Lord Sassoon
If I ever get to the amendments in the name of the noble Lord, Lord Eatwell, we will get to that point because it is raised by one of them. It is completely clear that the FCA will have the power to act as the administrator of the benchmark in question, if necessary. That is in the FCA’s general powers. It does not need to be written into these amendments, but I will address that when I talk about the noble Lord’s amendments. Within the FCA’s general powers it is absolutely clear that it has the vires to step in and act as the administrator, if that is necessary in a market context.
I should address the scope of the offences. The first question was whether LIBOR should be limited to the UK. What is proposed in these amendments reflects the current approach in Section 397 of FiSMA. It surely must be right that UK authorities can act only where misconduct has some connection with the UK. We have a very clear approach to extraterritoriality in our legislative framework. The amendments take a broad approach within the UK’s normal approach to these matters. There has to be a connection, which may be any of a statement made in or from the UK, a person at whom the statement was targeted being in the UK or a relevant agreement being entered into in the UK. Within the normal constraints about extraterritoriality, in which we would expect certain offences of the sort that the noble Lord postulates to be prosecuted by the US authorities, we have nevertheless drawn the connection with the UK widely as it is currently drawn in Section 397.
The noble Lord, Lord Barnett, is perhaps suggesting that he does not want the offences to be retrospective. I think that raises slightly wider questions, even in the case of LIBOR. We do not need to go into the human rights basics. I am glad if, on reflection, the noble Lord, Lord Barnett, accepts that.
Baroness Kramer
On a point of clarification about the offences, I fully understand that with LIBOR, which is a London-set rate—that is its whole point—it is a UK-originating offence. If, for example, one of the contributors providing a misleading statement was the subsidiary—or who knows what the structure is?—in the structure of a holding company incorporated in another country, I assume that what the Minister has described would enable the UK investigation and prosecution to follow that trail through to the originating parent, if that were the relevant party involved in the misleading statement or impression. Is there an argument that says that because this can be applied to many more benchmarks than just LIBOR, it would be appropriate to give the UK the opportunity, where investors in the UK were disadvantaged by a manipulation happening somewhere else—perhaps relating to oil prices, for example—to be able to follow and fine in the way that the US can follow and fine for offences that originate in the UK and are limited to US residents? I am getting extremely muddled about this entire process, but I think the Minister gets the sense of what I am trying to say.
Lord Sassoon
I would never accuse any noble Lord, least of all my noble friend, of ever getting muddled, other than accusing myself. The basic construct is that we do not as a general principle take the same approach to extraterritoriality as the US does. The US takes a unique approach to extraterritoriality and that has raised a number of extremely difficult cases in recent years where Members of Parliament in both Houses have raised questions about whether the UK should acquiesce to the US approach. I certainly do not think that we should be using this discussion as a way of opening up the question of whether the UK should take a different approach to extraterritoriality. The fact is that the US takes a different approach, and that is how it is.
What we are doing for this benchmark issue is to draw the offence and the connection to the UK in precisely the way in which it is done for the generality of offences under FiSMA, which by UK standards is a pretty broad definition. I shall not read them out again, but I read out the three different conditions that could apply and that is on the record. I suggest that the House would not want to put some special definition of territoriality and extraterritoriality into this offence as opposed to all the other criminal offences within the financial services arena. I hope my noble friend will accept that general principle. For the moment, I think she does.
Lord Eatwell
Before the Minister leaves the issue of offences, I asked a question about the exemptions around price stabilisation rules.
Lord Sassoon
I have some understanding, but I am a non-lawyer and it was a long time ago so it is only slight. Price stabilisation rules go back to pre-1991. They are very specific rules that allow things to be done in markets in very prescribed circumstances that would run against what might be perceived to be the free flow of markets. As the noble Lord knows, they were introduced in the context of ensuring a safe and stable aftermarket following a large share issue. I think they were first used in this country by the Government in the second sale of British Telecom shares, and they relate to that regime. If there is something else going on there, I will write to the noble Lord, but they are not intended to be some carve-out that could be used to get people off a charge of manipulating LIBOR.
Lord Barnett
I asked the Minister whether the criminal sanctions could be used retrospectively against those who may well be criminally responsible for the LIBOR scandal.
Lord Sassoon
Forgive me; I thought I did answer. It is an absolute principle that we do not put in place retrospective criminal offences because that would be, among other things, against human rights legislation. We will certainly not be doing that.
Lord Peston
I take it that the people who have already behaved in a criminal way can be prosecuted under the criminal law as it is. In other words, there is no need for retrospection because there is a criminal law sitting out there waiting. For all we know, it is already dealing with them.
Lord Sassoon
I am grateful to the noble Lord. As I have answered before in Questions on the LIBOR issue and as I said earlier, there are potentially other offences which may have been committed, and the prosecuting authorities and investigators are looking to see whether anybody could be charged under pre-existing law, so I am grateful for that clarification. The point is that it would be much more effective to have a targeted offence, which is what we are putting in place here.
Turning to Amendment 80A, under which the noble Lord, Lord Eatwell, would like the FCA to have the ability to refer to codes published by the Financial Reporting Council, as well as the body responsible for setting the benchmark, I believe that Amendment 80 already allows the FCA to make such a reference since it would be able to make,
“reference to any code or other document published by the person responsible for the setting of the benchmark or any other person”.
As Amendment 80 stands, the FCA is able to refer to a code issued by the FRC or any other body.
Having said that, while from time to time the Financial Reporting Council publishes codes and documents relating to standards of corporate governance and so on, it is unlikely that they will be directly relevant to the setting of specific benchmarks. Of course, as the noble Baroness, Lady Hogg, is here, if she would like to correct me I am very happy to be corrected, but I think that is very unlikely. The intention of the provision in the Bill is to allow the FCA to make reference to detailed codes, allowing the detailed instruction of how, when and to whom information should be provided to a benchmark. I certainly do not anticipate that the FRC would publish codes relating to benchmarks in that detailed way. I therefore do not believe that the amendment extends or affects the powers of the FCA to make the rules in any material way, and I cannot accept it.
I spoke earlier of my gratitude—and this has been repeated by other noble Lords—to the noble Baroness, Lady Hayter of Kentish Town, for spotting the small drafting mistake, and confirm my intention to accept her proposed Amendment 80B. I encourage her to move it.
I now turn to Amendment 80C and the recommendation that the BBA transfer responsibility for administrating LIBOR to a successor body. I have already dealt in some detail with aspects of this, but let me go through it again. The nomination for that successor body will be determined through an open and transparent tender process that will be run by an independently chaired committee comprised of respected individuals from the financial services industry and the UK authorities. As I have already said, I am delighted that the noble Baroness, Lady Hogg, has agreed to chair that committee. The committee’s work is in its preliminary stages, but further information will of course be published in due course. I acknowledge the noble Lord’s concern that there is a risk that a suitable rate administration will not be willing or able to administer LIBOR; I firmly believe, however, that this risk is of very low probability. As I said, a considerable number of expressions of interest have already been received.
In the unlikely event that there is no appointable administrator, or in the event that we have already discussed that the administrator is appointed and then fails, the FCA will already have power to step in to administer LIBOR, should that be necessary. A disorderly collapse or the unavailability of LIBOR would have severe implications for institutions and financial markets across the globe, as the Wheatley review sets out in detail. It is under the objectives of the FCA, particularly its consumer protection and integrity objectives, that would give it sufficient basis to step in and administer the rate. The FCA therefore would not need any specific legislative power to administer LIBOR, and it is worth reminding ourselves that LIBOR is currently administered by the BBA without a statutory underpinning. We know that this is unsatisfactory, but I am just making the point that the setting of LIBOR itself has never required any statutory powers. I am quite clear that the FCA’s powers, as outlined elsewhere in the Bill, are sufficient for it to undertake such a course of action, although we anticipate that being very unlikely.
I do not wish to put a specific time limit on how long the FCA could maintain the administration of LIBOR, but neither the Government nor the FCA would want the FCA to administer LIBOR in the long term. We want the regulator to concentrate on regulating the market, not to fill a gap in the market on a permanent basis. I do not consider Amendment 80C is needed.
Lord Eatwell
I thank the Minister; that is very clear and helpful. My only question arising from that is whether the noble Lord is confident that the FCA would have the appropriate range of skills, the intellectual property, to perform the task of administration. Is there going to be a shadow specified person within the FCA, ready to take over? As he pointed out, this may be very unlikely, but if it occurred it would be catastrophic. If there is a collapse or other form of demise of the specified person through inappropriate behaviour, inadequacy or some other reason, is he confident that the FCA would have the appropriate skills to do the job straight away?
Lord Sassoon
Yes, my Lords, I am confident that the FCA, on the risk approach that it takes to preparing itself for a huge range of potential eventualities, will prepare appropriately to step in. I have said, however, that those are a very low-probability set of circumstances.
The last thing that I was going to do, because I think that noble Lords are probably sick of hearing my voice for the moment—
Lord Sassoon
They will have another opportunity very shortly because I am afraid I will be introducing the next group as well, so I am encouraged by that reaction. I was going to go on to Amendment 80D, which is all about the Treasury Select Committee being involved, but I am not sure that the noble Lord said very much about that, so—
Lord Eatwell
I said quite a lot about it, so perhaps I could remind the noble Lord.
Lord Sassoon
It has suddenly come back to me; it was just a momentary lapse. The noble Lord spoke about the merits of the Treasury Select Committee being involved in the process of selecting the person responsible for setting the benchmark. There may be a slight misinterpretation of the process for selecting a successor to the BBA and administrating LIBOR, which was outlined in a government Statement on 17 October. As I have already mentioned, the successor to the BBA will be nominated by an independently chaired committee, convened by Martin Wheatley and the Treasury and at the commission of the British Bankers’ Association, which has publicly relinquished the nomination of a successor to the committee.
Those involved in the process can be called to account by the Treasury Committee. However, the transfer of responsibility for administering LIBOR from the BBA to a successor body is not a legislative matter. I do not think it would be appropriate for Parliament or the Treasury Committee to be directly involved in what is ultimately a process between private sector commercial bodies. For that rather technical reason—but nevertheless constitutionally rather important —I am unable to accept the noble Lord’s proposed amendment. I stress that those involved in the process can and may be called to account—I do not know—by the Treasury Committee.
Lord Eatwell
The noble Lord has completely misinterpreted what I said and apparently has not read Amendment 80D. One of the main points I made was that currently we have this particular conjuncture where the BBA has said that it does not want to continue doing the job. Quite rightly, the Treasury and the FCA have stepped in and set up an entirely appropriate procedure, as far as we can tell. I am sure that it will be appropriate, given that it will be under the chairmanship of the noble Baroness, Lady Hogg.
However, this is not the only potential benchmark covered by this legislation. There may be other specified persons to be appointed with respect to other benchmarks. To achieve the transparency to which the noble Lord said the Government aspire, the rules for determining the identification of a specified person—the objectives and the characteristics that the specified person might have—should be agreed in broad terms with the consent of the Treasury Select Committee. We then would have a procedure which everyone has looked at and has agreed upon. It can be used not as a reactive measure after a crisis but would be in place, ready to be used, at any time the Government deem it appropriate that, by order, a new benchmark is specified, and that there is a need to search for a new specified person to manage and to be responsible for setting that specified benchmark. I hope that the amendment is now clear.
Lord Sassoon
I may not have expressed myself clearly but I was entirely clear that that is the purpose of the amendment. I illustrate the situation by reference to LIBOR but the same considerations would apply in relation to any other benchmark where the process of the transfer would be very dependent on the private sector current administrator of the benchmark. It would be very specific to the nature of the market and the benchmark about which we were talking. I just do not see this as a class of activity that normally ever would be set down in some sort of framework of rules that would be agreed with the consent of the Treasury Select Committee. It is not territory into which that committee gets in terms of setting rules.
However, the noble Lord does not say that: Amendment 80D states:
“The rules determining the identification of the specified person responsible for setting a specified benchmark must be agreed with the consent of the Treasury Select Committee”.
It gets the Treasury Select Committee into vetting rules of a sort which I am not aware that the committee gets anywhere near, particularly because there will be secondary legislation, which case by case needs to deal with what benchmarks come in. The Treasury Select Committee at all stages can call people in to discuss the process. I entirely stand by my remarks on the amendment. This does not work with the nature of the transfers about which we are talking, with the flexibility we need to have, or with the way in which the Treasury Select Committee operates. However, what works very effectively is the committee calling people to account, which it may well do in this area.
The final amendment I wish to cover is Amendment 80CA, which requires that 12 months after Royal Assent,
“the Treasury shall report to Parliament on the progress of the extension of”,
the regulatory regime to cover benchmark activities. Given that the extension of the regulatory perimeter into a new type of activity may well have significant consequences, I agree that there is merit in making an assessment of the efficiency and operation of this new area of regulation.
I can confirm that it is the intention of the Financial Conduct Authority to conduct a thematic review into the system and control procedures of LIBOR-submitting firms and the LIBOR administrator in the first year of the implementation of the LIBOR supervisory regime. The FCA will be accountable to Parliament through the usual procedures, which we have debated at length.
I believe that the suggestion of a review is good but a review by the regulator itself is likely to be far more fruitful than a review by the Treasury. It is the regulator rather than the Treasury which will be best placed to modify and fine tune the regulatory regime to accommodate lessons learnt from the review. Of course, should the review suggest that there are difficulties with matters for which the Treasury is responsible, such as the scope of regulation, the Treasury stands ready to consider and, where appropriate, implement the recommendations made by the review. The underlying point is very good and the FCA will take it on board but I cannot accept the amendment.
I hope that, at some length, I have dealt with as many of the points raised as I could.
Lord Sassoon
“( ) after subsection (5) insert—“(6) “Benchmark” means an index, rate or price that—
(a) is determined from time to time by reference to the state of the market,(b) is made available to the public (whether free of charge or on payment), and(c) is used for reference for purposes that include one or more of the following—(i) determining the interest payable, or other sums due, under loan agreements or under other contracts relating to investments;(ii) determining the price at which investments may be bought or sold or the value of investments;(iii) measuring the performance of investments.””
“Part 2BRegulated activities relating to the setting of benchmarksGeneral24E The matters with respect to which provisions may be made under section 22(1A)(b) include, in particular, those described in general terms in this Part of this Schedule.
Providing information24F Providing any information or expression of opinion that—
(a) is required by another person in connection with the determination of a benchmark, and(b) is provided to that person for that purpose.Administration24G (1) Administering the arrangements for determining a benchmark.
(2) Collecting, analysing or processing information or expressions of opinion for the purpose of the determination of a benchmark.
Determining or publishing benchmark or publishing connected information24H (1) Determining a benchmark.
(2) Publishing a benchmark or information connected with a benchmark.””
Lord Sassoon
“Appointed representatives
(1) Section 39 of FSMA 2000 (appointed representatives) is amended as follows.
(2) After subsection (1B) insert—
“(1C) Subsection (1D) applies where an authorised person (“A”)—
(a) has permission under Part 4A, or permission resulting from any other provision of this Act, only in relation to one or more qualifying activities,(b) is a party to a contract with another authorised person (A’s “principal”) which—(i) permits or requires A to carry on business of a prescribed description (“the relevant business”), and(ii) complies with such requirements as may be prescribed, and(c) is someone for whose activities in carrying on the whole or part of the relevant business A’s principal has accepted responsibility in writing.(1D) Sections 20(1) and (1A) and 23(1A) do not apply in relation to the carrying on by A of a relevant additional activity.
(1E) In subsections (1C) and (1D)—
(a) “qualifying activity” means a regulated activity which is of a prescribed kind and relates—(i) to rights under a contract of the kind mentioned in paragraph 23 of Schedule 2, other than one under which the obligation of the borrower to repay is secured on land, or(ii) to rights under a contract of the kind mentioned in paragraph 23B of that Schedule;(b) “relevant additional activity” means a regulated activity which—(i) is not one to which A’s permission relates, and(ii) is comprised in the carrying on of the business for which A’s principal has accepted responsibility.”(3) For subsection (2) substitute—
“(2) In this Act “appointed representative” means—
(a) a person who is exempt as a result of subsection (1), or(b) a person carrying on a regulated activity in circumstances where, as a result of subsection (1D), sections 20(1) and (1A) and 23(1A) do not apply.””
Lord Sassoon
My Lords, noble Lords have to hear me again for just a little longer, although I will not speak at quite such length at least in my opening remarks. This important and substantial group of amendments concerns the regulation of consumer credit, which we considered in quite some detail in Committee.
The government amendments in this group share one overarching goal; namely, to ensure that the transfer of consumer credit regulation from the OFT to the FCA can happen smoothly, and in a manner which is proportionate and offers the right protections to consumers. The move of consumer credit regulation to the FCA, under FiSMA, is a significant step towards better quality regulation and even greater consumer protection for borrowers. That is because FiSMA provides the regulator with substantial and flexible powers to tackle issues quickly and effectively. The interim report by the OFT on its compliance in the pay-day lending sector makes very clear why a move to an FCA regime is the right thing to do.
In the vast majority of cases, it is right that the legislation treats credit-related activities just like any other regulated activities under FiSMA. That is, after all, the rationale for the transfer. But in the course of preparing for the transfer of consumer credit regulation from the OFT to the FCA, the Government have identified a small number of areas where simply applying FiSMA to credit-related activities may have unintended consequences. As my noble friend Lady Kramer has already said, we certainly do not want any unintended consequences, which is what this group of amendments seeks to address.
Amendments 73A and 94C relate to how the appointed representatives regime will operate where firms carry out a credit-related activity. An appointed representative is a firm, or a sole trader, which is not authorised but is allowed under Section 39 of FiSMA to carry on certain regulated activities as agent for an authorised firm or principal under a contract by which the principal accepts responsibility for the regulated activities carried on by its appointed representatives. For example, many insurers act as principals for those brokering insurance for them as appointed representatives.
Lord Flight
My Lords, I rise to ask the Minister some questions about the transfer of the regulation of the providers of credit to the FCA. I had understood that it was the Government’s current intention to repeal as much as possible of the CCA and replace the relevant clauses with a new rulebook written under FiSMA and that the Government have been proposing to finalise this new rulebook by March 2014 to be implemented the following month. The Minister will be aware that a lot of the industry feels that this will be physically impossible given the necessity of wholesale change to the credit industry’s computer systems and the need to retrain staff. It is also questionable whether the new rulebook will be ready by March 2014, as none of the main features of the new regime has yet been agreed—and some may not have been discussed.
The Minister will be aware that much of the industry accounting for some 65% of UK credit is urging the Government to take advantage of the flexibility in the Bill by keeping much of the existing CCA in place in April 2014. The FCA will be able to enforce the CCA using its new powers which exceed those of the Office of Fair Trading. This would allow time for the design of a generally proportionate new regime. If such an approach is not taken, tens of billions of pounds of existing credit currently available to ordinary consumers in the high street and elsewhere could be at serious risk.
Lord Stevenson of Balmacara
My Lords, I thank the Minister for his helpful introductory remarks, and the Bill team for letting us have information about this rather complex group of amendments early last week. I declare my interest as the Chair of StepChange, the debt charity.
My first point is that although I accept this is a relatively complex area, these amendments are rather late and, as a result, they have not been considered in the other place, and were not available for our discussions in Committee over the past few months. You have to wonder why that is—apart from the wholly frivolous idea that it was set up to coincide with the news today that the OFT has completed its progress report on payday lending and announced that it has opened a formal investigation into several such lenders over aggressive debt collection practices, as well as taking steps to write to all 240 payday lenders highlighting its emerging concerns over poor practices in the sector.
The OFT's progress report confirms what a lot of us knew already. Thanks to the sterling efforts of my noble friends Lord Kennedy, Lord Mitchell and Lady Sherlock, and indeed many others all around your Lordships’ House, we have been made well aware that there are concerns about the adequacy of checks made by lenders on whether loans will be affordable for borrowers; the proportion of loans that are not repaid on time; the frequency with which some lenders roll over or refinance loans; the lack of forbearance shown by some lenders when borrowers get into financial difficulty; and, in general, debt collection practices.
We welcome in particular the revised debt collection guidance, focusing on continuous payment authorities, which have been causing problems to our clients and also contributing to the workload of the Financial Ombudsman. I look forward to the full OFT report in the New Year, and in particular to learning whether wider action is needed to tackle problems in the sector. My personal view is that such wider action will definitely be required.
We do not dissent from the principle being expressed here: that it is necessary to make further provision related to the transfer of Consumer Credit regulation from the OFT to the FCA. However, in the short time available to us, we have been receiving representations on several issues; some of which I will pose as questions to the Minister; others may have to be raised later. In the event that he is not able to respond to them all today, perhaps the Minister might, when he winds up, agree with me that it may be necessary to return to this issue at Third Reading.
Turning to the amendments, the main concern being addressed is that without the amendments the transfer of responsibility from the OFT to the FCA should create a loophole for illegal money-lenders and debt collectors to evade the risk of criminal sanction by becoming authorised by the FCA for a low-risk activity and then crossing over to some other activities. As we have been arguing for some time, these concerns are exacerbated because the credit market deals with many financially and otherwise vulnerable consumers who may be subject to exploitation by unscrupulous operators, particularly when the individual enters into a spiral of debt and becomes reliant on the lender for further credit. So we welcome the Government’s decision to ensure that the transfer of regulation to the FCA does not lead to a reduction in consumer protection, and we accept that criminal offences should be retained in relation to illegal lending and debt collection so as to serve as deterrent to those who seek to exploit the FiSMA regime to avoid prosecution. In particular, we welcome the fact that the Government are bringing forward an amendment creating a new criminal offence of carrying out a credit-related activity without permission.
My questions are as follows. There are concerns that the appointed representative regime does not provide sufficient protection for consumers. I can see the point of a dentist allowing patients to pay in instalments through a credit agreement not having to be directly licensed, for example, and, under an AR regime, the firm providing the credit could assume regulatory responsibility for what the dentist does in respect of the credit. But what happens in a high-risk sector, such as second-hand car sales, when a risk-based approach might suggest that the sales people brokering the HP agreements et cetera should also be directly authorised? Could the Minister comment on that issue, and can he say—as I think he tried to explain about the new clause in Amendment 73A—whether it is the Government’s intention that a person can be an AR but can also be directly authorised? If so, how exactly is that dual system going to be introduced?
As we have heard, FiSMA makes it an offence to carry out a regulated activity without authorisation, but it is not an offence to do something without the right permission if you are authorised under the CCA. These amendments allow the Government to make it an offence to offer credit activities without the right permissions. However, the categories of credit activity that the amendment covers seem to include lending, administering credit agreements and debt collection— but debt management is not explicitly included. Can the Minister explain why debt management has been excluded? Surely, for all the same reasons that we were given in the introduction, it should be an offence to offer debt management services without proper authorisation.
Can I press the Minister for an explanation of why the claims management sector is not being included within this group of amendments? We heard at the meeting that the noble Lord, Lord Newby, kindly convened a couple of weeks ago why the original decision was to leave the regulation of CMCs within the MoJ, but on a temporary basis. We also heard, at the same meeting, a very good account of the discussions that accompanied a recent review of that decision but which opted for the status quo. Clearly, there will be some operational difficulties wherever the responsibility lies, but we on this side of the House are convinced that it would serve consumers much better if regulatory authority for this sector was transferred to the FCA. As I am sure my noble friends Lord Kennedy and Lady Sherlock would also confirm, having also attended that meeting, the arguments used to justify the amendments today could just as easily have been deployed to include CMCs. It is, after all, at heart a credit-related sector. I would be grateful if the Minister could respond to that point.
Developing a new regulatory regime for consumer credit, one that is firmly focused on consumers, raises a number of important questions for consideration by the new regulatory authority around the issue of how the FCA will need to adapt its operations, and indeed its whole approach, to be able to deal with the consumer credit market. Can the Minister share with us the likely consequences of that change in terms of structure, personnel and budget for that work? It will be a tragedy for consumers if the Government turn out to have willed the ends of the right policy but have at the same time failed to will the means.
Consumer credit is vital to the UK economy, but it is also one of the biggest causes of problems raised with the agencies operating in this field, including StepChange, the debt charity, and Citizens Advice. Over the last year, citizens advice bureaux in England and Wales have dealt with more than 2 million problems with debt, 41% of them consumer credit related. Debt problems overall represented 30% of all the matters that they dealt with. StepChange has helped more than 1.5 million clients with unmanageable debt in the past four years. There is great scope for consumer detriment where credit and debt are concerned, from a payday lender entering an individual’s bank account using CPA to a family losing their home because poor advice from a fee-charging debt management company meant that they paid non-priority debts instead of their mortgage. Problems with consumer credit can also have a significant impact on consumers’ family life and health, with increased stress causing both physical and mental health issues. In other words, these amendments presage important changes. They are sensibly focused on the regulatory aspects of consumer credit, but they have wide-ranging impacts and deserve to be considered with great care.
Lord Sassoon
My Lords, I thank the noble Lord for one or two focused questions on this. First, I repeat what I think I said before in answer to my noble friend Lord Flight and his concerns. I have nothing new to add in this area, but the question of the transition is an important one. I will say again what I have said before—that the Government will consult on their proposals for the transition in early 2013 and no final decisions have been taken. The Government are very much aware of the need to allow the FCA and firms time to manage a smooth transition. In that context, we are considering options for phasing the implementation of the new FCA rulebook as well as interim arrangements for existing licence holders. So I can only repeat that my noble friend’s concerns are perfectly fair and reasonable, and the Government are reflecting on them as we speak. Well, I am not—but wiser heads than mine are beavering away on this very topic this afternoon.
I come to the issues brought up by the noble Lord, Lord Stevenson of Balmacara. The reason why we are coming forward with these amendments now, having already dealt with the substantive matter of the transfer, is that, perfectly properly in the process of scrutinising legislation, the Opposition, Peers on the government Benches and all sorts of interested parties come up with points, reflected in many amendments, which are making this a better Bill as we carry on with our deliberations. These are issues that have been brought to the Government’s attention during the ongoing discussions with stakeholders, so I make no apology for bringing them forward now as an improvement to the legislation, giving better and more seamless protection to consumers but also treating firms in a proportionate way. I assure the noble Lord that the FCA will certainly have the means and resources at its disposal to carry out its new responsibilities in this area.
I do not wish to get too deeply into the general question of debt management and claims management companies, because we are talking about a narrow and specific but important area of the transition here. We could open up a debate that is not directly relevant to these amendments about debt and claims management companies. But I address the specific question about the new criminal offence applying to credit situations and not debt management, because it is right that the new criminal offence should be targeted proportionately at areas where there is the greatest risk of detriment caused by unscrupulous people selling dubious product. In that context, there is a great distinction between the provision of unsuitable credit and debt advice. In any cases where a firm engages in debt activity without the right permission, it would be a breach of FiSMA and the FCA will act.
On the appointed representative regime and the way it will work with the authorisation regime, I do not think that the noble Lord was challenging the basic premise behind the carve-out, but he is quite right that we need to get the way in which the two regimes mesh in together to work appropriately. To that end, as part of the 2013 consultation early next year, we will address that point and specifically ask who those firms should be. However, we will be putting forward a presumption that the firms to which this applies will be low-risk firms and all those whose primary business activity does not relate to consumer credit. The Government think that it is important that legislative provision is made now so that this option is available in the future, and that will help design a proportionate and appropriate regime. Nevertheless, I recognise that we should and will consult to make sure that we draw the line in the right place. Of course, if concerns emerge in future, the Treasury can change the class of people to whom the carve-out applies by order, and may in fact decide not to make it available to any firms at all if it thought it appropriate. I hope that that has addressed the main issues.
Lord Stevenson of Balmacara
My Lords, may I press the Minister on the point that I made earlier in my remarks about receiving a number of representations on this issue? Indeed, some of the points that he made reflected the fact that thinking is still going on. He mentioned that people were working on things as he spoke. In the circumstances, will he accept that it might be appropriate to have a further debate on this at Third Reading?
Lord Sassoon
My Lords, I was referring to people working on the transitional arrangements that come out of this. I have not been made aware of any further concerns or issues that would merit a debate at Third Reading; if I had, I would have brought forward amendments at this stage. So I am not aware of any concerns, but, as the noble Lord was kind enough to say, the Treasury team and I will be open to him and to anybody else if further issues come up. However, I do not anticipate them and I can think of nothing of a Third Reading magnitude—if I may put it that way—that is likely to detain your Lordships.
Lord Eatwell
“( ) The regulators must co-ordinate their procedures for, and provide clear and detailed guidance on, the processes for applying for, varying and cancelling permission that are applicable to authorised persons regulated by both PRA and the FCA.”
Lord Eatwell
My Lords, Amendment 73B reflects a concern that we have expressed at numerous stages in the discussion of the Bill about the process by which entry is possible within the financial services industry and the processes by which permissions are varied and are cancelled.
Our prime objective is to stimulate greater competition within the financial services industry. Entry is notoriously difficult, particularly in the banking sector, and it has been made more difficult since the financial crisis as the stable door has been banged firmly shut. The shutting of the stable door, of course, has not implied any extra sanction on those banks or other institutions which already exist but has made it much more complicated for new banks to be established or new firms to enter other major parts of the financial services industry.
From an examination of the provisions of the Bill on the issue of permissions, it seems clear that there will be firms that are regulated by both the PRA and the FCA and, indeed, that there will be firms that are regulated by one of these organisations but the process of granting permissions, variations and so on will require reference to the other organisation. Given the way in which permissions are dealt with at the moment, it seems likely that this will introduce further bureaucratic steps inhibiting entry. Those bureaucratic steps will be entirely unnecessary if the regulators have a statutory requirement to co-ordinate their procedures. If, on the other hand, as we suspect, the PRA and the FCA develop different procedures relative to their differing objectives, the possibility that processes will become excessively complex, slow and expensive increases significantly.
The objective of the amendment is simply to require the PRA and the FCA to,
“co-ordinate their procedures for, and provide clear and detailed guidance on, the processes for applying for, varying and cancelling permission”,
in order to facilitate competition and ease of entry into, particularly, the banking sector and into financial services in general. I beg to move.
Lord Newby
My Lords, as I said in Committee when we debated this issue, we are extremely sympathetic to what the noble Lord is seeking to achieve. However, as I also pointed out, the PRA and the FCA are already required by proposed new Section 3D in Clause 6 to co-ordinate their regulatory processes, including the authorisation process, so this element of the amendment would have no effect.
On the publication of detailed guidance, I point out that in order for the regulators to carry out authorisation, they will need to give instructions to firms about how to engage with the process. That is what the FSA does now, and what the PRA and the FCA will have to do in the future. Firms need to be authorised before they can enter the market and the Government agree that it is extremely important to encourage new entrants. The noble Lord talked about the shutting of the stable door in respect of new banks. The truth is that the stable door has been shut for many decades and there have been no new banks. We have to try to change the culture, in terms both of the regulators and of the regulated, that has been in place for many decades, and we are very keen to do it. That is why we had brought forward an amendment requiring the PRA to have regard to the need to minimise the adverse effect on competition that arises from its actions. One of the effects will be to ensure that the PRA works to remove unnecessary obstacles to new entrants; for example, by ensuring that the authorisation process runs as smoothly as possible.
The Government agree that it is important that the regulators explain how they will co-ordinate their regulatory activities. That is why there is a statutory duty to co-ordinate and to set out in an MoU how that co-ordination will operate in practice. The process for applying for permission is one of the things that proposed new Section 3E specifically envisages being in the MoU.
The Government entirely agree with the thinking behind the amendment but we do not believe that anything further is needed to implement what it seeks to achieve.
Lord Eatwell
That is rather complacent. If the noble Lord thinks that the FSA provides clear guidance at the moment, he has not tried to establish a bank. I can assure him that it does not. There is a reason for that. Given that most business plans are rather different and the guidance has to be specific, the FSA has expressed a reluctance to get involved in specific cases.
General guidance is of general use but is seldom useful in the establishment of a given institution. That is why the amendment calls for the provision of,
“clear and detailed guidance”.
That is not available elsewhere in the Bill. The Government are being seriously remiss by discouraging the competitive process as regards this aspect. I know that they want to increase competition but it is a mistake to do it in this way. It is not an intentional discouragement and so it would be enormously helpful if the amendment were to be accepted or some version of it were to be considered at Third Reading. I admit that it may well be belt and braces, but the amendment derives from experience of dealing with the FSA on these matters. It is in this area that the Government do not live up to the picture of assistance and guidance that the noble Lord has painted. However, at this stage, I beg leave to withdraw the amendment.
Lord Sassoon
Lord Flight
Lord Flight
My Lords, Amendments 75A to 75G and Amendment 77 relate to Clause 10 and Amendment 77B relates to Clause 13. The amendments to proposed new Section 55 seek to remove the need for the PRA to consult the FCA over authorising a bank or in relation to other regulatory actions, such as variation and cancellation of permission, and imposition of requirements. The effect of the amendment to Clause 13 is that the FCA would have no role in approving an application to act as a bank director.
I raised a similar area of principle at Second Reading. I remain of the view that the double doing of applications for banks and bank directors by the PRA and the FCA is unnecessary and adds to the costs and hassle for new banks trying to emerge and compete. The PRA process for bank applications is more than sufficient. The matters that the FCA deals with, such as good conduct in relation to citizens and consumers, are essentially ongoing rather than being about having a good banking plan and appropriate directors, appropriate capital and appropriate systems in order to be able to start a banking business. I have also recently encountered a situation whereby the new yet-to-be FCA organisation made inquiries of a senior director that related to PRA, not FCA, territory.
The amendments are also in part probing amendments because it is not clearly understood by the industry how the new arrangements are intended to operate. At one level, my understanding is that an application for a banking licence and bank directors will be dealt with by the PRA, which will merely refer to the FCA to see whether it wants to raise any issue. However, in other circumstances, there seem to be two different processes to go through. Therefore, if the Government are not willing to accept my point of principle, which is that it would be much better to leave the approval of banks and bank directors purely to the PRA, it would be helpful for the Minister to set out today exactly how the new dual system is intended to operate in practice. I beg to move.
Lord Sassoon
My Lords, Amendments 75A to 75G, tabled by my noble friend Lord Flight, would remove the requirement for the FCA to consent to authorisation decisions taken by the PRA relating to banks and other deposit-takers, including the decision to grant or remove permission. We discussed a similar group of amendments in Committee.
As I previously said, authorisation is a vital tool for the authorities to set and enforce standards for regulated firms efficiently. It is much more costly to address issues within firms following authorisation than it is to do so during the authorisation process. Such costs will fall on regulated firms and, eventually, consumers. Of course, it is far preferable for the FCA to be able to identify and address potential threats to consumer protection or integrity as part of the authorisation process and to prevent consumer detriment or improper behaviour before it happens.
The FCA will have a significant role in the authorisation process—for example, in assessing the range of products being proposed by the applicant, its systems and controls, its processes for treating customers fairly, including dealing with complaints, ensuring the business is not being used for a purpose connected with financial crime, and promoting effective competition in the interests of consumers. It is surely right that all these matters should be carried out up front. To take one clear example, it must be right that the FCA should carry out its anti-money laundering checks as part of the authorisation process. In addition, it is surely right that the FCA should be able to object to an application if it is not satisfied that a firm can comply with its threshold conditions.
Similar points apply in relation to Amendment 77B, which would establish that the FCA should have no role in approval of any person who is to be a director of a deposit-taker. This would mean, for example, that the FCA has no role in approving a director of customer services or a director with responsibility for regulatory compliance.
Let me cut to the chase, because my noble friend made it clear that he is probing around how the system will work. There will be one application, not two. This is the crucial point that people have not fully grasped. I believe that I have said this before in our debates but I say it again clearly. My noble friend is right to say that we want to minimise the inconvenience of the process. There will be a single administrative process for approval of firms and of persons to perform significant-influence functions. It would not be appropriate now for me to go through the detail of how the PRA and FCA will do it, but the key issue for this House and the Government in setting the framework is that there has to be one application. That is what sets the tone of the necessary and appropriate co-operation to make the process as seamless as possible.
On the basis of that further assurance, I ask my noble friend to withdraw the amendment.
Lord Flight
My Lords, it is highly important that it should be absolutely clear that there will be one application and, as I understand it, that means that an application to establish a bank will be dealt with by the PRA, which will then have its own arrangements to deal with the FCA for FCA matters. What really matters in establishing a bank is whether there is enough capital, whether the management and the directors are suitable and whether the business plan is sensible. The bits that the FCA is concerned with are much less relevant up-front and more relevant as the business develops, so the PRA really should be in the driving seat for approving banks.
I would also make the point that I made in a slightly different context the other day. A team from the BIS made an appointment to come and see me to ask whether, in my view, the process of applying for licences for new banks and approval of new directors was anti-competitive. I was pleased to find that the BIS was very focused on that aspect, even if the Treasury was not quite as focused. I am pleased to have the assurance of the Minister that effectively it will be one process with the PRA and the FCA liaising and, on that basis, I beg leave to withdraw my amendment.
Lord Sassoon
“( ) In seeking to ensure an appropriate degree of protection for consumers, the PRA and FCA shall—
(a) require banks to provide clear and prominent warnings to consumers where deposits are not covered by the Financial Services Compensation Scheme; and(b) make and maintain effective arrangements to consult consumers on the prominence and method of such warnings.”
Baroness Hayter of Kentish Town
My Lords, this amendment stands in the name of my noble friend Lord Eatwell and myself. It relates to passporting and, in particular, where a UK-authorised bank works in another EEA member state. Our concern, as we raised in Committee, is about adequate protection for consumers in those EEA states. This amendment would require the relevant authority, be it the FCA or the PRA, to require banks to make clear, prominent warnings to consumers where their deposits are not covered by the Financial Services Compensation Scheme. It is fairly obvious that it is vital that consumers know precisely and clearly whether their deposits would be covered by this compensation scheme and the extent of such coverage.
In Committee, the Minister assured us that it was sufficient for such a requirement to be in the regulator’s rule book. We have considered this further and we would beg to differ. It is such an important area of consumer protection and really important for the confidence in our banks that we must ensure that every depositor knows the security of their deposit. Furthermore, given that we saw a range of views in Committee on where and how such warnings to customers should appear, it is important that consumers themselves are consulted on this so that the most effective method of communication is used. I beg to move.
Lord Phillips of Sudbury
My Lords, I am generally sympathetic to Amendment 77AA, but what would the consequences be of a breach of its provisions?
Lord Davies of Stamford
My Lords, I was struck by my noble friend’s amendment. In reading it, I wondered whether this was already a provision which applied, quite outside the passporting context in which she moved it, to deposits in this country. I cannot see any reference to a rule of this kind elsewhere in the Bill. It may be that it is already part of statute law or part of the rule book of the FSA—and the FCA to come—but, looking back on my own experience, I do not normally have deposits which are greater than the threshold, which I believe is £85,000. On any such occasions when I have, I do not recall a bank telling me that part of my deposit was not subject to the national retail insurance scheme or to consumer protection. That seems to be a great weakness in the system and I would be grateful if the Minister could tell me what the rules are relating to the taking of deposits. Is this or is this not an obligation of a bank taking a deposit now which is in excess of that ceiling? I may be wrong in saying it is about £85,000, as it may have increased since I last heard a figure. If not, such an amendment should be made and this Bill presents us with an opportunity to do so.
I think we all agree that a balance needs to be struck here. No one is suggesting that the state should guarantee all banking deposits. That would be a massive moral hazard and would mean that depositors no longer had to interest themselves in the quality of the banks with whom they are investing. Equally, I think we all agree that it is unreasonable for small depositors to make a credit assessment of the banks with which they are depositing small amounts of money. It is not just a question of looking at the solvency ratios or capital adequacy ratios. You need to look beyond that if you want to assess the credit-worthiness of the bank. You look at the quality of the assets of the bank and the quality of its deposits. These are areas where it is not only difficult for an individual to come to a judgment but where we know that there has been fantastic regulatory failure throughout the world, particularly in this country.
The FSA’s behaviour in this matter was negligent to an extraordinary degree. It never seemed to interest itself in the declining quality of the assets of many British banks, which were buying more and more CDOs, for example. It never seemed to interest itself in the deteriorating quality on the liabilities side of the Northern Rock balance sheet and the fact that Northern Rock was becoming excessively dependent on wholesale deposits. If the regulators fail so badly, it is all the more important that the protection available for small or medium depositors is great.
It is very important that people should know because, as I have explained, even though I try to take an intelligent general interest in these matters I do not know exactly where the threshold currently lies. In my experience, I have certainly not had a notification from a bank that I may be placing deposits with it that are not in any way subject to such a guarantee. That is an enormously important aspect of the risk involved in such a transaction and, clearly, it ought to be brought to the attention of retail depositors. Is this currently part of statute law? Is it currently part of the rule book and, if not, is this amendment an opportunity to make it so or should we take another opportunity in this Bill to bring forward an amendment of that general kind?
Lord Newby
My Lords, I think everyone is agreed that the regulators should require banks to make their customers aware when their deposits are not covered by the Financial Services Compensation Scheme.
Lord Davies of Stamford
Did I hear the noble Lord say that it is a requirement from regulators that banks should notify their depositors when they are covered? If so, that is quite wrong. They should be notified when they are not covered. That is the important thing. It is no use notifying them when they are covered and saying nothing at all when they are not covered, for that is when the risks arise.
Lord Newby
My Lords, as I was saying, the regulators make considerable existing requirements in this area and I will explain what they are. Firms from the EEA that passport into the UK are covered by their home-state compensation scheme rather than by the Financial Services Compensation Scheme. It is obviously right that consumers are made aware of it but, as we have said before, this already happens. The FSA already has rules requiring this in the COMP 16 section of its handbook. Explicitly, EEA firms passporting into the UK are required to inform their customers that they are covered by their home state scheme. This is already included on customers’ bank statements and notices are prominently displayed in their branches.
This is what the text says:
“Your eligible deposits with [insert name of firm] are protected up to a total of 100,000 euro by [insert name of compensation scheme]”—
depending on which country is involved—
“… and are not protected by the UK Financial Services Compensation Scheme”.
Any deposits you hold,
“above the 100,000 euro limit are not covered”.
This wording is already being displayed and circulated to potential customers of these branches. In tandem, the FSCS has launched a programme to raise awareness of the scheme in general and to inform consumers how they can check whether they are covered by the scheme, so it is clear to us that this amendment is simply unnecessary. The FSA and FSCS are taking action in this area already and we strongly believe that that will continue once the new regulatory system is in place. It is right that the regulators and the FSCS have the flexibility to address this issue in the way that they see as most appropriate. On this basis, I trust that the noble Baroness will feel able to withdraw her amendment.
Lord Davies of Stamford
The noble Lord has read out the text of the communication which banks in this country must make to depositors who are resident in other EEA countries when they deposit more than the threshold amount of €100,000. Can he read out the text of the communication that banks in this country are obliged to make to depositors resident in this country when they deposit with them amounts over the threshold of £85,000 or whatever it is?
Lord Newby
I will check what I said, but it may have covered what the noble Lord is looking for. If it does not, I shall write to him with the relevant wording.
Baroness Hayter of Kentish Town
My Lords, I am sorry that the Minister did not listen to what I said, which was the reverse of passporting. It was about the passporting of our banks into EEA countries. I was interested in the protection of customers in those areas who are served by the UK banks that are being passported there but would be regulated here. Our regulator should therefore cover that. That is a different issue from the one that the Minister has answered. If he would check on that, I would be quite happy for us to revert to the matter at Third Reading. I am interested in consumers wherever they happen to dwell, such as the consumers in EEA areas being served by our banks. I am therefore worried about their lack of coverage by our compensation scheme, which should be brought to their attention. If I could leave the Minister to clarify that, at this stage I beg leave to withdraw the amendment.
“( ) In the event of a prohibition order being made, the FCA and PRA shall—
(a) publish an explanatory statement regarding the decision; and (b) include the individual on an updated list of those subject to prohibition orders to be presented on HM Treasury’s website.”
Baroness Hayter of Kentish Town
My Lords, this amendment stands in the name of my noble friend Lord Eatwell as well as mine. It is about transparency and we have moved from passporting to prohibition orders, with a big jump to Clause 12. The amendment would ensure that, when a prohibition order is made, the regulator publishes its reasons and the individual's name appears on a list of people subject to prohibition orders on the Treasury website. The purpose of this is both to promote good practice, by making it clear what constitutes bad practice, and to enable investors and others easily to identify who has been subject to such an order.
As was clear in Committee, the issue did not really divide us. At that stage, I quoted Matthew Hancock as saying in another place,
“the principle that prohibition orders on people who are not fit and proper persons should be published is crucial … Prohibition must not only be a sanction for past irresponsible behaviour, but a deterrent for future irresponsible behaviour … the point of prohibition is not only … to stop the actions of those who have … committed acts that make them not fit and proper, but to demonstrate the bounds of behaviour that are deemed responsible and reasonable”.—[Official Report, Commons, Financial Services Bill Committee, 6/3/2012; col. 384.]
The then Minister, Mr Mark Hoban, agreed that prohibition is both a punishment and a deterrent.
When we discussed this in Committee, the noble Lord, Lord Newby, replied in this House along similar lines, saying that,
“regulators ought to give explanations of their actions and I do not think anyone would dispute the need for the identity of persons subject to prohibition orders … to be made known”.—[Official Report, 8/10/12; cols. 860-61.]
However, he felt that the existing duty on the FSA to maintain such a list was sufficient. We disagree with regard to the list of those prohibited. Investors and borrowers here and abroad would be more likely to see the Government as a source of such information, and we would therefore like HMT, via its website, to have a role in this.
With regard to the first part of our amendment, it is crucial, if the findings of a case are to help influence the future behaviour of other firms and authorised persons, that they can read and understand exactly what was alleged and why it was found to have transgressed acceptable behaviour. Hence there is the need to publish reasons. I beg to move.
Lord Newby
My Lords, as the noble Baroness says, we discussed this at some length in Committee and, to a certain extent, I am afraid I can only repeat what I said then. I repeat that FiSMA already requires the FSA to maintain a publicly available record of individuals subject to prohibition orders. The relevant subsection simply says that the register must include a record of every,
“individual to whom a prohibition order relates”.
and provides that the register must include the name of the individual and,
“details of the effect of the”,
prohibition order.
The FCA will keep these records in future and the Bill, in paragraph 17 of Schedule 12, also requires the PRA to assist the FCA in keeping the record up to date, including by notifying the FCA of every prohibition order that the PRA makes. The principal effect of the amendment would be to move these records from the FSA website on to the Treasury website. The noble Baroness said, in effect, that the Treasury website would almost command more respect or be more likely to be looked at for this purpose. We disagree with that. The Treasury website sets out government policy, not records of regulatory decisions. The logical place to go for a record of a regulatory decision is to the regulator. We think that it would be confusing if investors expected to go to the Treasury website rather than to the regulator’s website to get the relevant names and other information. In our view, it would be contrary to the noble Baroness’s stated objective of ensuring clarity and transparency. I am afraid I cannot give her much comfort. We believe that what we are doing meets her requirements and that those are better met by doing it via the regulator’s website rather than via the Treasury website.
Baroness Hayter of Kentish Town
I thank the Minister for that response. I have a query that is not so much on the website. I think he said that the list was kept along with details of the effects of the prohibition order, which I assume means that this person cannot do this, that, or the other. We were asking for the reasons. I hope that he will look at this, even if there is only a recommendation back to the regulator. It is really important that the allegation and the reason why it was found proven is there as guidance for others. I hope that he will look at that and reassure me that the reasons are there, not just the effects of the prohibition order. With those comments, I beg leave to withdraw the amendment.
Lord Sassoon
“( ) section 87B to 87D;”
Lord Flight
“( ) For section 73 substitute—
“73 General duty of the FCA
In discharging its functions under this Part, the FCA should, so far is compatible with its strategic and operational objectives, have regard to the international character of capital markets and the desirability of maintaining the competitive position of the United King dom.””
Lord Flight
My Lords, Amendments 78A and 79A are supported by the Listing Authority Advisory Committee to the FSA, which is an external committee appointed by the FSA. The amendments have the objective of permitting the FCA going forward as the listing authority to have regard to the international character of capital markets and the desirability of maintaining the competitive position of the UK in international capital markets.
The advisory committee is concerned that without the amendment the FCA, when regulating, will not have the power to consider UK competitiveness in international capital markets and could in fact be challenged for doing so unless the issue is specifically covered. Under current legislation, the listing authority is separately set out in FiSMA, while most legislation under FiSMA is about the regulation of those conducting various forms of standard financial services businesses. The listing function is a very different role, though; it is about setting the rules for and regulating listed companies as the issuers of securities, both debt and equity, where issuers obviously have choices as to the markets in which they opt to access capital. Hong Kong in particular has become an even more important financial capital than London, which also faces great competition from New York.
At present, under Section 73 of FiSMA, the FSA is obliged to have regard to market competitiveness and the UK’s position in carrying out this function. These two amendments would leave the listings authority’s role and function substantially aligned with the rest of the FCA but would reflect the fact that this part of the FCA’s function is about regulating listed companies, not the financial services industry. It is different and should have competitiveness not as an objective but simply as a matter to which the FCA should have regard.
This may sound a slightly obscure point but the chairman of the Listing Authority Advisory Committee is concerned that unless this particular, slightly different responsibility of the FCA going forward is given at least the steer to have regard to international competitiveness, it will not be covered by the wider parts of the Bill requiring the FCA to have competitiveness as an objective. I hope that the Minister will be able to give comfort that the wider competitive objective covers the particular listing authority context of the FCA. If not, I hope the Government might consider this somewhat offbeat territory. I beg to move.
Lord Northbrook
I support my noble friend Lord Flight’s amendment. It is important that in this area the FCA should have regard to the international character of capital markets and the desirability of maintaining the competitive position of the United Kingdom.
Lord Sassoon
My Lords, Amendments 77A and 79A would reinstate an existing “have regard” that applies to the FSA in its capacity as UK listing authority as a “have regard” applying to the FCA’s listing work. This “have regard” is a requirement to take account of the international character of capital markets and of UK competitiveness. I can assure my noble friend that these amendments are not needed. As we discussed in Committee, the FCA and the PRA will be bound to have regard to the regulatory principle that any burden they impose should be proportionate to the benefits that flow from it. The proportionality principle will apply where a requirement would have an effect on UK competitiveness that would be a burden, and the same need to ensure that the burden was proportionate to the benefits would apply.
In addition, last week we debated and agreed to make an amendment to the Bill to add a new regulatory principle giving the regulators the duty to have regard to the desirability of sustainable UK economic growth. My noble friend was good enough to welcome that amendment, which I assure him will also encompass international competitiveness in the appropriate way in relation to listing as well as more generally. I think that that answers the direct question he posed to me. My noble friend refers to the London Stock Exchange and my understanding is that, although it was rightly concerned about the removal of the listing authority competitiveness “have regard”, it has welcomed the new regulatory principle. I hope therefore that my noble friend will agree to withdraw his amendment.
Lord Flight
My Lords, I thank the Minister for the comfort on this point. I am aware that the London Stock Exchange has raised this issue and I hope that what he has said will also provide comfort to the Listing Authority Advisory Committee. The only grey area for me is that I am still not entirely clear whether the general burden upon the FCA with regard to competitiveness automatically covers its role as the listing authority. The Listing Authority Advisory Committee seems to think it does not. However, I note that the point has been generally picked up and therefore beg leave to withdraw.
Lord Sassoon
“( ) In section 87A (criteria for approval of prospectus)—
(a) in subsection (1), for “competent authority” substitute ““FCA”,(b) in subsection (7)(a), for “competent authority”, in the first place, substitute “FCA”, and(c) in the heading, for “competent authority” substitute “FCA”.”
“( ) The Treasury must lay before Parliament a copy of any statement published under this section.”
Baroness Hayter of Kentish Town
My Lords, we reach the last amendment of the evening, which stands in the names of my noble friend Lord Eatwell and myself. It is short, sharp and clear. The Bill allows for FCA statements of policy relating to its use of disciplinary powers to be provided to anyone, for a fee if necessary; to be given to the Treasury, presumably for free; and to be published as appropriate. Noble Lords will have noticed that the one body not automatically to receive the statement is Parliament. This amendment would correct that oversight. I beg to move.
Lord Newby
My Lords, no one disagrees with the proposition that certain important reports and other documents that are produced under the new regime should be laid before Parliament. A good example of this view is to be found in Clause 80 under which, if the Treasury in future receives a report relating to an inquiry or investigation carried out under the provisions of Part 5 of the Bill, it must publish the report and lay what it publishes before Parliament. Since these reports concern inquiries or investigations in connection with possible regulatory failure or on other matters relating to the public interest, this is clearly the right approach. It enables Parliament to consider the matter and, where appropriate, call upon Ministers or the regulators themselves to give an account of their actions. Indeed, the Government are so committed to ensuring parliamentary accountability in this area that they have tabled Amendment 107D to ensure that any direction that the Treasury gives regarding these investigations is also laid before Parliament.
However, the statement of policy issued by the FCA under new Section 88C is not a report of that kind. It is more like the guidance issued under FiSMA, although it is really guidance for the regulator itself rather than for regulated firms. This explains why the FCA must follow the procedure in Section 88D before it issues a statement, which is essentially the same as the procedure when the FCA issues guidance to firms set out in new Section 139A. The Treasury must be notified of any new FCA guidance or changes to existing guidance but it has never been thought necessary for the Treasury to lay that guidance before Parliament, although it will be available on the FCA website.
The approach that we are taking not only follows the general FiSMA model but it is the same approach that is taken in other regulatory legislation. For example, Section 38 of the Competition Act 1998 requires the OFT to prepare and publish guidance on the appropriate amount of any penalty imposed for abuse of a dominant position. It must get the Secretary of State’s approval for it but there is no obligation to lay it before Parliament. Equally, Section 392 of the Communications Act 2003 requires Ofcom to prepare and publish a statement containing guidelines on the penalties that it may impose under that Act or other legislation, except the Competition Act 1998. Again, though, Ofcom is not required to lay that before Parliament.
All we are doing is following normal procedure. We do not think that this kind of guidance should be laid before Parliament because it is guidance to the regulator and will be available on the regulator’s website. In those circumstances, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for that answer and, via the Minister, I thank his Bill team because they have clearly done some interesting research for us in areas beyond HMT.
Ministers have probably not made the right call. There will be an increased requirement for transparency and Parliament is becoming more interested in questions of guidance, particularly in relation to disciplinary matters. My guess is that there will come a time when more of these will come to Parliament, because saying that it is normal practice and we can go on as before is not necessarily always the right view. We will get there, even if it is not in the Bill, but for the moment I beg leave to withdraw the amendment.
Health: Neurological Services
(11 years, 11 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Ford
To ask Her Majesty’s Government what progress has been made in improving neurological services, and in particular the provision of epilepsy services, in the United Kingdom.
Baroness Ford
My Lords, I am very glad to have the opportunity to table this Question for short debate this evening, which is now a longer debate. It covers a really important topic at a time of great change and potentially great opportunity for the National Health Service. The opportunity is there to improve neurology services if the clinicians and managers in charge of the new arrangements enable this to happen. But the converse is also true: there is also a risk that current service levels, already unacceptable in many parts of the country, will deteriorate, and I hope that the Minister will address that risk in her response.
I begin my declaring my interest as honorary president of Epilepsy Action, the national charity. I have had the privilege of being associated with Epilepsy Action for some years now and the work that it does and support that it provides for people with epilepsy and their families is simply tremendous. I also have close family experience of the condition and so completely understand the frustrations and challenges that managing the condition brings and of the hit-and-miss nature of the services in different parts of the country.
First of all this evening, I would like to draw attention to the wider issue of neurology services in general. The National Audit Office published a report in 2011 into services for people with neurological conditions, and it is worth reminding ourselves that neurological conditions affect about 8 million people in the UK. The report was not positive. Despite an astonishing 38% increase in spending between 2006 and 2010, there was no commensurate improvement in outcomes. Specifically, people received little or no support after diagnosis. Ongoing care was often fragmented and unco-ordinated. People admitted to hospital as an emergency were usually cared for by health professionals without any neurology experience or knowledge, and perverse performance incentives resulted in a cycle of referral, discharge, and referral. So, one has to ask, where was the money going?
The Public Accounts Committee did just that, and in response, produced an excellent report that set out six recommendations on how the situation could be improved. To their credit, the Government agreed to implement four of these. Can the Minister tell us what progress the Government have made on the PAC recommendations that were accepted? First, can she tell us what progress has been made in the promise to offer a care plan to each person with a neurological condition? The promised implementation date was April 2012. Secondly, the Government agreed to develop a generic neurological quality standard, again by 2012. Can she say what progress has been made in this? Thirdly, a commitment was also given to a plan for driving improvements in quality. This was promised by April next year and so an update on progress would be welcome. Finally, a promise was made to produce a neurological dataset—an extremely important commitment by the Government—by April 2014. Although that is still some way off, again, an update would be welcome.
All of these commitments were made by the Government and will go some way to helping the situation. But I would also like to ask the Minister whether the Government will again consider the recommendation by the PAC to appoint a national clinical lead for neurology. Given that there are currently 8 million people with neurological conditions in the country, that is not a huge ask. We have very welcome national clinical leads for other conditions such as dementia and diabetes, conditions that affect far fewer people, so why is the chief executive of the NHS so resistant to appointing a clinical lead in this important area, particularly as we know there is real room for service improvement and money is not being well spent? Perhaps the Minister can tell us.
The Minister might also like to say why the Government were resistant to mandating joint commissioning at exactly the time when the new NHS arrangements are expected to be significantly more joined up than before. It occurs to me that mandating joint commissioning is simple common sense now.
Turning to epilepsy services in particular, the Minister is aware of the 2009 report by Epilepsy Action, Epilepsy in England: Time for Change. We debated it in this House in September 2010. At that time, I expressed my great frustration that many of the basic building blocks of a decent service were still not in place. Two years on, there has been a slight improvement—I stress slight—but no real movement in getting to an acceptable standard of service.
That brings me to the changes planned for the NHS. The opportunity is clearly there to improve the service for people with epilepsy. But is the will there, and is the leadership there? The new clinical commissioning groups will have a critical role to play in providing and improving services. They could develop a much better quality service than has been the case in the past. But so far the evidence in terms of their planning is not reassuring. Epilepsy Action has been carrying out research into how the NHS in England is preparing for the reforms set out in the Health and Social Care Act. We will publish this research in January 2013, but our findings so far show that two thirds of the clinical commissioning groups that were surveyed do not have, and do not intend to produce, a written needs assessment of the health and social care needs of people with epilepsy. How on earth can appropriate services be provided without a clear assessment of need?
Equally, fewer than one in five clinical commissioning groups that responded has appointed a clinical lead locally for epilepsy. In the absence of a national lead, there is a serious vacuum if there is no local leadership either. Is this something that the Government are prepared to tolerate? How can we possibly maintain and improve services against such a backdrop?
My plea to the Minister is that the Government get on top of this and send out a very clear message to clinical commissioning groups that long-term neurological conditions have to be taken seriously and services planned appropriately. The services for people with epilepsy have not been at anything close to the NICE guidelines for many years. It would be a tragedy if the changes that the Government are implementing now cause the situation locally to deteriorate further because there are welcome changes at a national level, particularly in respect of national or specialised commissioning.
As I understand it, once the changes are implemented, specialised commissioning will become the responsibility of the NHS Commissioning Board. This is a major change and offers a real opportunity to improve services. A single national specification and single national commissioning policy should lead to more consistent standards of care and an improvement in care in those areas where the quality of care in the past has been highly variable. This is a big step forward and I would ask the Minister if she might say a little more about this in her summing up.
Greatly to be welcomed also is the move to commission epilepsy surgery for children nationally. The Government have committed to a three-fold increase in the availability of this surgery, which is fantastic news. Perhaps the Minister could also say whether there will be a commensurate increase in the availability of surgery for adults with epilepsy too, given that we know how totally life-changing and life-enhancing the surgery can be when used appropriately.
There is a huge opportunity to improve services for people with a range of neurological conditions, and we particularly welcome the planned clinical network for neurology. This is a really good step forward. There have been some important changes in the way that the Government have looked at these issues nationally and the new arrangements are to be applauded, but the worry persists—it has been a constant worry all the way through the passage of the Health and Social Care Act. That worry relates to how well the clinical commissioning groups will focus on long-term neurological conditions such as epilepsy, how they are to be held to account for the services that they provide and what the Government will be prepared to do in the event that such services continue to fall short of the basic guidelines set out by NICE. Epilepsy services are already a long way off being acceptable. The last thing we want is for that situation to persist.
Baroness Jolly
My Lords, I thank the noble Baroness, Lady Ford, for bringing this important issue to our attention, especially at a time when decisions are still being formulated by the NHS Commissioning Board. We know that neurological conditions and epilepsy in particular are great challenges facing the NHS. The efficient and effective provision of these services is crucial to the good care of the estimated 8 million people in England who have neurological conditions and the 600,000 of those who have epilepsy.
We know that good treatment of these conditions is vital. However, my comments today focus less on the method of treatment than on the commissioning of the care. Under the coming system of healthcare commissioning through GP-run clinical commissioning groups, will the Minister guarantee the training and resources to support GPs in these new roles for the commissioning of neurological care? Specifically, what is the NHS board doing adequately to prepare clinical commissioning groups to commission high-quality, appropriately targeted epilepsy and other neurological services?
I shall separate my concerns into three areas. First, I am concerned that neurological conditions have not been made enough of a priority within the Government’s objectives for the NHS. Secondly, I welcome the national network, but am concerned that our current approach to neurological care lacks focus, including, as it does, dementia and mental health. My third and perhaps greatest concern is that the board should help create and sustain local or regional neurological networks to support the commissioning process within CCGs.
On my first concern, what are the Government doing to ensure that there is adequate emphasis on and measurement of neurological care? Are these conditions being recorded by GPs? If they are not being recorded, we do not know where they are and we cannot plan properly
Some groups have come forward citing that only three out of the 60 outcomes within the 2012-13 NHS outcomes framework were neurological. Without appropriate outcome measures driving change, key problems with diagnosis and treatment may not be resolved. For example, Epilepsy Action notes that the epilepsy misdiagnosis rate is 20% to 31%—that is, between one-fifth and a third—meaning that around 138,000 people are currently misdiagnosed each year. What have the Government done within the new mandate to react to these past criticisms? How are decisions made about the relative focus among different conditions and how can we be sure that this is adequate?
On my second concern, recent reports from the National Audit Office and the Public Accounts Committee have cited some areas within neurological care as being in need of improvement for increased co-ordination of care, to address delays in diagnosis and to address recent increases in emergency hospital admissions. For example, 66% of patients with epilepsy presenting at an emergency department have not seen an epilepsy specialist in the previous 12 months. It is important that the Government develop a consistent national strategy and then help co-ordinate efforts in order for the board to bring this to the local level.
Lastly, I ask the Government what has been done to support local clinical leaders within neurological care, to connect them and to leverage this network to inform CCGs in their commissioning. This is the greatest concern that I have and the one that I am most anxious to see addressed.
Neurological care as I see it, especially in the case of epilepsy, fits within the spectrum of diseases for which GPs are now responsible for commissioning care. Many of the diseases for which clinical commissioning groups will commission care carry a level of familiarity with GPs—for example, various cancers, diabetes and kidney failure—but neurological conditions are not seen so frequently.
While I have confidence in the expertise and scientific knowledge of our GPs, my fear is that neurological disorders require a special understanding of prevalence and societal factors, and this leads GPs to having less familiarity with neurological conditions than with more common ailments. These networks could contribute to commissioning by helping demonstrate pathways of care for epilepsy and other neurological conditions.
While I am pleased to see the commissioning of treatment of specialised neurological conditions being carried out by the board—as has been said earlier, that is really good news, meaning that commissioning of really rare conditions will be the same across England—I believe that the board should also support and maintain local networks of neurological experts.
For commissioning under the new Health and Social Care Act to be effective for all with a neurological condition, the following three objectives must be reached. First, neurological disorders must become a priority in the measurement of clinical outcomes. Secondly, a national plan should be set out for addressing neurological conditions and, thirdly, networks of expertise should be created to inform the commissioning of CCGs and sustained support be given to them. I look forward to the Minister’s responses and the Government’s call to action on these specific issues.
Baroness Masham of Ilton
My Lords, I thank the noble Baroness, Lady Ford, for asking this important Question. There are an incredible number of neurological conditions, some very rare, all of which are important to the individual. I have a niece who has epilepsy and I know how important continuity of good-quality care is.
I stress the importance of specialist nurses for conditions such as epilepsy, Parkinson’s disease, stroke, multiple sclerosis and continence care. The withdrawal of specialist nurses would have a negative impact on services to patients. They are the consultant’s right hand. They co-ordinate care and training for other professionals and give support to patients who, without them, could deteriorate and have to be admitted to hospital.
I take this opportunity of bringing to your Lordships’ attention the vital needs of people with motor neurone disease. They have to be addressed urgently, as the condition can so often move on very quickly.
Drug development is extremely expensive. It can take more than 10 years and cost more than £1 billion to bring a new drug to market. Will the Government’s life sciences strategy, launched in December 2011, help speed up the drug approval process?
No new drug has been developed for motor neurone disease in more than 20 years. MND robs people of the ability to walk, talk, eat normally and ultimately breathe, but they know everything. Some 5,000 people in the United Kingdom have motor neurone disease, and about 1,500 of them die each year—that is about five a day.
A new campaign, founded by Les Halpin, a remarkable person who has motor neurone disease, has been set up to highlight the patient voice in this debate. It is called Empower: Access to Medicine and is focused on accelerating the drug approval process for people with life-threatening illnesses. Les Halpin has the strong support of his constituency MP, Geoffrey Clifton-Brown, and addressed a gathering of parliamentarians in June, when I met him. He has also met the noble Earl, Lord Howe, to discuss the campaign in more detail.
Genetic Alliance UK carried out a survey of patients with rare disease earlier this year and asked them for their views on trying drugs before they are fully approved. One patient replied: “If I was in a plane and offered a parachute with a 90% chance of failing, I would refuse it unless that plane was spiralling out of control towards the ground, in which case I might well be glad of it”.
Motor neurone disease—MND—is a rare condition that progressively damages the nervous system, causing the muscles to waste away. A medication called riluzole can extend the lifespan of people with motor neurone disease but it is only moderately effective. Empower: Access to Medicine is a new platform created to open the debate around the lack of drug development for patients with rare or life-threatening conditions. The discussion is not focused on one particular illness but is interested in any life-threatening illness which has a lack of drug development across the whole of the patient body. Given how long it takes to find the right combination of drugs to treat life-threatening conditions, Empower: Access to Medicine is keen to harness this collaboration to ensure that patients and doctors across the world share their experiences in an effort to improve knowledge and accelerate the timescale within which new drugs are developed and approved.
Speeding up the development and availability of drugs that treat life-threatening diseases would benefit everybody in society. The current testing and development process is long, cumbersome and expensive. In fact, a recent report by the Office of Health Economics found that it takes five years on average after launch for a new drug to win NICE approval. This timescale can be more than doubled when added to the time taken for a new drug to go from the development stage through to Phase 3 and beyond. As an example, no new drug has been approved for motor neurone disease since riluzole was approved 20 years ago.
The Empower: Access to Medicine campaign is a unique one, created for patients by patients. It is a powerful voice, rarely heard, but one that I believe could have a real impact on how pharmaceutical companies, regulators, politicians and the general public view drug development. As the director of the Oxford Centre for Accelerating Medical Innovations said:
“I am delighted to be involved in this campaign. Opening up the discussion around the lack of availability of effective drugs for rare and life threatening diseases is a vital first step on the path towards accelerating new innovative drugs”.
One of the key problems we are facing today in overcoming the lack of drugs for rare or orphan diseases is the challenge for industry in achieving a return on investment. Major drug companies have been cutting back on their research budgets because the R&D process has hit a wall of cost, time and failure rate. It is a staggering figure worth repeating: to bring a new drug to the market can cost up to £1 billion. Seriously ill patients are quite understandably more willing to try different combinations or new drugs. Because these drugs may improve their quality of life or even stop the progress of their disease, they are willing to accept the risk of possible side effects. We need to involve them more fully in the decision-making. This is a societal issue and all stakeholders must work together. We must be willing to rethink regulation, especially for rare and life-threatening diseases. The European Medicines Agency has an objective to pilot a new approach along these lines which goes under different names—for example, “adaptive licensing” and “progressive authorisation”. We must find ways for patients to access drugs more quickly.
I end by saying that there is currently no national guidance for MND. This is a huge gap. MND is rare, complex and progresses rapidly, so health professionals need clear guidance on how to care for people with this disease. Will the Minister please help to expedite the National Institute for Health and Clinical Excellence —NICE—to produce guidance and quality standards for MND? Both have been referred to NICE for development but the timescale for the guidance to start has not yet been determined. How long have they got to wait?
Lord MacKenzie of Culkein
My Lords, I join in the thanks to my noble friend Lady Ford for securing this important debate on neurological services. I have spoken in a number of debates on this subject over the past five or six years. I have an interest, partly as a nurse but more specifically because a few years ago a very close friend and colleague of mine died from motor neurone disease. After diagnosis he had good support from the health and social care professionals as well as brilliant support from St Raphael’s Hospice in the London Borough of Sutton. It was a very different story for another colleague of mine, whose father’s care before his death was nothing short of scandalous, with health and social services unable to get their act together, either within each service or between the two services. Those are two stories in different parts of the country—the postcode lottery—so I hope that I can be forgiven for concentrating, like the noble Baroness, Lady Masham of Ilton, on motor neurone disease.
I pay tribute to the Motor Neurone Disease Association for its untiring support for those living with motor neurone disease and for its funding of cutting-edge research into this miserable, rapidly progressing and ultimately fatal disease. I suspect that it is going to be a long time before we have a world free of motor neurone disease and, until that time, we need to concentrate on the best possible care for those living with it. It is to be welcomed that the Government have added improving the experience of care for people at the end of their lives to the new mandate issued to the NHS Commissioning Board in the past few days. That is good so far as it goes. It is perhaps not surprising that there is no specific reference to motor neurone disease in the mandate, but I was confident that there would be some reference to neurology. If there is one, I am afraid that I have missed it.
I find that omission to be surprising to say the least, given that, as has been said, there are something like 8 million people with neurological conditions in this country and about 500,000 new diagnoses each year. According to the Neurological Alliance, the cost to the National Health Service is some £4.3 billion each year, with social care budgets adding another £2.4 billion. That is a lot of money, but it is not surprising when almost 20% of hospital admissions are for neurological issues. Emergency admissions under this heading in the five years up to 2009-10 increased by 32% compared with 17% for the National Health Service as a whole. That does not sound to me as if there has been progress.
A great many conditions are wrapped up under the heading “neurological conditions” and these in turn get wrapped up, it seems, in the generic description “long-term conditions”. Motor neurone disease is not a long-term condition. The average lifespan after diagnosis is 14 months. So what needs to be done? It would be good if the Government were to revisit the reports of the National Audit Office of December 2011 and the Public Accounts Committee of March 2012. It is particularly disappointing that the Government have rejected the advice of the PAC relating to the appointment of a national clinical lead for neurology. Quite frankly, it is difficult to understand. Neither have the Government accepted the advice to mandate the commissioning of neurological illnesses. We know that national clinical leadership works. It has done a great job in, among other things, driving improvements on strokes and cancers. It is now essential that this is done for neurological conditions, so that improvements are driven there as well and can lead to a far greater visibility for neurology.
If there is a lack of visibility for neurology generally, specific conditions such as motor neurone disease are hardly on the horizon. Most general practitioners will see one case, perhaps two cases, if that, in a whole career, but five persons die from motor neurone disease every day and there are probably 5,000 living with motor neurone disease at any one time in the United Kingdom. It is notoriously difficult to diagnose—it can be done only by excluding every other possibility—and rapidly progresses, to the extent that 18 health or social care professionals can be providing care at any one time. Anyone with any appreciation of motor neurone disease must know that it cannot be dealt with by a one-size-fits-all approach to long-term conditions.
It is good that the National Institute for Health and Clinical Excellence has been asked to develop clinical guidance and a quality standard for the rarer neurological diseases, but is that likely to be forthcoming in the near future, or is it at the tail end of the very long list of quality standards that NICE has been asked to develop? Perhaps the Minister can tell us about that.
Any delay, together with the absence of a national clinical lead, certainly gives me no confidence in the effective commissioning in the new National Health Service of the complex services necessary for motor neurone disease so that we can get away once and for all from the fragmentation, lack of co-ordination and postcode lottery. The present situation is not good enough; indeed, it is unacceptable in 21st-century health and social services. It is self-evident that there is an urgent need for NICE to expedite its guidance and quality standards for motor neurone disease.
These poor, fragmented care pathways, including emergency admissions to hospital, together with the lack of access to palliative and respite care services, can double or triple the costs per patient per year from the estimated £200,000 that good care costs. There is a clear imperative to get this right. It is a classic case where what is best for the patient is also good for the taxpayer.
In summary, can we have as a matter of urgency a national clinical lead for neurology, the mandating of the commissioning of neurological conditions and, I stress again, the expediting by NICE of clinical guidance and quality standards for the rarer neurological conditions? I very much look forward to hearing what the noble Baroness will tell us about the way forward and again thank my noble friend Lady Ford for giving us this opportunity to discuss this important matter.
Lord Patel
My Lords, I am pleased to take part in this debate initiated by the noble Baroness, Lady Ford. She should be congratulated; I think that every patient with epilepsy would wish to congratulate her on her perseverance in ensuring that she holds the Government to account on services for patients with epilepsy.
As the noble Baroness, Lady Ford, mentioned, we had a similar debate more than two years ago, so the Minister is in a good position to have prepared her answers. The Question for Short Debate today is:
“To ask Her Majesty’s Government what progress has been made in improving neurological services, and in particular the provision of epilepsy services, in the United Kingdom”.
The last time we had this debate, the Minister ran out of time. It was late at night and she was unable to answer all the questions. I have adopted a different tack today: I shall put the same questions to her again. No doubt her assistants have read the Hansard of the debate then and they have had two years to try to address the issue of poor-quality care for patients with epilepsy. To remind her of what was said, I shall pose the same questions again.
To give some background, if the quality of services provided for people with epilepsy were measured on the basis of outcomes—that is, measured by appropriate diagnosis, appropriate and timely treatment, the education of patients and carers and avoidable deaths—the service currently provided would be regarded as a total failure. The Minister may contradict me by citing hard facts—not processes, because it is easy to say that progress is made by citing processes, such as that the Government have asked NICE to develop quality standards. That is good, but, as the noble Lord, Lord MacKenzie, said, quality standards will take some time to produce, be implemented and be audited, only to find that there has been no change. She may suggest that the mandate given to the commissioning board has within it a mandate to improve services related to neurological conditions but that, again, is a process.
I shall confine my comments to the care of children and young people with epilepsy. Epilepsy is the most common neurological condition among children and young people, affecting about one in every 200 of the population; that is, approximately 60,000 young people in total in the UK. On average, there is one child with severe epilepsy in every primary school and five in every secondary school.
Although those national numbers can be calculated, local and regional numbers are not available. If those numbers are not available, how are the commissioning groups to commission services for those children? Clinical guidelines from the National Institute for Health and Clinical Excellence exist, but they are not implemented in many areas. Where they are implemented, it is patchy. That means that children who have had seizures are typically referred to general paediatricians rather than paediatricians with training and expertise in epilepsy. From the very beginning, that makes the outcomes for those children poorer. Misdiagnosis is an issue. Up to 40% of children referred to a specialist clinic are not fully assessed as having epilepsy. If a child is branded as having epilepsy, they carry that diagnosis and treatment for life, so the outcome for those not fully assessed is worse than if they had been assessed as having epilepsy.
About 365 avoidable deaths occur per year of children with epilepsy. The Minister may correct me and tell me what progress has been made, because that is the number that I cited two years ago. If there is progress, that number should have come down—I know the real number, by the way. I look forward to hearing that.
I come to the five questions that I raised. They related to the campaign conducted by the National Centre for Young People with Epilepsy, which suggested 10 levers that could improve services for children with epilepsy—so two and a half years ago there was already help for the Government to have some idea of how to improve services. They were that NHS commissioners should know the number of children and young people with epilepsy in their area; the level of resources that they have in place to support these children and young people; the waiting times faced by children and young people with epilepsy for initial appointments, diagnosis, treatment and tertiary assessment; and the current perceptions of children, young people and their parents of epilepsy services. They also include the need for NHS commissioners to adopt one or more care pathways for children and young people with epilepsy; the need to ensure that they are seen by paediatricians with training and expertise in epilepsy; an easy-to-use and efficient process for referring children and young people to specialist epilepsy services; the need to ensure that every child or young person with epilepsy is offered a care plan; and the need for children or young adults with epilepsy to have their case reviewed at least once a year by a health professional with expertise and training in the epilepsies.
Those levers were based on National Institute for Health and Clinical Excellence guidelines and were therefore mandatory, so it ought to be easy to measure the progress against those indicators. I very much look forward to the Minister answering this time, because she will not run out of time today.
Baroness Gale
My Lords, I congratulate my noble friend Lady Ford on securing this important debate tonight. I declare an interest as I chair the All-Party Parliamentary Group on Parkinson’s. Approximately 127,000 people in the UK live with Parkinson’s and rely on the support provided by the neurological services to help them manage with the debilitating effects of that condition. Neurological services in the UK are not working as best they could to serve the people who have neurological conditions. This is despite the introduction of the National Service Framework for long-term conditions in 2005.
When the National Audit Office published its report on services for people with neurological conditions in 2011, it found that although waiting times for inpatient and outpatient neurology had improved, the NSF for long-term conditions had not delivered for people with neurological conditions. The report found that there had been a decline in quality services, despite an increase in health spending on neurological conditions of 38% in real terms, from £2.1 billion in 2006-07 to £2.9 billion in 2009-10. The NAO report identified a number of problems including delays in receiving a diagnosis, a lack of access to information and care that is fragmented and poorly co-ordinated.
The report also found that the Department of Health had not put in place specific arrangements for monitoring how the NSF for long-term conditions was implemented. As a result, it was unable to hold local commissioners to account for implementation because no national monitoring of its impact had taken place.
Following the NAO’s report, the Public Accounts Committee conducted its own inquiry into neurological services and published its report in March 2012. It made a number of recommendations, including one that a national clinical director of neurology should be appointed to provide clear national leadership. Other noble Lords have called for this tonight, so I hope that the Minister will take that seriously. It is disappointing that the Government rejected a number of the recommendations, including the call for a national clinical director for neurology. The Government agreed to adopt some of the recommendations, including developing a data set for neurology and ensuring that NICE develops a quality standard for neurological conditions.
In the new structure, the NHS Commissioning Board has appointed directors to the specific domain outcomes. This means that neurological conditions are considered under both domain one, reducing avoidable death, and domain two, long-term conditions. These are extremely large areas for the appointed directors to consider, and there is concern that neurological conditions will not receive the appropriate focus that they require.
There is a similar lack of prioritisation within the new structure of the NHS when it comes to appropriate outcomes and indicators for neurology. There are 44 indicators that have been published for the Commissioning Outcomes Framework, which will be used by the NHS Commissioning Board to hold clinical commissioning groups to account. While there are indicators specifically for dementia and stroke and one for epilepsy in under-19s, the only indicators relevant to neurology apply to all long-term conditions. This is further compounded by the fact that the NHS Outcomes Framework, which will be used to hold the NHS Commissioning Board to account, does not have any indicators specific to neurology.
The NHS Commissioning Board has acknowledged the need to improve services for specific conditions at a national level and has therefore introduced strategic clinical networks, one of which is for mental health, dementia and neurological conditions, to support and advise clinical commissioning groups. There is great urgency for a quality standard to be developed for both Parkinson’s and for neurological services, as identified in both the National Audit Office and the Public Accounts Committee reports.
A crucial part of ensuring that services are appropriately developed and improved is the use of accurate and up-to-date data to make decisions. It is encouraging that an appropriate database for neurology will be developed. However, there is real concern about how the data will be collected. Sir David Nicholson feels that data should be collected from voluntary sector organisations that represent patients with neurological conditions. While organisations like Parkinson’s UK can contribute to these data sets, the Government cannot rely solely on voluntary organisations to provide a robust and accurate data set.
The lack of specific leadership means that neurology will not receive the prioritisation that it needs to make the clearly and repeatedly identified and much needed improvements. The lack of specific outcomes and indicators suggests that neurology may be neglected for areas that do have specific targets. The lack of a comprehensive data set means that it will be impossible to get even a baseline understanding of what is needed to bring about these improvements.
I will put some questions to the Minister. Will she give assurances that people with neurological conditions will see the much needed improvement in neurology services? Can she give assurances that neurological conditions such as Parkinson’s will be appropriately prioritised within the new structure? How and when will the data set for neurology be developed, and what steps will be taken to ensure that it will be suitable, accurate and comprehensive so that it takes account of everyone living with a neurological condition? Will she provide clarity about when the quality standards for Parkinson’s and for neurological conditions will begin to be developed and when they are likely to be implemented? I look forward to the Minister’s response.
The Countess of Mar
My Lords, like other speakers, I am grateful to the noble Baroness, Lady Ford, for raising this subject today. She has asked several very valid questions, as have other speakers, and I hope that the Minister will be able to answer them all.
While the noble Baroness, Lady Ford, has specified epilepsy services in her Question, I realise that she is aware that epilepsy is far from being the only neurological service that has inadequacies. For many years, I have worked with people with ME, also known as CFS/ME. I am chairman of Forward-ME, vice-chair of the All-Party Parliamentary Group on ME and patron of a number of ME charities. Forward-ME is a member of the Neurological Alliance.
I have been assured that Her Majesty’s Government accept the WHO’s categorisation of ME as a neurological condition. The CMO report of 2002 described it as a “genuine illness” which,
“imposes a substantial burden on the health of the UK population”.
The NICE guideline of 2007 stated that:
“The physical symptoms can be as disabling as multiple sclerosis, systemic lupus erythematosus, rheumatoid arthritis, congestive heart failure and other chronic conditions”.
Yet there is no provision to examine the neurological aspects of this illness. Patients are simply allocated to either the CFS/ME group, where they are offered psychological therapies, or to various ad hoc diagnostic categories containing patients with neurological symptoms of unknown aetiology. In practice, these can be considered dustbins where no further investigations are considered necessary.
After the Chief Medical Officer’s report on CFS/ME in 2002, £8.5 million was allocated to setting up specialist ME centres. Some of the centres have closed because of a lack of funding. Others continue to operate but are somewhat constricted by the view that the only scientifically validated treatment for the condition is a combination of cognitive behaviour therapy and guided exercise training—CBT and GET. In fact, the much trumpeted PACE trials, which cost the taxpayer some £5 million and were intended to demonstrate the effectiveness of these so-called treatments, did no such thing. There is no indication in the trial results that one single person fully recovered after a year of CBT and GET. There is no indication that any who were not working went back to work or, in fact, that there was more than a very modest improvement in those whose health was deemed to have improved.
I would like to be able to go into the facts behind this research in more detail, but this is not the occasion. However, I must say that the spin on the results has had a very deleterious effect on the public perception of the illness and on the provision of health and social care for people with ME.
What is happening to these frequently very sick individuals? There is still a great deal of scepticism surrounding the reality of this illness, despite pronouncements from government, the CMO and NICE. It is acknowledged that if the condition is caught in the early stages and dealt with conservatively, it can improve and patients can recover. Instead, patients and, particularly, children are pushed by medical practitioners or, in the case of children, by teachers, social workers and carers, to keep going to work or school on the basis that it is good for them, until they collapse and what was a mild, treatable condition becomes chronic and untreatable. They are then encouraged to undertake programmes of cognitive behaviour therapy and guided exercise training which, at best, may help them to cope with their illness or, at worst, may exacerbate their symptoms, and they are blamed for not wanting to get better.
The Neurological Alliance is concerned that for clinical commissioning groups which cover relatively small population areas, it will not be cost-effective to commission services for less common conditions. I am particularly concerned about ME because GPs will do the commissioning. The Neurological Alliance suggests that the NHS Commissioning Board should monitor the observance and development of collaborative arrangements to prevent what we have come to know as a postcode lottery.
I have spoken about the poor levels of understanding of ME among health and social care professionals. This runs through much of neurology. Lyme disease, for example, is often mistaken for ME, and no treatment is offered as a result, yet with simple antibiotic treatment, Lyme disease can be cured. There is a need to equip properly commissioners in order to address successfully the legacy of neglect which has resulted from the complexity and relative rarity of most neurological conditions. There is a need for a national neurology strategy, as other speakers have said, dedicated national leadership and mandatory quality, accountability and incentive mechanisms.
The Neurological Alliance recognises that cross-cutting initiatives can help to support, develop and enhance services for people with long-term conditions, but it is concerned that the NHS Commissioning Board takes only a generic approach to certain long-term conditions while giving particular attention to others and that commissioners’ priorities will be weighted in favour of areas given a profile. Will the Minister say what guarantees there are that patients with less well recognised conditions, or conditions such as ME and Lyme disease, will be given equal treatment?
NICE, the Department of Health and the National Quality Board have yet to establish how they will prioritise the development of more than 160 quality standards. This will have the effect of prolonging neglect in areas without NICE-accredited guidance— ME is an exception as there is guidance—leaving commissioners unsupported in what are often the most complex and challenging areas. As other speakers have already asked, is the Minister able to enlighten the House on the likely progress?
Baroness Wheeler
My Lords, I too would like to thank my noble friend Lady Ford for initiating this debate. Like others, I pay tribute to her work as honorary president of Epilepsy Action and as a campaigner for improved services for people with neurological conditions. As usual, we were fortunate in this debate to have contributions from noble Lords with huge experience and expertise in this field, either as medical experts themselves or from working with health and social care professionals and expert organisations, institutions and community groups that provide such vital support for patients, clients and their carers. The debate is very valuable, because we know that we need a more holistic approach to the provision of neurological services if the barriers to progress are to be overcome and large-scale, consistent improvements are to be made at the urgent pace necessary.
Noble Lords have spelt out the facts and figures, issues and concerns very comprehensively, covering many of the specific conditions. On epilepsy, my noble friend Lady Ford drew a wide-ranging picture of the challenges to improving services and of what could be achieved given the political will to make those improvements happen. Both the noble Baroness, Lady Masham, and my noble friend Lord MacKenzie spoke of motor neurone disease—my noble friend referring to our wonderful mutual friend and work colleague who succumbed to this terrible disease, which kills an increasing number of people year on year. My noble friend Lady Gale focused particularly on Parkinson’s disease. The stark fact is that every hour, someone in the UK is told that they have this degenerating disease. The noble Lord, Lord Patel, asked some key questions about the real progress being made since the last debate, and I look forward to the Minister’s response to them.
I thank the Neurological Alliance, Epilepsy Action, the MND Association, Parkinson’s UK and the Sue Ryder charity for their excellent briefings for this debate. It is clear that much still needs to be done to allay the fear and confusion among people with neurological conditions, staff and their carers and the organisations providing support and care for them about how the new NHS structures will work, particularly the process and outcome of commissioning for neurological conditions across health and social care.
The two recent debates in your Lordships’ House on epilepsy and long-term neurological conditions and the important role played by the NHS and social care allied health professionals both took place in the early days of this Government, before we began on our marathon deliberations on the Health and Social Care Bill. Substantial reductions in both NHS and social care resources are starting to have a major impact. There is massive upheaval in the NHS as the new structures come in. Many CCGs are still in the early stages of development and are only just beginning to decide how commissioning will take place in their areas. We know that, despite Government denials, the NHS is having to make substantial cuts in resources that have already led to the loss of 6,000 nurses—including the deletion of specialised nursing posts—and the closure of many services.
In social care, many local authorities have had to make dramatic cuts to services and do not have systems in place to cope with the scale and quality of care that is needed. The recent Sue Ryder report on social care, The Forgotten Millions, spells this out quite vividly. This found that only 10% of local authorities had an agreed commissioning strategy for people with neurological conditions and only 6% categorised all specific neurological conditions.
I would quickly like to pick up on some common themes from today’s debate, starting with the issue of preventable early deaths. In epilepsy, for example, estimates show that one in three deaths is avoidable and that mortality is two to three times more than in the general population. We saw last week the publication of the Government’s NHS mandate, promising “measurable progress” against the NHS outcomes framework, rather than specific targets to reduce premature deaths or enhance the quality of life for people with long-term conditions. Will the Minister tell us, for example, how progress in reducing the number of avoidable deaths of people dying from epilepsy as a result of late diagnosis or misdiagnosis is to be measured across the two NHS outcomes domains?
Last week, my noble friend Lord Hunt expressed his concerns that the mandate was a wish list. I see that the Independent echoed this sentiment, describing it as,
“worryingly short on specifics and suspiciously free of concrete commitments”,
as well as giving,
“the unmistakable sense of a Minister expertly ensuring that he would not be blamed for any failings come the election”.
Perish the thought.
Secondly, noble Lords have underlined the need for expert commissioning for services, involving those with knowledge and experience of the treatment and nursing and care needs of patients and clients. Clarity over how services are to be commissioned in the future is urgently needed. During the mandate debate, we were promised regulations on exactly what “conditions”, “specialised conditions” and “highly specialised conditions” are. It is hard to see how commissioning planning either at national Commissioning Board level or CCG level can proceed effectively without the Government being clear and definitive about this. Will the Minister tell us when we can expect the regulations? Will they spell out exactly how the Commissioning Board is to provide leadership and direction on this matter?
Thirdly, there is evidence that the number of specialist nurses for neurological conditions is diminishing, not increasing—this when their role and cost-effectiveness is widely acknowledged and recognised. Parkinson’s, motor neurone, MS and epilepsy nurses, for example, make a huge difference by being a focal point of advice and support for patients and their carers; they signpost and provide important access to a range of therapies and other services.
With their support, people stay independent for longer, are better able to manage their own conditions, and the number of unnecessary hospital and care home admissions is reduced.
However, we know that we will be told by the Minister that provision is down to decisions made by local CCGs, hospitals and local authorities. Does the Minister accept that the provision of specialist nurses is an essential element of care for people with specific neurological conditions, including dementia and stroke? What action will the Government be taking to ensure that the number of posts is maintained and increased?
In the time left, I should like to highlight the often forgotten but vital importance of effective and dignified continence care for people with long-term conditions and its need to be integrated into care and treatment pathways. The noble Baroness, Lady Masham, touched on that issue. As I have stressed previously, this requires specialist knowledge and understanding of the different needs of continence care in primary and secondary care settings, and a joined-up approach across the full care pathway. We know that the system is too often slanted towards containment through pads and catheters rather than assessment for treating incontinence. We also know that these types of services have been undercommissioned in the past. Is the Minister confident that CCGs and social care will have the specialist knowledge to ensure effective and consistent commissioning of this service? What work has been undertaken by the Department of Health on this issue?
Finally, the need for an integrated, overall strategy for neurological diseases, which joins up and integrates provision with that for the higher profile conditions such as dementia and stroke, has been underlined. Does the Minister accept that the NHS Commissioning Board needs to show leadership on this issue, as called for by the report published by the Commons Public Accounts Committee earlier this year? Getting back to the NHS mandate, will she spell out for those of us who are still very confused how Ministers will account to Parliament over performance of the mandate generally and the provision of services for neurological diseases in particular?
Baroness Northover
My Lords, like other noble Lords, I pay tribute to the noble Baroness, Lady Ford, for tabling this Motion and for her very effective introduction. I know how important this subject is to her. I am also very well aware of her excellent work with the All-Party Parliamentary Group on Epilepsy and with Epilepsy Action to improve care and support for people living with this condition. Like others, I must declare an interest, as I did two years ago, that I have two close relatives living with epilepsy.
As ever, this has been an extremely well informed and wide-ranging debate, which has raised issues across a range of neurological conditions. In November 2010 I was in the fortunate position to be able to answer an equally illuminating debate put down by the noble Baroness, Lady Ford, to which she and the noble Lord, Lord Patel, referred. I know that she has been somewhat busy with one or two things since then, including the Olympics, but I am glad that we are returning to putting an emphasis on this issue.
I assure the noble Lord, Lord Patel, that, in being briefed on this subject, one of the first things that I did was to ask what I had promised two years ago and what had been delivered, and I hope that I can provide some reassurance. I cannot guarantee that I will not overrun, but if I do not answer all the questions asked by noble Lords—there have been a multitude of them—then I will write to them.
This evening, we have heard that the challenge posed by neurological conditions is huge. Taken together, they are common: more than 10 million people in the UK live with such a condition. As noble Lords have indicated, they can give rise to complex needs that require support from a wide range of professionals. They also can change people’s lives profoundly. We have heard that neurological conditions have not always been well served in recent years, which, once again, as it was two years ago, was reflected in many of the speeches tonight.
Since then, the Public Accounts Committee has reported on neurological services, and the noble Baroness, Lady Ford, and others made reference to that. That report, which was published earlier this year, clearly argued that we need to do more to improve the quality of services. We have already responded to that report and we take its recommendations very seriously. Some of the issues that were flagged up had been flagged up before, and work is already under way to improve neurology services.
As noble Lords well know, it has been argued for years that better integration between health and social care is vital in this area, as in so many others. That is something that we are working hard to achieve; my honourable friend Norman Lamb has it at the top of his agenda. Better integration of health and social care offers a real opportunity to improve care and support for people with complex needs.
The noble Baroness, Lady Ford, and others made reference to the current changes in the health service. Locally, joint health and well-being strategies will, as noble Lords know, set out how local commissioners will work together to deliver the best possible outcomes for their communities. Health and well-being boards will bring together local partners to address the wider determinants of health such as education, transport and housing. So there are new opportunities there.
The Health and Social Care Act 2012, the outcomes frameworks for the NHS, adult social care and public health, the NHS constitution, the mandate we have just heard about and the draft Care & Support Bill all emphasise how collaboration between local government and the NHS is crucial to the future success of health and care systems locally. We are working to identify barriers to integration—those who were at the King’s Fund breakfast the other day will have heard how people across the spectrum are seeking to do that—and the means to encourage integration, which will seek to ensure that the patient is the focus, whatever complex needs they have.
Integrated care will also be the key theme of the outcomes strategy for long-term conditions that we are developing. The strategy will take a life view of long-term conditions, looking at issues across the course of a person’s life, and will set out what local government, the NHS, communities and individuals themselves can do to improve outcomes. In addition to integrated care, the strategy will be structured around the goals of early diagnosis—again, noble Lords made reference to that—promoting independence and taking steps to support those with long-term conditions to live as well as possible.
The PAC’s report in particular identified a lack of neurological expertise in developing services. In the current system, clinical networks have been responsible for sustained improvements to particular care pathways or for particular groups of patients. Noble Lords made reference to that too. They have raised standards, supported easier and faster access to services and encouraged the spread of best practice.
We are committed to ensuring that in the new system this way of working and delivering services is maintained, and that we build upon the progress that has been made. In July the NHS Commissioning Board Authority announced the establishment of four new strategic clinical networks, including one covering dementia, mental health and neurology. The network will help to improve outcomes for patients across England by ensuring that the NHS Commissioning Board and clinical commissioning groups have access to expert clinical opinion about the way that care should be planned and delivered.
Quality standards, to which noble Lords have also referred, published by the National Institute for Health and Clinical Excellence, will also play a central role in the new health and care system by providing patients and the public, health and social care professionals, commissioners and service providers with definitions of high-quality health and social care. We have asked NICE to develop a number of quality standards that are neurologically focused. Noble Lords also made reference to them, and I shall come back to them in a minute. These are already in development and, additionally, people with a neurological condition will benefit from cross-cutting quality standards.
I want to try to address a number of noble Lords’ questions at this point. The noble Baroness, Lady Ford, raised a number of specific questions. She asked about individual care plans. I assure her that personalised care planning is already being delivered. She also asked what was happening with regard to quality standards. A clinical guideline on assessment is to be developed, and from this we can develop a generic quality standard.
The noble Baroness asked about the continuation of the PAC recommendations on progress and wanted to know about driving up quality. The mandate to which people have referred emphasises what is important for people with long-term conditions. Irrespective of the nature of that condition, the focus is on how you try to ensure that people with long-term conditions are supported and how they would best manage their conditions. Taking it in a generic way, you try to ensure that you do not exclude other long-term conditions that we have not been talking about this evening, but obviously these ones would be included in that approach.
A number of noble Lords referred to data. The NHS Commissioning Board is working with the Neurological Alliance to develop a data set. It is extremely important that the information is there because, as noble Lords have said, unless you understand the nature of the problem—where you have patients, what treatment they are receiving, and so on—you cannot take forward what you wish to achieve. When I first became involved in this area, I was astonished at the lack of information on particular conditions around the country. That is something that the previous Government, and Governments before them, must take responsibility for. I am not at all surprised that the noble Lord, Lord Darzi, started to try to draw up atlases of diseases and outcomes and suchlike. To me as a former academic, it was astonishing that that kind of information was not there before. I assure noble Lords that this Government are taking that forward, but I would pose a criticism to previous Governments for not having done that basic work.
The noble Baroness, Lady Ford, asked about clinical commissioning groups taking specialised commissioning seriously, as did my noble friend Lady Jolly. It is extremely important. The neurological charities and organisations are providing support in this area, and I welcome that; they are supporting commissioners to understand the complexity of support and services needed, and the Department of Health has funded neurological commissioning support to work with the CCGs. I hope that that will pay dividends.
My noble friend Lady Jolly asked about the national strategy to help with the diagnosis of epilepsy. Quality standards are due for publication in February which will cover referrals to specialists and timely access to diagnostic tests, which we hope will improve things.
The noble Baroness, Lady Masham, asked about MMD guidance and various aspects to do with that, including the development of drugs. The UK rare diseases plan, which will be implemented before the end of 2013, will be looking at drugs for rare diseases and the research needed to bring them to market. She is quite right that, as in developing countries, rare diseases do not bring in the kind of investment that is needed in these areas. That is something that we are looking at.
We continue to review how NICE is taking things forward, and, of course, NICE itself reviews its workload and how it is managing it. Clearly, those who are concerned about other diseases are equally concerned that their NICE proposals are expedited. It is extremely important that NICE carries this forward as rapidly as it can, but it needs to balance that with its other workload. We recognise the importance of specialist nurses—a point made by the noble Baroness, Lady Masham. They help to achieve significant cost savings, and the Royal College of Nursing is at the moment looking at the value of specialist nurses and will help service commissioners in trying to understand what is required and what the workforce needs to be.
The noble Lord, Lord MacKenzie, asked a number of questions, some of which I have dealt with in my previous answers. He wondered whether the PAC recommendations would be revisited. No doubt the noble Baroness, Lady Ford, will have another debate, which I will no doubt answer, but I can say that the PAC has been asked by the National Audit Office to follow up on its report in 2014.
In terms of clinical leadership, the NHS Commissioning Board is determining how to structure national clinical leadership and advice within the board, and further announcements will be made shortly. I note that Dr Martin McShane, who has been appointed as the lead on long-term conditions, met the Neurological Alliance on 12 September, so I hope that that is encouraging to those who are concerned about leadership.
The noble Lord, Lord Patel, raised a number of questions that he had put to me previously. In terms of better services for children, subject to regulations being laid, children’s neuroscience services will be commissioned by the NHS Commissioning Board, which will promote greater consistency. The children’s health outcomes framework, which will be published by Christmas, will support the delivery of better children’s services and better outcomes. The noble Lord asked whether that would be carried over to adults, and I will get back to him about that. With regard to following the NICE guidelines, I remind him that they are advisory, not mandatory. Clinicians are free to adapt the guidelines. However, in a transparent system where those guidelines are known, that, too, puts pressure on the clinicians via the patients and certainly by the specialist organisations, which are clearly so well aware of what is required.
I have talked about the NHS Commissioning Board developing data sets and how astonished I was that they did not exist in a previous era.
The noble Baroness, Lady Gale, asked whether Parkinson’s and other diseases could be prioritised. All conditions will have equal priority under the new system. For those who are concerned about so-called Cinderella conditions, that should be an encouraging answer, although those who feel that the diseases that they are particularly concerned about get a lot of focus already might be a bit concerned. All conditions will have equal priority, so Cinderella conditions should be improved.
I conclude by assuring noble Lords that there is a real commitment within the Government to address the challenges identified this evening, with the support of the NHS Commissioning Board and generally within the health and social care sectors. We recognise that much still needs to be done, but our primary goal is the same: to improve the patient experience and outcomes, and to bring real benefits and real change to the lives of people living with neurological conditions. I am very sure that the NHS Commissioning Board will have heard what noble Lords have said in this debate.
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