House of Lords

Thursday 13th December 2012 Lords Chamber

Thursday, 13 December 2012.

11:00

Prayers—read by the Lord Bishop of Guildford.

Police and Crime Commissioners

Thursday 13th December 2012 Lords Chamber

Question

11:06

Asked By

[Lord Blair of Boughton]

To ask Her Majesty’s Government what assessment they have made of the proportion of successful candidates for police and crime commissioner posts who were independent of political parties.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)]

My Lords, I am sure that the House will congratulate the 12 independent police and crime commissioners who have been elected as PCCs for their force areas. Nearly a third of PCCs are independents. Their experience and their willingness to serve the public in such a powerful office can only enhance and strengthen the ability of the police and the wider criminal justice partners to continue to reduce crime, hold the police to account and be the strong advocates of victims.

[Lord Blair of Boughton]

I thank the Minister for his Answer, but I think that there is something further to say. When I worked alongside provincial police forces in the 1990s, their members invariably agreed—and they were right—that policing should not be a subject for party politics, which should be left at the door of their meetings. Does the Minister agree that that sentiment has been clearly expressed once again in these recent elections, but this time by the public, through widespread abstention, an unprecedented proportion of spoiled ballots and a surprisingly high number of successful independent candidates? Does he therefore agree that in future elections all candidates should stand only as independents, on their record and aims alone and free of the encumbrance of party-political endorsement, which appears to be so off-putting to the public?

[Lord Taylor of Holbeach]

I hope that noble Lords will agree with me that there is nothing wrong with party politics in its right place. The key thing about the way in which the role of the police and crime commissioners is structured means that the operation of the police will not be politicised. Chief constables will decide all operational matters, such as who is arrested and how investigations are carried out—these will not become political decisions. The policing protocol helps to set out where the PCC’s role ends and that of the chief constable begins.

[Lord Mackenzie of Framwellgate]

My Lords, if a police and crime commissioner who represents a party finds that the public in the area he represents take a totally different view at the local level from the policies of that party, which policy should he implement? Should it be the policy of the public who elected him or the party policy?

[Lord Taylor of Holbeach]

This is something that all elected politicians have to come to terms with and I see no conflict here. For the first time, we have direct democratic accountability through the role of the PCCs and I see the next PCC elections bearing witness as to how effective this will be, in the sense that people will be making choices, some for someone they think represents their political point of view, while others will be looking for other characteristics. Above all, however, they will be judging on how well the PCCs have performed. That is the challenge that faces those who have taken on this office.

[Lord Elton]

My Lords, surely the high level of abstention to which the noble Lord, Lord Blair, referred, arose from the fact that most of the voters had not a clue who the candidates were. Must not something be done to remedy that before the next round?

[Lord Taylor of Holbeach]

I think we have discussed this before. There have been a series of Questions on the arrangements for the elections. The Electoral Commission will be producing a report on these elections and the Home Office will take note of it.

[Lord Tomlinson]

Does the noble Lord agree that it is precipitate to be talking about the success of the next elections? The answer we can draw from the previous elections is that they were disastrous in every respect. They did not inspire people to go out and vote, they did not inspire independents to campaign with the effectiveness that many people would have liked to see, and they are by every stretch of the imagination an unacceptable result to which the word “democratic” cannot be properly added.

[Lord Taylor of Holbeach]

I think the noble Lord has been carried away by his oratory. What I would like to know from the noble Lord is whether he represents a party that will abolish the PCCs. For my part, I see this extension of democratic accountability as unequivocally a good thing, and I hope noble Lords will agree with that.

[Lord Bradshaw]

My Lords, building on the Question put by the noble Lord, Lord Blair, I know from my own experience that experienced, independent members were actually put off from standing for election for two reasons: they could not afford it and they had no means of publicising their candidature other than by spending a lot of their own money. The very fine chairman of one police authority, an independent elected by the elected members of that police authority, was unable to stand for those reasons. What are we going to do to see that this is not the case in the future?

[Lord Taylor of Holbeach]

I think that the outcome refutes the noble Lord’s suggestion. I am from Lincolnshire where there were two independent candidates along with the party candidates. I am sure that the very fact that people have chosen to elect independent candidates will encourage other independent candidates to put their names forward next time.

[Lord Condon]

My Lords, does the Minister share any of my concern that nearly a third of the newly elected commissioners have appointed well-paid deputies or assistant commissioners without any transparency, selection criteria or adherence to Nolan-type principles?

[Lord Taylor of Holbeach]

I should make it clear that the facility for the role of the deputy police and crime commissioner is written into the arrangements, but it is not mandatory. It is indeed not politically restricted and it is designed to assist the PCC in his role. The actual administration of the PCC’s office will be in the control of a finance officer and a head of paid staff. The head of paid staff serves as the monitoring officer. I know the circumstances to which the noble Lord has alluded, but as I have said before, the decisions made by PCCs will be judged by the electorate at the next elections.

[Lord Elystan-Morgan]

My Lords, does the Minister accept that many of the independents who were elected had held high rank as serving police officers? Will he confirm that they will abjure any temptation to outguess a chief constable insofar as operational matters are concerned?

[Lord Taylor of Holbeach]

Yes, I think that I have made it absolutely clear. There is a protocol that sets down all these matters and I have no doubt that chief constables themselves will make sure that they keep their part of the bargain, as indeed will PCCs.

Energy: Tariffs

Thursday 13th December 2012 Lords Chamber

Question

11:15

Asked By

[Lord Whitty]

To ask Her Majesty’s Government what steps the Department of Energy and Climate Change and OFGEM have taken towards ensuring that energy companies offer their customers the lowest tariff, as announced by the Prime Minister on 17 October (HC Deb, col 316).

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)]

My Lords, the Government published a discussion document on 20 November setting out proposals to deliver the Prime Minister’s commitment to ensure that consumers are on the cheapest tariffs. The Government’s proposals build on Ofgem’s latest retail market review proposals published on 26 October. We are consulting on proposals to legislate in the Energy Bill to ensure that energy companies place consumers on the cheapest tariffs that meet their preferences and have clear, personalised information to help them shop around more easily for the best deals across the market.

[Lord Whitty]

My Lords, I thank the Minister for that Answer but the Question asked what steps have been taken. She refers to consultation. I have read the Statement, I have read the consultation paper and I have even tried to read the Energy Bill before another place; but the consultation document deals with simplification, it deals with collective buying, it deals with issues such as the companies offering a single tariff—but there is nothing in there to force companies by regulation to offer the lowest rate, which is what the Prime Minister promised. By the way, the Energy Bill as it stands does not really say anything about consumers until Clause 117.

[Baroness Verma]

My Lords, I remind the noble Lord that at least this Government have taken steps to help consumers who for far too long have not had information which is simple and easy to understand on their bills. The Government are at least taking those proposals forward. Just 15% of households switched last year and that is a really unacceptable percentage. We want to ensure that through the Energy Bill and through our consultations, we are putting the consumer at the heart of what we are doing. I am sure that when the Energy Bill comes to this House the noble Lord will look at it very carefully.

[Baroness Trumpington]

My Lords, whose tariff is employed to heat this House? Is the tariff very low? I ask because it is very cold here.

[Baroness Verma]

My Lords, I am afraid that I do not take responsibility for the tariff of this House, but I will take my noble friend’s request back to the facilities department.

[Lord Campbell-Savours]

My Lords, is not the best way to reduce electricity consumption prices to go for voltage optimisation? What is the Government’s attitude towards that?

[Baroness Verma]

My Lords, we have looked at all aspects of reducing energy bills, even voltage optimisation, but we feel that the path we are taking is one by which we will be able to give a greater mix of energy supplies to consumers and a greater choice.

[Baroness O'Cathain]

My Lords, what is the future for smart meters? All the evidence suggests that smart meters, when installed in the home, cut the cost of electricity, but not to the detriment of heating. They seem to be able to do it in such a way, through the mechanics of the thing, as to benefit the consumer completely. Is the same attitude being taken by the energy companies as was taken by the water companies over the installation of water meters—“No, no, don’t go there, because if we do not install them they will have to pay for more water”?

[Baroness Verma]

My Lords, my noble friend raises a very important part of the work that the Department of Energy and Climate Change is undertaking. Rolling out smart meters in a mass rollout from 2014 will enable consumers to see how much energy they are using and to make choices about whether they need to reduce their own energy consumption. My noble friend raises the question of industry and suppliers. This is very much led by industry and energy suppliers—they are very involved in the rollout of smart meters. We are working collectively.

[Baroness Worthington]

My Lords, does the Minister agree that until there is proper reform of the energy market to introduce genuine competition in generation consumers cannot be guaranteed fair prices, no matter how many tariffs are on offer, and that the Government’s Energy Bill represents a missed opportunity to usher in genuine market reform?

[Baroness Verma]

My Lords, I do not quite know how the noble Baroness can predict what the Energy Bill will do until it arrives. When it arrives, I am sure that we will have long discussions over it. She misses out the point that the Energy Bill has brought certainty for investment. It will create a lot of jobs and ensure that consumers are at the heart of energy policy.

[Lord Phillips of Sudbury]

My Lords, does my noble friend agree that it is a sad if not tragic reflection on the state of big business today that one has to introduce legislation to prevent it engaging in premeditated deception of the most vulnerable consumers?

[Baroness Verma]

My noble friend speaks as many people feel: there is much that we need to do for the consumer. However, he will also be aware that energy bills have been rising because of wholesale prices rising, a matter over which we have very little control. Many of the increases that have taken place have occurred because of wholesale prices and not because energy companies here are raising prices.

[Lord Campbell-Savours]

My Lords, voltage optimisation is not an alternative to competing energy tariffs—it can be applied in the case of all companies providing electricity. Why do the Government not take it far more seriously, when very substantial gains are available under the introduction of voltage optimisation?

[Baroness Verma]

My Lords, I appreciate the noble Lord’s insistence on this but I will refer to my previous response. We are looking at all options, and we have looked at voltage optimisation.

Renewable Transport Fuel Obligation

Thursday 13th December 2012 Lords Chamber

Question

11:22

Asked By

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what plans they have to review the Renewable Transport Fuel Obligation in order to support businesses that make biofuels from locally sourced waste and sell it close to where it is produced.

[Earl Attlee]

My Lords, the Government strongly believe that the renewable transport fuel obligation delivers effective and sustainable market-based support to the biofuels industry. The RTFO provides additional support for biofuels made from waste by awarding two renewable transport fuel certificates for each litre supplied. The Department for Transport has committed to a review of the double certificate scheme and the support provided by the RTFO in 2013.

[Lord Kennedy of Southwark]

I thank the noble Earl for his response. There is a real problem here in that small, green businesses making biodiesel from waste products collected locally and sold from their premises are just not getting a fair deal. Will he agree to raise the matter with the Secretary of State for Transport, and will he facilitate a meeting for me with the Secretary of State and relevant officials on this matter?

[Earl Attlee]

My Lords, one of the concerns I have identified in private conversations with the noble Lord is the possibility of distorting the market in UCO and biodiesel by importations of ethanol. I will happily raise that with my right honourable friend the Secretary of State.

[Lord Palmer]

My Lords, as one of the instigators of the RTFO, is it not a scandal that our commitment is met by only 11% from home-produced fuel in this country? I must declare an interest as president of the transport division of the Renewable Energy Association.

[Earl Attlee]

My Lords, I understand the point that the noble Lord is making but we are bound by the WTO trade rules and EU state aid rules.

[Lord Bradshaw]

Does my noble friend agree that there really are two types of renewable fuel? There is that produced from food crops, which are converted, and that which is collected as waste products from places such as fish and chip shops. There is a much greater utility in the second type than in the first. I somehow feel that the Government must go to the World Trade Organisation and the EEC, or somebody else, and make a clear distinction so that they can reward properly the people who are doing a service in stopping the deposit of waste into drains and onto land.

[Earl Attlee]

My noble friend is largely right. That is why fuels derived from waste products get two renewable transport fuel certificates, whereas short rotation first generation crops get only one certificate. However, there is a difficulty and the policy needs to be designed so we do not get indirect land use change problems. My honourable friend Mr Norman Baker is working closely with the European Union to get a solution to that problem.

[Lord Whitty]

I understand this global concern about using what was previously food production land for biofuels. However, when we first proposed the obligation, about 50% of the market was expected to be met from waste using the kind of operation that my noble friend Lord Kennedy is concerned about. There is also the separate problem that British Sugar has planted new land and made a substantial investment. If we renege on or reduce the obligation, it will not bring any return to a major investor in some of our important rural areas.

[Earl Attlee]

My Lords, the noble Lord makes the point that we need to give producers certainty and clarity. Next year we will look at how this obligation-year worked. We cannot start that process until later in the year, because the trading period is to April and certificates can then be issued until August. So we are looking at quite late next year before we have a full data set that we can analyse to see how the market is working. However, I understand the points that the noble Lord makes.

Civil Service: Permanent Secretaries

Thursday 13th December 2012 Lords Chamber

Question

11:26

Asked By

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government whether they accept the advice of the Civil Service Commission that the final decision in the appointment of Permanent Secretaries should be made by a selection panel independent of ministers, to safeguard a non-political civil service.

[Lord Wallace of Saltaire]

My Lords, in view of some of the exaggerated comments in the press in the last few days, it is perhaps best if I quote the statement by the First Civil Service Commissioner earlier this week:

“We agree that Ministers should have significant influence on the appointment of senior civil servants with whom they work closely; and, as more senior jobs are opened up to competition, we have developed a more active role for Ministers in top appointments than is generally understood”.

In paragraph 8 of the accompanying explanatory note on Recruiting Permanent Secretaries: Ministerial Involvement, it says:

“Under the terms of the Constitutional Reform and Governance Act 2010 the final decision whether or not to appoint the recommended candidate rests with the Prime Minister”.

[Lord Hunt of Kings Heath]

I am sure that the House is grateful to the noble Lord for reading extracts, but he has been rather selective. The fact is, his right honourable friend Mr Maude is essentially bullying the Civil Service Commission and threatening new legislation in order to give Secretaries of State the power to appoint Permanent Secretaries. Why are the Government going down that route? Do they not accept that it puts the political neutrality of the Civil Service at peril?

[Lord Wallace of Saltaire]

My Lords, we do not. I quote the right honourable Jack Straw, who said:

“I welcome his proposals for greater involvement by Secretaries of State in the appointment of their permanent secretaries”.

He went on to say,

“in each of the three permanent secretary appointments that I made”—

that is, Mr Straw—

“in the Home Office, the Foreign Office and the Ministry of Justice—I insisted that there was a shortlist of at least three candidates from which I should choose. There was not the least allegation that I had acted in a partisan or cronyist way”.—[Official Report, Commons, 19/6/12; col. 749.]

[Lord Jenkin of Roding]

My Lords, when I was Secretary of State for Industry, I was faced with a retiring Permanent Secretary. I found the names produced for me by the authorities unacceptable but I had hugely admired a senior civil servant from another department. I arranged that he should be appointed. He was one of the most successful Permanent Secretaries in the Department of Industry. A Minister’s involvement in this is absolutely essential.

[Lord Wallace of Saltaire]

My Lords, the relationship between a Minister and his or her Permanent Secretary is clearly key to the effective working of government. Some Members of this House will be old enough to remember the relationship between Dame Evelyn Sharp and Richard Crossman which was famously bitterly hostile. We do not want to go back to that sort of hostile arrangement again.

[Baroness Prashar]

My Lords, the explanatory note by the Civil Service Commission clearly states the appropriate involvement of Ministers in the appointment of Permanent Secretaries. It clearly indicates that it has not crossed the line that would in any way jeopardise the impartiality of our Civil Service. Does the Minister accept that the current Administration hold the Civil Service in trust for the next Administration and that nothing must be done to in any way jeopardise its impartiality? I was quite concerned to read the comments of Francis Maude when he said he was determined to increase the involvement of Ministers in appointments. In asking this question, I declare that I was a Civil Service Commissioner from 2000 to 2005 and had to resist similar efforts by the previous Administration.

[Lord Wallace of Saltaire]

My Lords, the Prime Minister in speaking to the Liaison Committee in July made clear that he holds very strongly to the Northcote-Trevelyan principles. But one has to modernise to some extent and going further into his speech I was interested by his talking about the gradual opening up of the question of accountability. We are talking about Civil Service accountability to Ministers but also ministerial and official accountability to Parliament. There are some interesting long-term issues here which we need to discuss further. To quote him again:

“I would like to see a gradual opening up of this accountability, with Ministers being given more discretion about permanent secretary appointments, and Select Committees being able to see more civil servants, particularly on implementation and major project issues. Those would be sensible reforms. Let’s do that and see how that works before taking another leap”.

[Lord Wright of Richmond]

My Lords, there was a brief discussion on Radio 4 this morning about whether we should follow the American precedent of fracking oil shale. Does the Minister agree that to follow the other American precedent of politicising the senior branches of the public service would seriously undermine the recommendations of the Northcote-Trevelyan report of 1853 for a permanent Civil Service which, I suggest, has done this country and Ministers a considerable benefit since then?

[Lord Wallace of Saltaire]

My Lords, I entirely agree with that. I felt that Sue Cameron’s article in the Telegraph this morning, clearly based on some rather hostile briefing by, I suspect, retired civil servants, goes enormously over the top in suggesting that ambassadorships were about to be given to donors. We have after all in the past occasionally had political appointments to ambassadorships. The noble Lord, Lord Richard, was one and very successful. There was also Peter Jay and Christopher, Lord Soames. We have held to the principles of Northcote-Trevelyan on political impartiality and we will continue to do so.

[Lord Tyler]

My Lords—

[Lord Soley]

My Lords—

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

My Lords, we have time. I think it is probably my noble friend Lord Tyler first and then the Labour Party.

[Lord Tyler]

My Lords, my noble friend has touched on the relationship of Ministers to Parliament. I wonder if he would just reinforce and reiterate the point that all Permanent Secretaries are answerable and accountable to Parliament for the whole of their departments, including of course the performance of the head and leadership of that department. Has he noted the suggestion that Secretaries of State might be subjected to confirmatory hearings by departmental Select Committees? Would he confirm that it is the Government’s view that, in this relationship, it is the Secretary of State to the department that is responsible to Parliament? So would it not be more appropriate for the Secretary of State on appointment to be subjected to a confirmatory hearing?

[Lord Wallace of Saltaire]

I will duck answering that question. The question of Civil Service accountability to Parliament is one of those issues now in play which does raise some very large and long-term issues and will need much further debate.

[Lord Soley]

I find a lack of clarity in the Minister’s reply. What many of us are looking for, following the comments by Francis Maude, is a very clear statement that Ministers will not be able to override the normal negotiations that take place and insist on having the Permanent Secretary they want, because that politicises it. At the moment, disagreements are usually resolved by discussion between the Civil Service and the Minister. If we have a situation, which Francis Maude seems to want, of Ministers insisting on having their civil servant, then that politicises it. Certainly what I am looking for—and I think many other people are looking for—is a clear statement from a Government Minister that it is not going to happen.

[Lord Wallace of Saltaire]

Let me be as clear as I can. The panel is asked to interview those who have applied. It ranks those whom it considers to be above the line in terms of being appointable or not. The issue at stake is whether the Secretary of State, and behind him the Prime Minister and the head of the Civil Service, can change the order of those who are ranked above the line. I recall that, until two years ago, the Prime Minister was able to change the order of those recommended as Archbishop of Canterbury—and on occasion did so, as Margaret Thatcher once famously did. The suggestion that Secretaries of State should not be allowed to at least consider the ranking of those above the line and accepted as appointable by the panel is one that we should consider further.

[Lord Butler of Brockwell]

My Lords—

[Lord King of Bridgwater]

My Lords—

[Lord Dubs]

My Lords—

[Lord Strathclyde]

My Lords, I think it is the turn of the Conservative Party.

[Lord King of Bridgwater]

I am not aware of any complaint from our side of the House about the selection that Mr Jack Straw made on a short list of three which he insisted on having, for which he perfectly properly said that he took final responsibility for his department. Are not those Permanent Secretaries, having been appointed, also entitled to expect that the person who makes the final decision stays in office for slightly more than one year? In the case of both the previous Government and the present Government, can we see a little bit more continuity in Ministers than we have had in recent years?

[Lord Wallace of Saltaire]

The current Government have been doing their best to provide rather greater continuity, particularly in the Ministry of Defence, than the last Government. One has to recognise that this is a difficult relationship. A very good friend of mine who was a senior official under the last Government said to me that if you want to be a senior official with this sort of Government—and he was talking about the last Government—you need always to have in the back of your mind that you could move somewhere else. It is a delicate relationship. We hold to the principles of a permanent Civil Service, but there is unavoidable tension between a Permanent Secretary and a Secretary of State—just as there is in a company between the chief executive and the chairman.

BBC Trust Chairman (Election) Bill [HL]

Thursday 13th December 2012 Lords Chamber

First Reading

11:35

A Bill to make provision for the election of the BBC Trust chairman by licence-fee payers.

The Bill was introduced by Lord Bates, read a first time and ordered to be printed.

Banking Professional Standards

Thursday 13th December 2012 Lords Chamber

Motion to Agree

11:36

Moved By

[Lord Strathclyde]

That notwithstanding the Resolution of this House of 17 July 2012, it be an instruction to the Parliamentary Commission on Banking Standards that it should report on legislative action no later than 19 December 2012.

Motion agreed.

Public Bodies (Abolition of British Shipbuilders) Order 2013

Thursday 13th December 2012 Lords Chamber

Public Bodies (Abolition of the Aircraft and Shipbuilding Industries Arbitration Tribunal) Order 2013

Legislative Reform (Constitution of Veterinary Surgeons Preliminary Investigation and Disciplinary Committees) Order 2013

Motions to refer to Grand Committee

11:36

Moved By

[Lord Strathclyde]

That the draft orders be referred to a Grand Committee.

Motions agreed.

Credit Unions

Thursday 13th December 2012 Lords Chamber

Motion to Take Note

11:38

Moved By

[Lord Kennedy of Southwark]

That this House takes note of the development of credit unions in the United Kingdom.

[Lord Kennedy of Southwark]

My Lords, I am delighted to open this debate on the development of credit unions in the United Kingdom. I have been a supporter of the credit union movement for well over 25 years. Since coming to the House two and a half years ago, I have tried to raise the profile of credit unions and to campaign for positive reform that will enable the movement to grow and to better serve its members. I firmly believe that a vibrant credit union sector is vital as part of the landscape of different financial organisations offering a range of financial products to citizens. I am a member of the Rainbow Savers credit union and have been for many years. I am also one of the vice-chairs of the All-Party Parliamentary Group on Credit Unions. Credit unions are financial co-operatives. I am delighted that in addition to being a Labour Party member, I sit in this House as a member of the Co-operative Party and as one of the 18 Labour and Co-operative Peers.

It is estimated that more than 90% of the UK population are eligible to join a credit union, either because of where they live or the industry in which they work. I am delighted that there is cross-party support in this House and in the other place for the development of credit unions—as there is in the devolved institutions, town halls and council chambers across the United Kingdom. More than 1 million people in Great Britain use credit unions. In June this year, credit unions held savings for their members amounting to £776 million and had £602 million out on loan to members.

In recent years, growth has been impressive. The previous Labour Government and the present coalition Government have both been supportive of the movement. The average membership of a credit union has increased from 200 members in the 1990s to more than 2,000 members today. Many of the bigger credit unions, such as Manchester, Glasgow and London Mutual, often get 200 to 300 applications for membership per month.

However, on an international scale credit union membership and penetration into communities here is on a small scale. Much more needs to be done. Compared with the UK’s 1 million members, the Republic of Ireland, which has a much smaller population, has more than 3 million members of credit unions. Two-thirds of the population of the Republic are members of credit unions. They have well over 10 times the amount of members’ money on deposit that we have in the UK. In the United States of America, 93 million citizens—just over 30% of the population—are members of credit unions, which have $845 billion on deposit. I hope that will give noble Lords some idea of where we fit in on the scale, and of what can be done if we work together.

One positive thing that credit unions do is encourage their members to save. Getting into the habit of saving and putting money aside for a rainy day, for Christmas or for something for the home is a good thing to do. It is a good discipline and a good habit to get into, and it will serve people well throughout their life. Credit unions also provide affordable sources of credit to members at a maximum interest rate of 2% per month, or 26.8% per annum. A £300 loan repaid over 26 weeks will cost a member less than £20 in interest. A similar loan from a home credit provider would cost well in excess of £170 in interest—and that is the nub of the problem.

If you are on a low or fixed income you often get the worst possible deal for finance, and all noble Lords should be angry about that. Why is it acceptable that those with the least should have to pay the most for finance? It is an outrage. With all the changes taking place in benefits and welfare, and with the introduction of universal credit, we should all agree that a sustainable fair-price mechanism to enable people to get the finance they need is desperately needed. An expanding credit union movement fits the bill nicely.

As I have said, if the big society initiative means anything, surely it means people coming together to help themselves and their communities. I contend that credit unions are the big society in action. I was delighted last week when we agreed an amendment to the Financial Services Bill that will cap the interest rates and other charges levied by payday lenders such as Wonga. I hope that the days of 4,000% interest rates from payday lenders will soon come to an end.

London Mutual Credit Union entered the payday lending market because it saw that local people had a need for that. People in desperate situations were coming in through its front door. They were drowning in a sea of debt and paying exorbitant interest rates, to unsympathetic companies whose only solution was to offer them another payday loan and rack up interest, charges and fines. People were offered another big loan that then could not be paid, so London Mutual stepped in. Its interest rate is 26.8% per annum, so if you borrow £400 for one month, you pay £8 interest, not the £120 you would pay with some high street payday lenders.

I accept that no credit union will be able to grow and be financially stable on payday lending alone. The London Mutual added this facility to a suite of products it offers to its members because it saw that there was a desperate need for it as people were being ripped off. Credit unions need to grow and prosper. That cannot be done just through government schemes and grants. They have to grow by attracting new members and savings and building their business on solid foundations. Credit unions must also be attractive to a wide cross-section of the population. They cannot be just institutions where poor people go for finance because no one else will give them any finance. Therefore, credit unions have to have a suite of products. Many of the large ones offer ISAs to their members at very competitive interest rates. Five of the biggest credit unions in the UK now offer mortgages to their members. Credit unions should offer traditional savings and lending, where possible and, where there is a need, look to provide short-term finance in addition to other financial products such as ISAs and much longer-term loans and mortgages where their financial strength allows. The movement should work towards providing financial services that are needed and wanted but do so on a firm footing with a strong financial base and using best business practice to achieve that. The challenge is for the Government, banks, business in general and local authorities all to play their role in supporting the industry to enable credit unions to grow their financial strength and robustness and deliver for their members reasonably priced financial products and services.

What should we be doing? The Government and Parliament need to ensure that the legislative framework in which the credit union sector operates is modern, up to date, flexible and enables it to develop and meet the challenges and take up the opportunities offered by the modern world. A start was made with the passing of the legislative reform order early this year but much more needs to be done. The DWP expansion project is a good government initiative and up to £35.6 million is available to credit union consortia. The aim of the project is to increase membership of credit unions by half a million by March 2015 and a million by March 2017, and increase access to affordable credit so that members save an additional £1 billion in interest payments compared with what they would have paid to high-cost commercial lenders between the start of the project and when it ends in 2019.

The Government should also ensure that the link-up with the Post Office happens. It would be good for the Post Office, develop the back office functions and give every credit union in the country a counter service at every post office, which is a trusted brand and presence on virtually every high street. This link has the potential really to boost confidence in the sector and create expansion.

We have on many occasions in this House spoken about banks and how these financial institutions have let us down. Not all but many banks do indeed have to earn the trust of their customers and the nation at large. Their practices have not been acceptable and people have rightly been cross at their actions. Many banks do some work in the field of credit unions by sponsoring events, reports and activities and some bank staff do a few hours’ work with a local credit union. While this is commendable and welcome, the banks have to do much more. If there are people in the community to whom banks do not want to provide financial products for whatever reason, they have a responsibility to enable the credit union sector to provide those services to people.

I would like to see all the banks—Barclays, HSBC, NatWest, Lloyds TSB and the Co-operative Bank—agree to second staff to work in credit unions. This would not be people just helping out for five hours but the banks identifying bright young people—those who they believe could be running their banks in the years to come and who will have major roles to play—and seconding them to work for credit unions for a year or two as part of their training and development programme. They could help build capacity, improve the management, practices and procedures, and build the robustness of the credit unions to provide financial products to those in the local community to whom the banks do not wish to provide financial services. This is socially responsible and I believe that the banks have a duty to put much more back into the community.

Local authorities have an important role to play in promoting credit unions to their residents. There are excellent examples of partnership working that are a real benefit to the local population and the local economy. Salford University did some research on behalf of Leeds City Council. It found that for every pound invested in credit unions there was a £10 benefit in retained income for the local economy as money was not lost in interest payments. Islington Council automatically signs up every new council tenant with the local credit union. It opens an account for them and puts £2 in it. Southwark, the borough in which I grew up, also works very closely with the London Mutual and actively promotes its services. Glasgow City Council deserves particular praise for the work it does—with its active support and engagement it has the largest credit union membership of any city in the UK. Some 22% of the population of the city of Glasgow are members of credit unions. The work in Glasgow was targeted to overcome organisational barriers to growth and to help the credit unions to become self-sufficient and standing on their own two feet. This is where we have to seek to go. I would like to see the Local Government Association and CoSLA actively encouraging their members to be fully engaged with, and supportive of, credit unions, playing a leading role in ensuring that credit unions in their areas have active agreements and active plans for growth and capacity building.

The social housing sector has also seen the potential for credit unions helping people with the transition to universal credits with jam-jar and ring-fenced accounts for regular outgoings, paying the rent to the landlord before releasing the remainder to the tenant. This has to be an area for further expansion with housing providers working in partnership so it is better for the tenants, the housing provider and the credit union and the work it is seeking to do.

There is also a role for employers to work with credit unions and there are some excellent examples, but quite a lot of them appear to be in the public sector. The private sector should look to engage more as there are real benefits for companies, their staff and local communities with minimal cost on their part.

As I bring my remarks to a close, I am delighted that my noble friend Lord Collins and the noble Lord, Lord Freud, will respond for the Opposition and the Government respectively. I thank all noble Lords and the right reverend Prelate who are going to speak today and look forward to their contributions.

11:52

[Lord Griffiths of Fforestfach]

My Lords, I am delighted to take part in this debate and I thank the noble Lord, Lord Kennedy, for initiating it. First, I must declare my interest. Last year I was appointed by my noble friend the Minister to the project steering committee of the DWP credit union expansion project, which reported earlier this year. More recently, I have also supported, but in a very small way, the initiative of the right reverend Prelate the Bishop of Durham to explore the potential for developing a credit union within his diocese and, more generally, in the north-east of England.

This involvement grew out of my interest in the subject as a result of being asked back in 2003 by the then shadow Chancellor of the Exchequer, Oliver Letwin, to set up and chair a commission on the subject of debt among low-income families, why people get into debt spirals and what might be done to help them. The commission was independent of any political party and reported in March 2005. In that report we made it very clear that we welcomed the growth in alternative sources of credit, especially in relation to commercial banks and doorstep lending, and we made a number of recommendations. On the basis of that, and subsequent involvement, I would like to make three broad points that really support what the noble Lord, Lord Kennedy, has already said.

The first is that although credit unions are small in number and in the volume of lending, they are nevertheless an important part of the financial services industry for a number of reasons. First, they provide low-income families with access to credit at interest rates lower than those of home credit and payday loans, let alone those of loan sharks. Credit unions have also never been accused of bringing undue pressure on the doorstep in encouraging potential borrowers; nor have they been accused of a lack of transparency.

Secondly, credit unions are an important way of reintroducing the personal element back into banking. The personal element exists today, but only for high net worth individuals. Many customers complain of the lack of the personal element, a problem that has been added to by technology. Credit unions have a key role in reintroducing this personal element into banking.

Thirdly, credit unions are an attractive form of ownership that gives borrowers confidence that they are not being exploited. Those who use these services and have taken part in credit unions speak particularly of the importance of the local and regional dimensions.

Finally, credit unions, as the noble Lord, Lord Kennedy, said, have at their heart a culture of saving that is desperately needed in this country. If you look at what has happened in the past five, six or seven years in the financial crisis, all elements of our society have gone into debt and have been overspending. The banking sector issued far too much debt through leverage and was a major cause of the financial crisis. As was made clear in the Autumn Statement last week, the percentage of government debt to income is expected to increase over the next three years. Consumer debt still stands at a horrendously high level and is, frankly, not sustainable. Therefore, at the level of individual families, in schools and among young people, credit unions have an important part to play in helping people to manage their finances.

Credit unions have changed over the past decade very much for the better. Membership has doubled and loans to low-income families over the past five years have tripled. Credit unions have recognised the need for change. Surveys have suggested that the people who are using them are very happy with them. The working party of which I was part commissioned a study from Experian. It found that the potential market for credit unions is 7 million people.

However, there is one fundamental problem about credit unions at present. They are not financially viable and, to exist in their present form, they need a continuing subsidy. Some credit unions, the most successful, are financially viable, but they are a small minority. Credit unions have been helped in the past six years, first by the initiative of the previous Government, the Financial Inclusion Growth Fund and, more recently, by reforms that this Government have made. However, in spite of this, in recent years the DWP has ceased to fund 55 credit unions, 25 of which have been forced to close or merge. Credit unions are important but they are not financially viable.

My second broad point is to welcome the initiative of this Government, particularly the interest shown by the noble Lord, Lord Freud, as the Minister responsible, which carries on from the previous Government. The working party faced three scenarios. The first was to do nothing; the second was to figure out how one could help those credit unions which wanted to change and which were viable or could easily become viable; and the third was to look at the issue of a cap on the interest rate. On the first scenario, if we do nothing, then the credit union movement is going to go into decline. Membership will go down and large parts of the country will have no credit unions. On the second scenario, we can support a programme of modernisation and expansion, which is what the Government are doing. Through that programme, you can really see membership of the credit unions doubling with a corresponding increase in the loans they make and the deposits they take and in the value of what they are doing. On the third scenario, the question arises of whether we should have an increase in the maximum rate of interest. At present it is capped at 2% per month. Through research we found that, if you could increase that to 3%, you could make the whole sector financially viable by 2015 or 2016. The argument against that is that you are then raising the annual rate of interest from something like 26% to 44%, which is true. If you were able to increase the rate of interest for limited periods for short-term loans—not for long-term loans—that would make a real contribution to credit unions.

I welcome what the Government are doing and the initiative they are taking. At present, they are very supportive of the credit union movement. However, I have been thinking about this issue for about 10 years and I have to say that I am frustrated. Here is the credit union movement which is what society wants—what people want when they hear more about it—and yet it is always small and struggling. Should we as a society not have a larger vision of what credit unions can do? We know that they play an important role at present. I am a great believer in the free market but we know that it alone is never going to solve the problem of credit unions. The Government continue to invest, which is a good thing, but the quid pro quo is that the credit unions must change.

Following the financial crisis, we have a unique opportunity in this country to restructure our banking system. Back in the 19th century, we had a very competitive banking system with a large mutual sector. In the First World War Lloyd George insisted that the banks financed the war effort by buying gilts, which they did. However, the banks said that, in return, they did not want to compete against each other. As a result, for 60 years, all areas of the City of London had cartels. Only since the 1970s has there been some increase in competition. Banks provide a service that is a public utility. Therefore, there is a strong case for the Government thinking about lifting the rate.

The noble Lord, Lord Kennedy, mentioned the big society and the banks being part of that. What can we as a society do to increase the role of the trade unions, churches and sports organisations and of the middle class in this area? We know that campaigns relating to things such as cycling, adoption, family courts and tax avoidance can be successful. Is there not something we can do to get the banks more involved? Last week we were told that two of the leading British banks were paying a $2.5 billion fine in the US. If banks can pay fines like that, surely, when the contribution of the Government is only £38 million, they can make more of a contribution to getting credit unions robustly established as part of our society. I make the following proposal, noting that two members of the banking commission are taking part in this debate. Could we not make it a condition of retail banks having a licence that they engage in some way in helping to create stronger mutual organisations, especially credit unions? I suggest that that is where the issue should rest.

12:05

[Lord Graham of Edmonton]

My Lords, it is a joy and a pleasure to take part in this debate. I cannot recall a debate during my time in this House and the other place that has got off to a better start.

I was fascinated by the previous speaker, with his knowledge and his candour about who was doing what and what else should be done. Very often when I listen to a debate, I come to the conclusion that everything that could be said has been said but not by everybody, and those of us who follow inevitably need to tap into the resources of the previous speakers and quote what has already been said. However, this debate provides a first-class opportunity not just to remind the Government about aspiration but to congratulate the many people—I call them the “small people”—who have struggled for a long time in their communities to achieve things.

As noble Lords who are here today will know, my background is in the Co-operative movement. I shudder to say it but it is 70 years since I worked in the general office of the Newcastle Co-op. People used to come in to collect their dividend, which, in a co-operative society and in society in general, was looked upon as a way to save for a rainy day. Of course, coming from Newcastle and having been born in the 1920s, the rainy days came often, and people looked to the aggregation of the value in their passbook. My memory is that people used what they had there to buy a pair of shoes or a pair of towels or whatever, and it was a means by which to save for a rainy day.

When I was studying many years ago, I came across Raiffeisen, the German who helped to create the germs of the credit union movement. Not only do I congratulate the speakers in the debate today but, looking at the speakers list, it is clear that we are going to be well served by experience.

My two pennyworth goes along these lines. The Co-operative movement relies on people helping each other. We are speaking in a year known by the United Nations as the International Year of Co-operatives. Recently, 10,000 people from all over the world from all kinds of co-operative societies and movements gathered in Manchester to celebrate what the Co-operative movement had done for them. Having worked with the movement all my life, I pay tribute to the fact that the zeal still burns in the breasts of those who call themselves co-operatives.

I am very grateful for a document called the Mutuals Yearbook which came through my door. It deals exclusively with mutuals. Not that we get confused, but what we are talking about comes under different names in different places. For instance, the yearbook shows that within the mutual sector there are 424 credit unions. However, that figure may vary and is part of a total of 17,897 mutual organisations in this country, all of which are part of the family of co-operative ideas. The sector includes clubs and societies, football trusts, employee-owned businesses, mutual insurers and building societies, all of which have impressive totals. The co-operative movement has recognised not only that it needs a number of shops, bank accounts and insurance policies but that it is part of a family.

I am heartened by the previous speaker, who encourages me to believe that there is a way of developing the credit union movement. Looking at the general nature of credit unions, we see that they are modest and ambitious. However, the previous speaker was right that we need some fundamental thinking to take us forward to the next step. I was delighted to hear that this was not a new idea. I pay tribute to the Government, their agencies and Ministers as they have certainly recognised the value of credit unions to ordinary working people. We can see the extent of the growth of the credit union movement in this country. I have met many enthusiasts who do what they can, but it is big business as well. For instance, there are credit unions in the police force and retail banking in higher education. When I queried that I was told that the Open University has a credit union. I am very pleased about that as I am a graduate of the Open University, and it warmed the cockles of my heart.

The fire service, the Post Office and local authorities are involved. Local authorities have a great opportunity. I am not saying what they should or should not do. It is incredible to think of it but 50 years ago I was the leader of the London Borough of Enfield, so I recognise the complexity and width of the responsibilities. I believe that for anyone who is serious about helping ordinary people, a credit union is a good adjunct to that.

How we go about widening and deepening the credit union movement is a very big topic. I am conscious of the financial situation of the nation and for individuals. We all know about the banking crisis and its effects, the amount of pay-offs, and so on. It is a different world from the credit union movement, which is what I am talking about. It is heartening that in the past 12 months, 100,000 people have changed their banking arrangements and transferred to the Co-operative Bank, which has a reputation as the ethical bank. Trust is the most important factor. People must feel secure and there must be modest profitability.

The greatest issue for ordinary people is security—they want to know that their money is safe. The number of credit unions going out of existence because they have put their members’ money in peril or difficulty is infinitesimal although one or two do fail. The greatest contribution this debate can make is to ask the Government—because the Government are the Government and they want to do their best—to look seriously at ways and means of providing a service for training and an understanding of the money world. Some people, perhaps naively, believe that all they have to do is make an announcement in the newsletter of the tenants’ association. Unfortunately, in this world, that is not all that is needed.

My contribution to the debate is to thank the opening and second speakers and hope that noble Lords will congratulate the third speaker in due time. However, whether or not they do, as far as I am concerned the credit union movement is part of the family of co-operatives, which have been in existence for a very long time. I hope sincerely that when the dust dies down and Ministers are talking about us all being in this together, they will see that there are people at the bottom end of the scale who are desperate and need encouragement and support. The reputation of bankers and banks has gone down and the reputation of credit unions and their ilk has gone up. That is simply because of trust. People who have great responsibilities to run a family or a community are beside themselves with perils and we need to build up the picture, even more than now, that credit unions are not only worth while but that they are safe and sound.

I congratulate the mover and second speaker on bringing their experience to the debate. The House has been very well served.

12:16

[Lord Stoneham of Droxford]

My Lords, I declare an interest as chair of Housing 21, a national provider of retirement homes, and as former chair of First Wessex housing group, which is heavily involved in supporting credit unions on the south coast.

I congratulate the noble Lord, Lord Kennedy of Southwark, on initiating the debate at a very timely period in the development of credit unions. I also thank the noble Lord, Lord Griffiths, for all the work and dedication he has given to social inclusion and the development of credit unions. I also congratulate the noble Lord, Lord Graham, on his speech and on his dedication and commitment to the co-operative and mutual movement.

I warmly welcome the initiatives being taken by the Government, led by my noble friend Lord Freud and the Minister of State for Pensions, Steve Webb, in building on the work of the previous Government on credit union development. We all know—we heard some of the figures this morning—that 1.4 million adults have no bank account; that 7 million people are using high-cost credit lenders; and that social exclusion and the disadvantage of not having access to bank facilities are big problems.

This comes at a time when, frankly, the clearing banks—I certainly welcome the suggestions and initiatives proposed by the noble Lord, Lord Griffiths—have been largely removing their risks and their unprofitable businesses so that they probably no longer have the day-to-day regional and local branch network contacts that they could develop into this market within their current structures.

We also know that pressures from the recession are contributing to social problems, with more changes of jobs, more part-time work, more uncertainty in households, more debt. Together with the changes in the welfare system, where we will have to confront the move to monthly universal credit, the changes in the discretionary Social Fund and the direct payment of housing benefit to individuals rather than to their housing provider, all these issues stress the importance of the work of credit unions.

If we look at the last decade, there has been a huge growth in the use of credit unions, which suggests that the market is large. I welcome the work of the project steering committee of which the noble Lord, Lord Griffiths, was a member; we must be aware in this debate of the problems it raised. The cost of the existing credit unions is too high, and as the noble Lord, Lord Griffiths, told us, they are not financially viable—unless there are changes. Their processes need modernisation; they are not currently fit for purpose. Many people simply have a lack of awareness about them and how to get in touch with them. However, we know that the market potential for credit unions—the noble Lord, Lord Griffiths, mentioned the figure of £7 million, which the working party concluded on—is very significant.

The Government are already pursuing a number of initiatives to follow up that report. They are raising the interest rate chargeable and allowing interest on deposits. They are welcoming a more flexible approach to extending areas of lending, recognising that these organisations will not be viable if we confine their activities to small, risky loans. The Government are also sensible in adopting a phased approach towards sustainable development.

Credit union development needs renewed impetus. It has problems of capacity and development potential; there are simply too many small credit unions. As a result, there are concerns about governance and competence. There is too little awareness in the market of what they can do, and their activities are too restrained. There is a danger that we will have very cautious regulation, when we should be encouraging them. I welcome the partnership between local authorities, the DWP and social housing providers, which is vital to the development of credit unions. These are key interested parties, and they have the most to gain from improving financial awareness, using banking facilities and helping people to better manage their debt.

There are a number of avenues, therefore, that provide a way forward. As somebody involved with housing associations, I certainly welcome a very strong link with housing associations. They could provide help with governance; they could get involved with the process of how rent is paid in the future, particularly with people who do not have bank accounts; and they could make appropriate investment in credit unions. They have an interest in doing so, to reduce their own debts. They have the resources. The best housing associations have a very strong social commitment, as well as being social entrepreneurs. Local housing associations, particularly ones that are regionally based, have a very important role to play in the development of credit unions. They should be using some of their funds to invest in and develop local credit unions in their areas. Local authorities will be central as well.

However, there has to be a greater size for credit unions; this is one of the areas we must encourage. The small, area-based credit unions need to move to a bigger scale, to the counties or the regions, to be viable and have the capacity to expand. To be sustainable, they must also expand their services; they simply will not be viable if they are concentrating on small loans, although that will be a major part of their work.

I welcome the proposed possible links with the Post Office, as one part of the banking offer. Many of these credit unions need the systems and the payment facilities to pursue their activities. The awareness of the Post Office—its strong brand—and its security will help to promote the use of those facilities. We must also encourage more volunteering from the financial sector. On the south coast we had people on secondment from banking and financial services. They are vital in understanding how to make loans, evaluate risk and manage the process. Such people need to be encouraged to come into the credit union sector.

We have to get the balance right between regulation and enterprise. We have to recognise that there will be failures in the sector. We have to protect those who could suffer through those failures, but that is inevitable when you are developing enterprise. However, we must ensure that the successes are greater.

Finally, I leave this thought with noble Lords: in many respects we are returning to an era of the previous century where a lot of people were involved in mutuals and co-operatives, developing services particularly for the poor, out of which grew major businesses and commercial enterprises. Sometimes society venerates the large entrepreneurs, the Richard Bransons and Rupert Murdochs, and gives them credit for building up million-pound businesses, but I recall the housing association I was first involved with, the Portsmouth Housing Association. That was started up by a vicar, Canon Bill Sargent, a very disciplined and determined man. He bought the first house for the housing association in 1972; in 2007 the business was capitalised at over £1 million and now it is part of a business several times that size. That is a huge achievement and these people need to be venerated as much as those who are involved in more publicity-conscious commercial enterprises. Local building societies, the Co-operative Bank and even some other banks started up through somewhat similar local initiatives in the 19th century and before, and they met a social need. Now we must find that combination of localism, meeting social need and social enterprise as we go forward.

12:26

[The Lord Bishop of Durham]

My Lords, like other noble Lords, I warmly welcome the debate and have had the pleasure of entering into discussions with the noble Lord, Lord Kennedy, around this subject. The powerful contributions of the noble Lords, Lord Griffiths, Lord Graham and Lord Stoneham, have taken away much of what I wanted to say, so I shall be surprisingly brief. In looking at credit unions, we need to remember that one of the most significant aspects of modern life is that accessible finance and affordable credit have become as much a basic utility as many other areas that we considered to be utilities. It is because of that, along with the move towards universal credit and particularly the changes to housing benefit, which have just been referred to, that the time for credit unions has come in a way that we have not seen since the 19th century. Many of the suggestions that have been made today speak to how credit unions can come into their own.

A few weeks ago I held a meeting in my office with leaders of the credit union movement in north-east England, especially in my own diocese. We had three credit unions, a large one based in Newcastle, a middle-sized one based in Stanley Crook and a small one from the Darlington area. There one could see the whole range of what credit unions do, from mortgages at the large end down to very small loans made on a voluntary basis out of someone’s front room at the other. In some ways, the middle-sized one was the most interesting because it was run by a woman of extraordinary entrepreneurial gifts—we have just heard that kind of thing mentioned—who moved the credit union from its office into the back of a white-goods and furniture store so that those who needed washing machines or furniture, instead of going to the payday or household lender to get the money at an exorbitant rate, could talk about their financial situation in the store with someone from the credit union. That move made good finance and access to credit available in an extremely deprived area. However, in the same meeting we saw the problems that have been mentioned so eloquently this morning.

The credit unions tend to be quite parochial. They tend to split, to divide, to have strong rivalries and not to be good enough at co-operating with each other. Their IT systems are notably lacking. Their management is often well meaning but without the profound expertise that we have seen over the years developing in more sophisticated companies. Also, of course, they face the problem we have heard alluded to, notably by the noble Lord, Lord Griffiths, of the interest rate cap. All these things are holding the credit union movement back and therefore, like other noble Lords, I very much welcome the DWP report—which was extremely powerful, very carefully put together and extremely thoughtful—and the Government’s commitment to follow it through with significant investment of funds over the next few years in a way that will make a substantial difference.

The DWP report showed very clearly that there is huge potential in the credit union movement. It keeps capital and profit at a local level. Speaking as someone on the Parliamentary Commission on Banking Standards, which has been referred to already this morning, one of the clearest things coming out is the immense centralisation of our financial system, which has got stronger and stronger, particularly since 2008. In a recent, very powerful piece of evidence, Andy Haldane from the Bank of England said that all the evidence shows that even major banks, once they get more than £100 billion in total balance sheet size, cease to have any economies of scale. Yet our banks are multiples of that and it all happens down in London. I am very fond of London—I am not saying anything about London; I have enough correspondence already—but keeping capital and profit local, beginning at the bottom of the tree rather than the top, is essential and is done most effectively by the credit union movement. This is especially needed in the north-east, where we are grievously underbanked, particularly since the demise of the Rock.

The DWP report was extremely optimistic about the feasibility of changing credit unions, provided that they modernise and that there is investment in them. It commented that investment in credit unions by Government is cost-effective, good for consumers and a good investment of government money: it is an effective use of government money with very high levels of gearing to the benefit of local communities. However, Government still have a significant role to play other than in investment. The regulatory environment for credit unions is particularly important. Other the past six months in this House we have been wading through the Financial Services Bill in excruciating detail, brilliantly led by the noble Lord, Lord Sassoon, on many occasions. The Bill sets up an entirely new regulatory structure for financial services in this country. The Government agreed, very imaginatively, to certain changes and amendments to the Bill which will make the role of credit unions more central and more important, but it is essential that the Financial Conduct Authority has its feet held to the fire in order that it delivers the kind of regulatory environment and systems that enable these small organisations to develop and grow and contribute significantly in their local areas.

In addition to the regulatory environment, there is also the convening power of Government. We have heard about the importance of getting the banks involved. The noble Lord, Lord Kennedy, spoke eloquently about the need for secondment, not just for a few hours once a week, but for the brightest and the best of up-and-coming bankers, who find the excitement of working in local communities, who are motivated by seeing the difference they can make, who learn about the ethics that come when they see their clients face to face and who end up running our big banks with all that experience in their background and lodged in the way they do their job. In addition to the banks, which can second staff and help with IT systems, we have heard much about the Post Office, but in my diocese every pit village has a branch of the Co-op. We have had two members of the Co-op speaking to us today. The Co-op is used to handling money and well trusted in the local community. There is also the third sector. The Church of England, of course, and the Roman Catholic Church have branches, if I can put it that way, in every community. We are used to handling money—not as much as we like, often—and we are rather good at it. We have very low levels of fraud. We need to get involved and contribute to this in a powerful and effective way.

I want to sound a brief word of warning. We need to keep the distinct purpose and nature of credit unions. In the 1980s, we saw the growth of the building society movement. As building societies demutualised they became banks, went up with the rocket and down with the stick. We need to prevent that happening to credit unions. Their distinct purpose and nature, their geographical links and their membership links are all essential.

This has been a debate about how we bank at the local level; a very important subject at the moment. It is a cause of much interest, because we are seeing in banking around the country this centralisation of which I have spoken and much criticism of the top level of the banks. Here, we are talking about the other extreme. We need to have a great ambition for the credit union movement to be transformative in local finance and for the ultra-small SMEs, which create the most and the most frequent jobs. The noble Lord, Lord Graham, spoke about the importance of local finance in his own experience over more than half a century. We have heard about the links to housing. This debate is warmly welcomed. The Government have started very well; I hope that they will continue to use their convening power and their ability to bring people together, to hold regulators to account and to get the major players in the financial service sector contributing to credit unions in a way that does not compete with them—because they do not want to be in that area—but that will enable a healthier society.

12:37

[Lord Cormack]

My Lords, it is a very real privilege to be able to follow the right reverend Prelate the Bishop of Durham, who has brought a new dimension to our debates on financial matters and will, I trust, continue to do so when he is elevated to an even higher station. We are very fortunate to have him and it is good to have someone in a position of moral authority in our country who is so aware of how society works and aware, too, of the problems surrounding financial institutions.

I was provoked into taking part in this debate because over the past few months the noble Lord, Lord Kennedy, has asked a number of pointed Questions on credit unions and I have chipped in. It is not a subject that I have studied in great detail in the past, although no one can represent a constituency in the other place, as I did for 40 years, and not be aware of the enormous problems faced by so many of those less fortunate in society, not be aware of the appalling activities of loan sharks, not be aware of how families are often torn apart, with distress, disintegration of family units and, sometimes even worse, with people being driven to suicide. That is really the background to the debate we are having today. We have had some fascinating and important contributions, not only from the noble Lord, Lord Kennedy, who introduced the debate so splendidly, but my noble friend Lord Griffiths of Fforestfach, who has tremendous experience in these areas and who injected a new reality into the debate, for which we are all, I am sure, extremely grateful.

No one in public life who is concerned about the welfare of the less fortunate can fail to be full of admiration for those pioneers of Christian socialism and the Co-operative movement in the 19th century. That is part of the warp and weft of our civilisation, and I honour those people. As a young Conservative, I was just as inspired and motivated by the great speech made in 1872 by Benjamin Disraeli—of course, Mr Miliband is on to this now—when he talked about the need for the Conservative Party to have as one of its prime objectives the elevation of the condition of the people. Those two things march side by side.

One can say, here in 2012, that although credit unions have been around for quite a long time they are an idea whose time has come. We need to have an ambitious acceleration of this movement in the way that my noble friend Lord Griffiths sketched in his speech—as did my noble friend Lord Stoneham, who brought to the debate his great experience of the housing association movement. When my noble friend the Minister comes to reply, I hope that we will hear a sense of real determination to be more ambitious. We are all grateful for what the Government have done and are doing but we need to be more ambitious. The two figures that stuck in my mind from the speech of the noble Lord, Lord Kennedy, were that two-thirds of the population of the Republic of Ireland and something like a third of the population of the United States are involved in credit unions.

At a time when people are often bemused by the advance of technology and the impersonality of the technological society, we need people who can talk to people. How many of your Lordships have not been exasperated when ringing a bank or some other institution on being confronted with a metallic voice instructing you to press button one if you want to inquire about a debit balance and button two for something else? It is bad enough for those of us who have had reasonable educations and think that we are moderately intelligent, but for people who are struggling in the face of debt and difficulty, that sort of thing can be daunting to the point of destruction. The great thing about the credit union, when properly administered, is that people are talking to people.

I was greatly taken by the suggestion of the noble Lord, Lord Kennedy, endorsed by others in this debate, that some of the brightest and the best from our banking system—I speak as the father of a banker—should give some time or be seconded to assist the development of these extremely important parts of society. Our bankers should believe, as I hope the best of them do, in responsible capitalism. Like my noble friend Lord Griffiths, I believe in the market economy and in capitalism, but I believe in responsible capitalism.

I have had the privilege, for the last 10 or 12 years, of being involved in the annual award run by First magazine for responsible capitalism. The first chairman of our judges was Lord Dahrendorf and our present chairman is the noble and learned Lord, Lord Woolf, the former Lord Chief Justice. Each year, we try to give an award to somebody who has really demonstrated responsible capitalism. In the last two years, we have instituted a second award for the SME sector and named it after Lord Dahrendorf. If we believe in responsible capitalism, we believe that the benefits of the market should extend to all our people. It is through the intelligent development of credit unions that that can happen.

Although debates in your Lordships’ House are not always as widely and as well reported as we would like, I hope that people will read today’s speeches by the noble Lord, Lord Kennedy, my noble friends Lord Griffiths and Lord Stoneham, the noble Lord, Lord Graham, with whom I worked often in the House of Commons many years ago, and of course the right reverend Prelate the Bishop of Durham. Running through all their speeches is a coherent thread, saying that those who are among the least fortunate in our society must not be overwhelmed by that society. Because of the rapid advance of technology, there is a real danger that that happens, just as there is a real danger that many of our children and grandchildren will grow up with myriad virtual friends and very few real ones. We have to be aware of these things.

The intelligent development of the credit union movement can help inject a new sense of belonging and community in and throughout our land, so perhaps my noble friend the Minister should ask my noble friend Lord Griffiths to head another inquiry into how we can accelerate the development of the credit union. I would like to see that. My noble friend Lord Griffiths talked about the banks paying these enormous fines and asked whether they could not find relatively small sums of money to augment the development of the credit union. Yes, they could and they should—especially as the taxpayer has such a large stake in those banks. From this debate, a message should go out to those in charge of our great financial institutions, saying that they have an obligation and a responsibility to make it possible for people who are perplexed, and very often greatly worried, to understand the system and to be able to have those in whom they can trust.

The importance of trust is another theme of this debate. That importance runs right through our society, which at the moment is, frankly, in danger. We have had so many examples in recent years of people feeling let down. I will not go into details because your Lordships know the sort of things that I have in mind, However, there is a real chance for the development of this movement, not only in areas such as the diocese of Durham—we had a very good account of that a few minutes ago—but throughout the country. Whether it be my in own rural county of Lincolnshire or the county of Staffordshire, which I had the honour to represent for so long, all over the country there are people who can benefit.

One point that has not been taken up since the noble Lord, Lord Kennedy, mentioned it is the need for people of all financial classes, if I can use that word, in society to take part in this movement. This is not merely a helping hand for the poor. It can help those who are in poverty and encourage them to save, making them cope with their debts in a realistic and proper way. We should indeed all be in this together and I would hope that when my noble friend comes to respond on behalf of the Government, a new sense of urgency will have been injected into government quarters and that he will be able to give us a rather more encouraging response than he gave to the last Question from the noble Lord, Lord Kennedy, on the Floor of the House. Although that answer was entirely benign, it indicated progress that would be far too slow. We have a duty to speed it up.

12:49

[Baroness McDonagh]

My Lords, I thank my noble friend Lord Kennedy for bringing about this debate. I also thank him for all the support and advocacy that he gives to the credit union movement. I declare an interest as a member of the Merton & Sutton Credit Union. This debate is so timely. In the last year alone we have seen the average family’s indebtedness increase by 50% in unsecured loans—credit cards, overdrafts and so on. We have seen people retiring £5,000 more in debt. Yet we are spending millions of pounds on financial capability and debt advice, which in itself does nothing if people have nowhere to go. We know that those on low incomes pay the most for everything: for fuel, food, energy bills and housing, and they have the least access to financial services. If they go to a cash withdrawal machine near where they live, they have to pay a fee—often £1.50 for getting out £10.

We also know that those living on the breadline in our country are most likely to be in employment, working very hard and are most likely to have children. Let us think of the individual who may not have access to credit or whose credit may be maxed out. Think of them needing their car for their work. What happens if that car needs fixing? If today they go to a payday company like Wonga and borrow £300, within four weeks they have to pay back that £300, plus £50 interest. We know that this is not possible and they cannot afford to pay £350 within four weeks, so what happens is that they borrow more and get further into debt, often leading to unemployment—a thing they had tried to avoid. However there are alternatives in credit unions. If that same person were a member of a credit union and went today to borrow that same £300, they would be entitled to pay it back over six months and would be charged £20 interest.

The Minister does not need a long litany of stats and facts from me. He will understand all too well these problems and know that every day people have to grapple with indebtedness and everything that it brings: the misery, stress, ill-health, unemployment, poor outcomes for children, homelessness and the overall cost to our society. Instead, I will make some practical suggestions of the sorts of things we might do. First is to encourage employers to bring credit unions into their organisations and organise check-off, so that people can make small regular payments. My second suggestion is to understand the nature of government as one of the biggest employers in this country. Credit unions and check-off should be made known and available to all civil servants. Half of civil servants work in administrative grades. Women earn on average £17,000 a year and men £17,500. They would really benefit from check-off and access to a credit union. The Civil Service also has the beauty of grades where people earn more money and are able to save.

Furthermore, will the Minister support the initiative by my noble friend Lord Kennedy in persuading the authorities at the Houses of Parliament to set up a credit union here at Westminster—which is due to happen soon—and to encourage staff here to save with this credit union by check-off? Will he also extend that facility to Members of this House and of the other place? The noble Lord, Lord Cormack, extended praise to Christian Socialists and to Disraeli for understanding these problems and issues. I would broaden this praise out to all parties, by reminding ourselves of the lesson that Beveridge taught us: that a service for the poor will always be a poor service. It is really important that we ourselves join and understand credit unions. With that experience we can take this knowledge into all the organisations that we work in. We all have an individual as well as a broader responsibility for them.

Lastly, it is fantastic that the Government have made money available for credit unions to bid for, but as a preference I ask them to support all sustainable bids, which brings about greater access to the credit unions, whether it be through the post office system or the internet. I am not for a moment suggesting that any of these recommendations are a panacea or a magic wand. If you are on a low income, raising a family and working hard, it is really tough in today’s environment, but these things will make credit easier to access at reasonable amounts of interest. I thank the Minister for thinking about these suggestions and I would like to thank my noble friend Lord Kennedy again for bringing about this debate.

12:56

[Baroness Armstrong of Hill Top]

My Lords, I pay tribute to my noble friend Lord Kennedy, not just for today’s debate, but for continually reminding us of the importance of supporting credit unions and changing the environment in which they operate. I have had long-term experience of credit unions in the north-east. I used to teach at what was Sunderland Polytechnic. I taught only mature students, who had come into higher education without the traditional qualifications, on a course where they would eventually become qualified community or youth workers. There was one incredibly strong woman who came from south Tyneside and who had had a difficult life, but was an incredibly good community organiser. We put her on a placement in an estate in Jarrow where there were real problems. These led to significant intimidation and threats because of the number of lenders and so on who operated on the estate without any controls or proper attention. We discussed this and talked about whether she should set up a credit union, which she did. It is now a strong and powerful credit union.

Subsequently, I joined my local credit union as an investor, along with the then Prime Minister. Even so, it did not succeed and I was part of winding it up. However, in the process of doing it, we encouraged other credit unions in Durham to look at merging. They did not quite get that far, but we were able to get housing providers in Derwentside and Wear Valley to support their local credit union. They made this a major issue in their tenants’ away days and in other ways when they put on events for tenants. They really got them to look at how they manage their money and brought in the credit union to help that thinking and spread good practice. Actually, in the housing association in Derwentside, some senior staff got very involved in running the credit union, so it is absolutely strong and has a very good base now. Again, I recommend that to others.

I also managed to get Barclays Bank to come and give advice, support and some publicity to the credit union. The banks could do more, and I very much support the ideas that both my noble friend Lord Kennedy and the noble Lord, Lord Griffiths, had about them. Banks have a great a responsibility but also they would learn an enormous amount about customer relationships and how to work with people who may not have much money but want to be careful with it and use it effectively. As my noble friend Lady McDonagh said, this debate is very timely. At the beginning of this week, I was talking about food banks. A young MP said to me, “I can’t remember: did we have poverty at this level with this effect during the period of Mrs Thatcher?”. Actually, we did not because the safety net was stronger.

I do not know whether the Minister ever gets the opportunity to wander around towns in poor areas but when I go into Consett, in the constituency that I used to represent, I am horrified at the number of shop fronts that are now easy credit shops. They advertise to folk who I know do not just have nothing but already have massive debts to go in and get another instant loan. Too many of those folk do not have pay days for it to be anything but ridiculous that they are offered that sort of opportunity. They then go into a shop where they get white goods and furniture, and they are charged the most incredible rates of interest on a weekly basis. Of course, in the past social fund loans funded that. The experience that the right reverend Prelate talked about in Stanley—“Big Stanley” as we call it in County Durham—links to that directly. Your cooker has broken down and you need a cooker to cook the kids’ tea so what do you do? What you do now is go to one of those shops where they give you extortionate prices for goods, even sometimes for second-hand goods.

I do not think the Government will be comfortable with that or with that being the end result of stopping social fund loans. We have to rethink this. I am not saying, “Go back to the old system”, but there needs to be something that gives people an opportunity to be able to feed their children without getting into that level of debt. Credit unions are one way—not the only way—but they are simply not there on the high street, certainly not in the north-east. I know that one or two of the very big ones have shop fronts but that is not there for most. The Government have to really think through some of the excellent recommendations that there have been and act quickly. The problem out there is getting more and more serious.

I had a Christmas greeting this week from someone that the Minister may have heard of: Bob Holman. Bob works and lives in Easterhouse, and was many years ago my tutor when I trained to be a social worker in Birmingham. He has more integrity than anyone I have ever met in my life. He left university teaching because he wanted to work on a normal wage among the people who he had been training us to work with. He berates me regularly for not taking a low wage—and for not taking a low wage when I was in Parliament. He lives by his beliefs. He described to me in his Christmas note the number of people in Easterhouse now using the food bank as the only way they can feed their children. He talked about the café they had opened at the local church, where they give free tea and coffee and subsidised meals. Bob, of course, is the person who persuaded Iain Duncan Smith to take poverty seriously when he visited that estate.

I do not think any of us can be proud of what is happening today on estates like that. The Government have a responsibility in this. I could have gone on about all the other ideas that everybody has had but I do not want to take up the House’s time. I hope that the Government will take up these good ideas but will also implement them quickly so that more people have access to decent credit and savings in a way that the credit union movement enables them to do.

13:06

[Lord McFall of Alcluith]

My Lords, it is a pleasure to participate in the debate today and in particular to congratulate my noble friend Lord Kennedy on initiating it and, as has been mentioned previously, his continuing work to emphasise this particular issue.

As a member of the Parliamentary Commission on Banking Standards, I and my colleague in the other place, John Thurso, visited Edinburgh last week to take evidence from credit unions, Citizens Advice and money advice services. The question in our minds was: how can we have a banking system that serves the whole of society, especially low-income and unbanked people who are not presently covered, and is there a duty on society and institutions to ensure that everyone participates fully in that society? We have moved from a banking system in which only a fraction of the population had bank accounts to a situation where people need a bank account even to receive state benefits. The banking system is now central to everything that goes on in society. Consequently, the treatment of ordinary citizens by banks—not simply the corporate context—is pivotal to adapting the present system to serve the modern needs of society.

It is a fact that those financially excluded are now also socially excluded. That is where credit unions come in. Mention has been made of the feasibility study done by the DWP in May 2012, a good piece of work which found that the total market for modern banking services for low-income people could be as high as 7 million, with 1.4 million in society presently unbanked. Credit unions are ideally placed to help meet this demand and serve that additional 1.4 million people.

Of course, as has been mentioned, consumers trust credit unions to provide their financial services. That is in contrast to what is happening at the moment with the major financial institutions. The motto of the City is: “My word is my bond”. A MORI poll conducted six months or a year ago in the City found that 80% of those who worked there did not recognise that that was the motto, so something has become disengaged. An anchor has slipped somewhere on that and we need that diversity. At the moment we have five or six major financial institutions—banks—in the United Kingdom worth 450% of the country’s GDP. Not only is that uncompetitive but it does not serve the financial stability interests of the country. That diversity is important.

One problem with credit unions, which was mentioned to us last week, is that they are seen as a poor man’s—or woman’s—bank. That is not so on one level, where they have an advantage and strength in offering services to people whom mainstream banks do not presently serve. But on another level, if credit unions are to grow and become fully established as a potent force, they need to attract the full spectrum of savers—from the low-income to the high-income people. The potential for growth in that area is extensive.

Presently, there are good competitive deals existing in the credit union movement. It was pointed out to us that if a credit union can hold interest at 12.7% APR—which is a target that they all try to achieve—for loans of up to £3,000, those rates are among the best in the market. Glasgow Credit Union, the biggest credit union in Britain, at the moment has a £3,000 loan over 36 months at 12.9%. That is better than any loan from any commercial banking organisation. So there are good things going on at community level at the moment. However, the number of credit unions that can offer current accounts and mortgages total only 24 out of the more than 400 in the UK. Thirty-six thousand people have current accounts. Again, only the four biggest credit unions do mortgages. That is a drop in the ocean and gives an illustration of the opportunity.

If the target of an additional 1 million members is to be reached in the next seven years, credit unions need to be attractive to people of all incomes. Talking of that, the new Moderator of the Church of Scotland, the Right Reverend Albert Bogle, was down in Westminster a couple of weeks ago. He invited me to dinner because I had been on the Church of Scotland’s economic commission looking at the future of the economic circumstances in Scotland. We suggested that following that economic commission, and following the Moderator’s interest, it would be good to think of developing something like a Church of Scotland-wide credit union for the whole of Scotland, because in the Church of Scotland you have high-income earners and low-income earners. It is an ideal establishment for that. I have encouraged the new Moderator to talk to the Scottish Government and the DWP so that we can get that going.

Mention was made earlier of the Irish experience. If we look at the experience in Ireland going back to the 1950s, it was the church there, particularly the Catholic Church, that encouraged members on higher incomes to save so that they could embrace members who needed to borrow, and do so at more affordable and ethical rates. The coverage of credit unions in Britain is 1%, while the coverage of credit unions on the whole island of Ireland, comprising the Republic of Ireland and Northern Ireland, is reaching 30%. So there is a good example for us to follow in that particular area.

The message for today is that credit unions are not the poor man’s or woman’s bank; they are everyone’s bank. I am proud to have been influential in my own area when I was a Member of Parliament in establishing a credit union in Dumbarton, particularly ensuring the common bond. My wife and I were founding members.

I also had the Dalmuir Credit Union in my constituency, which was started by one woman, the late Rose Dorman. It now serves more than 6,000 members and is one of the most flourishing credit unions, but it was down to her social entrepreneurship. There are many Rose Dormans up and down the land. So faithful was she to the credit union movement that when she was dying in St Margaret’s hospice, she called me in to visit her to tell me that the then Treasury consultation paper on credit unions was flawed and she wanted me to do something about it—and we did listen to her in part on that.

What has been suggested this morning came up in evidence last week in Edinburgh, that a major step forward to make credit unions more widely available would be that partnership with the Post Office network. We have been informed that that could indeed be possible if technology could be put in place and if funding was made available by the DWP from the credit union expansion project.

It is important here to emphasise points that have been made earlier. There is a complementary role between banks and credit unions, not just a competitive role—one that is in the interests of both entities: a strong mutual sector, a strong credit union sector and a strong commercial sector learning from the best of each other and thereby helping to serve the interests of consumers in society.

Already there has been some recognition from banks that credit unions have a part to play. For example, the Co-op Bank provides, on a commercial basis, back-office facilities for current accounts; the Clydesdale Bank provides back-office facilities for debit cards; Barclays, the Co-op and Santander post events and provide research for credit unions. The Co-op Bank in particular has seen a host of new business in the past 12 months, as my noble friend Lord Graham has mentioned. That is down to its ethical policy.

We cannot leave this debate without touching on those two words: culture and ethics—culture meaning behaviour and ethics meaning how we resolve the many conflicts of interest in financial services. As one former bank chief executive said to me when I was examining the financial crisis, “It is as if too often people had given up asking if something was the right thing to do and focused only on whether it was legal”.

If we are to build a market that is efficient and fair, non-market values have to underpin it. I refer to Adam Smith, professor of moral theology in 1759 at my alma mater Glasgow University, from which I was proud to receive an honorary doctorate a few years ago. In his writings, Adam Smith was convinced of the necessity of a well functioning market economy, but not of its sufficiency. In The Theory of Moral Sentiments, published in 1759, he argued that while prudence was,

“of all virtues that which is most helpful to the individual … humanity, justice, generosity, and public spirit, are the qualities most useful to others”.

He was also deeply concerned at the inequality and poverty that might remain in an otherwise successful market economy. Today we are witnessing those very issues of widening inequality and deepening poverty. Smith’s comments are as relevant today as they were when they were written more than 250 years ago.

Financial inclusion, diversity in the banking model, reinvigorating mutuality and the establishment of a new ethical framework and culture are urgent. The credit union movement is integral to these initiatives. It deserves our support not only on these market considerations but on those non-market sentiments and qualities of justice and public spirit, alluded to previously, which they execute on a modest yet ambitious daily basis up and down the land.

The right reverend Prelate the Bishop of Durham said the credit union has a distinctive purpose and nature. It is that distinctive purpose and nature that will be beneficial to the financial services industry and to the wider consumer—and one which we must take seriously today, move the debate on, turn things into reality, and make it a big player in financial services in the United Kingdom.

13:18

[Lord Elystan-Morgan]

My Lords, I am grateful to be allowed to speak very shortly in the gap. It was only late yesterday that I realised that I would be able to be in London today.

I applaud and admire the noble Lord, Lord Kennedy, for his sterling efforts, not only today but over the years, in relation to this particular aspect. I accept that it is only credit unions, or some development along very similar lines, that can solve the problem that is a burden for so many of our fellow countrymen. Millions of people in desperate economic conditions suffer the tyrannies of what is euphemistically called the sub-prime credit market. They are not there because they want to be but because the harsh conditions of their life have left them no options.

However, they are not without a shield; that is my point. The Consumer Credit Act 1974 was replaced by the Consumer Credit Act 2006, which extended its provisions and made them much more prevalent. The Act allows a judge in a civil court, whenever it is believed that a borrower has been unfairly dealt with, to intervene substantially and radically in relation to the contract. The judge can do so if he is of the view that the terms of the contract were less than fair, or that the way in which the creditor has acted was less than fair in all circumstances. On the face of it, that could bring about a virtual nemesis of the tyranny exercised by so many creditors in this regard. Even the best of them profit from a situation where there is a huge imbalance of status between creditor and debtor.

Unfortunately, very little use seems to have been made of that legislation. My brief appeal today is that this shield that can protect so many of our fellow countrymen in the years in which we will develop what I trust will be a very wholesome credit union situation, comparable with that in North America, the Republic of Ireland and Australasia, is used to ensure that those people are not left without protection. Society can do a great deal to allow these people to know that they have basic, fundamental rights under the Act of 2006. I would like to see the Judicial Studies Board of every circuit in England and Wales propagate the need for judges to give the fullest possible commitment on this matter, so that justice can be done to a limited degree in the short term for those people who so need it in this context.

13:22

[Lord Collins of Highbury]

My Lords, first I declare an interest as a member and chair of Enterprise the Business Credit Union. I, too, thank my noble friend Lord Kennedy for initiating this debate, and I congratulate all speakers on making terrific contributions. I also hope that today’s debate will assist some noble Lords in better distinguishing my noble friend Lord Kennedy and myself—that would be a bonus.

Current estimates are that up to 7 million people use sources of high-cost credit, and 1.4 million people have no transactional bank account. Four million people incur regular bank charges and 850,000 incur financially crippling bank charges because they need help to manage their money better. As we heard in the debate, just 2% of people in the UK are members of a credit union, compared to 24% in Australia, 44% in the United States and up to 75% in Ireland. Credit unions are also growing fast in eastern Europe and parts of South America, Africa and the Far East.

DWP figures show that credit unions offer the most competitive interest rates in the UK market on personal loans of up to about £3,000. They can save borrowers an average of £400 a year. People with incomes in the lowest 10% bracket would be able to save between £5 and £20 per week if they had access to a trusted local credit union. Despite the low levels of participation compared with other countries, credit unions have been growing steadily here over the past 10 years. Membership, assets, savings and loans have all at least doubled recently, laying the foundation for British credit unions to emulate their international counterparts. As my noble friend Lord Graham said, there are about 400 credit unions across England, Scotland and Wales. Well over 1 million people use credit unions, including—very importantly—more than 123,000 junior savers. These young people have their first experience of the financial sector through credit unions.

Figures show that £776 million is being saved in British credit unions and £602 million is out on loan to members. As we heard, 25 credit unions across the UK now offer current accounts, with more than 34,000 people holding one. Some credit unions offer mortgages, cash ISAs and insurance products. Credit unions operating in Britain today are extremely varied in size, in membership and in the range of services they offer, but they all share a basic philosophy of mutual support and co-operation. The uniqueness of many credit unions is their connection to communities and, more importantly, their commitment to localism.

The changes to the Credit Unions Act 1979 that came into force in January 2012 through the LRO will enable credit unions to provide far more than simply a banking solution for the financially excluded. Often, local communities want to save locally in order to be able to provide lending opportunities to support local businesses and help regenerate and reinvigorate their communities. This was highlighted by the right reverend Prelate the Bishop of Durham. This modernisation of credit unions has enabled and will enable a much more fundamental change in which they will shift from targeting the financially excluded to becoming fully inclusive. They are teaming up with associations and charities to find innovative ways of meeting the needs of new groups of members. We also heard in today’s debate about the social housing sector. The new unions will be available to all, accessed locally, fair, safe and simple. They will bring banking back into the heart of every community.

The investment in credit unions announced in June by the noble Lord, Lord Freud, following the decision to take forward the recommendations of the independent credit union feasibility study, is extremely welcome; it is terrific news. The objectives of the Credit Union Expansion Project are very ambitious. The project aims to increase credit union membership by at least 500,000 people on lower incomes by March 2015, and to increase this number to 1 million by 2017; to increase access to affordable credit so that members will save an additional £1 billion in interest payments compared to the charges they would otherwise have had to pay to high-cost commercial lenders; and to ensure that credit unions will deliver this expansion in a way that makes them financially sustainable. We have heard how difficult that is.

The £35.6 million of funding available through consortia of credit unions will enable support to go to credit unions of all sizes, enabling them to expand through capacity building and collaboration. The study found that even the biggest credit unions struggle to meet the operating costs of making small loans to people on lower incomes. The project will clearly help—and is helping—to secure the industry’s long-term financial sustainability. Credit unions will be able to buy in the new IT systems and infrastructure needed to increase the number of people they help to save and borrow.

As we heard from my noble friend Lord Kennedy, following the debate and amendments in this House, I welcome the Government’s acceptance of the need to cap the horrendous interest rates charged for so-called payday loans in an attempt to deal with the worst excesses of that market. As many have recognised in today’s debate, payday loans are only part of the story. Within the licensed market we have door-to-door home credit, pawnbrokers, rent-to-buy stores and agency mail order sellers.

We need to empower consumers, providing more information on the alternatives to high-cost lenders. We need to instil a culture of saving earlier on in life—something that schools need to embrace more readily. Trade unions, too, could do more to provide information, and I welcome the recent campaigns by some. Alongside employers, trade unions could also do more to support credit unions through payroll deduction schemes. Again, I welcome the comment of the noble Baroness, Lady McDonagh, that the Government as an employer could work with trade unions in the public sector to promote credit unions. Earlier this year, my own union, Unite, pledged to challenge Britain’s payday lenders by establishing a nationwide credit union network. This followed the launch of a Unite-backed credit union in Salford as the model for such a network. Steve Turner, the national official concerned, said:

“We are trying to get to the point where you can get emergency loans through credit unions, to stop that third week being Wonga week”.

Obviously, the interest rate cap for credit unions makes it difficult to offer sustainable arrangements that would enable them to compete in this way. Therefore, the Government’s proposal to increase the interest rate cap for credit unions from 2% to 3% is welcome. However, I am sure many credit unions will feel that this is difficult for them, as it runs counter to their ethos of low interest rates. I am sure that some may even argue for the removal of the cap altogether. I suspect that neither course is right.

What I hope we shall end up with, in light of the expansion of credit unions, is a change that maintains and safeguards members’ comfort and allows credit unions to get on in a competitive environment, ensuring that they are on equal terms with those other payday, home credit lenders and rent-to-buy stores. Credit unions will find it difficult to reach the targets without the support of the Government. Could the Minister tell us what role a nationwide marketing campaign might play in reaching the target and, if he thinks that this is appropriate, when it might be possible for this to commence? Could the Minister also tell us—and I repeat the question asked by my noble friend Lady McDonagh—what the department will do to expand and support payroll deduction schemes throughout and across government departments? There are many government employees who would seriously benefit from membership of a credit union.

13:34

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I must start by thanking the noble Lord, Lord Kennedy of Southwark, for securing what has been a really important debate and for his excellent work in supporting the sector, given his position as the vice-chair of the All-Party Parliamentary Group on Credit Unions. We have had a lot of very thoughtful contributions today, which I know he will have been pleased to hear. Before I touch on some of those, I must also particularly thank the noble Lord, Lord Griffiths, not only for his contribution today but also for his work on the steering committee responsible for the production of our feasibility study, alongside Deanna Oppenheimer, the chair of that team, and Paul Ruddle.

Credit unions play an important part in their local communities by helping low-income consumers, and they can support our aims to tackle problem debt and increase financial inclusion. Today has been an opportunity to reflect on the advances that credit unions have made and what needs to be done in order to provide a wider, more innovative range of financial services to many more consumers. There are 400 credit unions in Great Britain, with £776 million saved in them and more than £602 million currently out on loan. We have 25 credit unions offering current accounts, and some offering mortgages and insurance products. As a number of noble Lords have pointed out, membership of the movement has grown to just over 1 million—and that includes 123,000-odd junior savers. But as the noble Lord, Lord Kennedy, pointed out, that is still only 2% of the adult GB population, compared with credit union coverage of 75% in Ireland and 44% in the USA, so there is room for expansion, to say the least.

We have an estimated 7 million people impacted by what is called the poverty premium, which means that they pay much more for credit and goods than other people. Very often their options are limited to home credit, rent-to-buy shops, payday lenders and illegal loan sharks, which leads all too easily to over-indebtedness. A typical home-collected credit loan charges 272% APR, on a £400 loan over 52 weeks. This works out as a total repayment of £728, whereas a similar loan from a credit union would cost £457, a saving of about £270.

For many years, credit unions have been working in partnership with national and local government, commercial organisations and the voluntary sector to improve the financial health of individuals and families. Many MPs and Lords, as we have heard today, have taken—and continue to take—an active role in supporting their local credit unions.

One of the most interesting common themes running through many of today’s speeches from the noble Lord, Lord Kennedy, my noble friends Lord Griffiths, Lord Stoneham of Droxford and Lord Cormack, and the right reverend Prelate the Bishop of Durham, was the role of banks in supporting the credit union movement. I ought to make the point that banks are in fact supportive. Many see a role for themselves and, indeed, Deanna Oppenheimer supported our feasibility study out of her role on the retail side of Barclays. We should not just ignore their support, but it is clearly an interesting suggestion from noble Lords about whether one should look to the banks for further and deeper levels of support, both in terms of funding but also, and possibly even more importantly for an industry that needs to grow and mature, in the form of the expertise that can be found in the banking sector.

The DWP provided funds of £113 million to more than 150 credit unions between 2006 and 2012. This money was used to support low-income consumers to access necessary and affordable loans, offering a real alternative to the higher cost lenders. On top of that investment, we implemented the legislative reform order in January 2012, which allowed credit unions to reach out to new groups, provide services to community groups, businesses and social enterprises, and offer interest on savings. That helps the credit unions to grow, but clearly much more needs to be done. That is why, following the publication of the feasibility study findings in May, we looked at how credit unions could provide financial services for up to 1 million more consumers on lower incomes—in other words, doubling their footprint—in a way that would allow the movement to modernise, expand and, most importantly, become sustainable and financially viable. My noble friend Lord Griffiths made the important point that we need this industry to become viable. Those proposals reflected a mood for change that is evident throughout the sector and is shared by many interested stakeholders. The study told us that a new approach is required and that reducing costs, modernising, expanding and reorganising must all be part of the equation for the sector to become viable.

In June we announced that we would proceed with the project and make up to £38 million available over the next three years to credit unions that embrace change and modernisation. More than 60% of consumers contacted by the feasibility study wanted the type of local, trusted service that credit unions provide. We have asked for bids against the funding and are currently in the evaluation phase of the project. I will make a further announcement on this in February next year. I hope that that is soon enough. Some noble Lords have criticised the Government for moving too slowly on this. I hope that that date is soon enough to show that we are pushing ahead with this. However, I emphasise that the project will go ahead only if it is subject to tight project management discipline to maximise the chance of success and minimise the risk of financial failure.

Alongside those proposals, the study also proposed that the Government consider an increase to the credit union APR cap, which is currently set at 2% per calendar month, as that would allow credit unions to make small loans to more low-income people at a competitive rate. The study contained compelling evidence which indicated that the average unit price to deliver a loan was £108 and that making a £400 loan over 12 months would earn only £57 in interest—barely half the amount that it cost. While on the surface it does not seem fair to increase interest rates on loans, particularly for people on low incomes, we must move to a position where credit unions can cover their costs on these smaller loans, or get near to doing so, as these smaller loans are costly in terms of administration and staff time. The 3% charge on a £400 credit union loan would increase from £57 to £82. That is a much lower rate than that payable through the other options facing people who want this kind of loan. The increase will result in people paying about 50p per week extra for that typical average loan in return for access to a service that the feasibility study tells us they need and want. However, I remind noble Lords that this is a permissive change. Credit unions will continue to be free to charge lower rates. Clearly, they will want to do that on larger loans where you do not need to cover the administrative costs or you spread them more effectively.

The Economic Secretary to the Treasury, Sajid Javid, has announced that HMT plans to start the rate cap consultation next week, leading to any regulatory change by HMT and BIS being introduced in summer next year. This would allow credit unions to prepare and implement the change from April 2014. The consultation is seeking views on increasing the cap to 3%. Removing the cap entirely would have significant consequences for the movement. The cap is important because it exempts credit unions from consumer credit regulation on the basis that they are not-for-profit, ethical, lending institutions that can be trusted to treat borrowers fairly. Removing this exemption would place a costly burden on credit unions and consumers alike. If the proposal to increase the APR cap to 3% is accepted, the Government will look to ensure that the Consumer Credit Act exemption also remains in place. We are encouraging people to submit their views to the consultation.

I earlier suggested that credit unions must provide a wider, more innovative range of financial services. We hear daily about the growth in payday lenders. Clearly, for some people payday lenders provide a solution which works and is convenient, but they must not be seen as a solution to financial difficulty or a form of credit that is suitable for long-term borrowing. The APR is a very blunt instrument because of the administrative cost involved. If, for example, I was generous enough to lend the noble Lord, Lord Kennedy, £50 and wanted it back next Thursday and suggested that he pay £5 for that service and give me back £55, which seems utterly reasonable to me, the APR rate on that would be 14,300%. Actually, because it is a leap year this year, it would be 14,500%. I give that figure to illustrate that you have to be very careful when using an APR which is designed for longer-term loans, where it tries to cover the administrative costs. It becomes ludicrous when you are covering very short-term loans for small amounts of money.

Despite that comparison, the Government have recently tabled an amendment to the Financial Services Bill because clearly we need to take action to protect vulnerable consumers from the worst practices of lenders. That amendment gives the Financial Conduct Authority a specific power to cap the total cost of credit if it considers that it is consistent with its objectives to do so. These powers will come into effect once the FCA takes over regulation of consumer credit in April 2014.

To pick up the point made by the noble Lord, Lord Elystan-Morgan, the current regulator, the Office of Fair Trading, uses the provisions of the Consumer Credit Act and other legislation to regulate the activities of lenders, including payday lenders. When that responsibility moves to the FCA, it will have additional powers and a range of tools to tackle consumer detriment.

Our plans for universal credit will help low-income households to develop greater responsibility for managing their household budgets and support their transition into work. There is a role for credit unions here and, indeed, a number of them are already working with their local housing associations to develop an account that helps with budgeting and ensures that rent is paid, to pick up the point made by my noble friend Lord Stoneham.

We know that most people on low incomes manage their money well, but around 1.3 million working-age adults still do not use a mainstream bank account. The combination of monthly payments, access to a mainstream bank account and the right level of support will make it easier for households to take advantage of, for instance, cheaper tariffs for essential costs such as utility bills. Increased financial responsibility will also allow households to improve their access to affordable credit.

On the point raised by the noble Lord, Lord Kennedy, on jam-jar accounts, we recognise that accounts with in-built budgeting facilities could support some claimants to manage their money and we are currently working with a range of financial providers, including credit unions, to explore the feasibility of offering these accounts to UC claimants. We expect to announce our detailed approach in that area in the new year. We also recognise that people will need some additional help and support from services provided at a local level and we are working with local authorities, housing associations, credit unions, Money Advice Trust, Citizens Advice and other groups as we work out our strategy.

On the point raised by the noble Baroness, Lady Armstrong, universal credit support will still be available to claimants through budgeting advances, which will help meet unexpected expenses such as household equipment or furniture purchases.

While the support of government is important, it is essential that credit unions attract the appropriate mix of savers and borrowers and working and non-working customers from a range of income levels to become sustainable. It is in that context that I welcome the All Party Parliamentary Group initiative with London Mutual Credit Union to recruit more members from Parliament into credit unions. I support that initiative and look forward to the project launch, which I understand will be in February next year. This picks up the point made by the noble Baroness, Lady McDonagh, about joining such institutions.

The point made by the noble Lord, Lord Collins, about a nationwide marketing campaign is a good one. I do not have a response today, but I will go and mull on that point because next year could be appropriate timing to look at something like that.

I know that in my own department officials are working to promote the benefits of becoming a member of a credit union and encouraging staff to join or to volunteer to help. In the end, the credit union movement and credit unions themselves must step up and show they have the ambition to change and to serve many more people. It will require real leadership from the sector and a real will to modernise. I am sure that, together, we can develop a sector that is sustainable, innovative, and continues to be central to the communities it serves.

13:53

[Lord Kennedy of Southwark]

My Lords, I thank all noble Lords and the right reverend Prelate for their contributions. It is encouraging that there is so much support across the House. I very much endorse the remarks of many noble Lords about putting the personal back into banking and getting the retail banking sector to step up to the mark. Not having access to bank accounts leaves people at the hands of high-cost payday lenders. This is a huge problem that has to be addressed. Getting the balance right between regulation and enterprise is so important to create the conditions for the sector to prosper. Many noble Lords spoke about the importance of ensuring that the credit unions have the management and professional governance structures in place. I fully support what was said.

We have to be ambitious for the movement and for the sector. I hope the Government will reflect on the debate and see the credit union movement as a key component in the financial marketplace. While some banks have provided support, I was delighted that many noble Lords supported my call for them to do more.

In conclusion, I thank all noble Lords for their contributions. I can assure all noble Lords that the development of credit unions is a matter I will return to again and again in this House. The noble Lord, Lord Cormack, said the banks could and should do more. It is our job to make sure the banks respond to that challenge as, “Yes, we will do more.”.

Motion agreed.

Personal Independence Payment

Thursday 13th December 2012 Lords Chamber

Statement

13:55

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I will now repeat a Statement made earlier in the other place.

“The Government are committed to enabling disabled people to fulfil their potential and play a full role in society. Crucial to that is the reform of disability living allowance, a lifeline for many but which is simply not working in its current form.

In the past 10 years, the number of people claiming rose by more than a third, from around 2.4 million to 3.2 million and expenditure is now far in excess of initial estimated costs. This year the Department for Work and Pensions expects to spend more than £13 billion on DLA. As a percentage of GDP, we spend a fifth more than the EU average on disability benefits and we expect to spend more in real terms in 2015-16 than we did in 2009-10. Today we are publishing the Government’s consultation responses on the draft assessment criteria and on the detailed design of PIP. Alongside that, I will be laying in draft before Parliament the main PIP regulations, setting out the PIP entitlement conditions, assessment criteria and payment rates. We will also publish in draft what the transitional arrangements might look like. The main scheme regulations are subject to the affirmative procedure and I look forward to debating them in full early next year.

Personal independence payment will be easier to understand and administer, financially sustainable and more objective. Throughout the whole development, we have consulted widely with disabled people and we have used their views to inform policy design and implementation plans. As a result of hearing those views, we have made several key changes to the final assessment criteria. I would like to thank the individuals and organisations who contributed.

Starting with the rates, I am pleased to confirm that the rates for PIP will be set at the same rates as DLA. The daily living enhanced rate of PIP will be the same as the higher-rate care component of DLA, and the standard rate of the daily living component will be set at the middle-rate DLA care component. The mobility rates of PIP will be the same as the DLA rates. Furthermore, following the Autumn Statement, these disability benefits will be protected within our uprating measures. PIP, like DLA and carer’s allowance, will continue to be uprated by inflation.

The most important thing I want to announce today is that we have listened and acted on the huge amount of consultation we have had with disabled people and disability groups. We have made specific key changes as a result of our engagement. These are outlined in full in our consultation responses and include broadening our approach to aids and appliances, assessing ability to read and taking account of specialist orientation aids that help mobility; mirroring the linking rules for DLA, which will help to ensure continuity for people with fluctuating conditions; and new plans for contacting young people when they reach the age of 16, or their appointees, to help a smooth transition to PIP. All the changes we have made address the genuine concerns of disabled people and the organisations representing them. Overall, their effect is to make PIP more transparent, objective and fair.

We also listened carefully to concerns about the speed of reassessment. To that end, we will now undertake a significantly slower reassessment timetable to ensure we get this right. It will be phased in, starting with new claims only, in a controlled start area in the north-west and parts of the north-east of England from April 2013. We will then take new claims nationally from June 2013. From October 2013, we will start reassessing people whose DLA award is due to end, people who report a change in condition and young people who reach the age of 16. But now the peak period of reassessments will not start until October 2015. That means we can learn from the early introduction of PIP, testing our process and making sure the assessment is working correctly before we embark on higher volumes. We will then consider the findings of our first independent review, planned for 2014, and act on them. Importantly, unless people report a change in their condition, those with a lifetime or indefinite DLA award will not be reassessed until October 2015 at the earliest.

We can now publish caseload assumptions about the impact of PIP. Those figures clearly show that PIP will deliver its key objective of focusing support on those with the greatest needs. By October 2015, we estimate that we will have reassessed 560,000 claimants. Of those, 160,000 will get a reduced award and 170,000 will get no award. However, 230,000 will get the same support or more support. Under the new criteria, almost a quarter of PIP recipients will get both of the highest rates, worth £134.40 each week, compared with only 16% on DLA.

By reforming the system and ensuring that it is fit for the 21st century, we can use the money we spend on disabled people more efficiently and effectively to help those most in need”.

14:02

[Lord McKenzie of Luton]

My Lords, I begin by thanking the noble Lord, Lord Freud, for repeating the Statement made in another place. As my colleague in another place said this morning, we had the written announcement last week on the closure of Remploy factories, involving more than 900 redundancies; now we have a Statement that is intended to remove a vital benefit from thousands of disabled people.

The Statement gives us an overview of the introduction of the personal independence payment. We look forward to the detailed regulations and the transitional arrangements. As ever, the devil will be in the detail, as it is for universal credit. As the Minister said, we will be scrutinising and debating these measures in the early part of the new year. I thank the Minister for a specific briefing for Peers arranged for Monday. It will be useful.

We should be clear that we are in favour of a process of assessment for a new benefit, provided that it is the right one. In his introduction, the Minister made great play of the increasing numbers of DLA recipients, but does he not recognise that part of the increase is for a good reason, that the lives of disabled people have changed dramatically in the past 30 years? The opportunity to live independent lives in the community, rather than move into residential care, is surely something that we should all welcome.

We acknowledge that considerable expertise has been applied in devising the assessment, involving an extensive engagement and consultation, particularly with disabled people and their representatives. The same was said at the time of the WCA’s introduction. It is understood that the face-to-face assessments are to be undertaken partly by Atos and partly by Capita; there is a geographical split. We know that the work of Atos on the WCA has been heavily criticised, and perhaps the Minister can tell us what assessment was undertaken to establish the capacity of each organisation to deliver. Was the capacity of Atos assessed on the basis of an ongoing involvement with the WCA?

Currently, DLA is not taxable, is ignored when calculating tax credits, is not taken into account when calculating any of the means-tested benefits and, depending on the rate, a recipient can claim exemption on VED, provided that the car is for sole use and that the recipient qualifies for the blue badge parking concessions. Will all this passporting be available to recipients of PIP and be included in the universal credit? Can the Minister confirm—I hope that he can—that receipt of PIP will mean exemption from the benefit cap?

The Minister said that the Government estimated that 170,000 of the 560,000 claimants who will be reassessed by October 2015 will not be eligible for PIP. If this is true, what estimate have the Government made of the impact on carers? We will obviously look at impacts in more detail when considering the regulations, but can the Minister give a broad outline of the current DLA caseload that will make up that 170,000? What sort of needs that are recognised in the current DLA will not be recognised in PIP?

It is welcome that PIP is to be set at the same rates as for DLA, with the standard rate for the daily living component being set at the middle-rate DLA care component. However, of course, the issue is not only the rates but who will be accessing them. Given the Government’s disgraceful approach to uprating generally, we should welcome the fact that PIP, like DLA, will continue to be uprated by inflation.

We also welcome the Government’s recognition that the initial proposals on the speed of reassessment were unrealistic and that there will now be a significantly slower pace. Having said that, we are still looking at June 2013 as the vesting date for all new claims. Is the Minister satisfied that the systems are in place to cope with the timetable, especially given everything else that is going on at that time?

There are some further matters on which we will wish to press the Government in the detailed scrutiny. Given that DLA support allows many people to travel to work, what advice and support will the Government give when such support may be taken away from someone? The Government are protecting the under-16s and those over 65; how does this match with the Government’s ambition to get disabled people into work, when the new PIP changes disproportionately impact on working-age disabled people by reducing their financial support? The new criteria must not push people into social care or the NHS. What discussions has the Minister held with the DCLG, local government generally and the NHS on the impact on those hundreds of thousands of people who will lose benefit?

Finally, what will be the overall impact of these measures on the poverty of disabled people? There is a raft of measures in place or about to come into effect that will affect the lives of thousands of disabled people. We have the bedroom tax, the ESA restrictions, the chaos of the WCA and the management of the Atos contract, and the Work Programme, which is not delivering for disabled people. We know that some 2,000 disabled people have been made redundant through the closure of Remploy, and there is the impact of localised council schemes. That is to mention just some of the measures. We are amazed that the Government continue to refuse to develop a comprehensive impact assessment to cover all these issues, and we will continue to press for that.

Having said all that, it is important that PIP delivers for disabled people. We recognise the hard work that has gone into this by officials, Ministers, disabled people and disability groups. It is our responsibility to challenge where appropriate but to give it a fair wind where we can.

14:09

[Lord Freud]

My Lords, I thank the noble Lord, Lord McKenzie, for his speech and his—as ever—very thoughtful questions. I will do my best to deal with as many as I can.

I should preface this by saying that we are going to embark on a major exercise and I am determined that it will not be only when we debate the regulations that we will get the information across. There will also be some sessions for noble Lords where we will be able to go through issues with officials and start to look at the detail so that there is a real level of information for all those who are interested. I have made that commitment generally in respect of all the welfare changes we are making, because I acknowledge that there are a lot of them. They require a level of understanding and focus that cannot always be dealt with purely in this Chamber so we have to expand that process.

Picking up the point about the speed of reassessment, that was an issue that I was able to talk about last January, I think it was, when we were very focused on the right speed of introduction. As we introduce a number of very significant changes, we are determined to deliver them safely and steadily, looking carefully at their impacts. That is our approach as we get into the detailed implementation, as it is our approach here and on a lot of the other changes that we are making.

On the question of capacity in relation to Atos, we conducted an open competition in which we measured the capacity of the organisations to deliver on what is the reality on the ground—that was an objective assessment. It is a different process from the WCA, in particular in the delivery, where the bids were looking at delivering a more localised service using health partners.

We are maintaining the existing arrangements for passporting in relation to DWP benefits and we want to ensure that external passports such as concessionary travel and the blue badge scheme are maintained. Those arrangements in particular will be a matter for the other departments which manage the passported services.

It is very difficult to summarise some of the detail about the types of people who are covered by DLA but are not in PIP because we are moving from a non-objective test to an objective test where we can start to measure properly, coherently and systematically the people who really need the support. This test will make sure that the money we have for people who are disabled goes to those who need it most. The figures I have show that, up to 2015-16, we shall be spending more in real terms each year than in the 2009-10 base year.

There has been appropriate consultation across government in introducing PIP. The noble Lord, Lord McKenzie, will have seen the approach to the impact assessments in the Autumn Statement, which goes through segment by segment trying to look at all the impacts on a decile basis. I suspect that he will not be entirely satisfied with that but there is a lot of information in that particular piece of analysis. As the noble Lord will know, like DLA, PIP is payable to those who are both in and out of work. One of the unfortunate myths surrounding DLA among too many communities is that it is an out-of-work benefit, which it is not. It is reflective of need, and people get it either way. We will be signposting people to other available support such as Access to Work which, as noble Lords may remember, has been called “the DWP’s greatest secret”.

I hope I have covered most of the noble Lord’s key questions. However, to the extent that I have not, I will not offer to write on this occasion because I know that we will have ample opportunity to dig into some of these issues over the next couple of months.

14:16

[Baroness Turner of Camden]

My Lords, the noble Lord will no doubt remember that I have raised the issue of Remploy on a number of occasions in the past. My current information is that most of the people who were made redundant as the result of the closure of the Remploy factories remain unemployed now. So getting rid of them has not increased opportunities for them to become independent—quite the contrary. I am sure the Minister knows that the unions involved are still protesting about it and still believe that the closure of the Remploy factories has certainly not helped the disabled people who once worked there and had the opportunity to make some sort of living. There are also, of course, the people who supervised their work—looking after disabled people is a specialist kind of supervision which requires a bit more training perhaps than ordinary supervision—and they also have been made redundant.

I am glad to note that the Government are continuing with their consultation and paying some attention to the way in which the transition from DLA to PIP will take place. That is very important because I have received a number of letters from disabled people expressing a great deal of concern about the transition. Although it is very nice to talk about independence and so on, one of the first things one loses when one becomes at all disabled is a feeling of independence. I speak from some knowledge because I am partially, although not very, disabled myself. Things that you used to do for yourself you have to rely on other people to do for you. It is all very well if you can afford to pay someone else to assist you but that is not the case for very many people. I am fortunate enough in that I can pay for others to assist me, but if I were not able to and relied on DLA, I would be very concerned about whether my independence would continue to be looked after if I had to rely on a different kind of benefit. So it is going to be very important to look at the transition because, as far as I can see, people who are disabled are very worried about moving from one benefit to another.

I ask the Minister: is there an appropriate system of appeal? If people are assessed in a way that they feel is not correct and does not maintain their independence, it is very important that there is a system of appeal. My understanding is that, in the current situation where there are appeals, roughly 40% have been successful. This indicates that the people doing the assessing have not been very skilled in their assessment. It is, therefore, necessary to have an appeal system.

[Lord Freud]

On the noble Baroness’s key question, clearly there will be an appeals system, as there is for the WCA. The reason behind the 40% success rate for those who go to appeal—and that figure is roughly right—is usually that there is new information, either oral or written, which was not originally available. On that basis, I do not think it is fair to say that the original WCA and Atos were at fault. Clearly that is not an appropriate charge if one is looking at a different set of information. The real question is whether all the relevant information can be made available at an early stage. We are looking to make sure that there is not additional information which would mean a claimant going to appeal, as that is expensive. The question is whether we can ascertain that earlier in order to truncate the process.

[Baroness Thomas of Winchester]

My Lords, I am very grateful to the noble Lord and his department for listening so extensively to arguments about the needs of disabled people. I am particularly pleased to find that there is a broadening of the definition of people who need to use aids and appliances. At one stage, it looked as though people who used aids and appliances would be thought to be okay and that they would not need any extra resources. Perhaps I may ask a question following on from the one posed by the noble Baroness, Lady Turner, rather than continuing with the Minister’s theme. It concerns the treatment of medical reports. I am rather shocked to find that only a very small proportion of medical reports seem to be read, particularly at the first stage. Will the medical report of every claimant be sought and read by assessors; or will it still be the case that only a proportion of them are read; or will it be left to a decision-maker in the DWP to read them? I am particularly pleased that these regulations are not set in stone yet. Am I right in saying that they are still in draft?

[Lord Freud]

My Lords, on my noble friend’s question about the medical reports, my understanding is that all information which is relevant is brought to the assessments, and that indeed people—supporters or family—can be brought forward to make the case and provide evidence. Again, I am not sure about the extent to which the fine detail of this issue is yet locked down. We are going through the details, and indeed on Monday we can start to discuss some of the fine points. The regulations have been laid in draft to be looked at by the various committees—the Secondary Legislation Scrutiny Committee and so on—and I think that that is the stage of the process that we are at. The noble Baroness is looking puzzled. If I am wrong on that, I shall make sure that that is corrected.

[Lord Sutherland of Houndwood]

My Lords, I welcome the Statement. There are a number of good things in it. However, I should like to ask for reassurance on a specific point. Can the Minister reassure us, either now or certainly at the stage at which regulations are introduced, about the extent to which these changes and their impact will be monitored—for example, in relation to the employability of disabled people, in relation to whether there is a rise in demand for additional residential or homecare support, and in relation to whether there is consistency of assessment between the two different assessing bodies? There are a number of points here on which many of us would be much reassured if monitoring arrangements were in place. No Government can get all of this right. We will be bombarded with statistics from around the whole country, and it would be useful to know that central and independent monitoring was taking place.

[Lord Freud]

My Lords, we are planning to have a real look at this in the autumn of 2014, once the system is up and running. I am sure that we have not yet fine-tuned the exact nature of what we will be testing for, but consistency of application will clearly be one thing. We generally watch that quite closely but that is likely to be one of the issues, and the impacts will be another area which it is likely that that 2014 process will cover.

[The Lord Bishop of Exeter]

My Lords, I go back to the question of objective testing. I speak as the father of a 33 year-old Down’s syndrome daughter, who is in supported accommodation and in receipt of DLA. She has recently had her benefits cut to the point where they barely cover her housing and food costs. Were it not for the financial support that she receives from us, her parents, she would not be able to access the integrated drama group, visit the gym or go swimming—the very things that give quality to her life. To what extent would the criteria for assessing PIP cover not just the hard needs that enable a person to survive but the soft needs that enable them to thrive? What assurance will we have that there will be real consistency across the country, rather than the huge variations between local authorities that exist at present?

[Lord Freud]

My Lords, clearly what we are talking about today is a centralised national process. There are social care provisions on the ground which local authorities are responsible for. PIP will be far more consistent and, indeed, objective than the current DLA, where the criteria for deciding who is entitled to DLA have become increasingly fuzzy. That is one of the problems associated with DLA. The money is designed to deal with the extra costs of being disabled, and those costs are incurred whether someone is in work or out of work—they are extra costs that need to be borne. However, the point of it being made as a payment, as opposed to a provision, is so that people can decide where best to apply those funds. As the right reverend Prelate said, some people will decide on the softer things, which for certain people are just as important as the harder requirements, but it is up to them to decide how to spend that money.

[Baroness Hollis of Heigham]

My Lords, I wish to make two brief comments. First, I have a question, which I am sure the noble Lord will be able to answer. Of the 170,000 people who are going to lose DLA when it moves to PIP, how many are on the current lower-level rate? Secondly, perhaps I may challenge the Minister to be wary of the assumption that DLA should be an objective test. It was never intended to be as such in 1992, when we introduced it, primarily because two people with the same objective disability may have very different competences in coping with that disability. It will depend on their resilience, their family support, their educational ability and their financial resources. Because DLA was person-centred and not a box-ticking exercise against some objective at their assessment, it was able to respond to that difference in competence, as well as to the depth of the disability. I very much hope that the Minister will not be led by a false myth into thinking that this can be reduced to an objective account of external health or mental health which is standardised across the country. It cannot be and, in my view, it should not be.

I support my noble friend very strongly in urging the department to come up with a layered assessment of how all of those benefit changes are interacting. I share briefly with the House a letter I received from a disabled middle-aged lady in an eastern region city who lives in a two-bedroom bungalow. She has rented a nearby garage so that she can charge up her mobility scooter. She is now faced with a housing benefit cut and losing one of her bedrooms of her bungalow, but as she says, there is no one-bedroom bungalow for her to go to. She has had a wet room installed under the disability facilities grant, so if she moves out within five years she would have to repay the grant. If she moves she has to repay the grant; if she stays she has a housing benefit cut. On top of that, she will almost certainly be forced to pay 20% for the first time on council tax, even though she is on benefit, and on top of that, some of her DLA support may also be questioned under PIP. What advice will the noble Lord give me to give to that lady?

[Lord Freud]

Yes, if I can deal with those in order. We do not have a breakdown of where people have moved from.

[Baroness Hollis of Heigham]

My Lords—

[Baroness Stowell of Beeston]

Order. This is a Statement, not a debate.

[Lord Freud]

I am told that we do not have that information. Clearly, we will be able to go through the figures, to the extent that we have them, when we meet on Monday. When I said that PIP was objective, I was not trying to imply that it was using the medical model. It is objective in the sense that it is looked at through specific competences. As the noble Baroness pointed out, people can respond very differently to different levels of disability. Taking the example raised by the noble Baroness, a substantial amount had been spent on adaptations—she referred to the wet room. We have a specific exemption for people with very heavily adapted homes for that reason. It would not make sense to sell, so it would not make sense to move. Clearly, I cannot comment on a particular case but one needs to look closely before one assumes the worst.

In making the different changes to our welfare system, we have set in train a thorough level of monitoring and assessment as we gradually bring these systems in. One of the reasons for our strategy of gradualism and monitoring is to understand what is happening on the ground and make appropriate changes if we find that we have to do so.

[Baroness Uddin]

I hesitate to rise because I missed part of the noble Lord’s Statement. I apologise for that but I have been spurred on by the right reverend Prelate and my noble friend Lady Hollis.

I refer to the way in which the noble Lord has approached this whole matter and the fact that the Statement was supposed to clarify the personal independence payment. I declare an interest as a mother of a child who is 33 and has autism, and I have some experience of speaking to other people. I say with respect that ordinarily and normally the Minister provides a great deal of clarity on such matters. However, today he has been less clear. If he is not able to put forward the case with clarity, how can he reassure the House and people with disabilities and their carers who are in a great deal of confusion, disarray and distress, as clearly laid out by a number of noble Lords this afternoon?

[Lord Freud]

My Lords, I made a very full Statement, which I hope was comprehensive. We have focused a lot on people with mental health and learning difficulties. Indeed, we divided communication activity in the new assessment criteria, so there is a new activity focused on reading and understanding signs, symbols and words. That reflects the importance we place on the non-physical side which is one of the areas on which PIP is far more satisfactory than DLA

[Baroness Sherlock]

I shall pick up where my noble friend Lady Hollis stopped. Will the Minister help us to understand the implication of the fact that some people will be better off and some worse off? We cannot understand whether those who will be worse off are those, for example, who are getting the severe disability premium at the moment on one benefit. It is hard to understand. We may simply be redistributing the large amounts of money currently given to people with very high needs by giving smaller amounts of money to those who have lower needs. A number of noble Lords were at a briefing this morning where a range of charities were raising questions with us. Has the Minister been able to reflect, for example, on what happens to those who currently receive severe disability premium—those on mid or high rate DLA who live alone and do not have a carer in receipt of carer’s allowance?

[Lord Freud]

We may have to pick that up and take it later as we are out of time. Within PIP there is a greater concentration towards the people with highest needs. I gave out percentages: I think it was 23% of people on both top rates, which is more than under DLA.

Israel: Arab Citizens

Thursday 13th December 2012 Lords Chamber

Motion to Take Note

14:37

Moved By

[The Lord Bishop of Exeter]

That this House takes note of the issues of equality and discrimination affecting Israel’s Arab citizens.

[The Lord Bishop of Exeter]

My Lords, we each come to debates such as this with our own personal stories. Mine begins with my father who served with the British Mandate force, and I grew up with his memories and photographs, and a strong sense of the historical and moral responsibility that the UK still carries for where Israelis and Palestinians find themselves today. More directly, I have visited the area regularly for the past 35 years, as a one-time trustee of Christian Aid, as a patron of a range of Israeli and Palestinian human rights organisations and also of BibleLands—now Embrace the Middle East. Additionally, my diocese has a companion link with the Anglican Province of Jerusalem and the Middle East. I have met many people of all communities on the ground, and over the years have witnessed a radical change in the composition and culture of Israeli society, with one element of this being increased inequality and discrimination faced by Israel’s Arab citizens. However, I have also seen directly, and wish publicly to affirm, the work of those organisations, including those that are Israeli, working to combat such discrimination and inequality. A wish to highlight both the problem and the work of those seeking to address it are among the reasons I sought this debate, but there are further reasons for having it now.

All the signs are that we may be reaching the end of any realistic prospect of a genuine two-state solution: the past assumption that progress in the peace process would help improve Arab-Jewish relations within Israel no longer holds. Addressing Israeli-Arab discrimination needs now to be seen as a justice issue in its own right and very much framed within a discourse of civil rights. In 2011, the EU acknowledged that Israel’s treatment of its Arab citizens was a core issue that could not be postponed until the peace process is revived.

Secondly, this debate needs to be set within the context of a mood of democratic awakening across the Middle East. Last year, Israel experienced its own democratic awakening with the 14 July movement. Last year’s activism could lead to a deeper process of political awakening, exposing the oppressive power structures and inequalities at the heart of Israeli society, and ultimately opposing all forms of segregation and injustice, including that experienced by Israeli citizens who are Arabs—a term which here I take to include not only Muslim and Christian Palestinians and Bedouin Arabs, but Arabic speaking Druze and a small number of Circassians as well.

My third reason for requesting this debate now is that next year is the 10th anniversary of Justice Theodore Or’s inquiry into Israeli Arab support for the second intifada which concluded that,

“successive generations of Israel’s government have failed to address in a comprehensive and deep fashion the difficult problems created by the existence of a large Arab minority inside the Jewish state. Government handling of the Arab sector has been primarily neglectful and discriminatory”.

They have not shown,

“sufficient sensitivity to the needs of the Arab sector, nor done enough to give this sector its equal share of state resource. The state did not try hard enough to create equality for its Arab citizens or to uproot discriminatory or unjust practices”.

The nature of such discrimination is well documented. Your Lordships will have seen the excellent briefing pack produced by the Library, and I am grateful for briefings not only from various human rights groups but from the Board of Deputies of British Jews, the UK Task Force on issues facing Arab citizens of Israel, whose work I warmly commend, and the Jerusalem-based Jewish Centre for Jewish-Christian Understanding.

In many ways, this debate merely surfaces an ongoing debate in many Jewish circles, in Israel and here. That debate concerns a widening gap in Israeli society between law and practice. In law, Israeli Arabs enjoy full equality and are endowed with the full spectrum of democratic rights. It is also the case that Israeli Arab citizens have made considerable social and economic progress in recent years. Mortality rates have fallen by nearly two-thirds over the past few decades, while life expectancy has risen and infant mortality rates have been slashed.

However, in practice there are many areas of life where Israeli Arabs are systematically disadvantaged. While Israel’s declaration of independence and basic laws purport to enshrine certain rights for Israel’s non-Jewish citizens, there is no explicit constitutional right to equality. Israel is yet to reconcile the tension between its identity as a Jewish state and its claim to be a democracy with equal rights for all. This means that non-Jews are effectively, in many respects, second-class citizens, denied the full rights which their Jewish co-citizens enjoy. As the Association of Civil Rights in Israel has pointed out,

“this is reflected in discriminatory policies in the areas of citizenship rights, economic and social welfare, employment, education and (most crucially) land ownership and development”.

So, Jewish and Arab Israelis have different citizenship rights and constraints in relation to marriage and family reunification. Their economic and social circumstances differ. Despite a legal ban on employment discrimination on the basis of ethnicity or religion, Arab citizens face significant disadvantages in the labour force. The most recent official Israeli survey to look at income differentials between individual employees suggested that the gross monthly income among Arab citizens of Israel was 32% lower than the comparative figure among Jewish citizens. There is, according to Israel’s own National Insurance Institute, a 53.5% incidence of poverty among non-Jewish families compared with 15.2% among Jewish families. Also, Arab communities are among the poorest in Israel. Almost nine in 10 of the localities in the lowest three socio-economic groups are Arab. Arab Bedouin are particularly disadvantaged, with up to 90,000 Bedouin deprived of their ancestral lands and living in what the Israeli Government call “illegally constructed villages” in the Negev where there are virtually no public utilities or government services.

According to the Legal Centre for Arab Minority Rights in Israel, Adalah, the starkest area of inequality and discrimination relates to land holding and planning. It states:

“Jewish and Palestinian citizens of Israel have unequal access to land resources, land rights, and the ability to use the resource of land to develop their communities”.

A UN report in 2003 suggested that Arab citizens, despite their 20%-plus population share, privately own just 3.5% of the state’s total land, while Arab municipalities had jurisdiction over only 2.5% of the total area of the state. In Galilee, despite a 72% share of the population, just 16% of the land is owned by Arab municipalities. Since 1961, there have been 291 new Jewish localities compared with, at most, 25 new non-Jewish ones. It is estimated that Arab citizens of Israel are, in practice, blocked from purchasing or leasing land on around 80% of the land in Israel on the basis of their ethnic identity. The way in which the 2011 admissions law is being used adds to the issue of discrimination a concern about further segregation.

Yet it did not have to be like this, and some of the early aspirations of the founders of the State of Israel were clearly very different. Indeed, the principles of equality and non-discrimination were enshrined in Israel’s declaration of independence of 4 May 1948, when the new state undertook to,

“uphold absolute social and political equality of rights for all citizens, without distinction of religion, race or sex”.

Twenty years ago, there were some grounds for optimism. It is important to remember the constructive work that Yitzhak Rabin did in his second term as Prime Minister to address these issues of inequality in Israel’s life. However, he was probably the last Israeli Prime Minister to do so.

In recent years, the Knesset has passed a raft of discriminatory legislation. In 2009, Avigdo Lieberman’s Yisrael Beitenu party became the second largest coalition partner, after an election campaign during which he repeatedly attacked Israel’s Arab minority. Since then, each Knesset session has been replete with overtly racist Bills that have helped further to alienate Israel’s non-Jewish citizens. Together they seem to be forming a pattern whereby extreme back-bench proposals become watered down to form a steady drip of government initiatives that are slowly eroding minority rights.

This seems to be backed by changes in Jewish Israeli public opinion, with both the FCO and the US Department of State noting a growing and disturbing climate of intolerance, with an increasing desire among a majority of the Jewish public to see preference for Jews over Arabs in various areas of public life and a willingness to see the two communities reducing contact and moving further apart.

Some have suggested that this debate should not be taking place as it colludes with hostility towards Israel rather than offering it a hand of friendship. Nothing could be further from the truth. A peaceful and prosperous Middle East needs a strong and secure Israel. However, threats to Israel’s security come not only from without but also from within. Increased discrimination so easily leads to radicalisation of those discriminated against, whether intentionally or unintentionally. Frustration fermenting beneath the surface could yet bubble over into societal conflict. Should current trends continue unabated, localised intercommunal violence should come as no surprise.

There is the further concern, raised by the Archbishop of Canterbury in a debate in your Lordships’ House a year ago, that discrimination and inequality contribute to the emigration of indigenous Christians from Israel, a further cause of polarisation and loss of community cohesion. By contrast, addressing the discrimination and inequality experienced by Israel’s Arab citizens, and so building community cohesion, could have positive implications both for the State of Israel and for the wider peace process. It would strengthen Israel’s democratic credentials by inviting more participatory models of citizenship, so enhancing a sense of community and belonging. Rehumanising the “other” within Israel might encourage a reframing of the way that Israel negotiates with its Arab neighbours.

The anniversary of the Or report next year offers an important occasion to take stock of the steps and measures that have been taken by the Israeli Government to address the levels of discrimination and inequality faced by Israel’s Arab citizens. Looking back nine years on, there is a widespread feeling that the institutional changes put forward by the Or Commission have not been whole-heartedly adopted. When I tabled a Written Question on the Or report a few months back, the noble Lord, Lord Howell of Guildford, responded on 24 September that,

“few of Or’s recommendations on the socio-economic causes of Israeli Arab frustration have been addressed. We continue to urge the Israeli Government to implement the recommendations made by the 2003 Or Commission, specifically to address (i) economic disparities; and (ii) unequal access to land and housing. In general we condemn all instances of inequality and discrimination against individuals and groups because of their faith, ethnicity or nationality”.—[Official Report, 24/9/12; col. WA 265.]

At the heart of this Motion is an understanding of human dignity and well-being. I am sure that all would agree that inequality and discrimination impair human dignity and flourishing. So I note with pleasure the strong interest shown by Her Majesty’s ambassador to Israel in supporting Israel’s minorities. Speaking at the Israeli Equal Opportunities Commission’s 2011 conference, Ambassador Matthew Gould said:

“Israel enjoys the most extraordinary diversity in its population”,

and that the,

“diversity of Israel’s population is something that should be celebrated”.

However, if that diversity is allowed to lead to increasing division, then the fabric of Israel’s society could be fatally damaged. For that to be avoided, the UK and the EU need to continue to press Israeli Governments for the realisation of Israel as a Jewish and democratic state, in which Jews and Arabs live together with full and equal human dignity and civil rights.

Ultimately this is a question about the character of the Israeli state, the answer to which must have buy-in from all the communities of which it is composed.

14:51

[Lord Warner]

My Lords, I am sure that we are all grateful to the right reverend Prelate for obtaining this debate and for his constructive, excellent and robust introduction. I should declare my interest at the outset as a trustee of the Council for European Palestinian Relations, an organisation that facilitates visits by European parliamentarians to see at first hand the circumstances in which Palestinians live, in Israel, the Occupied Territories and, indeed, in the external refugee camps. The circumstances in which thousands of Palestinian women, children and vulnerable older people live in many of these areas are, frankly, an international disgrace.

Those of us who regularly raise our concerns about the treatment of Palestinians within Israel and the Occupied Territories are regularly accused of a lack of balance, or told of Israel’s right to defend itself, or reminded of the firing of rockets by Hamas into civilian areas. The disproportionately high levels of Palestinian deaths and casualties, compared with those suffered by Israelis, are consistently and conveniently overlooked. There is always another side to the stories: the Palestinians cannot unite, Hamas is formed of terrorists—even though, somewhat inconveniently, Hamas won a fair and democratic election with international observers in 2006. It is Israel that is the real democracy—an island of democracy in a sea of Arab autocracy. We must not be too hard on Israel, if we want the virtually non-existent peace process to achieve progress and to keep alive the seriously damaged two-state solution. That is the context in which we have come to this kind of debate. Yet year after year, the Palestinians living in this shining example of democracy are seeing their already modest human and civic rights eroded further and further. They are supposed to put up with this without protest. The international community continues to accumulate more and more documents setting out the abuses of Palestinian human rights undertaken by, or at least with the collusion of, the Israeli Government. These catalogues of abuse are simply ignored by Israel, despite strenuous diplomatic efforts on the part of the UK and other Governments to bring them to the attention of Israel’s Government.

The Library’s excellent briefing for this debate identified some of the documentary evidence of Israeli abuses of civic rights and protection of its own citizens. The variety of the sources—UN, US state department, FCO, international human rights organisations, and brave Israeli internal organisations ashamed of their own Government’s behaviour—all lend testimony to the same set of messages, which were extremely well set out by the right reverend Prelate. We are spoilt for choice as to which pieces of documentary evidence we want to alight on. It is striking how little independent counterevidence the Library has been able to find in assembling its excellent briefing.

I want to pick on one document in particular from the Library’s briefing, from the FCO. It quotes from page 206 of the FCO’s April 2012 report to Parliament on human rights and democracy in different countries. In that document the Government drew attention to their continued concerns on Israel and the occupied territories. I quote:

“Our particular concerns included Israeli demolitions and evictions of Palestinians in East Jerusalem and the West Bank; the human rights effects of restrictions on Gaza; the increase in the number of attacks by extremist Israeli settlers; the treatment of Palestinian suspects within the Israel justice system; the high proportion of civilian casualties and fatalities resulting from Israeli airstrikes on Gaza”.

By comparison, they did identify abuses of human rights within Gaza and the Palestinian authorities, but these abuses were modest by comparison with this particular catalogue. I ask the Minister to look at what the FCO, her own department, is citing: the concerns are not the kind of concerns that most British Governments have had with so-called allies and friends. They are on a scale which is fundamentally different in terms of the human rights concerns. Many of the discriminatory actions set out in the various reports are of long standing; but some are more recent, as the right reverend Prelate identified.

I have another example. In March 2011, the Knesset passed laws that authorised rural Jewish and majority communities to reject Palestinian Arab citizens and other “unsuitable” applicants from residency and imposed fines on any government-funded institution, including municipalities, which provide health and education for those commemorating Nakba, the destruction of Palestinian villages and the expulsion of their residents, after Israel’s declaration of independence. That is a recent example of the kind of discriminatory behaviour that is being passed through the Israeli Parliament.

The heart of the problem of Palestinian discrimination is that the status of Palestinians under international human rights instruments, to which Israel is a state party, is that of a national, ethnic, linguistic and religious minority. But the basic laws of Israel do not recognise them as a national minority within the protections that flow from that position. The definition of Israel as a Jewish state makes inequality a continuing practical reality for Israel’s Palestinian citizens. Worse still, they are frequently—and increasingly—seen as a “fifth column”, simply because they are Palestinians.

I do not want to extend this catalogue of discrimination in the remainder of my time, because other speakers will no doubt do some of that. The question is—what should the UK, as part of the international community, do about this established and continuing pattern of behaviour and discrimination? It is a pattern of illegal, inhumane and abusive behaviour. When South Africa was engaged in this kind of behaviour, the international community was so shocked that it imposed sanctions of various kinds to try to change that behaviour. We have tried to brush this issue aside, but we cannot go on finger wagging at the Israeli Government and getting very little in the way of response. The time has come for the UK and its EU partners to start thinking about something else, which is assembling a graduated set of economic and other sanctions to try to encourage the Israeli Government to attend to their duties as a democratic state in terms of removing some of the discrimination against many of their non-Jewish citizens.

Much of the argument in this House in recent times was that we needed to wait for the American presidential elections and get the Americans to help us take this forward. If you listened carefully to the Obama presidential campaign, the speeches made in that campaign made it clear that the time had come for America to do nation-building at home, not abroad. We have to understand that we cannot necessarily rely on activity on the part of the US in terms of pressure on Israel to change some of its behaviour. We have to be a bit more grown up, work with our EU partners, and think about what we as Europeans want to do in trying to encourage Israel to reverse the trend of discrimination against its Arab citizens.

15:01

[Lord Steel of Aikwood]

My Lords, it is a pleasure to follow the noble Lord, Lord Warner, and I want to pick up on his last point at the end of my speech. However, I begin by thanking the right reverend Prelate for introducing this debate so comprehensively. I am often under attack by some of my Palestinian friends for being a paid-up member of the Liberal Democrat Friends of Israel. I want to make it clear to them and to the House that there is a clear distinction between being a friend of Israel, which I am, and a friend of the present Government of Israel, which I am certainly not. That is an important distinction which we ought to keep in mind throughout the debate.

My experience of the area goes back to when I was a very young MP. In 1967 I happened to be with a parliamentary delegation to the General Assembly of the United Nations. I remember with pleasure the spirit of optimism in the British delegation. Lord Caradon was the British representative and a key figure in the formulation of UN Resolution 242, which was supposed to be the basis for peace in that part of the world. However, it is a very sad fact that the optimistic mood of 45 years ago has disappeared.

After I became the leader of the Liberal Party, I took a delegation around the Middle East to see for myself what the situation was on the ground. We went to Syria, Lebanon, Jordan and Egypt and were received by the heads of government of all those countries. Four of us wrote a report while sitting in the garden of the embassy in Cairo. The report bears examination today because it was a prelude to the two-state solution. The only member of that group who is still with us is the noble Lord, Lord Alton of Liverpool. But on that visit there was one head of government who did not meet us, and that was the Prime Minister of Israel. Why was that? It was because we had talked to Yasser Arafat in Damascus. Our colleague, the noble Lord, Lord Wright of Richmond, was the young ambassador in Syria at the time, and in those days no British Minister would talk to a member of the Palestine Liberation Organisation because it was a terrorist organisation. Officials could talk to its representatives, but I was the first party leader to talk to Yasser Arafat, whom I met over many years. I had great regard for his capacity as the leader of the PLO, but as the head of the administration, he was an absolute disaster—although that is another story. But not talking to the PLO was simply daft. Today we have come full circle because we do not talk to representatives of Hamas. Why is that? It is even worse now because, although like Arafat at that time, Hamas does not recognise Israel, it has actually been elected in Gaza. We do not like it, but Hamas is there. I do not see any point in continuing a policy of failing to speak to its representatives.

Against that background, it is not surprising that we have seen the appalling launching of rockets against the southern part of Israel, where I have also been. I feel great sympathy for what the population has had to endure. But there is no substitute for talking to people with whom you disagree. The latest threat from the Netanyahu Government to create 3,000 new settlement residences on the West Bank has sounded for the first time a long overdue note of alarm from our own Foreign Office. As described, these settlements would isolate Ramallah and Bethlehem from East Jerusalem and from each other, and would make a complete mockery of any possibility of the two-state solution. That should be deeply alarming not just to this House and the Foreign Office, but, as the noble Lord, Lord Warner, has just said, it ought to be of deep concern to the United States, a keen supporter of Israel, as well.

The right reverend Prelate gave us many statistics to illustrate the discrimination between Jewish and Arab citizens in Israel. These statistics are agonisingly familiar to those of us who have followed events in South Africa over many years. Because of my background as a boy in Africa, I was always a keen member of the Anti-Apartheid Movement. During my time as president of that movement I visited South Africa a great deal. One thing that strikes me is the comparison between what is happening to the Arab citizens of Israel today and what happened to the non-white citizens of South Africa then. For example, the resettlement of some Arab citizens from Jerusalem to the West Bank is reminiscent of the Group Areas Act of the apartheid regime. The separate roads in the West Bank used by Israelis and Palestinians to travel are a reminder of the public transport arrangements in apartheid South Africa. What I remember now but which did not strike me at the time concerns the work I did for the AAM with people in South Africa and over here. When one looks at the names of friends of mine from that time—Helen Suzman and Zach de Beer, and others who were not Liberals but perhaps members of the South African Communist Party such as Ruth First, Joe Slovo, Hilda Bernstein, Helen Josephs, Albie Sachs and Ronnie Kasrils—the extraordinary thing was that the leadership of the white resistance to apartheid came from the Jewish community. Why was that? It was because in the decades after the Holocaust there was a deep-seated revulsion against any idea of racial superiority. That is what the right reverend Prelate reminded us of in his remarks. The founding charter of Israel is quite clear on the issue and the present Government have departed very far from it.

I am not naive enough to think that if there was a settlement between Israel and Palestine, international terrorism would disappear, but there is no doubt in my mind that our failure to deal properly and independently with this dispute is breeding Islamic extremism and terrorism around the world. I would therefore argue that it is in our own interests to adopt a far more equable policy.

I want to end on an optimistic note. A couple of weeks ago some of us attended a meeting upstairs with a group of Israeli businessmen who have formed the Israeli Peace Initiative to mirror the Arab Peace Initiative. That is a hopeful sign. They are not politicians but businessmen in Israel who are fed up with the intransigence of their own politicians and who are promoting peace with the Arab world. It is in that context that the end of discrimination against Arab citizens can become a real possibility. I shall finish by making the same point as that made by the noble Lord, Lord Warner. I believe that as long as Israel consistently flouts international law, it is quite wrong that we in Europe should maintain a beneficial trade association with a country that is behaving in this way. We have got leverage and it is time that we used it.

15:10

[Lord Bew]

My Lords, like other noble Lords, I thank the right reverend Prelate the Bishop of Exeter for securing this important debate. I start by conceding his critical point that precisely because, in the terms of the overall resolution of the problems of the Middle East, we are, unfortunately, in a period of conflict management rather than conflict resolution, the question of Israel’s minority becomes, in a way, even more important. I declare an interest as chairman of the Anglo-Israel Association and, as the function of that body is to promote understanding between the United Kingdom and Israel, this debate provides an excellent opportunity to do just that.

I want to step back and take a historical perspective before returning to the nub of the debate as it has been defined thus far. Going back to the early part of the last century, school textbooks in the United Kingdom said to young readers that we are a mongrel people and that this was a matter to be proud of. In the United Kingdom it is now accepted that all people, no matter what their colour, background or class, have a right to equality of treatment, and it is one of our most profound defining features as a liberal democracy that we attempt to deliver equality of treatment for all our citizens. Even so, it has to be accepted that even in the United Kingdom at this time we sometimes fail quite markedly in the achievement of that objective. In Northern Ireland, where I come from, the watchword for United Kingdom government policy for several decades was, “equality of esteem for both traditions”, but we can see, even in the past fortnight or so in Belfast, in the riots that have occurred, how difficult it can be to achieve that objective of equality of traditions where these disputes of ethnic, national and religious identity exist.

Israel, however, is a state that exists in quite a different context. Like another liberal, democratic state, the Republic of Ireland, its existence significantly reflects the trauma of one particular ethnic and religious group. In the Republic of Ireland’s case, the brutal trauma is the Great Famine. In Israel’s case it is the Holocaust, a far worse example of trauma than the Great Famine because it was a deliberate, intentional genocide characterised by repeated actions by human individuals—human agency—on a large scale. The Jewish state, like the Irish Catholic state, accepts and has always accepted, as noble Lords have conceded, a responsibility towards its minorities; but as both states have shown, given the importance of one group in the raison d'être of the state, it is a responsibility which is not always easy to discharge. Indeed, it is particularly difficult to discharge. In the first several decades of the history of the Irish Republic the Protestant population dropped markedly and radically. The Irish Republic has much liberalised in recent years, but the tragic death of a young Indian woman in hospital in Galway is a reminder of the continuing existence of the outlook of one religious tradition in the practices of that society.

When we talk about the case of Israel it is widely accepted that by certain criteria which are supposed to be important to us in the West—freedom of speech, women’s rights, gay rights, the protection of educational opportunity—Israel is a beacon in the region, far ahead of any other country. For example, and on a difficult point, in recent days there have been pro-Assad demonstrations in different parts of Israel and they have gone ahead peacefully. These are difficult questions for Israeli society but it seems to be rather better at handling them than many other countries in the region. It is said by some that that is only to be expected of Israel, though it is apparently not expected by all in the West of its neighbours.

Then one must look at the role of Israeli Arabs in the Knesset, the Parliament of Israel. To take one important and dramatic example, George Karra, a Christian Arab, was the presiding judge in the trial of a former Israeli President. It is inconceivable in any other country in the region that a member of a religious minority could play such a role. Mention has been made of Christian Arabs, but there is no doubt that by every known statistic Christian Arabs are a very successful and vital group, a spectacularly successful group, it could be said, in the society of Israel. Again, it is sometimes said with judicial appointments in Israel, in the United States and in this country, that there is an element of tokenism. Perhaps, but even so, it seems a pretty striking example.

Mention has already been made of Israel’s declaration of independence and its promise of political, economic and social equality to all citizens, as well as the fact that Israel has laws against discrimination in employment. Is this just empty rhetoric? Taking it broadly, Israeli Arabs have an employment rate of 72.2% as against 77.7% for the rest of society. There is a disadvantage there in absolute terms of numbers; it is not a particularly startling or spectacular disadvantage. It is probably the case, I would accept, that Israeli Arabs have less well paid jobs—the point has already been made—but in terms of absolute figures in employment, it is not a dramatic disadvantage.

Let me take another figure—I often think it is the most important figure, and it is the one I always ask about; it is the figure that gives, for example, the proof of the advance of Northern Irish Catholics over the past 20 years—and that is the figure for medical students in university. This tells us a lot about the educational opportunities of relative communities and a lot about the possible future life chances of the brighter children in those communities. It is a good, simple way of looking at the problem. In the case of Israeli Arabs, they are 20% of the population of Israel and 19% of the students in Israeli medical schools. This seems a very significant fact to me. Mention has been made of South Africa and apartheid: does any noble Lord recall any figure remotely like that in the case of South Africa? I cannot.

So there are important considerations. There is not absolute equality of opportunity in Israel, I am very clear in my mind about that. There is a fundamental problem and a difficult problem to resolve. Some of the successes of the Israeli state in this respect should perhaps be recorded and acknowledged more fully than they have been.

Let me take one other very significant aspect of Israeli reality which I think that everyone who knows anything about the country is aware of. At the beginning of this century the magazine Kul Al-Arab carried out a survey of Israeli Arabs in towns adjacent to the West Bank and, consistently and by a large majority, those people resisted transfer to Arab rule. What is that telling us? Is it a meaningless finding? It cannot be; it tells us something about what life is like, for all its difficulties, in being an Arab under Israeli rule. Only last year the Council on Foreign Relations—a distinguished body in New York—and Princeton University carried out a poll in Jerusalem which asked its Arabs how they would stand on this matter. They discovered that a large slice of the Arabs in Jerusalem would prefer to remain in Israel. These findings, which are not seriously disputed, tell us what it is like to be an Arab in Israel despite there being many difficulties in that and they ought to be more respected than they have been thus far in this debate.

Finally, I hope that I have said enough to indicate that the problem is complex and that the implementation of liberal ideals is not always easy. At the moment, the Israeli press is full of considerable concern about racist chanting at football matches. If you read our own press in the past few weeks, you will also see considerable concern about racist chanting at football matches in this country. Reference has been made throughout this debate to the tradition in the Jewish community of support for human rights. I hope that I have said enough to suggest that this tradition is not yet extinguished in the modern state of Israel.

15:18

[Lord Parekh]

My Lords, I congratulate the right reverend Prelate the Bishop of Exeter on securing this debate and on introducing it with great passion and erudition. I would make one small point of clarification. In the Motion, as well as in what has been said so far, Arab citizens of Israel are all being referred to as “Israel’s Arab citizens”. It is worth bearing in mind that they do not identify themselves or wish to be identified in this way. The Arab citizens of Israel prefer to call themselves Palestinian citizens of Israel and the Arab minority as a Palestinian minority in Israel. In matters of this kind, if we want to respect people I think we need to make sure that we accept their self-identification.

These citizens do that for two reasons. First, by calling themselves Palestinian citizens of Israel they want to remind themselves and the world of their history: that they are a minority but not an immigrant minority or an indigenous minority, like the original nations in Canada and Australia. They are a majority that have been reduced to a minority. Their second reason for wanting to do so is to show that they are part of a diaspora or global community, in exactly the same way as the Israeli Jewish community is. Although I might from time to time slip into the language of talking about Israeli Arabs, I wanted to make that point clear and put it on record that we need to bear this in mind.

Although my good friend the noble Lord, Lord Bew, produced statistics to show that the picture is not as bleak as some have made out, let me make it absolutely clear that there are many areas of life where Israeli Palestinians suffer from considerable discrimination. I did not want to produce those figures but he has produced some on medical students. I could explain those figures in other ways, because they have been the subject of considerable analysis and are contradicted by figures in other areas, but I shall not do that. All I need to say here is what the right reverend Prelate the Bishop of Exeter said. Justice Or’s commission reported in 2003 that there had been a “neglectful and discriminatory” treatment of Israeli Palestinians. It went on to say that state resources were not allocated “in an equal manner”.

These conclusions of the Or commission have been supported by various independent research bodies. Let me mention half a dozen figures to give some picture of what I have in mind. Fifty per cent of Israeli Palestinians are classified as poor. Only 1.3% of Arabs who graduate in high-tech fields find work in their fields, although Israel is short of technical manpower. In fact, the recent report of the Bank of Israel said that not hiring Arabs costs Israel 31 billion new Israeli shekels a year in lost production. The average per student allocation in an Arab junior high school is one-fifth of that in the Jewish junior high schools. Less than 2% of academics are in tenured or tenure track positions. There is discrimination in areas relating to planning permission, housing, zoning regulation, urban development and civil rights.

Moving to the political area, to the best of my knowledge no Arab political party has ever been a part of the ruling coalition. There is constant talk in any negotiations about voluntary transfer or expulsion and territorial exchanges which treats Arab citizens of Israel as if they are dispensable—not a permanent part of Israel but one that can be got rid of in any negotiations. I would find it very difficult to live in a country if I were constantly told that I was dispensable and could be negotiated out of existence.

One might also look at the national anthem of Israel, which speaks very movingly, of course, of Zion and the yearning of the Jewish soul. That is fine, but imagine how you would feel singing the national anthem if you were an Israeli Palestinian? In October 2000 there was the Al-Aqsa intifada, in which protests took place and 13 Arabs were killed. To the best of my knowledge, no policeman has so far been indicted. It is also striking that there was no Arab Minister in the Israeli Government until Raleb Majadele was appointed Minister without portfolio in 2007, and a few months later, Minister of Culture, Sport and Science. As a result, there is a deep sense of alienation and withdrawal from the political process and electoral participation has gone down considerably—from about 75% at one time to 48% or 49% now. If one is not careful there is a danger that people might turn to other methods.

While that is one side of the picture, the other side is also striking which is that many Israelis recognise this. Having been to Israel on two or three occasions, lecturing and debating precisely these questions, I am struck by the way in which many progressive groups in Israel feel strongly about what is going on. In the 1999 elections, Ehud Barak talked about “a state for all”, implying thereby that it had not been a state for all. As a result, 95% of Arabs voted for him. When nothing happened, there was a grave sense of disappointment and when elections took place two years later, they boycotted them and 80% did not vote. The Supreme Court of Israel has constitutionally often stood up against the resolutions of the Knesset and pointed out that they are inconsistent with Israel’s commitment to democracy and equality. As a result of this internal self-correction and self-criticism, there is the remarkable figure in a recent survey that showed that 45% to 50% of Israeli Palestinians are proud to call themselves Israelis.

In other words, I suggest there is a very complex picture. On the one hand there is the systematic marginalisation of and discrimination against Israeli Palestinians. On the other, there is constant criticism of this, with institutions like the Supreme Court constantly providing correcting mechanisms. How do we explain this? I suggest there is a deep tension at the very heart of the Israeli state’s identity. On the one hand, it sees itself as a Jewish state. On the other, it is committed to democracy, to working—as the declaration of independence says—for the benefit of all its citizens and pursuing the ideas of liberty and justice. On the one hand, the Jewish state: on the other, democracy, liberty, equality and justice. How do you reconcile these two—not quite contradictory but conflicting—impulses at the very heart of Jewish identity? That is at the root of the marginalisation of its minorities.

When one talks about a Jewish state—something that I have talked and written about—what does one mean: a state of the Jews, by the Jews, for the Jews? It cannot possibly be that, because Israelis are already committed to some form of democracy. It could be “of” the Jews, but not just “by” them because there are Arabs; it cannot just be “for” the Jews, because it is committed to the benefit of all. I am not trying to preach, but I simply suggest that Israelis need to resolve this tension at the heart of their identity. In so far as it defines itself as a Jewish state, there is a constant thrust towards turning Israel into an ethno-cultural state, majoritarian, a state owned by its majority. In so far as they see themselves as committed to democracy, they recognise that it is a liberal, civic or multi-communal state. My suggestion would be that although this temptation to become ethno-cultural exists in every state, including our own where people want to see it as a white Christian state, they recognise that it is not possible. In India, they tried to see it as a Hindu state and recognised that this was not possible. Some such move needs to be made in Israel itself.

15:28

[Lord Palmer of Childs Hill]

My Lords, the previous time I spoke in the same debate as the right reverend Prelate was a year ago when your Lordships’ House debated Christianity in the Middle East. I remember his words in December 2011 when he said,

“almost every community-Muslims, Christians, Jews; Arabs, Kurds, Copts, Israelis, Palestinians and Turks-seeing themselves, with some justification, as a minority”.

He also said,

“the primary victims of religious extremism in the Muslim world are other Muslims”.—[Official Report, 9/12/11; col. 934.]

Sadly, to be a Jew in most countries of the region is not comfortable or even possible in many places. Indeed, Christians such as the Copts of Egypt are under severe pressure. Like the noble Lord, Lord Bew, I declare an interest: I am vice-president of the Liberal Democrat Friends of Israel, and I welcome the right reverend Prelate’s good intentions and masses of facts within his speech. As a Liberal Democrat, I must declare that I am against any unequal society, wherever it is.

The right reverend Prelate told mainly a story of a half-empty glass. I will try to tell a story of a half-full glass and how the Israeli Government, unlike their neighbours, are working hard to improve the situation of their minorities—in my view, not quickly enough; the sooner it happens the better. Israel’s Arab population is about 20% of the whole and numbers 1.7 million. They are citizens, as the right reverend Prelate called them. The reason we call them Israeli Arab citizens is that that is the title used by the right reverend Prelate. Personally, I call them all “Israelis”. They are all Israelis, they have rights and they should have all those rights.

As an example of a half-full glass, in 2010 Israel approved a $220 million five-year development plan for 13 Arab cities and towns, including $30 million for the expansion of public transportation. The plan is actually being implemented by the Authority for the Economic Development for Arab, Druze and Circassian Sectors, based in the Israeli Prime Minister’s Office, and is focused on 12 specific Arab and Druze localities, including Nazareth and Rahat—I will not detail them all. The Israeli Government are also allocating funds for 13 industrial parks in Arab communities.

There are some real examples of action being taken. Prime Minister Netanyahu recognised the deficiencies in the workforce and stated earlier this year—I know it is only a statement but he said it—that:

“The Arab sector is a main growth engine for the Israeli economy”—

as mentioned by the noble Lord, Lord Parekh, a moment ago—

“which has yet to be fully utilised, and I believe that their integration into the labour market will contribute not only to the Arab sector, but to the State of Israel as a whole”.

In July 2012, the Israeli Government launched a new affirmative action campaign to encourage companies, especially in the high-tech sector, to employ Israeli Arabs, with the Government contributing 25% of their salary. The hope is that this will encourage companies which are, as has been mentioned, reluctant to take on Arab employees to do so. Once this had been done, it will reduce discrimination in the workplace. In June 2012, the Israeli Government launched a public awareness campaign against prejudice and discrimination by Israeli companies against Arabs. That cannot be tolerated. Also in June 2012, Cisco chief executive officer John Chambers announced a four-year plan to create 12,000 new technology jobs for Israeli Arabs. He said:

“We have an opportunity to show the rest of the world what we can do together with a government that really gets it and with citizens who really get it”.

I would have hoped that the right reverend Prelate and other noble Lords, while detailing the inequalities—which do exist—would at least have mentioned some of the actions being taken to rectify those problems. As has been mentioned, there are numerous organisations inside and outside Israel trying to rectify those problems. That will take time but they should be given credit for so doing.

This is all against a background of Khaled Meshaal, the Hamas leader, on his very recent visit to Gaza, referring to the liberation of Palestine in Ramallah, Jerusalem, Haifa and Jaffa while the crowds yelled, “Hit, hit Tel Aviv”. This is also at a time when 40,000 have been killed in Syria without a demonstration in the UK. Nor were there Motions in this House when Hamas shot men accused of being Israeli spies without even the pretence of a trial. Their bodies were then dragged through the street behind motorcycles. I am not saying that there are not inequalities for Israeli Arabs—or Israeli Palestinians if you want—that need to be dealt with and are being dealt with, but perhaps we should also reflect on the bloody conflict between Sunni and Shia Muslims, the hounding of the Christian Coptic community in Egypt, the unrest in a number of Middle Eastern states and the toppling of regimes.

In Israel, Arabs have served as elected representatives in the Knesset, the Israeli Parliament, since Israel’s first elections in 1949. There are currently 17 Israeli Arabs and Druze in the Knesset out of a Chamber of 120, although that is short of the 24 which under strict proportional terms would reflect the numbers of the Arab-Israeli population. There are many Israeli Arab judges. The noble Lord, Lord Bew, mentioned one of them. They include Israeli Supreme Court Justice Salim Joubran and George Kara—he has been mentioned—who presided in the Tel Aviv district court that convicted former Israeli President Katsav.

Israel’s first Muslim consul general was appointed in Atlanta in 1997; Israel’s first Muslim ambassador was appointed to Finland in 1995; Israel’s first Druze ambassador was appointed to Vietnam in 1999; in 2004 Bnei Sakhnin was the first Arab Israeli football team to win the State Cup; and—still on the soccer theme—the Arab Israeli football star Walid Badir is the captain of Hapoel Tel Aviv. The Arab-Israeli Mira Awad represented Israel at the Eurovision Song Contest; and the Arab Israeli Rana Raslan was Miss Israel.

Do noble Lords remember the amazing time—amazing to me and I am sure to everyone else—when Majalli Wahabi, a Druze, was the acting President of Israel? Noble Lords may have read the Bedouin Israeli diplomat Ishmael Khaldi’s book A Shepherd's Journey. In academia there are Bedouin professors and others whom I do not have enough time to relate.

Of course, if there was no problem, no action would be required. The reasons advanced for the standard of living for Israeli Arabs being generally lower than the Jewish and Christian Israeli population are poorer participation in education and the failure of women to take up employment. I will tell your Lordships’ House the following sad statistics: twice as many Muslims leave school without qualification; three times as many are unemployed; three times as many live below the poverty line. I should add that these sad figures are not in Israel but in Britain. It is sad here and it is sad there.

The reasons for inequalities in Israel, Britain and elsewhere are generally due to education, employment and where you are in the food chain of life. The aim in Israel and the UK is to improve the conditions of all by improving opportunities for a better life.

Finally, it would be good if the right reverend Prelate could also acknowledge that 850,000 Jews have been forcibly displaced and exiled from Arab countries since 1948, and that justice for such Jewish refugees from Arab countries has been expunged from the peace and justice narrative for the past 65 years.

I trust that when my noble friend the Minister replies she will say how Her Majesty’s Government will acknowledge inequalities and discrimination worldwide—not just in Israel—and not just the accusations against Israel made in this debate.

15:37

[Lord Singh of Wimbledon]

My Lords, I, too, thank the right reverend Prelate the Bishop of Exeter for securing this important and timely debate.

The April 2012 report of the Foreign and Commonwealth Office on human rights and democracy reminds us of the some of the injustices suffered by Arabs living in Israel, with Israeli NGOs reporting a denial of basic hygiene, sleep deprivation and violence in interrogations; allegations of unequal treatment of Arabs by the Israeli judicial system and allegations of abuse of Arab detainees during arrest and in Israeli prisons.

It is to the credit of Israel that the country’s constitution guarantees freedom of religion for Christian, Muslim and other Arab minorities and in general they are allowed to get on with their own lives—although as the noble Lord, Lord Parekh, reminds us, generally in lesser employment. Non-Jewish citizens are exempt from compulsory service in the Israel Defence Forces, a concession that also underlines a lack of trust over possible divided loyalties. Politically, Israeli Muslims are part of the state, but loyalties are bound to be influenced by what happens to their kith and kin in Palestinian areas.

Concerns over evidence of aggressive Israeli policies in Palestinian territories affect and add to tensions and mistrust between Jews and Arabs in Israel. These include the expansion of illegal Jewish settlements in Palestinian areas, with the demolition of Palestinian homes and the eviction of Palestinians from East Jerusalem and the West Bank; the use of military courts to try alleged breaches of the peace by Palestinians, which contrasts with the use of civil courts to deal with the same offences by Jews; concerns that cases heard by the military courts system are frequently based on secret evidence that is not available to defendants’ lawyers, on dubious confessions or on the evidence of minors who themselves face detention; and the fact that cases of wrongful killing by the Israel Defence Forces are investigated by the forces themselves rather than by independent investigators.

However, Israel is not alone in the abuse of human rights. Palestinians, too, are frequently involved in gross abuses of the rights of other faiths. These include arbitrary detention, restrictions on the freedom of non-Muslims and the use of the death penalty. Palestinian human rights NGOs point out that senior court positions in Gaza are often filled by political appointees. There are also reports of violence against detainees.

When one considers the history of the formation of Israel, with the arbitrary displacement of the Palestinian population and the subsequent history of continuing conflict, it is easy to understand allegations of divided loyalties in the Arab Israeli population, the anger and bitterness of surrounding Palestinians and the hostility of the wider Muslim world. It is also easy to understand, and have a measure of sympathy for, the siege mentality of Israeli Jews. It is only when we look to and understand the difficult environment in which they work that we begin to understand the incredible courage and commitment of both Israeli and Arab NGOs, of international human rights groups such as Amnesty International and Human Rights Watch, and of humanitarian organisations such as the Red Cross and the UK-funded NGO, Defence for Children International. They deserve our appreciation and support for their near-impossible work.

It is frequently said that the only way to secure peace and the respect of human rights in this troubled part of the world is a two-state solution, with a fully independent Palestine. I may be in a minority of one in preferring to see positive initiatives for closer integration between the different communities, based on mutual interest. I am not convinced by the feasibility of artificial boundaries dividing an area of land which in part is historically and culturally entwined, with a shared history and culture. Recent history reminds us that rigid partition of a country where different groups share a common heritage inevitably leads to resentment and continuing conflict. The partition of the subcontinent of India cost millions of lives, and the stand-off over Kashmir continues. We should also remember the continuing threat to peace arising from the partition of Korea, the genocide resulting from the partition of the former Yugoslavia and, nearer home, years of conflict in Northern Ireland.

I know that religion gets a bad press, but with the constant failure of political initiatives it might be worth looking at religious teachings in a search for elusive peace. At a time of similar conflict between Hindus and Muslims—and different factions of those religions—in the subcontinent of India, Guru Gobind Singh reminded warring factions that despite their different religious and cultural practices, Hindus and Muslims, and Shias and Sunnis, were all members of the same human family, with similar concerns and praying to the same God. Leviticus, chapter 20, verses 33 to 34, stresses the same sentiment:

“The stranger who resides with you shall be to you as one of your citizens; you shall love him as yourself, for you were strangers in the land of Egypt”.

In the Koran, sura 14, verse 6 says much the same thing.

A few years ago, I was invited by the noble Lord, Lord Sacks, the Chief Rabbi, to join him on a visit to Israel to help look for ways to peace. We talked to university professors and office and manual workers in both the Jewish and Palestinian communities, and everywhere found a common desire in people to be allowed to just get on with their lives and look to their families in safety and security. They simply wished for the opportunity to live in peace and harmony with their neighbours in the ways taught by their different faiths.

In what now seems like a previous incarnation, I studied the works of Mary Parker Follett on conflict resolution in industry and used what she called “the law of the situation” with success. It is a concept that gets away from the usual two sides of a conflict or dispute and invites those involved to look at the different facets of common problems with a view to getting the best outcome for all concerned.

The signing of peace accords that ignore basic underlying concerns is like building grandiose structures on uncertain foundations, and is unlikely to lead to lasting peace. The more I look at that sad and beautiful land, sacred to the world’s major faiths, the more convinced I become that the only way to true and lasting peace is for members of those different faiths to look beyond the trappings of religion to the common imperatives of respect and generosity to others contained in actual teachings. The NGOs working to highlight human rights abuses and provide humanitarian assistance are doing just this. It is important that we in the international community do all we can to support them. Addressing entrenched attitudes and prejudices is not easy and does not capture many headlines, but it is a challenge that can be met. A Christian hymn reminds us that, with faith, a weak arm,

“may turn the iron helm of fate”.

15:47

[Lord Janner of Braunstone]

My Lords, it would be very good if mutual faiths could bring us together and ensure that we have as much peace as possible between people of different religions in different parts of the world. One problem is that this does not always happen, as is the case in the Middle East. Sadly, inequality and discrimination happen throughout the world. Even sometimes here in Britain we, as citizens, have to deal with prejudice against race, gender, disability and other minority factors.

I know something of the Israeli situation. Its Bureau of Statistics shows that there are some 1.62 million Arabs in Israel, making up 20.5%, or about one-fifth, of its population. The Arab community is divided up between Muslim, Christian, Druze and Bedouin. Of these, the Christian and Druze Arabs are the most integrated within Israel. The Arab community has always been represented in the Knesset, or Israeli Parliament, but Arab MKs are often criticised for focusing on the Israel-Palestine conflict instead of domestic issues surrounding the Arab communities in Israel.

Although Israel is constantly working to try to merge the division between the Jewish and Arab communities, I am going to speak primarily about our British support to improve these issues. The United Kingdom Task Force is a wonderful organisation. It was established here in Britain to raise awareness of the issues relating to Israeli Arabs. It aims to deepen understanding of these matters among the United Kingdom Jewish community. That community is very centred on that concern. I declare my interest as one of the endorsers of this task force. The organisation does not work just with British Jewry but endeavours to teach communities worldwide, both religious and non-religious, about issues which surround Arab citizens. Even our own Government are involved, with a co-funded venture with the United Kingdom task force, through the British embassy in Israel.

Last year, in 2011, a total of some £340,000 was granted by the British Government to be used towards four specific projects that coincided with the British embassy manifesto. The United Kingdom task force press release states:

“It is to advance shared priorities in regard to the integration and empowerment of Arab communities in Israel … These projects are to address the needs of Arab communities in the north, centre and south of Israel, thus achieving a geographic spread reflective of the diverse Arab communities in Israel”.

The funding of £340,000 has been divided between four projects, each enhancing the role of Arab-Israeli citizens. The first project is with Tsofen High Technology Centre, an education centre working to integrate Arab engineering graduates into technology sectors. Israel is one of the most advanced countries for science and technology. The centre this year has welcomed even more Arab citizens to learn computer skills, and some 80% of the participants have been women, which is perhaps a rather better rate than we have here. The second project is to increase volunteering between the young—Jewish and Arab—after they have completed school. The final two projects relate to two mixed cities. These are places in Israel where Jews and Arabs live together. I have personally long worked tirelessly for co-existence in Israel and throughout the world. For me, these final projects with mixed cities are crucial to enforce understanding of one another.

I was truly privileged in October of this year when I received an honour from the state of Israel for my contribution to that country and dedication to building bridges between its Jewish and Arab communities. I have spent a lot of my working life on that issue. The State of Israel, with support from the ambassador here, Daniel Taub, for whom I have the very greatest respect, and the Israeli embassy in London, chose a kindergarten in a place called Ma’alot Tarshiha, which is a very unique town in the Galilees in the north of Israel, and named it—I cannot hide this from noble Lords—The Lord Greville Janner Education Centre, which is not what they call the House of Lords. That is a remarkable and incredibly proud privilege for me. Ma’alot Tarshiha is a truly magnificent place where mixed communities live. It is a town for Jews, Arabs, veterans and immigrants to live side by side together in peace. The Mayor of Ma’alot, said in his speech at my ceremony:

“Ma’alot Tarshiha is a town with communities living together in a real way, seeing children who are Jewish and Arab playing with each other. You cannot tell at this kindergarten, if a child is Jewish or Arab, this is what is so wonderful about our town”.

That is certainly correct. For us to overcome discrimination against minorities, we must emphasise the importance of co-existence. Every citizen has rights. This kindergarten in Ma’alot Tarshiha, demonstrates that dialogue and understanding should always start when people are young. These children can clap, sing, dance, play together and become friends while they are young rather than waiting until they become old or Members of the House of Lords.

I thank the right reverend Prelate for this debate. Some Members of the House who have already spoken have identified critics of Israel, and some who are yet to speak will do so, but I want the House to acknowledge that my own experience has shown me that the Arab citizens of Israel have just as great a desire for peace and prosperity as the Jewish Israelis who live around them. The benefits of building positive relations between the two communities are immeasurable and I commend the numerous organisations that are working to deepen understanding of these issues. May they succeed in doing so.

15:55

[Lord Weidenfeld]

My Lords, I have been involved in the cause of a Jewish state in the Holy Land for nearly 80 years. I was privileged to have served the first President of Israel, Chaim Weizmann, as adviser and head of his office and claim a continuous involvement with the theme of this debate. I am aware how, from the very outset, Israel’s leaders upheld the founders’ pledge to treat the Arab minority as equitably as any state in the civilised world would treat its minorities. This has been demonstrated in some eloquent contributions by the noble Lords, Lord Bew and Lord Palmer of Childs Hill, and I will not repeat their argument in detail.

Yet in my 36 years in your Lordships’ House, the disproportion between debates questioning, through stern criticism, Israel’s attitude to its Arab citizens and those concerning the most heinous persecution of minorities in the Arab world is surely rather disquieting. I see, for instance, no debate scheduled on the gruesome persecution of Christians in Arab lands, the burning of Coptic churches, the maltreatment of members of missionary orders and the serious economic erosion of Christian communities, causing forced emigration. In contrast, I claim that the treatment of Palestinian Arabs, Muslims and Christians in Israel is not only more than correct but remarkable if you reach back into the history of the state and consider that on three occasions—1947, 1967 and 1973—Arab armies launched wars against Israel, not just for minor strategic frontier rectifications but for the wholesale destruction of the state and various forms of removal of its Jewish inhabitants.

Only a few days ago a Hamas leader pledged ever deadlier rocket attacks against Israel’s most populated areas and vowed to reconquer Jerusalem, Haifa and Jaffa, which is a euphemism for Tel Aviv. Israel’s society of course is not free from intercommunal tensions. Quite apart from the questions of Jews and Arabs, it is shaded and diverse as to culture, geographic origin and degrees of religious orthodoxy, but it is united in the defence of freedom and justice. An Arab Israeli member of the Supreme Court presided at the trial of the President of the State of Israel. The Israeli Ambassador in Norway is a Druze; his deputy is a Christian Arab. A newly arrived counsellor to the London Israeli Embassy—I think the noble Lord, Lord Palmer, mentioned him—is a Bedouin of the Islamic faith. He has spoken on campuses in this country about his very interesting and moving experiences, proving that he is a loyal citizen of Israel and that Israel treated him very well. Arabs are exempt from compulsory military service in Israel but they are allowed to volunteer.

The number of Arab outpatients at the Hadassah hospital in Jerusalem often exceeds the number of Jewish citizens. In Rambam Hospital in Haifa—the biggest hospital in the north of Israel—30% of the doctors and 26% of the nurses are non-Jewish, such as Israeli Christians and Muslim Arabs. This means that non-Jewish staff in the hospital represent a higher proportion than their actual representation in Israeli society. In addition, some of the most senior heads of departments are Arab doctors—for example Dr Suheir Assady is the hospital’s important head of nephrology.

Collaboration between Jewish and Arab cultural groups, ranging from popular music through dance and chamber music is very impressive. The Jerusalem Foundation, founded by the late mayor, Teddy Kollek, has an ever-widening range of joint intercommunal programmes.

Having been for 11 years chairman of the board of governors of the Ben-Gurion University of the Negev, I have had first-hand experience of the close relationship between Arab and Israeli students and lecturers, some of them beneficiaries of state stipends. Jewish students were regularly drafted to private teaching of Arab children from poor families. My involvement in furthering educational and social contact between Jews and Arabs in Israel is a source of great pleasure and pride to me. The number of NGOs of interfaith groupings monitoring most closely movements favouring the state of ever-closer cultural and social relations with the Arab minority in Israel is very impressive. If the right reverend Prelate wishes to obtain further information, I would be delighted to provide it.

In conclusion, I agree with Dr Weizmann’s strongly held views that the Jewish-Arab conflict in Palestine is not one between right and wrong, but between two rights and two wrongs. Yet he added that,

“ours is the smaller wrong”.

16:01

[Baroness Uddin]

My Lords, I express my deep gratitude also to the right reverend Prelate the Bishop of Exeter for his profound narrative of the reality of the Arab-Israeli experience.

When we speak of the occupation of Palestine, we tend to encompass Gaza and rarely focus our sight on, nor are we aware of, the size and significance of the Arab Palestinian population living within Israel. According to Israel’s Central Bureau of Statistics, the number of Arabs in 2010 was estimated at 1,573,000, representing 20% of the country's population. The majority of these identify themselves as Arabs or Palestinian by nationality and Israeli by citizenship, as the noble Lord, Lord Parekh, said. Many continue to have family ties to Palestinians in the West Bank and Gaza Strip.

With much of our permanent focus on events in Gaza and the West Bank, we hear little of the brutal repression and discrimination placed on them as citizens of Israel by Israelis, and it is that which I should like briefly to highlight. In September 2011, the Israeli Government approved the Prawer plan for the mass expulsion of the Arab Bedouin community in the Naqab, or Negev desert. If fully implemented, this plan will result in the forced displacement of up to 70,000 Arab Bedouin citizens of Israel and the destruction of 35 “unrecognized” villages, which are regarded by Israel as illegal. Despite the Arab Bedouin community’s complete rejection of the plan and some strong disapproval from the international community and human rights groups within Israel, the Prawer plan is going ahead with impunity. More than 1,000 homes were demolished in 2011 and, in August this year, a special police force was established to officially begin implementing the plan and demolishing even more homes. In September this year, dozens of structures were destroyed in a single day, in what was proudly described by the Israel Land Administration as a “rolling enforcement operation” against “invasions” of state land. Then, on October 11, the recognised village of Bir Hadaj was raided, and officials posted demolition orders on some homes, prompting protests from village residents. In return, there was a harsh and brutal response by the police.

Around half the Bedouin population in Israel live in 45 so-called “unrecognised villages”. The Israeli Government intend to force them out, claiming that their “squatting” is taking over the Negev desert. The truth is that while they make up 30% of the region's population, the Bedouin actually live within less than 5% of the total area.

Although the law that will serve as the implementing arm of the Prawer plan has not yet begun its legislative process in the Knesset, events on the ground indicate that the focus on demolition and displacement is already shaping policy that is targeting the Bedouin. In other words, Prawer is happening now, and we need to do something to prevent Israel from committing further atrocities on their Arab citizens.

There are many significant strategies and devices being used to discriminate against the Arabs as well as against other ethnic minorities in Israel. I should like to draw attention to two in particular. First, there is the cruel and deliberate discrimination which takes place in respect of the prevention of marriage between residents of the Arab-Israeli sector and their natural affiliates in Gaza and the West Bank, to which the right reverend Prelate has already referred.

I, too, welcome the activism within Israel. In January this year, Israeli rights groups and MPs denounced a court ruling upholding a law that prevents Palestinians married to Arab Israelis from obtaining Israeli citizenship or residency. At present, Palestinian men over 35 and women over 25 married to Israeli citizens can obtain only short-term permits to be in Israel. They have limited permission to work; this permission is regularly and humiliatingly reviewed and such families are excluded from all social benefits and entitlement.

The brutality of this law is best understood in the context of a statement made by Justice Asher Grunis, who is expected to become the next Supreme Court President. He justified the widely recognised racist law on the grounds that:

“Human rights are not a prescription for national suicide”.

While the subjugation and abuse of Palestinians living within Israel and in the Occupied Palestinian Territories are well documented, what is less well known is how ingrained racism is in Israel; this is also perpetrated against Jews who come from the ethnic minority background of Falasha, Ethiopian Jews who have been brought into Israel in several mass transfer operations, who have found themselves relegated to an underclass. They are not only racially discriminated against in housing, employment, education and the army, but they have also been unwittingly used to bolster illegal settlements. Many Ethiopians put their experiences of this brutal racism down to the fact that they are black.

To my horror, I came across one report which suggests that health officials in Israel are subjecting many female Ethiopian immigrants to a controversial long-term birth control drug in what Israeli women's groups allege is a racist policy designed to reduce the number of black babies. Figures show that 57% of those prescribed Depo-Provera in Israel are Ethiopian women, despite the fact that Falasha represents only around 2% of the entire Israeli population.

“This is about reducing the number of births in a community that is black and mostly poor”,

said Hedva Eyal, the author of the report by Woman to Woman, a feminist organisation based in Haifa, northern Israel. She said:

“The unspoken policy is that only children who are white and Ashkenazi are wanted in Israel”.

The contraceptive's reputation has also been tarnished by its association with South Africa, where the apartheid Government had used it, often coercively, to limit the fertility of black women.

“The answers we received from officials demonstrated overt racism”,

Ms Eyal added. She went on to say:

“They suggested that Ethiopian women should be treated not as individuals, but as a collective group whose reproduction needs controlling”.

This is the first time I have looked into this matter. It is not only shocking in its candour but also for the fact that it is being carried out by those who, above all others, should understand and appreciate brutality at the hands of the state.

In the search for information about this issue, I came across the impressive new and very rare publication by Ben White entitled Palestinians in Israel: Segregation, Discrimination and Democracy. I commend it to the House for its deep insight. I also thank Carl Arrindell, as well as the House of Lords Library briefing team, for the thoroughly comprehensive information with which they were able to provide me.

While I, too, propose that we should be implementing sanctions to demand a cessation to such brutal and deliberate treatment, at the very least I ask our Government not to turn a blind eye to these clear violations of international law when they assess issues such as joint trade agreements. I also ask that they do not simply view their engagement with Israel in terms of the West Bank and Gaza but that they take account of the plight of Israel’s Arab, Ethiopian and other minority citizens. Much has been said today about discrimination against minority rights in that country and elsewhere. Such discrimination is not acceptable anywhere.

Finally, Britain has a specific responsibility to clear up this mess. In the light of the available evidence presented today and elsewhere, will the Minister confirm that the UK Government will not be bound by unquestioning loyalty to the official discourse when Israel continues to flout all international laws and natural justice?

16:10

[Lord Hylton]

My Lords, I echo the thanks to the right reverend Prelate for introducing this debate. In the course of it, I have found myself very much on the side of my noble friend Lord Singh. I speak from only little experience, but in July 2010, with colleagues from this House, I met in northern Israel two Palestinian Members of the Knesset and others from a committee linking Palestinian mayors and MKs. They pointed out that, since 1948, much Palestinian land has been confiscated under 20 separate laws of Israel; for example, lands of Muslim waqfs and absent owners, and land taken for roads and state purposes. Zoning, they said, discriminates by not allowing land for Palestinian housing and employment. They told us that two separate school systems exist, with, in their view, insufficient teaching of Palestinian history. They could have added that spending per child is more than five times higher in the Israeli schools.

As to health, infant mortality is about twice as high for Palestinians as for Jewish Israelis. Although Palestinians pay health insurance, they receive poorer-quality services. As to poverty, 50% of Palestinians live below the poverty line, while only 20% of Palestinian women are in work. Military service, as has been mentioned, is not compulsory for Palestinian citizens, so on the whole they do not do it for fear of having to attack their own people. Unemployment is far higher among Palestinians compared with other Israelis.

In general, the feeling was that Israel sees Palestinians as temporary residents, alien and not indigenous. Palestinians sense Israeli animosity and police suspicion. There is a sense of dispossession, since Palestinians own only 3.5% of the land within the 1967 borders, although they account for slightly more than 20% of the total population.

I do not see that much has changed over the past two years. This is despite the best efforts of Palestinian mayors and MKs and the good work of NGOs such as the Mossawa Centre, Adalah, Neve Shalom/Wahat al-Salam—a shared village with a big outreach—or indeed the New Israel Fund. Recent discussion about Israel as a specifically Jewish state has increased tensions. These are aggravated by the unrecognised status of some Palestinian and Bedouin villages.

A grand plan is being drawn up for the future of the semi-desert Negev. It is felt that the Bedouin there were not sufficiently consulted. The noble Baroness, Lady Uddin, has given considerable detail so I will add only that little thought seems to have been given to the wish to return to ancestral lands of the Jahaleen tribe now living east of Jerusalem.

Israel claims to be the only well established democracy in the Middle East. It deserves respect for many reasons but given its claims, it will be judged by a very high standard. This must, I suggest, include full equality and non-discrimination for all citizens. Such standards are built into the association agreement between Israel and the European Union.

I conclude by mentioning recent discussions on a possible variant of the idea of two contiguous but separate states. This would allow Israelis to remain voluntarily in the West Bank as full citizens of Palestine. In return, equality of rights would be enshrined for the Palestinian and non-Jewish citizens of Israel. I believe that this concept is worth examining. It would, of course, be difficult to implement because of separate living areas in Israel, and because separation is so embedded in law and practice. Several European states are nevertheless looking carefully at the concept. Will Her Majesty’s Government examine it also, together with all other ideas that can prepare for political agreement and help eventual implementation?

16:16

[Baroness Hussein-Ece]

My Lords, I, too, thank the right reverend Prelate the Bishop of Exeter for securing this very important debate, and for his excellent introduction.

Like others, I wanted to take part in this debate because of my personal passion and commitment to equality and the protection of human rights for all people, whatever their background, faith, race, sexuality, disability, and so on. My family were migrants to the UK; they came here in the early 1950s, before race relations legislation. Like many migrants who had arrived here over the decades, they faced open hostility and discrimination. We as a society have evolved, and have outlawed discrimination, racism and anti-Semitism, and we have developed co-existence and how to live with one another.

We support and promote the principles of equality and non-discrimination as a cornerstone of international human rights law. So when debating the continuing practices of a nation that itself was born out of European intolerance and racism in the extreme, it is hard to understand how it can be tolerated. There cannot be a Member of your Lordships’ House who would support any form of discrimination. As a councillor in Hackney some 15 years ago, I worked closely with a large Orthodox Jewish community in Stamford Hill, ensuring that they had proper access to services for their children and young people. Often they did not have equal access and felt very discriminated against. I am pleased to say that I still maintain strong links and friendships with leading figures from that very strong community.

Sadly, it remains the case that in Israel the right to equality and freedom from discrimination is not explicitly enshrined in law as a constitutional right; nor is it protected by statute, as has already been mentioned. A recent poll in Israel revealed that a majority of Israeli Jews believe that the Jewish state practises apartheid against Palestinians, with many openly supporting discriminatory policies against the country’s Arab citizens. Perhaps what is so depressing is that a third of respondents believe that Israel’s Arab citizens should be denied the vote, while almost half—47%—would like to see them stripped of their citizenship rights and placed under Palestinian Authority control. These views appear to echo hard-line opinions that are usually associated with Israel’s ultranationalist parties and depressingly suggest that racism and discrimination is more entrenched than was generally thought. Just over 40% would like to see separate housing and classrooms for Jews and Arabs. The findings reflect the widespread notion that Israel, as a Jewish state, should be a state that favours Jews. As a leading columnist commented:

“After almost half a century of dominating another people, it’s no surprise that most Israelis don’t think Arabs deserve the same rights”.

The definition of Israel as “the Jewish state” makes inequality a practical, political and ideological reality for Palestinian Arab citizens of Israel, who are marginalised by and discriminated against by the state on the basis of their religious affiliations as non-Jews. Numerous groups of Palestinian citizens of Israel face multiple forms of discrimination on the basis of their membership of one or more distinctive sub-groups. Arab women in Israel, for example, face discrimination as members of the Arab minority and as women. As has been mentioned, Arab Bedouins face an additional layer of institutional discrimination. Individuals are subjected to multiple forms of discrimination. For example, a disabled Arab Bedouin child living in an unrecognised village in the Negev—referred to by the state as an illegally constructed village—faces intolerable discrimination.

It is therefore an irony that, in regard to certain marginalised groups, Israel has some of the world’s most progressive laws and policies, with strong anti-discrimination legislation and legal protections for women and disabled persons. However, these have not been extended to the Palestinian minority in Israel. As a result, these marginalised groups do not receive the full benefit of such protections. More than 30 main laws discriminate, directly or indirectly, against Palestinian citizens, and the current Israeli Government have proposed a flood of new discriminatory Bills which are at various stages in the legislative process.

Underinvestment in Arab schools in Israel sustains these gaps between the Jewish majority and the Arab minority and, as Arab children account for 25% of all children in Israel, the unequal investment in their education and development further contributes to the inequality. According to official state data, the state provides three times as much funding to Jewish students as it does to Arab pupils. My noble friend Lord Palmer, a valued colleague, cites inequalities here in the UK. Yes, he is quite right, there are inequalities among different groups here in the United Kingdom, but the difference is that the United Kingdom does not deliberately invest less in ethnic minority children than it does in the majority population.

In the field of health, the inequalities are just as stark. The noble Lord, Lord Hylton, referred to mortality rates. The infant mortality rate, for example, among Palestinian citizens is double that among Jewish citizens, and higher still among the Arab Bedouin population. As to income and poverty, Arab families are greatly overrepresented among Israel’s poor, with half of Arab families in Israel classified as poor compared to an average poverty rate of one-fifth. The unrecognised Arab Bedouin villages in the Negev are the poorest communities in the state. Gaps in income and poverty rates are directly related to institutional discrimination against Arab citizens.

Unemployment rates remain significantly higher among Arab than Jewish citizens. Arab women citizens make up only 20% of the workforce, among the lowest in the world. As the noble Baroness, Lady Uddin, said, the Bedouins of the Negev valley are the most disadvantaged. They are systematically excluded from Israeli society and denied the rights and standards of living enjoyed by the majority. Approximately half of them are living in what are termed as unrecognised villages. They have Israeli citizenship but those living in these villages have no address registration, which can lead to problems with accessing services. The vast majority of Arab Bedouin citizens living in Negev have been expelled from their ancestral lands, some repeatedly. With no official status, these villages are excluded from state planning and government maps, have no local councils and receive few to no basic services and facilities.

A few years ago I had the pleasure of meeting the women from this community who established the charity Sidreh. Khadra Elsanah, who is the director of the charity, told me of the valuable work they are doing at the grass roots among Bedouin women organisations in the Negev. She referred to the way in which the Israeli Government demolish their homes. She said that they come in the morning, when the husband is away, so that only the women and the youngest children are in the house. Most of them cannot speak Hebrew, and even if they could, it would not help. She said that they demolish their homes; they leave people on the street, with no other accommodation. Then they send them the “bill” for the demolition.

I want to ask my noble friend why, as a friend of Israel, we tolerate this treatment of minorities, which we would never tolerate with our own communities. Surely tolerance and equality extended to all Israeli citizens would foster and be a step towards a climate of peace in the Middle East, something that we all want.

00:00

[Baroness Royall of Blaisdon]

My Lords, I too am grateful to the right reverend Prelate the Bishop of Exeter for tabling this debate and for his robust and excellent introduction. It is also a timely debate, because this is a critical time for the peace process. The Israeli Arabs are profoundly affected by both lack of progress and the escalation of tensions. The right reverend Prelate is quite right when he says that inequality and discrimination against Israeli Arabs is a justice issue which must be seen in the context of civil rights. After my Question on Palestine last week, I was accused by some people of being anti-Israeli. However, like the noble Lord, Lord Steel, I am not anti-Israeli: I am a friend of Palestine; I am a friend of Israel; but I am not a friend of the current Israeli Government.

The noble Lord, Lord Weidenfeld, was right to raise wider issues about the despicable treatment of Christians and other minorities in Arab countries, and, indeed, we do debate these issues. I know that all noble Lords recognise the vulnerable situation of Israel, which in so many ways is an extraordinary country. However, as a friend of Israel it is right to be critical of Israel.

For a minority population in any country, there are issues of integration while retaining identity and culture. However, it must be extraordinarily difficult to be an Israeli Arab facing discrimination not only by the day but also, at the moment, when the Government are building settlements encroaching on areas that do not belong to them and when the Government are occupying their land.

The issue of Israeli Arabs—or perhaps, like my noble friend, I should say Israeli Palestinians—is a crucial political dimension of the Israeli-Palestinian peace process. Palestinian Arabs who are citizens of Israel should have the right to continue to live in their homeland without inequality and discrimination.

As an aside, while watching the BBC news last night about Syria and all the refugees, I thought it was right to remember that some of those coming out of Syria are in fact Palestinian refugees who are now twice refugees.

On the settlements, noble Lords will be aware of the anti-boycott law passed by the Knesset in 2011 that imposes sanctions on any individual or entity that calls for an economic boycott of Israeli settlements in the West Bank or of Israel itself. This is a controversial—indeed, shameful—law that offends against basic human rights. Human rights organisations have clearly stated, as is obvious, that it targets Israeli Arabs. At the time the law was passed the Knesset legal adviser warned that the legislation was “borderline illegal”, but of course it went through notwithstanding. The High Court has recently asked the Government to explain within four months why the controversial law should not be cancelled. We look forward to further consideration of the case, which is of great importance to Israeli Arabs.

The declaration of the establishment of the State of Israel in 1948 says that the state will,

“ensure complete equality of social and political rights to all its inhabitants irrespective of religion, race or sex”.

Yet there are so many instances of deep discrimination, about which we have heard today. The picture is depressing from the outside, intolerable for Israeli Arabs and demeaning for the State of Israel.

For example, with regard to employment, Arab and Jewish Israeli men suffer from unemployment at similar levels. However, on average Arab men earn 30% less than Jewish Israeli men. Among those employed, as has been said, Arabs are under-represented in various sectors of the economy, including business, public administration, banking, insurance, finance and high-tech, but as a result, while Arabs constitute approximately 20% of the population, they contribute only 8% to Israel’s GNP. If we look at this in an economic context, the Israelis are missing out.

The gap has grown since the 1990s when the Israeli economy began to move away from a reliance on agriculture and textiles and towards innovation and high-tech, but the state does not invest in the education and life chances of Israeli Arabs. In secondary education, a pupil in the Jewish system receives on average 2.01 teaching hours a day compared with 1.75 hours in Arab education. That is not right.

However, there are beacons of light, as has been said by my noble friend Lord Janner and others. I would draw the attention of noble Lords to Hand in Hand, an organisation with which I have had some association in the past and which I had the pleasure of visiting in Jerusalem. Hand in Hand operates a network of bilingual Hebrew-Arabic schools where Jewish and Arab citizens of Israel study together. There are five bilingual schools in Israel of which three are operated by Hand in Hand, and it will continue to build communities and open new schools to provide as many Israeli children as possible with the option of an integrated top-quality public education. However, increasing the number of bilingual schools in Israel is a challenge due to the geographical separation between most Jewish and Arab towns.

The British Council in Israel has backed several language projects, including Hand in Hand and English language communication and training for NGOs. Perhaps I may ask the Minister if there is anything else our Government can do to support these schools further. They are hugely beneficial to the students, who learn tolerance and strike up lifelong friendships, but they are also important in bringing parents together, who in turn foster understanding within their communities. I would say in passing that I am a great supporter of integrated education in Northern Ireland, and I know that Hand in Hand works together with integrated schools there. There is much that could be learnt by each of the two communities.

Many noble Lords have mentioned land distribution and planning, which is an area where Arab citizens suffer the most severe deprivation. There have been some initiatives to improve the situation, but land shortages have created the problem of illegal construction and resultant demolition orders. The frustrations caused by that must be mighty and are exacerbated by the proliferation of settlements. The Arabs see their houses being torn down, whereas the settlements are growing.

I can well understand that Arabs have served as elected representatives in the Knesset since Israel was founded, and they also sit in Israel’s powerful Supreme Court, but notwithstanding that, we must be honest about the lack of rights for Israeli Arabs and the intolerable discrimination that they suffer. The Israeli Government are taking action to combat inequalities, but not nearly enough. The commitment of the current Israeli Government to the needs of the Arab population was apparently affirmed after they were elected in 2009 with the establishment of the Authority for Economic Development of Minorities which aims to tackle socioeconomic gaps between the Arab and Jewish communities. But words are meaningless if they are not followed by action and radical changes in practice.

In March 2010, the Israeli Government launched an initiative that allocated £135 million to develop employment, provide housing solutions, improve access to transportation, empower human capital and increase personal security and safety, but again, that is not enough. These initiatives are welcome, but they do not counter the systemic inequality and discrimination that is suffered by Israeli Arabs. I would be grateful if the Minister could outline what action the Government might consider they could take with our European partners, as suggested by my noble friend Lord Warner and the noble Lord, Lord Steel. We cannot just sit back and talk about discrimination, we have to take some action.

I understand that Israeli civil society is working to advance equality through, for example, the Abraham Fund Initiatives, which seeks to advance coexistence and equality between Israel’s Jewish and Arab citizens. It runs the Language as a Cultural Bridge Initiative in co-operation with the ministry of education. But while this is welcome, much more action must be taken. I wonder if civil society in Israel is talking to civil society in Northern Ireland because so much was done about inequality there as a consequence of action taken by civil society.

Health inequalities are unacceptable, as has been said, but I draw attention to the wonderful Hadassah hospital where Arabs and Jews are treated together by Arab and Israeli doctors and nurses, everybody working together, putting the patient first. There were some real insights recently in a magazine when some of the staff were interviewed: they said that it is a learning process for all. These people, who live totally separate lives, when they come to work start to understand the differences between their communities. A credible peace process is the best way to ensure that Israeli Arabs can continue to live in their homeland without discrimination and inequality. However, they cannot wait for a two-state solution which grows ever more distant. A peaceful Middle East needs a strong Israel living side by side with a strong Palestinian state, but Israel can be truly strong only if it is tolerant within and without and if all its citizens have equal rights in practice as well as in theory.

16:35

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)]

My Lords, I thank the right reverend Prelate for securing this important debate. I welcome his personal experience and interest in the issues surrounding Israel’s Arab citizens and his proposals as to how Arab citizens might enjoy more equal and active citizenship. I acknowledge the comments of the noble Lord, Lord Parekh, about language and definition of identity. He speaks with great expertise, and I hope that he will forgive me if my FCO terminology does not quite meet those standards. In recent weeks the noble Baroness, Lady Royall, and I have much discussed some permutation of this debate across the Dispatch Box. She has always been serious, measured and constructive and, for that, I thank her.

The promotion and protection of human rights is at the heart of UK foreign policy. How a country treats its minorities is an important test of a country’s democracy and respect for human rights and the rule of law. This is equally true for Israel. Indeed, it will become even more important for Israel as the proportions of the Arab Israeli and ultra-orthodox communities increase over time. Israel, as a state party to the International Covenant on Civil and Political Rights and the Universal Declaration of Human Rights, has an international obligation to ensure equal social and political rights for all citizens, irrespective of religion and race. Israel’s declaration of independence calls for the establishment of a Jewish state with equal social and political rights for all citizens irrespective of religion and race. However, successive Israeli Governments have acknowledged that Israel has not fully met its commitments with particular regard to the Israeli minority. The report by Justice Theodore Or in 2003 concluded that government handling of the Arab sector had been neglectful and discriminatory and made numerous recommendations as to how this could be addressed.

As we have heard, significant concerns remain about the situation of the Arab Israeli community. It is widely acknowledged to suffer discrimination, particularly at work and in government spending on housing and education, as well as in educational attainment. For instance, despite Israel’s impressive economic performance in recent years, current indicators suggest that the economic situation of Israeli Arabs is static or worsening. According to the OECD, 50% of Israeli Arabs live in poverty. The lack of town plans and planning permission for Israeli Arab towns is one of the main causes of inequality and of the failure of Israel’s Arab citizens to fulfil their economic potential. In many areas with a large Israeli Arab population, town plans either do not exist or are out of date and do not reflect population growth. In the absence of plans, new building cannot be approved, but faced with existing overcrowding and the expanding need for housing, Israeli Arab communities build without approval, which leaves them vulnerable to prosecution and demolition of the new structures. As such, no new Arab city has been built since the establishment of the State of Israel.

In the 10 years since the Or report was published there have been several positive changes, some of which were referred to by the noble Lord, Lord Bew. For example, there has been an increase in non-Jewish police recruitment, from 0.1% to 8.9%; better police liaison with Israeli Arab municipalities and community leaders; and an end to the use of live fire as a means of crowd control. However, as the right reverend Prelate said, disappointingly few of the institutional recommendations put forward in the Or commission’s report to address the socio-economic causes of Israeli Arab frustration have been adopted. We continue to urge the Israeli Government to implement the recommendations made by the commission; specifically, to address the economic disparities and unequal access to land and housing.

These are issues which matter to the United Kingdom. One of the strategic goals of the British Embassy in Tel Aviv is to help Israel become more cohesive and inclusive, in particular through ensuring the place of Arab Israelis and protecting Israeli civil society. The embassy is consistently monitoring events and reactions in the communities and attaches great importance to their concerns. Nothing should be done to prejudice Israel’s non-Jewish citizens or to discriminate against people on the basis of their race or religion. We are deeply disturbed by instances of anti-Arab rhetoric or violence.

The Foreign and Commonwealth Office has taken important steps to support the socio-economic integration of Israel’s Arab citizens. We allocated £250,000 in 2011-12 to the Arab community to support various projects that aim to redress some of the marginalisation. This year we funded Tsofen, a non-profit organisation, to strengthen the high-tech sector in Nazareth. Tsofen, founded in 2008 by Arab and Jewish high-tech and community leaders, aims to advance the economic and social equality of Arab citizens of Israel by accelerating their entry into the high-tech industry and helping Israel’s high-tech industry to locate successfully in Arab towns.

We have also supported a project delivered by the Arab Center for Alternative Planning to help empower Arab municipalities to deal with the reform in planning legislation. This non-governmental organisation works towards equality and the integration of Israel’s Arab citizens into public life activities, while preserving their cultural identity. The centre has now been formally recognised by Israel’s Interior Minister and has the legal right to intervene in official planning procedures as an independent legal entity. The project’s activities have significantly increased the knowledge and interests of engineers, planners and mayors of the Arab municipalities.

We are also extremely grateful for the supportive work of the UK Task Force on Issues Relating to Arab Citizens of Israel. As the noble Lord, Lord Janner, described, the UK task force was set up in 2009 under the joint leadership of the United Jewish Israel Appeal and the Pears Foundation with the aim of supporting an inclusive Israeli society. Its commitment to facilitating new partnerships to advance the integration and opportunities of Israel’s Arab minority is entirely positive; I pay tribute to the particular role played by the noble Lord in this work. I will also take back the work that the noble Baroness, Lady Royall, referred to—specifically, by Hand in Hand—and look at whether HMG could look to take some of that forward.

The noble Baroness, Lady Uddin, and the noble Lord, Lord Hylton, raised the issue of the Bedouin minority in the Negev, one of the most discriminated groups within Israeli society. Estimated at approximately 170,000 people, the Bedouin in the Negev comprise 12% of the Arab citizens of Israel. Between 1968 and 1989, half of this population was transferred into several Israeli-built townships in the north-east of the Negev. The rest remain in unrecognised villages built spontaneously by the Bedouin, without basic services such as electricity and running water. Unable to secure planning permission for such villages, whole communities have been issued with demolition orders.

In 2007, the Israeli Government voted to create the Goldberg commission to address the Bedouin issue. In 2011, the Goldberg commission issued its report and made several key recommendations which, if implemented, could go some way to addressing the long-running land dispute between the state and the Bedouin. These included: the recognition of most of the Bedouin villages; allowing the majority of the homes to go through a legalising process; and establishing a committee to hear and settle traditional land claims. We remain concerned that those recommendations have not yet been implemented and that the situation of the unrecognised Bedouin villages and houses remains largely unchanged, with demolitions still occurring.

We note that, following the Goldberg report, the Israeli Government put forward the so-called Prawer plan, which was intended to implement those recommendations and led to significant concern and controversy—the noble Baroness referred to that. There is an ongoing consultation process between the Government and Bedouin representatives; we understand that there is still some way to go before proposals are finalised. During his visit to Israel last month, the Minister for the Middle East raised our concerns on implementing the Prawer plan for the Bedouin of the Negev, again with Benny Begin, the Minister responsible for the Bedouin community. This is an issue which Mr Burt and the British ambassador have raised on a number of occasions with the Israeli Government. We continue to encourage the Israeli Government and Bedouin communities to engage in further dialogue to find a lasting and satisfactory solution to this long-standing issue of unrecognised Bedouin villages.

These issues cannot, of course, be separated from the wider context of the Middle East peace process. The UK has long been clear that we support a negotiated settlement leading to a safe Israel, living alongside a viable and sovereign Palestinian state. This should be based on 1967 borders, with agreed land swaps, Jerusalem as the shared capital of both states and a just, fair and agreed settlement for refugees. That is the only way to secure a sustainable end to the conflict and it has wide support in this House and across the world. We welcome the fact that Palestine is now a non-member observer state at the United Nations, but sadly the situation on the ground remains the same. The UK will work urgently with the US and EU to call for a new initiative to restart the peace process.

The noble Lord, Lord Warner, made specific calls for a move towards potential sanctions. He spoke of the potential lack of initiative on the part of the US. While I accept and understand the noble Lord’s frustrations, I am sure that he will accept that it will be difficult to deliver and move forward with a two-state solution without the co-operation of the United States. The noble Lord, Lord Singh, raised the issue of criminal justice and detainees. The treatment of Palestinian prisoners forms part of our ongoing dialogue with Israel, including the issue of child detainees. The Foreign and Commonwealth Office funded a visit and report by a team of respected British lawyers, which included the noble and learned Baroness, Lady Scotland. We have passed the independent report to the Israeli authorities and urged them to take forward the recommendations, including an end to shackling, night-time arrest of children and introducing audio-visual recordings of interrogations. These issues were again raised by the Attorney-General during his last visit to Israel in November.

My noble friend Lord Steel of Aikwood spoke passionately and with great expertise and I agree that a settlement in the Middle East is in our interest. Instability there continues to have a destabilising effect on the region and the wider world. My noble friend Lord Palmer sought to bring an alternative view to the debate. He made an important contribution and I agree when he says that inequality must be tackled wherever and whenever it occurs. That point was also made by the noble Lord, Lord Weidenfeld. However, I am not sure that the reference by my noble friend Lord Palmer to the reasons for underachievement in communities in the United Kingdom bears any real comparison to the reasons for lower life chances among minorities in Israel. Indeed, my noble friend Lady Hussein-Ece outlined the equality of opportunity that she as a member of a minority was afforded by the United Kingdom. She raised the important point that inequality is not intentionally perpetuated in the United Kingdom by policy decisions. I am sure that all noble Lords will understand my discomfort with the argument that serious discrimination elsewhere should be cited as a reason for justifying discrimination anywhere. The “it’s worse elsewhere” argument does not impress the Government much, because we will tackle inequality and discrimination of minorities wherever and whenever it arises.

To conclude, I thank noble Lords again for their participation in this thought-provoking debate. The situation of Israel’s Arab population is an important one, for Israel and for the region, with implications for Israel’s democracy and its relations with its neighbours. In line with the Government’s firm commitment to human rights, we will continue to support efforts, including by the Israeli Government and civil society, to address the problems of Israel’s Arab population and to build relations between the two communities.

16:49

[The Lord Bishop of Exeter]

My Lords, we have had a good debate. I am grateful to all noble Lords who have taken part and to the Minister for her response. Every contribution raised a point to which I would be tempted to respond but I will resist that temptation. Just to return to the point made right at the beginning by the noble Lord, Lord Steel, on the important difference between the Israeli state and the Israeli Government, I regard myself as a loyal Briton but your Lordships may have noticed that I am not always the most enthusiastic flag-waver for everything that comes from the Front Bench to my right. To those noble Lords who talked about the importance of being friends to Israel, I am often reminded of that advertisement for malt whisky: “True friends give it to you straight”.

This is not just a matter of government. It is also a matter of culture—and the disturbing development of culture. We have in Israel today a vicious circle in which discrimination in law and practice leads to disengagement on the part of minorities, which then leads to fears of disloyalty on the part of the majority—and so the vicious circle goes round and round. We need to reverse that and achieve a virtuous circle, which will then flow out to touch the wider region. Otherwise, as the noble Lord, Lord Palmer, and the noble Baroness, Lady Royall, pointed out, we will see more people on the move yet again. We are not powerless. Many noble Lords have pointed to the leverage that we have through the robust and consistent application of international law.

Again, it is not just a question of law. A number of noble Lords pointed to the importance of grace. By one of those acts of serendipity, when I was having my breakfast this morning I turned on Radio 4 and heard “Thought for the Day”, given by the noble Lord, Lord Sacks. It was a remarkable reflection. He talked about yesterday’s results of the census and the rise in the number of those who say that they have no religion. He talked about the importance of religions facing the fact that they might be a minority. He said that was important because religion at its best speaks not out of power but out of powerlessness. Perhaps the healthiest society is one where all religions are a minority and so have to engage with one another. Those are wise words. They are a challenge to us here in the UK. They are also a challenge to Israel.

Motion agreed.

Care Services: Abuse of Learning Disabled

Thursday 13th December 2012 Lords Chamber

Question for Short Debate

16:51

Asked By

[Lord Rix]

To ask Her Majesty’s Government what steps they are taking to address the abuse suffered by people with a learning disability as illustrated by that which took place at Winterbourne View care home.

[Lord Rix]

My Lords, first, I should apologise for my limited appearances in your Lordship’s House of late but my wife has been in hospital for some time and returns for major heart surgery at the beginning of January. I am sure your Lordships will understand where my priorities lie after some 63 years of marriage.

I am equally certain that all of us present today will have read the government report about Winterbourne View Hospital, Transforming Care, and will have welcomed the sentiments expressed by the Minister of State in his introduction to the report and in his Oral Statement. The report sets out a strong commitment to prevent abuse happening again and stresses in no uncertain terms that clinical commissioning groups and local authorities must develop services so that people can remain in their communities and not be sent away, where they are at greater risk of abuse. As is the way of things, what is written on paper and what happens in practice is often very different. I urge the Government to remember that the policy on local and personalised support has been in place for years—it is the implementation that has failed. I can only hope that this short debate will underline our agreement with many of the Government’s proposals and reinforce their determination to carry them through, in partnership with others.

The serious abuse suffered by people with a learning disability at Winterbourne View Hospital has rightly shocked the nation. The images broadcast in the BBC’s “Panorama” programme in 2011 and again in October this year have left us angered and bewildered. They have also left many of us astonished that such brutal treatment of extremely vulnerable people did not bring down the full force of the law on the management and board of directors of Castlebeck Care Ltd—the owners of that so-called hospital. Unhappily in this country, under successive Governments, people at the top of organisations who fail in their duties of oversight and accountability seem to escape scot-free, while those lower down the ladder are held to account for their role in scandals. I look forward to seeing proposals in the spring on what the Government intend to do to strengthen the accountability of managers and directors in both public and private providers.

To underline this whole sorry saga, let me tell your Lordships about Simon, whose experiences were written about in Mencap and the Challenging Behaviour Foundation's Out of Sight campaign report. Simon has a learning disability and behaviour that challenges. He spent 15 long months at Winterbourne View, far from his family and the community that he grew up in. During that time he was hit, pushed, abused and tormented. Prior to Winterbourne, Simon had received support locally and lived close to his family. When Simon needed a few more hours of care and support, social services refused. Things got worse for Simon and he was sent to an assessment unit. From there he was sectioned under the Mental Health Act and then sent far away to Winterbourne View. His parents describe the torment of being helpless to prevent this, sidelined by uncaring authorities which did not listen to them or to Simon. With the Care Quality Commission failing to see the signs of poor practice, it took a whistleblower and “Panorama” to expose what was happening. Simon’s story and that of his family brings into sharp focus our failing as a society to care for and support those who are most vulnerable.

Winterbourne View Hospital was a 24-bed institution run by Castlebeck Care Ltd. It was registered as a treatment, assessment and rehabilitation centre for people with learning disabilities. What it became was a place where people remained for significant periods of time, sometimes years, well beyond the time they should have been there for the supposed purposes of assessment and treatment. In that time they were subjected to emotional, verbal and physical abuse.

There are over 1,500 people with a learning disability in assessment and treatment centres, and 3,400 in total in in-patient services. This is far too many. It should rarely be necessary to admit a person to an assessment and treatment unit. In most cases what the person needs is good assessment and support in the place where they are living. However, people are ending up in places such as Winterbourne View because either support services in their local areas are not available or the skills and expertise to support people locally is lacking.

The late and much missed Professor Jim Mansell called these places “dumping grounds” used by commissioners looking for an easy so-called solution for placing some of our most vulnerable people with high support needs. And we should not forget cost. Each person at Winterbourne attracted funding of around £3,500 a week—money that would have been better spent on local support services that are in all likelihood cheaper.

What of the scale of the problem? We might be tempted to think that Winterbourne is an isolated incident, but this is not the case. Following the “Panorama” programme, the Care Quality Commission carried out unannounced inspections of all similar units and a number of social care residential services across the country. Its report in June of this year showed that half of the services investigated were not only failing to meet essential standards around care and welfare but also failing to meet standards around protecting people from abuse. This was a deeply concerning finding, meaning that essential safeguards were seriously lacking in many institutions, placing vulnerable people at risk.

Of course, it comes as no surprise to organisations such as Mencap—of which I must declare an interest as president—and the Challenging Behaviour Foundation. We have been campaigning tirelessly on this issue and our joint report Out of Sight must remain firmly on the Minister’s desk in coming years to remind him of the task ahead.

The action plan in the government report commits to a timetable to review all current placements and, by June 2014, to move all those inappropriately placed to community-based provision. While clear timescales are to be welcomed, the future of vulnerable people in remote institutions seems now to hang on the words “inappropriately placed”. Who will determine this? Will the person with a learning disability and their family have a say? I fear very much that the tendency of professionals, commissioners and public authorities to protect the status quo will win over. We must be bolder. These units must close and no more should be permitted to open by the Care Quality Commission.

I turn now to the Care Quality Commission. The regulator, when inspecting Winterbourne View, failed to spot the abuse that was taking place. Furthermore, its inaction when contacted by a whistleblower was totally unacceptable. However, it has since reacted quickly and purposefully to the scandal, carrying out a comprehensive programme of unannounced inspections. We may not see it often, but the CQC does have teeth. For example, it can refuse to register public and private providers who wish to develop new services that go against national policy and put people at high risk of abuse. The CQC can also deregister high-risk existing services. I want to see the Care Quality Commission using its powers to stop another institution like Winterbourne View ever being established.

Your Lordships may recall that back in the 1980s all the talk, and subsequent action, was about care in the community and the closure of long-stay subnormality hospitals—yet here we are, some 30 years later, still finding that care in the community does not exist for many of those in need of care. Instead, they are transported sometimes hundreds of miles away from their homes and left to rot in what is, in effect, a small, long-stay subnormality hospital. How can central and local government allow this non-care in the community to happen—and at such cost to the taxpayer, too?

What happened to Simon? He is now back living near his family, and loving life again. He is at the residential care home he was in before he was sent away, but the service has been adapted to meet his needs. This has been done by developing a flat for him adjoining the care home, where he lives with his support team. Simon’s package of care costs half as much as it did at Winterbourne View and I know from Mencap, which is working with his mother, that he feels safe and happy. A solution has been found.

Living safely and happily should be the reality for all those with a learning disability and behaviour that challenges, and we must strive to make it a reality. Then, and only then, will the promise of care in the community be fulfilled.

17:02

[Lord Touhig]

My Lords, I thank the noble Lord, Lord Rix, for securing this debate and for bringing to it his very great experience and background in giving support and care to people with disabilities.

In his Statement on the final report on Winterbourne View, the Minister for Care and Support, Mr Norman Lamb, said that,

“hospitals are not where people should live”.

He was so right. He went on:

“There are far too many people with learning disabilities or autism in hospital, and they are staying there for too long—sometimes for years … We should no more tolerate people being placed in inappropriate care settings than we would people receiving the wrong cancer treatment”.—[Official Report, Commons, 10/12/12; col. 49.]

However, the truth is that we have been prepared to tolerate this sort of care—and for far too long. We have simply tinkered at the edges of the issue of caring for people with learning disabilities.

As the noble Lord, Lord Rix, said, more than 30 years ago the big idea was care in the community. Everyone got worked up calling for the closure of institutionalised hospitals and care homes. At the county hospital near where I then lived in Pontypool was a ward called St Hilda’s Ward. The hospital had been the local Victorian workhouse and this ward was given over to the care of around a dozen ladies with learning difficulties. It had become their home and they had become very much part of the community, shopping in local shops and attending every event from carol services to school fêtes. Care in the community was supposed to end this sort of caring arrangement, giving people an independent life in their local community, but I believe for many it has made things worse. In order to give people a degree of independence, they were put into small houses and encouraged to live in what were supposed to be family units, but for many the care was non-existent.

A dear friend of mine was persuaded that her daughter with Down’s syndrome would be better off living independently in the community. She was placed in a house with two elderly men, both of whom had dementia. The so-called care amounted to a person—often a different person—calling each morning to see that they had breakfast, coming again in the middle of the day to see that they had a midday meal, and calling late in the afternoon to see that they had tea or supper. The rest of the time they were left alone, with next to no contact with neighbours or anyone but close family. My friend’s family rightly removed this lovely young person from this so-called care in the community placement. It simply did not work and care in the community did not amount to a tin of beans.

Contrast that with three young women, all with Down’s syndrome, whom I met during the Blaenau Gwent by-election. They lived together in a small house and their carer lived with them. It was truly a family environment. They had a rich and varied social life, and the carer was part of their family. That is real care in the community, but I believe it to be the exception rather than the rule. If any noble Lords walk down Victoria Street tonight, barely a few hundred yards from this Chamber they will see people sleeping in doorways. Many clearly have mental health problems and learning difficulties, but their homes are cardboard boxes. This is the life of many who should be cared for in the community.

The Minister, Mr Lamb, said that all hospital placements will be reviewed by June 2013 and everyone who is there inappropriately will move to community-based support as quickly as possible. Could the Minister say precisely what is meant by a move to community-based support? If it is like the so-called care in the community that we have now, I wonder how many will end up like the poor souls sleeping on Victoria Street.

I would now like to spend a few minutes speaking about another matter of concern—disability hate crime. More than a third of the patients at Winterbourne View had a diagnosis of autism and the National Autistic Society, of which I, along with the noble Baroness, Lady Browning, have the honour of being a vice-president, has been campaigning to end poor care and abuse at large, institutional-style services such as Winterbourne View since “Panorama” first aired its programme. The 11 individuals who were charged following the Winterbourne View scandal were charged with disability hate crimes. Disability hate crime is a major concern, regardless of whether someone is in hospital, a care home or the community. It is clear that nobody should suffer abuse because of their disability. In race-related hate crime, the Attorney-General has the power to intervene to increase sentencing where he believes that it has been too lenient. I strongly believe that this power should be extended where there has been a disability-related hate crime.

A lack of training and support for staff can contribute to poor and, in the most extreme cases, abusive practices such as those seen at Winterbourne View. It is vital, therefore, that staff have access to training in the specific needs of patients, especially those with autism. The Department of Health made specific commitments related to training in the adult autism strategy. However, I know that the National Autistic Society is concerned that such commitments have not been fulfilled. In July, the National Audit Office published a memorandum explaining that, despite progress in many areas, key recommendations related to training had not been implemented. Its report demonstrates that the Government have failed to, for example, work with the National Health Service and local authorities to identify priority groups for training and to ensure that autism awareness training is available to everyone working in health or social care.

I urge the Government—and I am sure I am not alone in this—to ensure that the training commitments made in the adult autism strategy are fulfilled. The review of the strategy will take place next year. This is the chance for the Government to carry out their promise to ensure adequate training. I certainly hope that they will embrace that.

17:09

[Baroness Jolly]

My Lords, I start by echoing the words of the noble Lord, Lord Touhig, in thanking the noble Lord, Lord Rix, for bringing this important issue to the attention of the House. His personal expertise and wisdom have informed the House for many years, and long may it continue.

It is vital that we make public this failure in care and act swiftly to ensure that vulnerable populations in society are treated with dignity and afforded quality, compassionate treatment. Today, I want to touch on a few distinct aspects of this issue. Systemic and, perhaps, societal issues need to be raised. As evidenced by the 11 individuals prosecuted and sentenced for providing shockingly abusive care, the actions taken by these staff at Winterbourne View were criminal. There is no excuse for this appalling abuse. I am pleased to note that the criminals have been brought to justice and that larger investigations into more than 150 other hospitals have not found similar abuse and neglect. However, where were the safeguards within this hospital to identify failures in care and correct them? Where was the management of this organisation in monitoring abuse and establishing the quality of care?

Culturally, I am concerned that this event reflects a fault in how we value our vulnerable populations—those with mental health problems, the disabled and the elderly. Our respect for these populations is apparent in whom we charge to care for them and we undervalue them when we pay little attention to how their carers are trained and managed. However, we do little to respect the ill treated if we do not change the culture of care to prevent these crimes from happening again.

We were all rightly shocked when the BBC “Panorama” programme uncovered this systematic abuse of patients at Winterbourne View Hospital. Vulnerable patients were bullied, pinned down and tormented, not once or occasionally, but systematically. This would be appalling even if this treatment was limited to one staff member. What escalates the abuse at Winterbourne View to a national scandal was the culture of neglect and ill treatment that was fostered throughout the hospital. Even with this widespread negligent culture, the existing accountability safeguards did not detect the abuse.

I see two areas of concern. First, the patients who received ill treatment in the hospital should not have been in the hospital setting to begin with. The noble Lord, Lord Rix, made that point very clearly. Similar stories of misplacement into the wrong care settings have been found all across England, so greater scrutiny must be called for in the determination and monitoring of treatment plans for the vulnerable. In particular, we should explore every option for them to live close to their families and the people who care for them. The provision of less institutional and more local care can be a great safeguard against abuse.

Secondly, the abuse was found in a private, foreign investment-backed firm. As we move towards a system with greater diversity in how health and social care is provided, will the Minister tell the House what oversight is being put in place to ensure that these new forms of care delivery are fit for purpose and free from repetitions of this kind of abuse? In these settings, good management is key to setting the standard for institutional practices. Clearly, there was a failure to lead and train staff effectively and eliminate unacceptable behaviour. In these new methods of care delivery, with less direct government oversight, how can we ensure that management is effective in setting behaviour standards and being held to account?

There is a cultural issue that I would like to raise around training, appraisal and professional development of care staff. Clearly, there was neglect at many levels of the organisation, but in particular I believe that how we value front-line care workers reflects how we value vulnerable populations. The following example has been used before in your Lordships’ House. A very high-profile department store and grocery chain will not let a new employee on to the shop floor without providing basic training on the job in hand and on the corporate culture—and this takes weeks, not days. It is accepted and common practice that staff at all levels are given close monitoring until a probationary period is over and that they are part of an appraisal scheme. This is not overkill; it is to ensure that employees know what they are doing and that employers know what employees are doing and can take appropriate action if there is a problem.

This brings me to registration. I know that the Government are reluctant to regulate for the registration of care workers but, with a large population in all areas of health and social care, the failure to register looks like a failure to value their work. When we start setting a precedent of lower value for these workers, it shows in their professional behaviour. If this vital cohort of workers were part of a registered body, that would send a signal to any companies that see the health and care business as a cash cow. Care workers do a valuable job. They are a resource to be valued and their training is not a cost—something to come off the bottom line—but an investment.

Finally, I applaud the action plan set forth by my honourable friend Norman Lamb. At the same time as we embrace innovative forms of care delivery, we must complement this flexibility with accountability from all levels of care organisations: owners, boards of directors, managers and care workers. We need to stop patients being inappropriately placed in the hospital as their primary care setting and instead design personalised services enabling them to live in communities closer to their families.

Again, I reiterate: how we value care workers reflects how we value the populations they care for. Universal professional standards for care workers should be developed and implemented to create a culture where their work is professionally valued and appraised. We need to know, too, that they will be registered. By moving quickly to implement these reforms, we can make what was a horrible failure in care into an opportunity to prevent its repeat.

17:15

[Baroness Kidron]

My Lords, it is a great privilege to rise for the first time in your Lordships’ House and I would like to take this opportunity to extend my thanks to noble Lords from all sides of the House for their very warm welcome, as well as to the delightful staff whose acts of kindness and gentle instruction have kept my transgressions to a minimum.

I will detain your Lordships only a very short while to tell you my own journey to involvement with young people with learning difficulties. I declare an interest as a trustee of the Paul Hamlyn Foundation, which over many years has done excellent work in the area of learning disabilities, and as co-founder and vice-chair of the educational charity, FILMCLUB. FILMCLUB was founded six years ago as a way of engaging and educating young people with the intention that they should see a broader world. It has been a very successful endeavour, with many tens of thousands of young people each week watching, reviewing and debating subjects both in and out of the curriculum, and in doing so learning about a world much richer than the one they usually inhabit.

One of the surprising outcomes of the scheme was the number of SEN teachers in mainstream and specialist schools who adopted the FILMCLUB programme to teach young people with learning difficulties. For some it was simply a peaceful moment for a restless mind; others found a place where they could engage with subjects and emotions that they recognised but in daily life struggled to articulate. It is one small space where young people—some with very challenging behaviour—found a method to communicate on their own behalf what concerns them.

I am by profession a film-maker and it was in this capacity that I was introduced to Louise, a young woman with complex needs who—as is the Government’s ambition—lives in her community with her family. She is exemplary in her achievements against the odds—bright, humorous and ambitious to make the most of her life. She is an advocate for Young Advisors and a keen sailor. She also has cerebral palsy, is confined to a wheelchair and needs a communication aid to speak. Louise’s life has been blighted by a series of disagreements and misunderstandings about where her physical disability ends and her learning difficulty begins, putting her family at odds with those who deliver the support she needs.

Louise has been shunted between schools of every possible variety, each in turn unable to cater to her complex needs. In her last school, for young people with physical disabilities, she was accused of attention-seeking, resulting in punishments that included encircling her wheelchair with furniture, taking her from her chair and laying her on concrete paving, and removing her communication aid. These punishments, which were casually meted out by staff with little knowledge of learning difficulties, were experienced by her as acts of incomprehensible cruelty. When I asked her how the removal of her communication aid made her feel, she said, “It was as if they put tape across my mouth”.

Louise lives in her community with her very loving family, but still her treatment was out of sight of her parents. She did not have the capacity to describe what was terrifying her, but she did protest at going to school. She started self-harming and repeatedly said that she wanted to die because she was “bad”. Feeling powerless at her distress and unable to get answers from those entrusted with her care, her family withdrew her from school permanently to give her 24-hour care themselves. She was 12 years old.

Winterbourne was a shameful episode, both for those who inflicted violence and humiliation on the vulnerable and for us as a community. However, my concern is that in moving back to community-based support we do not overlook the indignities and cruelties routinely experienced in other contexts, because a culture of “not understanding” can, as in Louise’s case, prove as abusive as deliberate criminal acts.

There has been a broad welcome of the Government’s plan to transfer more than 3,000 people incarcerated in inappropriate care settings, but we must have concern that the burden of care is not subtly or cruelly transferred on to families, many of whom are already on a lifelong journey of supporting loved ones with complex needs, without them being assured of a fully resourced effective implementation, delivered with a level of competence that meets the needs of even the most challenging, for the newly released and for those already struggling with care in the community. The legacy of Winterbourne must be that the care provided in our all institutions and services is imaginative, compassionate and trustworthy.

It is the tradition of a maiden speech not to be controversial, and I will leave it to others in this Chamber more expert and able than I to judge if the Government’s response is adequate to the task of providing a level of care in institutions and public services of which we can be proud. However, it is my hope that in my time in this House I will be able to lend robust support to the voices of the young and those on the margins to whom we often do not listen closely or hear clearly when they try to speak.

I thank my noble friend Lord Rix, who has been tireless in his support for people with learning disabilities, for bringing today’s debate to this House.

17:22

[Baroness Browning]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Kidron, and to have this opportunity to congratulate her on her maiden speech. She has been acclaimed both nationally and internationally as a film-maker, and we must add our congratulations on her choice of subject matter in her maiden speech. We look forward to future contributions from her as the years go by.

I begin by supporting and joining the call from my noble friend Lady Jolly on two points—first, on the registration and structure of care workers in health and social care. I must say to my noble friend on the Front Bench that there is a real body of steam behind this. I know that my noble friend Lord Howe has said that he will keep an open mind on this, but I say to my noble friend that this is not going to go away and the sooner we get on with it, the better. Also, I join my noble friend Lady Jolly on the question of accountability of those upstream owners of private homes and hospitals. Again, complex though this issue may be, I hope that the Government will address it as a matter of urgency.

As my noble friend Lord Touhig—if I may call him that—said, a third of the patients at Winterbourne View had a diagnosis of autism. I am genuinely filled with despair that, after the high profile of the Bournewood case some years ago now, we are still looking at people with a diagnosis of autism being held in a hospital, and the views of parents and carers being dismissed by so-called professionals. I thought we had moved on from there and I am going to ask my noble friend to carry forward a suggestion I made when we had the Statement earlier in the week about the Mental Capacity Act, which I will come to in a moment.

First, I will say something very briefly about autism and challenging behaviour. There is no doubt that there are people with an autistic diagnosis who have comorbidities—they may be learning-disabled or have specifically diagnosed mental illnesses—and they are complex cases. In another place over many years I raised again and again the difficulty for psychiatrists who are dealing—particularly but not exclusively—with adult patients who present with very challenging and disturbing behaviour. However, sometimes when they are seen by psychiatrists with an understanding of and expertise in autism, it is possible to unscramble what appear as perhaps rather obvious mental health symptoms, when in fact those symptoms have an autistic base.

Autism is not a mental illness and very often the challenging behaviour that is presented does not have a psychotic base to it at all. People who work with adults with autism who are challenging will know that, with the right package of support and particularly with the right expertise of the people working with them, all too often you can identify the triggers that create that autistic behaviour. Why? It is actually rather simple: it is because the autistic mind works differently from the way other people think, and rationalisation is a very complex area. I have known of many—and I do mean many—autistic adults who have been held in some form of detention; some voluntarily, some not. When they have been placed in an appropriate setting with professionals who understand what those triggers are and why their often challenging behaviour presents in a certain way, with the right package of support they have been able to live and be supported in the community rather than locked up.

I say to my noble friend, we really cannot keep going round and round in circles, coming back to these high-profile cases where we seem to have learned nothing. I was involved in the Bournewood case with patient P, who was detained in a mental institution, and it was only when his carers went through not just all the courts in this country but to the European Court and got a judgment there that he was allowed to be released—and I use that word deliberately—from his institution when all the expert advice was that he should remain there. We have to do something. This is about fundamental human rights for a group of people who are unable to make the case for themselves. We, as politicians and in this House, have a duty to ensure that the structure is out there for those who represent them—whether they be parents or carers or people professionally appointed as advocates on their behalf—and that those human rights are at the forefront of what happens to them.

As always, I congratulate my noble friend Lord Rix. His work in this field is an exemplar for us all. Today I have written to the chairman of the Joint Committee on Human Rights, Dr Hywel Francis MP, because I have had grave concerns for some time that the Mental Capacity Act, on which I sat on both the pre-legislative scrutiny and the Bill committees in another place, is not in practice supporting the people whom Parliament intended it to support.

I say again to my noble friend that the Care Quality Commission needs to be more rigorous—we hope that we will have learnt lessons from this tragic case—and that the Mental Capacity Act is not doing what it should in terms of parents, carers and, in particular, patients. I also suggest that the deprivation of liberty safeguards are too narrowly defined by the courts and that the whole framework needs to be reviewed, taking account of the way in which the courts implement the framework.

I hope that my noble friend will understand the call not just for the Joint Committee on Human Rights but for the Government themselves to completely review the implementation of the Mental Capacity Act—an Act I thoroughly support. We will not get to the bottom of some of the problems that we are discussing today unless we are prepared to do that.

17:30

[Lord Addington]

My Lords, this is one of those debates where I think that the general element of agreement is going to be overwhelming: we should never have got anywhere near this situation; there were structural problems which were not addressed; and, as has clearly been pointed out, there was also criminal activity. The real question that we face is: how can we minimise the chances of anything like this happening again?

Having said that there is a considerable degree of consensus, looking at exactly what happened at Winterbourne View, we probably had a perfect storm for abuse, as I think it was described in some of the briefing that I received. There was bad management and a disinterested owner, who made no investment, which meant that care workers, who were badly recruited and badly trained, were left to deal with people with what has been called challenging behaviour. To play devil’s advocate for a second, if you meet challenging behaviour—for instance, people who self-harm, are unable to communicate and occasionally lash out through frustration—and you have been trained only in basic restraint, that is what you will use. There is an almost iron inevitability about what will happen unless there is somebody alongside you telling you that there is another way. In this case, such a person was not there. Therefore, it was almost inevitable from the word go that something like this would happen. We should remember that it took less than five years for this culture to be put in place. It was not a slip; it was a fall into very bad practice, and there is no way that we can ever allow it to happen again.

I want to take up a point which my noble friend raised earlier, on the training of staff. The care and support workers at Winterbourne View should have been given better training and—something that is incredibly easy to say but apparently incredibly difficult to do—they should have been told when to call for support. As anyone who has dealt with front-line support in public service will know, getting that message across at any level is difficult.

I have had a discussion with numerous Ministers from numerous parties over many years about many issues relating to people with disabilities. I have pointed out that the people in charge need to be told that the tick-box method does not work. They will need support, and that support will differ as circumstances change. Often, the Minister or senior official has said, “Yes, we’ll do it”, but it does not happen. I have had meetings with Ministers of all Governments and have asked when they are going to implement this. The response has been, “But we said we’ll do it in legislation or in guidance”. However, it does not happen on the ground. That is clearly the situation that we have here. Therefore, we created something that was bound to go wrong—perhaps not as wrong as it did but it was bound to go wrong.

We have to bring about worker registration and make sure that these people have a responsible job where they can develop a career so that they have some stake in it, as well as a stake in making sure that their co-workers are correctly registered. We could talk about whistleblowing here. If we make sure that people have a job where they have a future and a clear duty, the chances of this happening again will go down. We can never totally remove it. Indeed, the idea for better inspections, et cetera, by those higher up are, of course, needed. We can start to take away a part of this cocktail of disaster; we can start to remove it. We can have a group of people who have a stake and who will go back in again.

I do not envy my noble friend her job, but I hope that when she replies she can give us a clear idea of exactly what process we are talking about and where it will be implemented. We must have people who are trained well enough to recognise that they need support and who are willing to ask questions. We must start to work with the situation for those with autism. The noble Baroness, Lady Browning, has been an important part of my secondary education on autism. Once we start working in that field, we need a different approach. There is always a danger that those of us dealing with a disability will think that it is like the disability we have. Probably our problems with bureaucracy are more similar than our actual on-the-ground experience. Unless our front-line workers are better trained and told that it is okay to ask for help and support, such problems will occur again. I hope that my noble friend will say that steps are being taken. We are trying to ensure not that it does not happen again but that the next time it happens we are better able to deal with it because these problems will not go away.

17:36

[Baroness Hollins]

My Lords, I thank my noble friend Lord Rix for his inspiration and tenacity on behalf of people with learning disabilities, and I congratulate the noble Baroness, Lady Kidron, on her eloquent maiden speech, which reflects her long-standing commitment to social justice.

I know quite a lot about learning disability. I know about it as a parent, a psychiatrist, a policy maker, and I also chair a charitable organisation that creates communication resources about life and relationships for people with learning disabilities. First, I commend the Government on their report, for the programme of action signed up to by 50 organisations, and for setting out what good care should look like. I also commend the serious case review conducted in such a painstaking way by my former colleague Dr Margaret Flynn.

The BMA under my presidency recently commissioned an expert round table in your Lordships’ House at which Dr Flynn spoke. I shall draw on the notes from that meeting in what I say. There is a story to tell which begins with a question: why were these very vulnerable people at Winterbourne View at all? The existence of Winterbourne View and similar hospitals represents a commissioning failure. Hospitals such as Winterbourne View have been considered unsuitable for more than 20 years. Jim Mansell’s first report on challenging behaviour in 1993 criticised the widespread core practice of exporting people with behaviour that challenged. A drawn-out, long-stay hospital programme that originally began after institutional scandals in the 1970s and 1980s was completed only just three or four years ago.

Even before the closure programme had been completed, new mainly private hospitals were already touting for business. As a policy adviser in 2001 I drew attention to this trend, as did others, but there were no incentives in place to encourage local providers to develop adequate local support for people. With some notable exceptions the practice of exporting patients similar to those who ended up in Winterbourne View continued. The sad journey of most of these patients began long before they arrived in hospital. The serious case review showed that. There were many lost opportunities to provide better, more personal and local care, but they were missed. Why were they placed such a long way from home? Typically a crisis happens just before a weekend and risk-averse professionals seek an emergency hospital bed somewhere, anywhere.

Many of these adults have had sad lives; they may have been abused, bullied or have had a traumatic bereavement. Such dislocation to a distant hospital can further disturb and re-traumatise them. On entering hospital, vulnerable adults depend on the nurses to get to know them and to understand and meet their needs, and on the other members of the team to draw up an active treatment plan. We have heard a great deal about the lack of compassion in different types of hospitals, but Winterbourne View was the site of systematic abuse by poorly paid and untrained staff with the wrong attitudes. They were unable to understand the communicative function of their patients’ behaviour; they lacked the skills to support them in a respectful and safe manner.

I am pleased to see the roles envisaged for Health Education England, the professional senate on learning disability and Skills for Care to turn this around. However, I agree with the noble Baroness, Lady Jolly, and the noble Lord, Lord Addington, that these staff need to be better supported. Some will need therapeutic supervision to enable them to care better.

Distant placements make it difficult for families and carers to provide oversight and protection, and yet the best safeguards for people with severe learning disabilities are the people who know and love them. I am glad that the DH final report and the concordat recognise that services must be provided locally and that containment must give way to personal care and personal treatment plans. The ordinary life that campaigners such as David Towell have argued for for so many years seems to be within the reach of even those whose behaviour challenges. Does the Minister believe that the timescale proposed to get people back home is realistic? I hope so.

Choice—an OFT-heard mantra—is a key principle of the Health and Social Care Act, but what sort of care would service users choose if they were able to? This is the question that those who commission and provide services need to ask. I am encouraged that the report expects people with learning disabilities and family carers to be involved in future CQC inspections.

Too often those close to vulnerable adults—many of whom wish to help—are still excluded from decision making. Personal budgets and direct payments provide one mechanism for more personal care but for people with behavioural challenges pooled budgets are needed to avoid financial arguments about whose responsibility it is to provide effective and timely care and support. People were placed at Winterbourne View by the NHS largely, but the NHS looked to the local authority to take responsibility for funding their rehabilitation. Where was the incentive? They were out of sight and out of mind. Does the Minister think that the new plans will provide adequate incentives to get people home?

NHS-funded care, whether in hospitals or the community, should deliver high-quality assessment and treatment and it should be evidence based. Winterbourne View was a hospital; its patients had mental health needs. Most were detained under legislation but they received little in the way of specialist health care. It seems to me that people with severe learning disabilities are still seen as second class citizens and not afforded the same rights as other citizens. The 2001 White Paper, Valuing People, challenged those assumptions and raised the hopes of people with learning disabilities and their families, but access to the same health care as others is still denied to many. This is as true of mental health services as physical health services.

Underfunding, a lack of 24/7 working, the separation of specialist learning disability services from primary care and mental health services means that even those specialist services cannot support and deliver the safe and timely care that people need. For example, in the case of specialist psychological therapy services, IAPT services and highly specialist psychotherapy services have not been adapted for people with learning disabilities. This is especially important for people whose behaviour challenges. Can the Minister clarify the expectations of the Government with respect to the mental and physical healthcare of this group? Does parity of esteem apply to this patient group too? It is disappointing that there is so little in the report about the range of mental health treatments that people need.

My first boss in learning disability, Joan Bicknell, recruited me back in 1981 because I was a medical psychotherapist and a family carer. She lectured extensively about the emotional lives of people with learning disabilities. I remember how sceptical her audiences were. How could people with little spoken language have feelings? Is this the same attitude that makes it possible for so-called carers to abuse the people they are caring for? Some of my research studied the effect of abuse and bereavement on people’s behaviour and emotions. To help their carers understand their inner world, I turned that research into picture books about life experiences for them to read together. More research is needed to help us understand what happens in people’s homes and what leads to behaviour that challenges. Can the Minister tell us whether there will be substantial investment in research, similar to that being used at King’s College to develop a care home research network for people living with dementia?

Winterbourne View hospital failed to meet the needs of these adults. How can we be sure that this time we do not forget; that the lessons from this tragedy are truly learnt and safeguards are put in place?

17:45

[Lord Maginnis of Drumglass]

My Lords, I echo what has been said on the importance of closing these large impersonal assessment and treatment centres for people with a learning disability. Good-quality provision that is developed and delivered locally must be our aim and we must keep a watchful eye on local authorities, clinical commissioning groups and the Government to ensure that this happens. I am grateful to the noble Lord, Lord Rix, for raising this matter this evening, despite his domestic pressures. Perhaps I may say to him that we hope and pray that Lady Rix is soon well again.

I want to focus on what happened to the 48 patients who were in Winterbourne View hospital over the years from the time it opened in 2007 until it closed last year. That will, I believe, highlight the extent of the challenge that the Government’s programme of action faces. The Government’s report shows that in March of this year, 26 former Winterbourne patients had moved into a range of social care supported arrangements and 22 patients were in various in-patient facilities. I am sure I will not be alone when I say that one learns with considerable anger how 19 of these people have had to be subjected to a safeguarding alert in their new location.

In September 2012 the Government again looked at former patients and found 32 in a range of social care settings and 16 patients in in-patient settings. There were initial safeguarding alerts or active safeguarding procedures for six people. One of these people, Simone Blake—then just 18—faced some of the most outrageous and inhuman abuse at Winterbourne View. This included being drenched in water and left shivering and shaking on the freezing ground outside. You may recall her story from the follow-up “Panorama” programme earlier this year.

When Winterbourne closed, Simone was moved to a National Health Service hospital, Postern House in Wiltshire. Postern House was just 40 minutes’ drive from her parents, allowing them to visit her several times a week. In June this year, her parents received a letter from Ridgeway Partnership, the health trust that runs Postern House, telling them that Simone was again the subject of a safeguarding alert and that four members of staff had been suspended. However, the fact that two-thirds of the former patients have now been moved into social care settings shows what is possible and gives further credence to the Government’s programme of action to move all those inappropriately placed in hospitals to social care settings by June 2014. None the less, the fact that a significant number of former Winterbourne patients, such as Simone, have had to be subjected to further safeguarding alerts is shocking and should not be forgotten, and nor should it be overlooked that 27 people have required support subsequent to the trauma experienced at Winterbourne View hospital.

What assurances can the Government give that, as they seek to move those inappropriately placed in hospitals into community settings, they will be kept safe and offered support by appropriately skilled professionals? This challenge applies not only to the former patients at Winterbourne View but to every one of those others that the Government, through their programme of action, intend to relocate. Forgive me if a note of cynicism creeps into my voice, but at a time when Prime Ministerial apologies are coming two a penny on time-distorted issues from the distant past, one expects a great deal more than that in respect of this existing problem. What is so wrong must be rectified on an immediate and ongoing day-to-day basis. I want the Minister’s assurance we are not merely going to pay lip service through a process that is delegated and forgotten about until we reach an accounting period in 2014. Can she reassure us that 2014 will be an effective staging post on a journey that has progressed with full government support and participation based on professionally led community care that is delivered locally? We do not want a token start date for the Government’s programme of action. The year 2014 is too far ahead if you are someone like Simone Blake.

17:52

[Baroness Emerton]

My Lords, I, too, congratulate the noble Lord, Lord Rix, on initiating this debate, and I congratulate my noble friend Lady Kidron on her outstanding maiden speech. I want to concentrate on the management of change in the situation that we find ourselves in, and perhaps I may take noble Lords back to the beginning of Winterbourne. I was called in with Professor Jim Mansell to look at the footage before it was put out on television and asked why in the late 1970s we had been able satisfactorily to relocate 1,115 and 1,112 patients respectively from two large institutions, all suffering from learning disabilities, after 10 years; and why, in 2011, we find the same things happening now as happened in the late 1970s.

I want to raise the issues that we found. First, what were the principles and what were the things that needed to be looked at? We needed a multi-professional team, a strategy, a programme and research. We had no idea that the project would take so long, but we set about it. I was most fortunate in recruiting the then young Professor Mansell as a psychologist and researcher. It was his first post, other than working at the Kushlick centre, since leaving university, having changed his degree after the Ely inquiry. He was outstanding in the field of care for those with learning disabilities and continued his research right up to his sad death last year. The principles were that patients should return to their district of origin; that they would be individually assessed and diagnosed with their treatment set out; that they would work to a programme; that the staff would be trained to meet that programme; and that accommodation would be suitable to the need. Membership of the project team was large—we had a psychiatrist, a psychologist, a researcher, members of social services and we set up a university department. The principles were clear—that no patient would be discharged without an assessment, training programme, support programme and suitable accommodation.

The barriers were enormous. The psychiatrists at the hospital were totally against it being closed and the patients themselves were not happy about going, because it had been their home for a long time. The relatives became very edgy because they thought that it was a safe haven and that going into the community would be unsafe and the recipients in the community had a little of the “not in my backyard” attitude. Finance was an issue but at the time it was government policy and we were able to get funding. On the question of accommodation, we had to look at all the different types of accommodation that might be available—houses, housing association flats, and very small units.

The patients with less challenging behaviours were the easiest to relocate. Those with more challenging behaviours were more restricted: specialist skills were required to care for them. Fortunately, because we had Professor Mansell, we were able to relocate all of these with the right treatments and staffing levels. The training programmes were for support workers, who were trained but obviously not registered, at that stage, since they had never been registered. We also had trained nurses and social workers and we went through the programme. Resistance was overcome by influence, persuasion and personal visits to local councils, social services and parents themselves, and by going to hear what the patients had to say. We made sure that the team, which worked extremely hard, remained committed to overcoming the barriers.

Near to the closure of the 1,500 bed hospital, most of the patients had been relocated back to the sites from where they had originally come, but some—mostly those with challenging behaviours—remained. We had to persuade those within the counties and the districts: we had seven local London districts as well as Kent and Sussex. It took time to persuade them that it was possible, but Professor Mansell was instrumental in persuading people that even those with the most severe challenging behaviour could be housed in the community. We eventually succeeded in getting them out—the decisions were taken and the assessments went on—and the communities began to accept them and were happy. We found, through visiting them, going round to tea with the residents, that they had settled and that the community had accepted them. The budgets were sorted and the patients were happy. I remember a flat in Camberwell where three elderly gentlemen who had been in hospital for 30 years said what a treat it was to be able to go to a fish and chip shop; they also invited us to tea.

The programme would not have succeeded without the leadership of Jim Mansell and the rest of the team. It would not have succeeded had we not used leadership, influence and persuasion, or if we had not trained the staff. Today, the noble Baroness, Lady Jolly, and other Members have mentioned the need to register support workers. We cannot go on without having that registration of support workers, who are trained to understand the special needs that go with learning disability.

The point of making this reminiscent therapy that I have gone through is that today we face the same barriers and issues, and we have to overcome them. I am grateful that we have been able to see the report from the Government but we need to address these barriers urgently. If we do not, it will be those who suffer from learning disabilities who will be disadvantaged.

18:01

[Lord Hunt of Kings Heath]

My Lords, first, I pay tribute to the noble Lord, Lord Rix, who for so long has been a champion of people with learning disabilities. I always remember the late Lord Carter, who was the Chief Whip a few years ago, advising me that the noble Lord, Lord Rix, always gets his way in the House. That was certainly my experience as a Health Minister and my advice to the noble Baroness, Lady Northover, is to reflect very strongly on the points that he raised. I also very much welcome the maiden speech of the noble Baroness, Lady Kidron, which was excellent. We look forward to her contributing to our debates in the future.

The noble Lord, Lord Rix, made a number of very powerful points about the shocking events at Winterbourne View. He started by drawing attention to the contrast between policy and implementation. I suggest that that gap is what lies behind the unease clearly felt by many noble Lords today. We have had the welcome news from the Government that all current hospital placements are to be reviewed by next June and that everyone there who is inappropriately placed will move to community-based support as quickly as possible, and no later than June 2014. I would have thought that any assessment is likely to mean that many people will need to move to locally-based community care. Like the noble Baroness, I ask whether this is a realistic timetable in the circumstances in which health and social care finds itself at the moment.

We are going to expect a lot of commissioners, yet commissioning has led many people down. It is these commissioners who have been prepared to pay for people with learning disabilities to go miles and miles away from home and who have then forgotten about them. Does the noble Baroness, Lady Northover, really think that the commissioners are in a position to do what is required?

I would also refer to the changes in the National Health Service. I do not think that the primary care trusts can say that they dealt with this matter with any distinction but, my goodness me, what are clinical commissioning groups going to do? Can we be assured either that this is going to be done at a national level—or at least through the local offices of the national Commissioning Board—or, if it is to be done by clinical commissioning groups, that they will have the people with expertise? I am sceptical because there is no sign yet that clinical commissioning groups have people with enough seniority or expertise to do this kind of commissioning.

The noble Baroness, Lady Browning, made an important point about the owners and directors of these private institutions and their responsibilities. I have received a brief from Castlebeck, the people concerned with Winterbourne View, which details the actions it has taken and says that a new board of directors is in place. It also says that the shareholders who owned Castlebeck at the time of Winterbourne View have never drawn a return at any time and have now lost all their investment. However, there are still some serious questions about owner responsibilities. I refer noble Lords to the serious case review, which stated:

“Castlebeck Ltd appears to have made decisions about profitability, including shareholder returns, over and above decisions about the effective and humane delivery of assessment, treatment and rehabilitation”.

The review’s authors also say that,

“the corporate responsibility of Castlebeck Ltd remains to be addressed at the highest level”.

I would be grateful if the noble Baroness could say a little more about how the Government intend to do that. At the very least, will the Government require private companies to name the owners and members of the boards and details of their financial structure before they can be licensed and registered to provide publicly-funded care?

I will not labour the point on the regulation of health and social care workers. This will be the third time this week that the issue has arisen. There was also the Statement on Monday and the debate on nursing launched by the noble Baroness, Lady Emerton, only two days ago. However, persuasive arguments are being put forward for the regulation of these workers. On Wednesday, the noble Earl, Lord Howe, relied on the kind of voluntary registration that he proposed during the passage of the Health and Social Care Act. He also made it clear that the Independent Safeguarding Authority can take action to bar care workers from working in regulated activity. The point is that there are many circumstances where such workers may not have been brought to the attention of the Independent Safeguarding Authority, but may have been dismissed by, perhaps, the National Health Service or an institution and can simply go on to work in another place. We have examples of where that happens. The noble Earl also said—this is in relation to the NHS but it is just as relevant to Winterbourne View—that nurses,

“who are themselves subject to professional regulation … should not be asked to undertake a task for which they are not trained”.—[Official Report, 11/12/12; col. GC 295.]

He also said that healthcare assistants come under the supervision of those nurses. That ignores the strength of the employer as opposed to those healthcare workers and nurses. I accept that regulated nurses clearly have responsibilities, but to blame them for delegating responsibilities to healthcare assistants is wrong and unfair.

My noble friend Lord Touhig made some good points about hate crime and the challenge of care in the community. I want to end on that point. Care in the community has been the policy of successive Governments for more than 30 years. We now have a situation where money is very tight, particularly in local government, but also in the health service. The National Audit Office today signalled some of the pressures in the system. I ask the Minister this question. Do Ministers really understand what is happening on the ground? I do not think they do. They are living, not in a dream world, but one which has no link with the reality, the pressures and the strains. I end, as I started, with doubts about how on earth this change can be made within 18 months when the whole system is under such acute pressure.

18:08

[Baroness Northover]

My Lords, I, too, congratulate the noble Lord, Lord Rix, on securing this debate. I am glad to see him back in his place and wish him and his wife well. He has a formidable record in this area and we are pleased to see him back here. He has been fighting for a long time for the rights of people like Simon, whom he mentioned.

There can be no more important issue for us as a society than how we treat our most vulnerable people, as my noble friend Lady Jolly and others emphasised. I, too, was impressed by the maiden speech of the noble Baroness, Lady Kidron. It was very moving and she absolutely rightly emphasised that this debate is about cases like that of Louise. If we cannot get things right for people like Louise and her family, we are not getting anything right.

I thank the noble Baroness, Lady Hollins, for her praise for the report issued this week. I assure the noble Lord, Lord Maginnis, of the huge commitment of my honourable friend Norman Lamb in this area. That commitment shines through in this uncompromising report. Stimulated by this terrible case, it does not just deal with Winterbourne View but looks at the whole sector with its radical proposals—which I am glad so many noble Lords welcomed. Noble Lords have, if anything, asked if those can be done and delivered, rather than questioning whether this is the right route to take. There is a firm and detailed timetable of action. I hope that noble Lords have marked that, including the noble Lord, Lord Hunt. I am sure that noble Lords will hold us to account. My honourable friend Norman Lamb will oversee this. He will leave organisations in no doubt of his commitment in this area.

The scandal that unfolded at Winterbourne View was devastating but it has spurred us into action. Straight after the abuse was exposed, the Government commissioned an in-depth review. Noble Lords have referred to the report published earlier this week. As we said then, the Winterbourne View abuse was criminal. Staff whose job was to care for people instead routinely mistreated and abused them—as my noble friend Lady Jolly, the noble Lord, Lord Maginnis, and others said. Management allowed a culture of abuse to flourish. Warning signs were not picked up, and the concerns of residents’ families, and of a whistleblower, went unheeded.

As I have said, this case made us look again at how we care for one of society’s most vulnerable groups of people. Winterbourne View provided care for people with either learning disabilities or autism, together with mental health problems or challenging behaviour. Around the country some 15,000 people have similar needs, of whom some 3,400 are in in-patient settings. Many people receive good care in these settings but—as my honourable friend Norman Lamb, the noble Lord, Lord Touhig, and others have said—hospitals are not where people should live. Across the country, far too many people with learning disabilities or autism are in hospital and staying there too long. As the noble Lord, Lord Rix, and others emphasised, we have known for a long time that with the right support the vast majority of people with challenging behaviour who also have autism or a learning disability can live happy, fulfilled lives, close to their families and in their own communities—as Simon now is. When someone needs to be in hospital, it should be for a short period, in a small unit as close to their home as possible. I, too, pay tribute to Jim Mansell for all the work that he did on this.

We know what change is needed. It is now time to make sure it happens. First, owners, boards and senior managers must take responsibility for their services. I assure the noble Lord, Lord Rix, that we will examine how corporate bodies and their boards can be held to account for the provision of poor care and for harm experienced by people using their services. We will consider both regulatory and criminal sanctions, and will set out proposals in this area in spring 2013. I look forward to the noble Lord’s comments on those proposals. Of course, the noble Lord, Lord Hunt, is right to focus on the corporate responsibility of Castlebeck and other companies. I am sure that he will also scrutinise with great care the proposals that we bring forward. In addition, we will explore whether we can introduce a test to ensure that directors are fit and proper persons to oversee care. The CQC will consider a best practice model of care as part of its regulation of services from 2013. It will also check whether all providers are following national guidance or similar good practice. Where standards are not met, it will take enforcement action.

We will also stop people being placed in hospital—unless hospital is actually the best place to be. All current hospital placements, as noble Lords have referred to, will be reviewed by June 2013. Everyone who is there inappropriately will move to community-based support as quickly as possible—and no later than June 2014.

18:15

I assure the noble Lord, Lord Rix, and other noble Lords, of the involvement of parents and families in the review; they will have a key role. Additionally, every area will develop a plan to make sure that this group of people receives high-quality care. As a result, we expect to see a dramatic reduction in hospital placements. Noble Lords have made reference to that. The noble Lord, Lord Touhig, asked how we would ensure that we do not end up with people simply on the streets and the noble Lord, Lord Maginnis, and others hoped that moving to the community would ensure better care—putting a question mark over that.

I emphasise that the department has published good practice guidance and will be publishing further guidance and working with the CCGs and local authorities that are commissioning suitable care through joint improvement teams. As I mentioned, the involvement of families and advocates in what happens to family members is absolutely key. However, as the noble Baroness, Lady Kidron, points out, this cannot mean—must not mean—that families themselves find that they are the ones who are picking everything up.

The noble Baroness, Lady Hollins, and the noble Lord, Lord Hunt, asked about the timescale of getting people back home. We agree that the timescale is challenging, but we believe that it is realistic. It is vital—that is something which came through in noble Lords’ contributions. They have been waiting decades for this to happen. We must not slow it down now.

In terms of incentives to return home, we agree that people need to be in appropriate settings. The department will work with the improvement team to monitor very closely and report on progress nationally, including reporting comparative information on localities. A follow-up report will be published by December 2013 and repeated in December 2014.

I can assure the noble Lord, Lord Hunt, the noble Baroness, Lady Hollins, and others that this will be closely monitored. I can confirm to the noble Baroness, Lady Hollins, that parity of esteem does, of course, apply to this group of people. They deserve to have their rights respected—just like anyone else—and to have access to whatever mental health treatments they need. I also note what she says about the King’s College research networks and I will make sure that that is fed in to the department.

We will support a positive and open culture, where staff provide excellent care. As part of this, it is crucial that the staff working with people with challenging behaviour are properly trained in essential skills. We expect commissioners to assure themselves that providers are meeting proper training standards. Contracts should be dependent on assurances that staff are signed up to the proposed code of conduct that the Department of Health has commissioned, and that minimum induction and training standards for health and care assistants are being met. Noble Lords have referred to the regulation and training of workers in this area. A number of noble Lords expressed concern and it is indeed crucial that they meet these standards. Contracts within any remaining learning disability and autism centres or hospitals should be dependent on assurances that staff are signed up to these codes of conduct, which the department has commissioned from Skills for Health and Skills for Care. As I say, minimum induction and training standards will be required.

My noble friend Lord Addington also asked about this. I assure him that owners, boards of directors and senior managers of organisations must take responsibility for ensuring the quality and safety of their services. This is also an area that we are looking further at. From April 2013, Health Education England will have a duty to ensure that the system of education and training is supplying a skilled and high-quality workforce.

I realise that I am running short of time. With regard to autism, I say to my noble friend Lady Browning that we are currently putting together our plans for a review, which will be a priority for the Government. We are working closely with people with autism and their families, with service commissioners and providers and with relevant voluntary organisations to assess what impact the strategy has had in improving support and outcomes for people with autism and to consider what further action is needed. We will pay close attention to what she says, given all her experience.

My noble friend also asked about the Mental Capacity Act. There was post-legislative scrutiny of the Act in 2011, when a report was laid before the House of Commons. We absolutely agree that families are best placed to understand their loved ones’ wants and needs, and we are determined that there should be a closer partnership with families. There will be a further opportunity to look at this as we consider the Care and Support Bill. I am sure that my noble friend will look at it with all her experience and expertise, and we look forward to discussions on it with her.

All noble Lords agree that this is something that has to change—and change fast. I assure noble Lords of our enormous commitment, and of that of my honourable friend Norman Lamb. We will make these changes as quickly as possible. A concordat signed by more than 50 organisations set out the specific actions that each organisation committed to deliver. The NHS Commissioning Board and the Local Government Association will lead an improvement programme to supervise changes, and Norman Lamb personally will oversee progress. We must use the tragic events at Winterbourne View as the spur to make things better. There are places that are already getting this right. They show what can and should be done for all, and that a better life for people with learning disabilities and autism is within our grasp.

House adjourned at 6.21 pm