Grand Committee

Thursday 28th February 2013 Grand Committee

Thursday, 28 February 2013.

Arrangement of Business

Thursday 28th February 2013 Grand Committee

Announcement

14:00

[The Deputy Chairman of Committees (Lord Faulkner of Worcester)]

My Lords, I have to advise the Committee that if there is a Division in the House the Committee will adjourn for 10 minutes.

Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (England) Order 2013

Thursday 28th February 2013 Grand Committee

Considered in Grand Committee

14:01

Moved by

[Baroness Hanham]

That the Grand Committee do report to the House that it has considered the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (England) Order.

Relevant document: 16th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, this order will enable local authorities to implement localised council tax support from 1 April when council tax benefit is abolished. These changes are part of the Government’s wider policy of decentralisation. The order will amend the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, which allows local authorities, if they choose to do so, to contract out statutory services relating to the administration of local taxes which they would normally have to provide themselves: for example, the calculation of individual council tax liabilities and the serving of demand notices.

New administrative functions will be created when localised schemes are implemented. This order will add these new functions to those that can be contracted out already. The new functions are: the issuing of council tax reduction decision letters; the payment of reductions in certain circumstances where the billing authority is of the opinion that it would be appropriate; the serving of penalty notices in connection with a reduction; the repayment of an amount paid in connection with a penalty issued in connection with reductions under local schemes that has been subsequently quashed; and the calculation and collection of premiums on long-term empty dwellings.

The Council Tax Reduction Schemes (Detection of Fraud and Enforcement) (England) Regulations 2013 deal with the detection of fraud and enforcement mechanisms relating to local authority schemes. They provide local authorities with the means of protecting their reduction schemes from attempted fraud and deterring those who may be considering making a false claim.

These regulations are being put forward for approval using powers in Sections 14A, 14B and 14C of the Local Government Finance Act 1992, which were inserted by Section 14 of the Local Government Finance Act 2012. These powers allow for the creation of criminal offences, the creation of civil penalties that may be imposed by local authorities, and regulations providing powers to require information from individuals or organisations.

These powers are broad, and noble Lords and Members in the other place rightly sought assurances from the Government during the passage of the Bill on how the Government would seek to exercise them. A statement of intent, Localising Support for Council Tax: Information Sharing and Powers to Tackle Fraud, was published in July last year and committed the Government to bringing forward proportionate and measured proposals that would not go beyond the existing powers relating to council tax benefit, while replicating only the powers that were essential in the context of reduction schemes. These regulations are the result of that commitment, and I shall explain how that has been translated into specific provisions.

Regulation 2 sets out a number of definitions, but noble Lords may wish to note how we are defining a council tax offence for the purposes of subsequent regulations. A council tax offence is defined as any criminal offence committed in making an application for, or in the award of, a council tax reduction; or an offence committed for the purpose of facilitating the commission of such an offence; or any attempt or conspiracy to commit such an offence. It does not include offences committed for wider purposes related to council tax administration and enforcement, nor for other criminal offences committed against a local authority. Noble Lords may wish to bear this context in mind when examining later regulations that deal with requiring information and the creation of offences.

Regulation 3 provides for local authorities to authorise individuals to undertake investigations into council tax offences. The provisions are equivalent to those that are currently in place for local authorities to authorise investigations into housing benefit and council tax benefit cases. However, the regulation restricts how authorised officers may exercise their powers. They may do so only,

“for the purpose of preventing, detecting and securing evidence of the commission … of a council tax offence”.

This does not allow for powers to be exercised for routine checks on individuals or, more generally, to verify the content of applications.

Regulation 4 provides that authorised officers may require a person to supply information that is needed, again for the prevention, detection and securing of evidence of council tax offences. Where the person from whom information is to be required falls within the list of persons set out under paragraph (3), information may be required only in relation to a particular person, and where there are reasonable grounds for believing that the identified person, or a family member,

“has committed, is committing or intends to commit a council tax offence”.

The classes of people who may be required to provide information are equivalent to those who may be required to provide information for welfare benefit offences, with the removal of certain groups. For instance, we are not providing for officers to require information from telecommunication providers, since such requests should instead be exercised, monitored and reported on through legal avenues under the Regulation of Investigatory Powers Act and be subject to requirement for judicial approval and oversight.

Regulation 5 provides for electronic access to information to be provided to an authorised officer, where such arrangements can be made. Local authority investigators have similar powers to seek electronic access to information in relation to welfare benefit investigations. Under the regulations, the powers to require electronic access to information may be used only where the electronic records are likely to contain relevant information for the purpose of preventing, detecting and securing evidence of the commission of a council tax offence.

Regulation 6 provides that it will be a criminal offence intentionally to delay or obstruct an authorised officer when exercising their power to require information. It is also an offence to refuse or to fail, without reasonable excuse, to provide information or access to electronic records when required to do so. I hope noble Lords will accept that deliberately frustrating an investigation should itself be an offence. These offences are similar to those that exist in relation to delay or the obstruction of an officer in relation to a welfare benefit investigation.

Regulation 7 provides that it will be a criminal offence to make a false representation or to provide or allow to be provided information that is known to be false in order to gain a reduction.

Regulation 8 makes provision, similar to that currently in force for council tax benefit, that a failure to notify a relevant change in circumstances would be an offence. The regulation also makes it an offence knowingly to cause or to allow another person to fail to notify a change in circumstances affecting their entitlement to a reduction.

Regulation 9 deals with offences that may be committed by a body corporate and the ability to prosecute the officers themselves if the offence was due to their actions or omissions.

Regulation 10 deals with the legal timescales for prosecutions.

Regulation 11 provides that a local authority may offer to impose a penalty on a person rather than prosecute them through the courts. In the face of sufficient evidence to prosecute, the person may wish to avoid a criminal sentence and voluntarily accept a financial penalty. In return, the local authority can avoid the need to prepare a legal case and the time and resources involved. Any such agreement would be subject to a cooling-off period and may be offered only when there is sufficient evidence to institute proceedings, so that there is no question of any person with a legitimate defence being pressured or forced into accepting a penalty against their will.

Regulations 12 and 13 extend the existing system of financial penalties that local authorities may impose for council tax discounts, so that similar penalties may be imposed in relation to council tax reductions.

An authority may impose a £70 penalty on a person when they are negligent in providing information or notifying a change in circumstances that lead to them receiving a reduction beyond their entitlement. These are for non-criminal actions and are at the discretion of the local authority. If a person has been charged with an offence or issued with a penalty as an alternative to prosecution, a penalty may not be imposed. There is no question of penalties being imposed under these two regulations when a person has been charged with an offence and a prosecution subsequently fails or lacks sufficient evidence.

In conclusion, these regulations in large part reflect the provisions that are currently in place for the internal administration and enforcement of council tax benefit. If approved, they will carry out two essential functions. They will enable local authorities to deliver their local schemes, whether using internal resources, external providers or a mixture of both, as well as providing a proportionate but robust system of enforcement powers to combat attempted fraud and seek information from organisations that can assist in bringing offenders to book.

Localising council tax reduction delivers on three of the Government’s key priorities: devolving power and control over local matters from the centre; reforming the welfare system to make work pay; and reducing the deficit. It is important that we provide authorities with what they need to deliver a cost-effective council tax system and to combat attempts to defraud them and honest local taxpayers. Together, this is what these statutory instruments will do, and I commend them to the Committee.

[Lord Shipley]

My Lords, first, I declare my interest as a vice-president of the Local Government Association. I shall comment on this one and on the next, too, so I need speak only once.

I have a desire for a reassurance that in all the contracting out of existing functions of local authorities, whether they have been previously contracted out or may be in future, exactly the same standards will apply on matters concerning data protection and in the duties, obligations and service standards of those to whom work is contracted out. I am thinking in particular of the role of bailiffs and what standards of service they will be required to work to. There has been a discussion and things have been done about this in the past year or two, but I seek the Minister’s assurance that exactly those same standards, or perhaps even better standards, will apply in future.

[Baroness Smith of Basildon]

My Lords, I am grateful to the noble Lord, Lord Shipley, for speaking before me, because it has reminded me to say that I am also a vice-president of the Local Government Association, which I may have forgotten otherwise. The points that he made are ones that I would also have wished to make, and I will not repeat them. I refer particularly to the point on bailiffs, which was very well made, and I look forward to hearing the response from the Minister. I will come back to the freedom of information point.

I thank the Minister for her explanation, as it was good to have such a detailed explanation of the instruments. It answered a couple of the questions that I have, although I have others. Obviously, we support measures that would prevent fraud, detect it and take action against it, and any system of enforcement should be effective and fair. We entirely concur with those principles. My questions are on points of clarity, because I was not 100% clear. Legislation can sometimes be opaque, and it would be helpful to have some more information.

As the noble Lord, Lord Shipley, was saying, when services are contracted out, particularly in this case, very detailed confidential financial information can be provided to a private company or organisation. I understand that under data protection legislation, the responsibility would remain with the local authority, but would the DCLG give any guidance to local authorities on how they may enforce their responsibilities to organisations to which they have contracted out those services? What redress would remain available to an individual who felt that their confidentiality had been breached in any way? Would that remain a matter for the local authority, or would responsibility lie with the company that held the information and had inadvertently or wrongly released it?

14:15

On a general point about freedom of information in circumstances where services have been contracted out or privatised, under a public authority we regularly read in the press information about the collection and enforcement of council tax. It is open to public debate; indeed, we sometimes even see league tables published of how local authorities have performed. Will that information still be available if it is held by a private company rather than the local authority? Clearly it is information that is of interest at present.

The order is relatively straightforward, and those are the only questions that I have on that. I have a few questions on the regulations. On the power to require information, Regulation 4(1) states:

“An authorised officer who has reasonable grounds for suspecting that a person”,

and goes on to explain why the information is required. I am not clear about the phrase “reasonable grounds”. Is there a definition of the reasonable grounds required for suspecting that someone has the information? What happens if the evidence required cannot be produced? Although an authorised officer may have reasonable grounds for suspicion, that does not mean that the organisation or individual definitely has the information required. What evidence would be accepted that they are unable to supply the evidence required?

I am also curious about the sanctions for not doing so. Under Regulation 6, headed “Delay, obstruction etc of authorised officer”, it appears that sanctions apply only to an individual. If the delay, obstruction or refusal is due to the extreme inefficiency of an organisation and not an individual, are there any sanctions in place? Regulation 6(1) seems to apply only to an individual not providing information, not to an organisation. I may be wrong, but that seems very specific. Perhaps the noble Baroness can explain whether it is my understanding or the drafting that is not accurate. That would be very helpful. I assume it is my mistake, although the mistake might lie somewhere else, but from here it appears that it is only an individual, not an organisation, who can face sanctions.

Regulation 4(5) states:

“An authorised officer shall not, in exercise of those powers, require any information from any person by virtue of that person falling within paragraph (3) unless it appears to that officer that there are reasonable grounds for believing that the identified person to whom it relates is … a person who has committed, is committing or intends to commit a council tax offence”.

There will be clear evidence if someone intends to commit a bank robbery or to enter a property without consent—burglary, theft—but I am not quite sure how we would know whether someone intends to commit a council tax offence. I do not have the benefit of legal training and I have adopted a common-sense approach on this. I do not understand how one would know whether someone intends to commit a council tax offence. It is slightly curious wording. I would not like to be in a position where someone is second-guessing a person’s intention to notify changes in circumstances or to pay their council tax bill.

On false representation for obtaining a reduction, Regulation 7(1)(b) states:

“provides, or knowingly causes or knowingly allows to be provided, any document or information which P knows to be false in a material particular”.

There is similar wording in Paragraph 8. Can the Minister enlighten me on the kind of circumstances she envisages this would include. I am not clear what would be included in that.

My final point relates to Regulation 11 concerning a penalty as an alternative to prosecution. In principle, it is absolutely right and good if legal proceedings can be avoided, as they are costly and often not the best way of resolving an issue. I would hope that the Government and all of us would encourage local authorities to distinguish between a genuine mistake that a person had made and was keen to rectify as soon as possible and a deliberate attempt to defraud. A penalty as an alternative to prosecution should be just that: it should be for an intention to defraud, not a catch-all for a genuine mistake where there is no clear evidence to take the matter to court but someone ends up paying a penalty.

Regulation 12 concerns a person negligently making an incorrect statement or representation or negligently giving incorrect information or evidence. I am not a lawyer, but I consulted a lawyer on what “negligently” would mean in that context. He told me that he could write a book on it but I wanted only a paragraph. My understanding is that something that is negligent can indeed be a genuine mistake. Obviously such a mistake should not be made when dealing with issues such as someone’s council tax, but I hope that the Minister would not want to see the automatic issue of a penalty when a person might be very upset about making a mistake and want to resolve it.

As I said, it is clearly very sensible to avoid legal proceedings wherever possible for all the reasons that I have stated. However, if someone has made a genuine mistake and they have a genuine defence, they should be able to receive independent advice regarding their options before accepting a penalty. I have recently heard of a number of cases where council officers have been posted at magistrates’ courts, and before a person goes into the court to offer their defence for not having paid or for there having been a delay or some other problem they are encouraged by the council to pay up because, they are told, it could cost them more to proceed in court. They do not really understand that they would have a chance to offer their defence in court. Having paid up, however, they still have to pay more because the case has got as far as the court. Clearly, the issuing of a penalty before that point is the right course of action but not if it is used as a catch-all for dealing with somebody who has made a mistake.

If would be helpful if the Minister could say something about the circumstances in which she feels that a penalty would be used. Can she also say whether she thinks the Government would consider people having the opportunity to receive independent advice on receiving a penalty? That could speed things up. There is a provision in Regulation 11(11)(h),

“that a person who agrees to pay a penalty may withdraw the agreement within 14 days”,

but that means that they have to start the whole process again. Therefore, I think it would be better if the person could get advice before any penalty was issued.

Those are a few points on which I seek clarity. I hope I have made it clear that we believe it is important to prevent, detect and deal with fraud fairly and effectively, and we support measures that do so, but I should be grateful if the noble Baroness could give me some clarification on the issues that I have mentioned.

[Baroness Hanham]

My Lords, I thank the noble Lord, Lord Shipley, and the noble Baroness, Lady Smith, for their questions, which were, as I would have suspected, practical and straightforward, and I shall try to deal with them in that way.

The noble Lord, Lord Shipley, asked about data protection. It is correct that local authorities remain the responsible authority, even though they have contracted out to a private company or have made alternative arrangements. They are responsible for ensuring that the provisions of the Data Protection Act 1998 are met. That position has not changed; that is the way it is at the moment.

The noble Lord, Lord Shipley, and the noble Baroness, Lady Smith, also talked about bailiffs. The use of bailiffs has worried this House for some time. We are very clear that aggressive bailiff activity is completely unacceptable, and we are committed to bringing forward effective proposals to protect the public and ensure that they act proportionately. The proposals are to implement Part 3 of the Tribunals, Courts and Enforcement Act 2007, which would provide legal protection by introducing a comprehensive code that governed, among other things, when and how bailiffs can enter somebody’s premises, what goods they can and cannot seize if necessary and sell, and what fees they can charge. Aggression, force and enforced sale are more or less the complaints that we have heard all along, and we are trying to deal with them.

[Baroness Smith of Basildon]

Is the Minister also aware of circumstances recently when bailiffs entered people’s homes to try to remove property but the poverty was such that they could retrieve nothing to sell anyway?

[Baroness Hanham]

I know that that matter has been raised, but that will be covered by what we are trying to do with the Tribunals, Courts and Enforcement Act 2007. The noble Baroness is correct that if there is nothing there that enables a debt to be dealt with, bailiffs ought to report that to local authorities and not just go ahead. We have had a lot of discussions on bailiffs and the Government are very sympathetic to what has been said. Efforts will be made to try to restore some confidence in the bailiff service, which is not very strong at the moment.

The data protection standards will, as I have already said to the noble Lord, Lord Shipley, remain as at present, with the local authorities being responsible for them. I think the noble Baroness, Lady Smith, asked what an offence committed by a body corporate is. It is when an offence has been proved to be committed with the consent or connivance of, or attributed to any neglect on the part of, a director, manager, secretary, or other similar officer purporting to act in any capacity. The number of occasions when a body corporate may be involved in an individual’s council tax seems to me to be remarkably slim, but it is there just in case.

[Baroness Smith of Basildon]

Perhaps I was not very clear. I was asking—

[Baroness Hanham]

I am sorry, am I answering the right question?

[Baroness Smith of Basildon]

No, I think not. My question was about corporate bodies in relation to the power to require information by the authorised officer. Regulation 6 is entitled, “Delay, obstruction etc of authorised officer”. It refers only to an individual, but an authorised officer can require an organisation or a body to provide information. I do not think that that is the question that the noble Baroness is answering. I am happy for her to write to me on that.

[Baroness Hanham]

I shall write to the noble Baroness, if she does not mind, on the people who are entitled to ask for information. I apologise for not answering her question correctly.

The proof of intention to commit an offence is not very easy, but it can be obtained or come from information that is made available, such as anonymous tip-offs, discrepancies between records that people become concerned about, reports of fraud from the DWP, and so on. It may not appear very often, but there are areas where it would be possible to demonstrate intention.

I hope that I have more or less picked up all the points raised by the noble Baroness, Lady Smith. As I say, they are essentially practical, but if I have missed any, I will come back, but as I say, I hope that I have addressed the main points.

Motion agreed.

Council Tax Reduction Schemes (Detection of Fraud and Enforcement) (England) Regulations 2013

Thursday 28th February 2013 Grand Committee

Considered in Grand Committee

14:29

Moved by

[Baroness Hanham]

That the Grand Committee do report to the House that it has considered the Council Tax Reduction Schemes (Detection of Fraud and Enforcement) (England) Regulations 2013.

Relevant document: 16th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Gateshead and Northumberland (Boundary Change) Order 2013

Thursday 28th February 2013 Grand Committee

Considered in Grand Committee

14:30

Moved by

[Baroness Hanham]

That the Grand Committee do report to the House that it has considered the Gateshead and Northumberland (Boundary Change) Order 2013.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, there are two elements under these two orders and I wonder whether I might deal with them both together. The first is the Gateshead and Northumberland (Boundary Change) Order 2013, and the other is the East Hertfordshire and Stevenage (Boundary Change) Order 2013. I will talk to them both if that is acceptable to your Lordships.

The Boundary Commission invited local authorities across the country to tell it whether there were any boundary anomalies that councils believed should be investigated. The Boundary Commission was prepared to undertake reviews only where both the affected local authorities agreed. In essence, only three cases came out of that request, and these are the final two.

These orders are very straightforward; they transfer small areas of land, and in the case of East Hertfordshire and Stevenage a few houses, from one local authority to another. The transfer between Northumberland and Gateshead is basically a case of the transfer of one house, which ratifies the position on the ground. The property and its residents are already registered with Northumberland, although at present they are not in the county. The first order simply puts that right. In both cases, the councils concerned agreed that a change is necessary and supported a boundary change.

It might help if I explained the statutory framework that allows change and the context within which boundary change is now being considered. On the statutory framework, this is the second use of the powers in the Local Government and Public Involvement in Health Act for boundary change. Under the legislation, a boundary change can take place between two local authorities only on the recommendation of the Boundary Commission, whose responsibility is to give advice to the Secretary of State. In doing so, it: gathers evidence, for example from the councils involved and local people; publishes and consults on draft recommendations based on this evidence; and, once it has considered the representations, makes final recommendations to the Secretary of State. When considering whether a change is desirable, the boundary commissioners bear in mind the statutory criteria that change should lead to effective and convenient local government and reflect community identities and interests.

Secondly, the context within which boundary change is being considered must ensure that local government boundaries reflect communities and that councils can deliver effective and efficient services. This has been described as,

“a keystone of effective democratic local government”.

A boundary that cuts through a property or an estate is unlikely to be convenient to the property owners, who may have to have dealings with two separate local authorities: for example for council tax, refuse collection or planning purposes. While local government will in practice generally put in place informal arrangements—or indeed make formal agreements to deal with such situations, as they have done in the case of Northumberland and Gateshead—the very fact that they need to do so can be wasteful of resources and not conducive to effective and convenient local government.

It is recognised that moving a boundary and changing the area of a local authority is a fairly large step to take, particularly when the number of residents affected is small. We would expect councils to work together to alleviate the impact of such boundaries. However, we recognise that, especially in cases where local people do not feel an affiliation to the area of their local authority, to reflect the concerns of local people it is best to take that further step and amend the boundary.

The Gateshead and Northumberland boundary review concerns a property—a bungalow and associated grounds—part of which is in Gateshead and another part of which is in Northumberland. The order realigns the boundary so that the property is transferred from the metropolitan borough of Gateshead into the county of Northumberland, as is the entirety of the gardens and grounds of it and neighbouring properties. Not unsurprisingly, very few representations were made, but the county council, the local councillor and the parish concerned are supportive.

On the East Hertfordshire and Stevenage (Boundary Change) Order 2013, as a result of the current boundary position 19 properties within three culs-de-sac are represented by East Hertfordshire District Council, while 15 are represented by Stevenage Borough Council. However, the existing boundary means that the access for all the East Hertfordshire residents in the affected properties is via Stevenage Borough. This order realigns the boundary so that all the affected properties are in Stevenage.

The commission received 20 submissions on its draft recommendations from East Hertfordshire District Council, Stevenage Borough Council, three district and county councillors, 12 residents directly affected by the boundary change, two members of the public and one other. All those who responded were unanimous in their support of the proposed boundary change. It is clear that local people consider the current boundary arrangements to be anomalous and that residents clearly relate to a Stevenage community identity.

The Boundary Commission has confirmed that the changes will provide for effective and convenient local government. In its view, there is no adverse impact on the local authority’s ability to deliver value for money. In short, the orders implement small boundary changes, and I commend them to the House.

[Lord Shipley]

My Lords, I support both these simple proposals, which reflect common sense. However, I am puzzled by one matter: why it has taken so long. The final recommendations were published in May 2012, based on the consultation a year ago. Why has it taken nine months for the matter to arrive now, in February of the following year? There may be explanations that I have not understood, but it strikes me as a long time when the consultation occurred almost a year ago. Any guidance or further details on the procedure being followed and the timetable to which those involved should keep would be helpful to know.

[Lord Rosser]

My Lords, we have no objection to the orders, which are clearly not of the greatest significance for the nation. Indeed, when I read them—and in this position one surely has to try to speak for at least two or three minutes—I thought I had been reduced to reading extracts from the Oxford English Dictionary. I feel even more that way since the noble Lord, Lord Shipley, has taken away about 90% of my contribution.

I will raise one or two points for clarification as much as anything. Paragraph 7.3 of the Explanatory Memorandum states that, from its establishment, the Boundary Commission,

“has compiled and maintained a list of boundary anomalies that have been notified to it”.

It goes on to say that the Boundary Commission,

“has sought the views of the local authorities concerned on all these anomalies”.

It says further:

“In three cases there was local agreement”.

Are there in fact lots of cases that the Boundary Commission is looking at in which there is no agreement? Obviously, one inference can be drawn from that. If there is no agreement, are we to assume, as paragraph 7.2 rather implies, that the Boundary Commission would not put any recommendations in front of the Secretary of State? In the two cases that we are considering, I think the Minister has probably already answered the question in her opening comments, but who actually initiated these two? Was it one or more of the four local authorities concerned? Was it the Boundary Commission’s own initiative? I can hardly imagine it was at the request of the Secretary of State, which is the other basis on which a review might be undertaken.

I will make exactly the same point that the noble Lord, Lord Shipley, so eloquently made as to what exactly has been going on over what appears to be the past 11 months since the consultation ended—on draft recommendations on which, we are told, there has been no significant disagreement. It would certainly be of interest to know why there has been this delay.

A further point that I should like to pursue—I am not seeking to suggest that it is a major point because clearly it is not—is that paragraph 8.1 of the Explanatory Memorandum states that the normal minimum period of consultation is six weeks. In the case of Gateshead and Northumberland it was less than six weeks. In fact, it appears to have been about four weeks, the argument being the small scale of the change. One might have some sympathy with that argument, but what exactly has been achieved by reducing the consultation from the normal minimum of six weeks to somewhere around four weeks? Looking at the timescale, I cannot see that anything at all has been achieved. I appreciate that it was a Boundary Commission decision, but does the Minister know why it was done if it has not speeded things up, or has the Secretary of State perhaps asked the Boundary Commission why it thought it necessary to reduce the period of consultation when it does not appear to have been done in order to speed up the process?

In her comments on the Gateshead and Northumberland order, the noble Baroness referred to those who had responded. However, can she be a bit more specific about how many people responded to the draft recommendations? No figures are given, but figures, including a breakdown by category, are given for the East Hertfordshire and Stevenage order. Paragraph 7.8 of the Explanatory Memorandum says that the Gateshead and Northumberland order will affect only two electors. Are the residents of Ravenside Farm, who were not exactly supportive, the two electors in Northumberland referred to in paragraph 7.8? If they are, they are apparently the only ones affected by the Gateshead and Northumberland order. They did not appear to support it and if they are the two concerned, I suppose you could say somewhat facetiously that there was 100% rejection by the electors affected. I do not want to turn this into a major point, but it would be interesting to know.

My final point is very minor. Indeed, some might think that it is more nitpicking than anything else. Paragraph 7.3 says:

“In three cases there was local agreement that the anomalies should be addressed”.

The two in front of us are two of those three. However, paragraph 8.3 indicates a measure of disagreement from the residents of Ravenside Farm, which would appear to contradict what is said in paragraph 7.3. The reply may be that there is a distinction between agreement that the anomalies be addressed, and agreement over the recommendations and how they should be addressed.

I hope the noble Baroness will be able to respond to those points. I reiterate that we support the orders. I do not wish to suggest that the points that I have raised are of fundamental importance, although it is interesting that both the noble Lord, Lord Shipley, and I are extremely interested in why it has taken so long to bring these instruments forward.

[Baroness Hanham]

My Lords, I am lost in admiration that the noble Lords managed to find so much to raise on these rather small orders. However, I do not deny that they are more than reasonable questions, and I am very happy to try to deal with them.

The noble Lord, Lord Shipley, asked about the delay between the consultation ending and the orders being brought forward. Once the Boundary Commission had undertaken its inquiries, it then had to deliver its results to the department. The issue has been with the department since June and has been waiting for, first, the necessary parliamentary time and, secondly, the time of the officials to deal with it. That, I think, is the straightforward answer to the noble Lord’s question, although I agree that this is not a matter that should require an awful lot of effort.

The noble Lord, Lord Rosser, asked about the number of applications that have been made to the Boundary Commission. I said in my notes that the Boundary Commission sought applications widely and that there were only three in total. We have dealt with one and we are now dealing with these two. It is not anticipated that there will be any more. Given the size of this nation, the fact that there are only three tweaks probably means that the Boundary Commission gets it right most of the time.

14:45

[Lord Rosser]

This may sound like nitpicking, but that is not the spirit in which I am saying it. Paragraph 7.3 of the Explanatory Memorandum states that the Boundary Commission,

“has sought the views of the local authorities concerned on all these anomalies. In three cases there was local agreement”,

the inference being that there were more than three.

[Baroness Hanham]

There was a list of more than three, but it was only within these three that the local authorities were agreed.

[Lord Rosser]

Others obviously disagreed?

[Baroness Hanham]

Yes. I hope that is correct. The noble Lord also asked about representations for East Hertfordshire. The responses came from three councillors, the local authorities and 14 residents, and they supported the boundary amendments. As for Gateshead and Northumberland, where there was only one property, two electors, one in the Ravenside bungalow and one in the parish, responded. The one from the Ravenside farmhouse wondered why the boundary had to be changed, and the residents of the Ravenside bungalow would live within one county boundary, with all the land they owned being within another. They had no objection, but they put forward some reasons; they were mostly complaining about the glossy brochure and the cost of this tweak.

The noble Lord, Lord Rosser, also asked about the period of consultation. It is entirely a matter for the Boundary Commission, which carries out consultations as it wishes. It has completed them now and the order means that the changes have to take place from 1 April.

The noble Lord, Lord Rosser, asked who initiated the reviews. Again, they are initiated by the Boundary Commission. As I said in my remarks, it carried out a countrywide search and come up with the list, but there was no agreement from the local authorities except from these three. I gather that there are no further reviews in the pipeline. If I have missed answering anything that either noble Lord has asked, I shall respond in writing.

Motion agreed.

East Hertfordshire and Stevenage (Boundary Change) Order 2013

Thursday 28th February 2013 Grand Committee

Considered in Grand Committee

14:48

Moved by

[Baroness Hanham]

That the Grand Committee do report to the House that it has considered the East Hertfordshire and Stevenage (Boundary Change) Order 2013

Relevant document: 17th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Guaranteed Minimum Pensions Increase Order 2013

Thursday 28th February 2013 Grand Committee

Considered in Grand Committee

14:50

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do report to the House that it has considered the Guaranteed Minimum Pensions Increase Order 2013.

Relevant document: 18th Report from the Joint Committee on Statutory Instruments.

[Baroness Stowell of Beeston]

I shall also speak to the Social Security Benefits Up-rating Order 2013. These orders were laid before the House on 28 January 2013, and I am satisfied that they are compatible with the European Convention on Human Rights.

I will start by touching briefly on the Guaranteed Minimum Pensions Increase Order 2013. This order provides for contracted-out defined benefits schemes to increase their members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 2.2%, in line with inflation as at September 2012.

On the Social Security Benefits Up-rating Order 2013, I shall start with the increase in the basic state pension. One of this Government’s first acts was to restore the earnings link to the basic state pension. Indeed, we went a step further and secured a triple lock for pensioners: a commitment from the Government to increase the basic state pension each year by earnings, prices or 2.5%, whichever is the highest. This year, that third element of the triple lock will have an effect for the first time. The basic state pension will be uprated by 2.5%, a level above both earnings and prices. This means that millions of pensioners will see an above-inflation cash increase of £2.70 a week, taking the new level of the basic state pension to £110.15 a week; and that from April 2013 the basic state pension is forecast to be around 18% of average earnings, a higher share of average earnings than at any time in the past 20 years. I can confirm that additional state pensions will rise in line with inflation at 2.2% in 2013-14, which means that the total state pension increase for someone with a full basic pension and an average additional pension will be around £175 a year.

On pension credit, we have taken an important decision to ensure that the poorest pensioners are able to benefit from the effects of our triple lock. That means that rather than rising in line with earnings at 1.6%, the minimum required by legislation, the standard minimum guarantee credit in pension credit will be increased by 1.9% to ensure that the poorest pensioners benefit from the full £2.70 cash increase in the basic state pension.

Consistent with our approach last year, the resources needed to pay for that above-earnings increase to the standard minimum guarantee have been found by increasing the savings credit threshold, which means that those with higher levels of income will see less of an increase. The decisions that we have taken on pensioners reflect the Government’s belief that even in exceptional economic times it is important to protect those who are less able to increase their spending power.

However, noble Lords will also be aware that this order takes forward a number of decisions that are a lot harder to make. Some tough choices are necessary if we are to restore our public finances. The working-age welfare budget, which accounts for about £1 in every £8 that government spends, cannot be immune from these tough choices. That is why, having regard to the national economic situation, we have decided that the working-age personal allowances in jobseeker’s allowance, income support, housing benefit and employment and support allowance, along with the work-related activity component of employment and support allowance, will be uprated by 1% next year. On the same basis, this 1% uprating will also apply to statutory maternity pay, statutory paternity pay, statutory adoption pay and statutory sick pay. This will save around £200 million in 2013-14, savings that are crucial as we continue to pay down the deficit.

We do not take such decisions lightly. Wherever we have been able to do so, we have sought to protect those who have the greatest difficulty increasing their spending power. The benefits that reflect the additional costs that disabled people face will be uprated in line with inflation. These include disability living allowance, attendance allowance, the disability premiums in working-age benefits, and the support component of the employment and support allowance. This is true of the carer’s allowance and the carer premium as well, both of which will be uprated in line with inflation.

In previous debates this week I have spoken of the need to strike a balance. At a time of great economic difficulty we have had to find savings, but we have sought to balance these with key protections wherever we can. This order is also about balancing our commitment to the here and now with our commitment to the long term. We have a responsibility to the next generation to secure a stable and growing economy, and I do not believe we can achieve that without taking these difficult decisions. Of course, we have a responsibility to those who will be affected by this order today, and we take that responsibility seriously.

It is worth noting that at a time when the nation’s finances remain under real pressure, through this order the Government will be spending an extra £2.8 billion in 2013-14 as part of our drive to ensure that the people who are least able to change their incomes are protected against increases in the cost of living. Of that £2.8 billion, about £2.1 billion is for the state pension, including an above-inflation increase for the basic pension. Nearly £500 million will go to disabled people and their carers, and nearly £300 million will go to people of working age. I believe that this is the right decision for families now and in the long term, and it is on that basis that I commend these orders to the House. I beg to move.

[Lord German]

My Lords, I start by saying that I hope we will not have a reprise of the Second Reading debate of the Welfare Benefits Up-rating Bill, because there would be many arguments to espouse.

I add my welcome to the triple-lock pensions increase that has been put into this measure again, and as the Minister has indicated, using 2.5% as the third trigger—the third lock that is being used for the first time—means once again that pensioners are benefiting from an increase that is above inflation.

What is interesting from the information that has been presented to us, and from my noble friend’s introductory comments, is that from April 2013 the basic state pension will be about 18% of average earnings. I have two points to make about that. First, it is a higher percentage than at any time in the past 20 years; and, secondly, it is only 18%. Recent research conducted by the pensions industry indicates that many people approaching retirement say that they need 50% of their average earnings—that is the rough figure they say they need—and they believe that they will get 50%, which in the nature of these things is obviously not true at present. It demonstrates the importance of the new flat-rate pension and that auto-enrolment will be decisive in helping people to meet their own aspirations for retirement. However, in the interim, the pension credit increase in line with the triple lock, as opposed to average earnings, goes a little way to helping Britain’s poorest pensioners.

I turn now to the uprating by 1% of all benefits apart from those protected because of disability or age. I still find that the issue of personal allowances indicates that there is an underpinning rationale, which has not yet been fully demonstrated to me, in having the personal allowance element of the employment support allowance being the same personal allowance that applies for housing benefit and anything else. Can my noble friend the Minister first outline why those personal allowances have to be the same for each allowance? It interests me to know what the rationale is behind that.

15:00

Finally, and perhaps slightly facetiously, because I have read the information provided for us in the Explanatory Memorandum, paragraph 9 on guidance indicates that:

“Leaflets will be up-dated to reflect the new rates in due course and guidance bulletins have been issued to operational staff to advise them of the new rates”.

Other Lordships here today may be in receipt of the basic state pension. I received a letter a month ago from the DWP informing me of my new basic state pension rate from April this year, which somewhat indicates that the Government are ahead of the order before us. I wonder whether we could be a little more honest about this, in that we have published, updated and reflected the new rates in consultation with people who are going to be recipients. I would hope that we can be clear on that matter. In other terms, with a somewhat heavy heart, because it is never easy to hold back on expenditure for people who are in need of these benefits, I am happy to support the orders before us.

[Lord Kirkwood of Kirkhope]

My Lords, I am pleased to follow my noble friend and concur with everything that he said. I have been doing uprating statements since 1984, I think, and I am here this afternoon really because I did not want to miss one. I have the boxed set, so I would feel that I was in the wrong place if I was not here. However, and this is me in my moaning mood, in the old days when men were men and women were women these debates were really big parliamentary occasions. These are huge sums of public money that we are considering this afternoon. This is no reflection on the Government at all, because while it is a question for the whole House I do not think that if we held this debate on the Floor of the Chamber there would be many more people here. I cannot help but say that it is a shame that we do not have more concern or attention from other colleagues albeit on what I accept is a ritual.

This is a very important annual debate, but this year it is different. My noble friend explained some of the differences, and I want to explore them a little more deeply, because, both qualitatively and quantitatively, these orders are different from any I have seen before. I make it clear that the Government are absolutely entitled, under the rules of the game as I understand them, to make these reductions against an economic background that we can all see. I am obviously not going to move against these orders, particularly in the context of the uprating Bill, which is in front of the House, but we are in exceptional circumstances. There is therefore a case for the Government to say, “For the next 12 months, Britain is a poorer nation and we all have to make a contribution towards getting back on to a steady state”. My point is that I am not confident that we will get back to a steady state for a number of years. I am not an economist and I do not know, but I really believe that the paradigm has changed and that we will all be forced to face up to the circumstances. That may be supporting the Government’s case more than I am accustomed to do, as the Minister might say.

The point I want to make on the back of that is that if we are in different circumstances if I can use the analogy of discretionary housing payments and if the Government are saying that the housing benefit changes are so profound that there have to be mitigating short-term, time-limited emergency procedures to take the sting out of them for low-income families, we may be forced to think about an equivalent emergency package for low-income households if year after year we find that we do not get back to trend levels of growth. I think that in future uprating debates we are going to be forced to look very carefully not only at adjusting the levels down but in addition at ways of getting behind people who are really at the end of the financial road. They have no scope.

The Government have recognised the plight of pensioners, and the rationale for that is understandable. My noble friend mentioned it: they have limited ways of increasing their earnings. The Government’s suggestion is that working-age households always have the option of work, but I wonder how realistic that is. If we are seeing food banks develop to the extent to which I fear they may develop in future in local communities, I think as legislators we will have to reflect that rather than just assuming that we are in a steady state and that the Government can take those savings out year after year. We might all need to think about how we tackle this. Part of that might be exceptional measures for low-income households.

The evidence comes at me every day from every source. This morning, I picked up a very interesting piece of evidence from the Money Advice Trust, which is a very important institution that I watch because I am interested in the development of payday loans. There are problems about some of the administration and regulation of payday loans. The statement from the Money Advice Trust demonstrates the changes that are happening underneath us and that are affected by this uprating statement. It reports that:

“its National Debtline service took over 20,000 calls for help with payday loans in 2012 … The figure represents a 94 per cent year on year increase, and an increase of 4,200 per cent since the onset of the financial crisis in 2007”.

I know a little about payday loans. Working families take advantage of them. I am not against payday loans. Short-term unsecured credit has a role to play. I do not think it is regulated properly, but that is a different argument. These are working-age families. In my estimation, these levels of increase are not going to get any less any time soon. I recognise that something has to be done with the deficit reduction, but we may need to have a grown-up discussion about this across the parties and across Parliament to make sure that we are not ignoring what is happening in a lot of our challenged communities, particularly in the old social-rented council estates of my native Glasgow, for example, where I know that some these changes that we are introducing on top of everything else that is happening will produce levels of financial challenge for particular groups. Lone-parent families are one group that I particularly care about, and I know that colleagues know even more about that than I do.

I am concurring with this order on the basis that we need to think about other ways of providing some sort of emergency relief—hopefully only short-term—as well as what we are doing in these orders. If we do not start thinking about that now, we will suddenly find that we will be hit by levels of malnutrition and child poverty that will be found completely unacceptable by the population at large. We have to avoid that at all costs.

Finally, I apologise for this because I should have checked before I came, but I do not know what the Government Actuary has to say about the National Insurance Fund, which is appearing in not the means-tested but the contributory dimensions of these orders. Presumably, no Treasury grant is being requested, although I would be surprised if that was the case. Can we have a statement from the Minister to the effect that the department and ministerial team are comfortable with the Government Actuary’s view of the orders as they stand? That is important for the Grand Committee in its consideration of these important orders this afternoon.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her introduction to these two orders. We do not have much to raise on the first order. The GMP is a promised income for those who contracted out before 1997, so the order is a routine process, which we support.

I have just one question. The Explanatory Note refers to there being no new costs on the private or public sector as a result of these orders, but an uprating cost clearly has to be borne by someone: the pensions providers. Is that not the case?

We have covered much of the ground on the Social Security Benefits Up-rating Order, as the noble Lords, Lord German and Lord Kirkwood, have said. I do not mind having a rerun of this, although much has already been said and we still have more Committee proceedings to go, let alone Report, so I shall resist the wholesale revisiting of our debates, although if provoked I might withdraw that assurance.

The noble Lord, Lord Kirkwood, as ever, made an incredibly valuable contribution on where all this is heading. We all know that the deficit has to be dealt with, although we might argue with how that is being done. But we have not seen as part of an impact assessment—and it is something I would ask about—the impact of this uprating order on child poverty. What assessment, if any, have the Government made of this uprating order’s impact on things such as personal debt and poverty more generally? What do they think about the food banks, which are growing up in our country at the moment? One opened in Lewisham, but unfortunately it was on the day of the universal credit regulation, so I could not go. It is just one of just hundreds that are growing up in a country that we know could by any standards be classified as rich.

We have heard about the basic state pension and the much lauded triple lock—the highest of earnings, prices or 2.5%, in this case. We have no difficulty with the basic state pension having been a higher share of average earnings for some time, although is that not largely because average earnings are so depressed because of the state of the economy? My right honourable friend Stephen Timms in the other place dug away at the triple lock, saying that it is certainly a success in terms of rhetoric but that its practical implications have been much more limited. He knew of one that was not operated because RPI gave a better result, and in year 2 inflation was used. It was only in year 3 that the 2.5% kicked in, in excess of inflation. On the old basis of uprating by RPI in those latter two years, the award would have been higher. Perhaps the Minister can confirm that 1.5 million pensioner households are missing out compared with what would have been the position had the standard minimum guarantee been uprated by earnings and the savings credit threshold frozen.

15:15

We heard again from the Minister the repeated assertion that those who face additional costs because of their disability, and who perhaps have less opportunity to increase their income through paid employment, will see their benefits increase by the full value of CPI. As the noble Lord, Lord German, alighted on, this is not entirely true. It is true to a limited extent only for people in the support group who have the support component uprated by inflation, but it is not true of the personal allowance. The noble Lord raised an important question: what is the rationale for having that personal allowance standard throughout the system? It might be arithmetically comforting, but in its impact on people there seems to be no great rationale for it.

When we were debating this issue on the uprating Bill, the Minister said that people who were in the WRAG were essentially seen as having a short-term benefit that they would come out of and get into work. I do not think that is the basis on which it was introduced. It was certainly seen as a benefit for people who were not deemed currently fit for work but who could engage in work-related activity and could be moved closer to the labour market. I do not believe that the concept that it was essentially a short-term benefit featured in its introduction in Parliament, in which the noble Lord, Lord Kirkwood, and I participated. In fact, I was the Minister responsible for dealing with the original legislation at this end. If that is the assertion and the Government’s current view, can the Minister tell us the total numbers in the WRAG currently? What average length of time do people remain on that benefit, if it is a short-term benefit? What do the data actually show?

On the scope of the order, I believe I am right in thinking that the benefits that we are uprating by just 1% in this order are identical to those that are restricted to 1% in the uprating Bill, other than the universal credit component, which is not covered. So the tax credits, which are restricted in that Bill, are not covered in this order. We are presumably due an uprating order on tax credits at some stage soon.

Can the Minister identify any benefits or components of benefits that are not being uprated next year, either by 1% or CPI, or on any other basis? That would include some of the capital limits and earnings rules, but it would helpful to have a full analysis of those. In addition, can we have some detail on costings? Comparing 1% with what would have been CPI, can we hear from the Government what savings they are anticipating next year from restricting uprating separately to SMP, paternity pay, adoption pay and SSP? What are the figures for the subsequent two years, taking account of inflation at OBR forecast levels? Also, can we have the costings in respect of the personal allowances in ESA, including the work-related activity component of ESA, and of child benefit?

This order represents just part of a collection of changes to benefits and tax credits, together with real cuts to tax credits, the additional two years of restrictions to both benefits and tax credits in the uprating Bill. We have a collection of really nasty features. Of course, the policies already announced, such as the bedroom tax and council tax support restrictions, are about to be introduced. These measures have to be seen together and the order is just a part of that.

I conclude by reiterating our opposition to these measures that will largely hit poor people in work, disproportionately affect women, push many more children into poverty and fail adequately to protect disabled people. We would be very happy to engage in the sort of process suggested by the noble Lord, Lord Kirkwood, to try to look at these issues for the longer term. I am bound to say that I am not innately attracted by the concept that we have lower levels of benefit because the very poor and disadvantaged can have some supplementary cash to help. In a sense that has been the Government’s approach when they have hacked away at things such as the benefit cap or housing benefit, and with the underoccupation provision and putting aside a bit of money or discretionary housing payments to placate and help a few who were disadvantaged. As a process or a basis for a sensible system of support, that is not the route that we should adopt. There is a danger of straying into the debates that we will return to in our consideration of the Welfare Benefits Up-rating Bill, when we will debate the issue of poverty time and again in the upcoming months.

[Baroness Stowell of Beeston]

My Lords, I am grateful to all noble Lords who have contributed to today’s debate. I shall get straight into responding to some of the important points raised. I note that there was broad support in the Committee for the first order. I am grateful for that, but there was one small question from the noble Lord, Lord McKenzie, which I will dispense with straight away so that I can get rid of one piece of paper that I am grappling with. He asked about the costs of the Guaranteed Minimum Pensions Increase Order 2013 and whether they would fall on the private or public sector. No new costs will be incurred; the costs will be the ones that would usually be incurred as there is no policy change.

I move to some of the points raised in the wider debate. My noble friend Lord German talked at some length about pensions and welcomed the triple lock and its effect this year. He noted that it would now be 18% of average earnings—the highest for 20 years—but that there was evidence to suggest that some people would need more as they neared retirement age, and worryingly thought they would get it. I do not have an immediate response to that, but as he acknowledged, it is one of the reasons why it is important that we are taking steps towards the single tier and auto-enrolment. While these measures will not benefit people who are already at or about to enter pension age, we are seized of this issue and are tackling it as a longer-term issue.

While we are on the pensions issue, the noble Lord, Lord McKenzie, referred to the triple lock. He was trying to question whether it was really as beneficial as we believe. I am surprised that he raised that question. It has delivered this year. As I said, it has come into effect for the first time and is above inflation and earnings. As he knows, it has been the policy of successive Governments to use the inflation figures of the previous September to determine the rates for the following year. We have done nothing other than what all Governments do, which is to use the September figures. The September figures were 2.2% inflation, and that is why we introduced the triple lock this year: so pensioners have benefited. That is a good thing and we are pleased about it.

My noble friend Lord German asked a question that he said he had asked earlier this week, when we were debating the Bill, about the consistency of personal allowances across the various benefits. That was echoed by the noble Lord, Lord McKenzie. I can do no more than restate what I said when were debating this then. Personal allowances across income-related benefits for working-age people create the basis for the way our current benefits form a consistent means test across the income-related benefits. If we were to treat different benefits differently in terms of their personal allowances, there would be no clear level of income at which state support via income-related benefits is set and at which access to other help, such as prescription charges or free school meals, would be available across a wide range of services. At a time when we are trying to simplify the welfare system, it would seem strange to introduce an additional layer of complexity for those who are seeking to use the benefit system and for the way we operate it because that would attract additional costs.

My noble friend Lord German also asked about guidance and leaflets that are issued to pensioners. Benefit recipients and pensioners are notified of their new provisional rates following the announcement of those rates by the Minister for Pensions in his Oral Statement. That needs to happen over a number of months because of the volume of notifications and because we need to make an advance claim to basic state pension. It is useful for recipients to have early notification of provisional rates, and it has been the practice for some time.

The noble Lord, Lord Kirkwood, raised a few points that were echoed in slightly different terms by the noble Lord, Lord McKenzie. My noble friend Lord Kirkwood said that he came today because he does not like to miss uprating statements and has been to every one for the past however many years. I hope I do not disappoint him. This is my first, so I have a lot of catching up to do. He made the point that these orders are different from anything that he had seen before, but he acknowledged the economic conditions that we are in and that they are an important reason why we are in a different situation from that of previous uprating statements that he has contributed to. He asked what might happen for people who are exceptionally poor or who might over time be affected in ways that at this stage we may not be able to anticipate. The noble Lord, Lord McKenzie, echoed some of that in his remarks.

I shall make a number of points on this. It is important for me to restate that some of the measures that we are taking today will have an immediate impact on people in a way that we would not want them to have, but we think that all the measures that we are taking both here in the order today and in the Bill contribute to the longer-term plan and strategy to make sure that we deliver a better economy for everyone.

15:29

Alongside that, we are also making significant reforms to the welfare system. The introduction of the universal credit this year and the various initiatives as part of that will ensure that work always pays and that lower-income families receive the support that they need. By making these different decisions, we will strengthen the economy and increase the number of job opportunities —1 million jobs have been created in the private sector over the past couple of years—and there are things that we are doing in addition to these measures to make sure that there is a positive future for people.

My noble friend Lord Kirkwood raised the issue of child poverty, as did the noble Lord, Lord McKenzie, and I shall make a couple of points in response. My noble friend asked how we are keeping these issues under review in the context of the long-term effects of some of these changes. In addition to the measures within the Child Poverty Act, Alan Milburn and his Social Mobility and Child Poverty Commission will carry out an annual review of the Government’s activities in regard to the requirements set out in that Act. The first review will happen this year and will ensure that we are subject to proper scrutiny. We want to ensure that we protect people, and if anything we are doing puts anyone at risk we need to know about it. Those are the kind of arrangements that we are putting in place.

[Lord McKenzie of Luton]

What is the Government’s assessment of the effect that the measures in this order, let alone those in the uprating Bill, will have on vulnerable people? Have the Government concluded that it will have no effect or an adverse effect? If it is as the Minister has said and the Government are mindful, as I am sure the noble Baroness is, of not pushing people into poverty, what will be the effect of this order?

[Baroness Stowell of Beeston]

I was about to remind noble Lords that we have carried out an impact assessment of both the order and the Bill on child poverty. That is in the public domain. However, we cannot consider only the impact of these welfare changes; other dynamic changes are being made that will have an effect on child poverty. For example, the introduction of universal credit is expected to lift up to 250,000 children out of poverty. There are varying ways of looking at its impact on child poverty. We want to make sure that it is done in the round and that it is not considered in a one-dimensional way. We are very much seized of this issue and take it seriously.

My noble friend Lord Kirkwood asked about the GAD report. GAD has said that the balance of the national insurance fund at 31 March 2014 is expected to be greater than one-sixth of the amount of benefit payments in 2013-14 and that there is no immediate need to address the fund balance. We welcome this statement. GAD has also said that there is no immediate need to do anything to address the risk of the fund falling below the one-sixth threshold. It will review the situation again in a year’s time.

There were other points that the noble Lord, Lord McKenzie, made which I have not covered already. He asked about various costings. I think that he asked about statutory maternity pay and the WRAG component. I will have to write to the noble Lord with the details of that. He also asked for information on the average time that people are on ESA—the work-related activity group. Fewer than half of new ESA claimants are on the benefit for a year, but perhaps that is something else on which I could write to the noble Lord with a little more background.

The noble Lord, Lord McKenzie, also asked me—I may not have had an answer through on this; sorry, I have it here—which benefits are not covered by this order but are in the Bill. I think he was asking whether there was any inconsistency. He is right that this does not include tax credits; there will be a separate order on them, which should be coming soon. I think the only other significant difference between the order and the Bill is on child benefit.

[Lord McKenzie of Luton]

I also asked the related question of whether there is anything that is not uprated by only 1% for a CPI amount.

[Baroness Stowell of Beeston]

That would include child dependency increases and capital limits, but I think I will have to write with a full list on that one.

The noble Lord, Lord McKenzie, asked about the 1.5 million pensioners who will see a loss from the savings credit measures. The pass through to the triple lock is a cost-neutral measure: 1 million people gain an average of 50 pence. They are the poorest pensioners, but as this is cost neutral some will obviously see a smaller cash increase. One-and-a-half million pension credit claimants will see this smaller cash increase, which is on average about 35 pence. We have done this to provide protection for the poorest pensioners and ensure that they see the cash increase from the triple lock. As I said at the beginning, my main point here is that this order ensures that the poorest pensioners receive the proper entitlement to that triple lock and get its full benefit. As I have said, I will respond to any outstanding questions that I have not covered in writing.

In conclusion, my main point is that this uprating order is one for the long term, but it is critical to have regard to those who will be affected by the order today, and we have done that. I have already explained that we are spending an extra £2.8 billion on uprating pensions and benefits in 2013-14, enabling us to protect key benefits and vulnerable groups, but we are also taking decisions that will matter to all families in the years to come. Those decisions will help us to secure a better economy and a better future for everyone. That is something which I hope all noble Lords can support and it is on that basis that I commend these orders to the Committee.

Motion Agreed.

Social Security Benefits Up-rating Order 2013

Thursday 28th February 2013 Grand Committee

Considered in Grand Committee

15:39

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do report to the House that it has considered the Social Security Benefits Up-rating Order 2013.

Relevant document: 18th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

National Employment Savings Trust (Amendment) Order 2013

Thursday 28th February 2013 Grand Committee

Considered in Grand Committee

15:40

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do report to the House that it has considered the National Employment Savings Trust (Amendment) Order 2013.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments.

[Baroness Stowell of Beeston]

My Lords, I am pleased to introduce this instrument, which was laid before the House on 15 January. I am satisfied that it is compatible with the European Convention on Human Rights.

As noble Lords know, NEST was established to support automatic enrolment. It is a trust-based, occupational pension scheme, and the NEST order and non-statutory rules act in the same way as a trust instrument. The NEST order was set in March 2010 and NEST has been operational since July 2011. Like any other pension scheme, occasionally NEST’s operating framework will need adjusting. Since 2010, there have been a number of changes to automatic enrolment legislation which impact on the order. In addition, live running of NEST has highlighted that some provisions in the order are unclear or do not operate as intended. The changes in this order were requested by the NEST trustee. They will allow NEST to focus on its key remit: to support automatic enrolment and provide clarity to employers and members who use it.

I shall now summarise the changes. To give smaller employers more time to adjust, we have extended the staging period for implementing automatic enrolment. We are therefore extending the period during which NEST has discretion to defer admitting self-enrolling members—for example, the self-employed—until 1 March 2018. This will enable NEST to focus on helping employers to meet their automatic enrolment duty.

We have removed the duty for employers to automatically enrol jobholders who are also qualifying persons as defined by the Occupational Pension Schemes (Cross-border Activities) Regulations 2005. However, NEST is not able to decline contributions from a member who, because of a change in circumstances, later becomes a qualifying person. It could be costly to accept contributions from a qualifying person. This would require NEST to ensure that it met the pension regulations of another EEA state. It is important that NEST remains a low-cost scheme for its target market, so this order allows NEST to decide whether to continue to accept contributions in respect of members who become qualifying persons or qualifying self-employed persons.

In practice, employers may want to cease participating in NEST, for example, when an employer changes pension provider. This order allows employers to terminate their participation in NEST and includes a consequential amendment to the definition of participating employer. Members admitted through employers are not required to sign terms and conditions. NEST is obliged to admit self-employed individuals to membership, but the order requires them to sign terms and conditions. We are therefore removing this requirement to bring the admittance process into line with other members.

The current description in the order of who can contribute to a member’s account is unclear. We are making an adjustment to that description to ensure contributions from third parties—for example, a member’s relative—will be accepted. We do not want to place unnecessary burdens on employers to process refunds of contributions not made through payroll, so this order allows the trustee to refund third parties or members directly.

Regarding minimum contributions, all contributions made by an employer count towards the annual contribution limit. Where a member of NEST has multiple jobs, NEST must accept minimum contributions from each employer. The quality requirement in Section 20 of the Pensions Act 2008 sets minimum contributions, which are currently 8% of earnings between roughly £5,500 and £42,500. Regulations now also allow for an alternative quality requirement, known as certification. The minimum contribution under the alternative requirement is one of 9% of basic pay, 8% of basic pay where basic pay is at least 85% of total earnings taken in aggregate, or 7% of total earnings. This order makes it clear that minimum contributions capture both the Section 20 and alternative quality requirements.

15:45

On survivor benefits, I am sure that noble Lords will understand the importance of NEST being able to respond quickly to pay benefits to a deceased member’s closest relations. The order removes the requirement for the trustee to consider next of kin as strictly defined by rules applicable in England and Wales, Northern Ireland or Scotland. Like other schemes, it allows the trustee to decide to whom to distribute benefits where a deceased member’s account has under £5,000.

Finally, the order corrects some minor inaccurate cross-references. I hope that noble Lords will see that a range of different amendments is brought into effect via this order but it is a series of technical changes. I therefore commend the order to the Committee and I beg to move.

[Lord German]

My Lords, I have only one question in relation to the changes in this order. I suppose that I should declare an interest in that my wife works for a small charity which is seeking to become a member of NEST for its employees. However, I do not think that I really have an interest in the sense that I am relating my question to the technical change removing the requirement for the trustee to consider next of kin. Therefore, it is a general question rather than being specifically about me.

The Explanatory Memorandum talks about rules, with a small “r”, in England and Wales, Northern Ireland and Scotland, but further on it talks about doing something differently in accordance with Rules with a capital “R”. In terms of next of kin, what is being changed here in respect of those to whom payments should be made? Why is there a £5,000 limit on death benefits being transferred, and what Rules, with a capital “R”, will apply when the trustee looks at the question of those to whom they should pay sums of less than £5,000?

[Lord McKenzie of Luton]

My Lords, I thank the Minister for introducing this order and I say upfront that we will be supporting it. Perhaps I may revert to an item touched upon by the noble Lord, Lord German, which I was going to raise in our previous debate concerning people’s expectations of pensions, the importance of auto-enrolment and certainly the importance of NEST as a key component of that. When the Turner commission looked at the prospect of auto-enrolment and how employer pensions were to be organised in future, I think that the criteria around contribution levels and the band of earnings to which they applied were struck so that over a working lifetime the required level of replacement earnings would be produced. I am bound to say that with what has happened to the band of earnings, contribution levels have not shifted. I have not seen an update of that calculation and I do not know whether there is one—I think that it is an adjunct to this order—but if there is, it would be interesting to see it.

I have one or two questions in respect of some of the detail. We understand why the discretionary period to allow self-enrolling members to be accommodated is necessary, but can the Minister update us on the current elongated process for enrolment? I do not have that fully in my mind. What is the position of new self-enrolling members at the end of that period? Do they have an unfettered right to enrol? Perhaps we can use this occasion, given that NEST has been up and running for a little while now, although with regard to auto-enrolment larger employers are involved first, to find out whether we have any early numbers for the employers and employees who are enrolled.

We support the lifting of the obligation dealing with cross-border obligations and the other essentially technical amendments. I have a small point on terms and conditions. The Minister said that the proposed change would mean that self-enrolment individuals, as others, do not have to agree to members’ terms and conditions, so what is the purpose of those conditions? What relevance do they have? As for multiple jobs, again we support the change that has been outlined, but what is the position on multiple jobs within the same employer group? There is a maximum of 4,400 but, if that can be exceeded and there can be multiple jobs, are there any constraints if those multiple jobs are within the same group, possibly on a specifically organised basis to circumvent the limit?

With those few small inquiries, I say again that we support the order and are pleased to see that NEST is making progress.

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Lord, Lord McKenzie, for his support for this order and, indeed, for the support from my noble friend Lord German. I will try to respond to a few points, but I must say straight from the start that I will probably have to write to the noble Lord on many of his queries. This being quite a technical order with quite a lot of associated technical questions, I am afraid that I know my own limits. This one might take me beyond them, so forgive me from the start if I have to follow up in writing.

The noble Lord, Lord McKenzie, asked me for the latest figures about membership of NEST. I have those in front of me. It has been operating since July 2011 and automatic enrolment commenced, as we know, in October last year. We estimate that by the end of staging it will have 2 million to 4 million members and 750,000 participating employers. To the end of January, NEST has more than 200 participating employers, around 45,000 members and a little over £2.2 million in assets under management.

The noble Lord, Lord McKenzie, asked, in going back to the last debate that we had on the last order, about the percentage of average earnings that people will accrue as they enter retirement. If there is anything more that I can say on that, I will have to follow up in writing.

The noble Lord, Lord German, asked about next of kin and what is happening there. The requirement for NEST to have to consider next of kin is in line with the Administration of Estates Act 1925. In Scotland, a person is entitled to moveable estate on intestacy. These are very specific; the change allows NEST to determine who to pay survivor benefits to. The rules with a capital “R” are the NEST rules that support the order. On why the trustee’s discretion to pay survivor benefits is applicable to pots only under £5,000, the Administration of Estates Act specifies a limit on the amount of property allowed to be disposed of on death without the necessity for probate or other proof of title. That limit is currently £5,000.

The noble Lord, Lord McKenzie, asked about the position of self-enrolling members after the staging period. They will be able to join NEST, as NEST has an obligation to accept them. He also asked about what he described as the elongated staging profile. Currently, large employers have staged and medium employers will become subject to the duty from April 2014. Smaller employers will become subject to the duty from June 2015, and all employers will be in by February 2018.

The noble Lord, Lord McKenzie, also asked whether there is an update on the calculation of contribution levels. I think I am about to answer something that I promised to write to him about. In the hope that this answer will mean a shorter letter, if not another letter, the qualifying earnings band is from about £5,500 to about £42,500. A revision order has been laid in draft and will be debated shortly. The noble Lord is correct in saying that the contribution rates remain as in the 2008 Act.

[Lord McKenzie of Luton]

That is very helpful. I am specifically interested to see, if it is available, what that would mean if one revisited the original Turner commission’s calculation to see what, over a working life with that earnings band and those contributions levels, that would be likely to give in terms of the level of replacement income for somebody about to retire. There was a specific calculation that drove many of these parameters at that time. If there is no update, it is of no great moment, but if there is, I would be interested in seeing it.

[Baroness Stowell of Beeston]

If there is anything available that I am able to provide, I will do so. The noble Lord also asked whether there were any constraints on minimum contributions within the same job. Where there is an upper limit on contributions into a scheme, however expressed, the scheme can still certify as long as the upper limit could not result in contributions that are less than those required by Section 20. I think I am right on that one.

Since I have run out of pieces of paper in order to try to respond to the questions that noble Lords have generously put to me today, I will conclude by saying that I am grateful for those contributions. The changes in this order are consequential, minor and technical. They are deregulatory and will ensure NEST continues to operate efficiently for employers and members who use it. NEST is critical to the success of automatic enrolment. I am grateful to noble Lords for their support today. I commend this order to the Committee.

Motion agreed.

15:59

Sitting suspended.

Vocational Education

Thursday 28th February 2013 Grand Committee

Question for Short Debate

16:00

Asked by

[Lord Lucas]

To ask Her Majesty’s Government what is their assessment of the report by City & Guilds Centre for Skills Development, How to Teach Vocational Education: A Theory of Vocational Pedagogy.

[Lord Lucas]

My Lords, it has been widely acknowledged that we have a problem as a nation with the quality of the teaching of vocational subjects in further education. The most recent example and proof of that has been Ofsted’s refusal to grant outstanding status to any FE college, although I believe there is one going through the process now. I am being told that it got it, which is wonderful. That news had not reached me. It would certainly be a first, and a very welcome first. So we know that we need to improve the quality of our vocational education teaching.

Vocational education is not an easy thing to teach. There are demands for a high-quality outcome. Most of these courses are intended to produce someone who will be an employee or craftsman of high quality, and we need a high-quality system and a high-quality foundation to get them there. That is why I am very pleased to be able to draw attention to this report from the City & Guilds Centre for Skills Development. I declare an interest as a member of its advisory board. By foundation, I mean not the main foundation, but one of the stones in the foundations of a high-quality vocational education system because we ought to base the way that we are teaching vocational education on a sound pedagogy, on a sound theory of how vocational education is best taught.

I find this document extremely readable and lucid. It is just a beginning. From here, it will go on to be discussed with employers and teachers. It will find its way through a process that is at educational rather than political speeds, so I suspect that it will take a year or two to get to the point where it is not just a theory of vocational pedagogy but a practice and something with some well consulted background.

By way of illustration, I draw particular attention to page 47 of the report, which looks at the structure of the outcomes that one is aiming for from a well organised vocational pedagogy. It looks at the skills that one would expect a plumber to have, starting with routine expertise. It states that, if a boiler requires an annual service, the plumber,

“is familiar with the make and model and runs through a routine process of checks to ensure the boiler is safe and working properly”.

Beyond that, the plumber requires resourcefulness because the boiler may be exhibiting some strange symptoms. You want the person who has passed out of a vocational course, once they have tried the obvious solution, to consider alternative courses, to think carefully about what they might be, to investigate and to try alternatives. One also wants the plumber to have what you might call “functional literacies” so that they can handle language and interpolate between technical language and the level of comprehension of clients, so they do not just spout jargon at customers but can explain in their language what is wrong with their boiler and what needs doing.

We want craftsmanship, which we often look for in vain. It is such a delight when one comes across a builder who really cares about what he has done, who takes joy and pleasure in a job well executed and in having done something right that will last. That is going beyond just doing the job; it is being able to do something relatively simple and routine a great number of times and still take pleasure in a job well done at the end. It is a matter, too, of business-like attitudes: to have a proper relationship with the client and know that he has often relied on your assistance; to do something little free of charge; and to build a long-term relationship. Beyond that, people need to develop wider skills and resilience to build on their qualifications to go further in their career, to have determination to refuse to give in, to know how to look for resources beyond their own immediate understanding and to consult colleagues, carry out research and look further.

When we think of what we would like the plumber who calls round to look after our boiler to be, that is a pretty good set of ambitions to have for a trained plumber, and a pretty good set of resources and qualifications for a plumber to have. Based on that, you can hope for a secure life if you choose to stay as a plumber, or if you want to go beyond it, you have learnt a lot of skills that will apply elsewhere. One could read through that list and think that it applies pretty well to a Minister and to many other professions. Indeed, one could say that it would apply pretty well to school education, although not in the context of a particular skill.

This research has led to a good place. It resonates for me as the right answer. It obviously needs polishing and working through with employers to make sure that they recognise the skill sets that they would hope to have, with teachers to make sure that what is being said is teachable and workable, and indeed, with customers. It cannot hang as a piece of research on its own but needs to be worked at and enriched over the next year or two to produce a thoroughgoing basis on which to build a very high-quality system of vocational education. I am looking for the Minister’s supportive interest and hope that she will say that this is an initiative that the Government support and to which they will continue to pay attention. I want them to keep up communications about their own thoughts on this so that it does not go wandering off in a different direction from the one with which they feel comfortable. I feel confident of receiving that, not least because I know the Minister’s background in this area. I hope that she will have sympathy with it. I beg to move.

16:09

[Baroness Sharp of Guildford]

My Lords, I thank the noble Lord, Lord Lucas, for bringing forward this debate, which is a timely one. I declare an interest as a patron of the Institute for Learning, and as a member of the advisory committee for the City & Guilds Centre for Skills Development. It is very timely, because another committee is sitting, as I am sure the noble Lord recognises—the McLoughlin committee on adult teaching and learning in vocational subjects. In many senses, the City & Guilds report feeds into the McLoughlin committee and is seen as that, but we will get a full response from the Government when the McLoughlin committee has reported to them.

In the report now two or three years old from Alison Wolf on vocational education and training, she drew attention to the fact that we have getting on for 2.5 million young people aged 16 to 19 who are going through vocational education of one sort or another. In this country, we give a lot of attention to those who achieve GCSEs A to C, and we measure to some extent the success of our educational system by the proportion of the young people who achieve at least five and, moving forward, six GCSEs A to C, including English, maths and science. What we often fail to recognise is that something like 40% of young people, and often more, fail to achieve GCSEs and in fact follow the vocational pathway. They go on and often achieve quite highly in other respects through the vocational pathway. The Wolf report made it quite clear that these vocational programmes, if well taught, are for those young people not only a more satisfying preparation for employment and life than the GCSE and A-level route but for the country they are extremely necessary in raising productivity and meeting our skills deficit.

I put emphasis on the words, “if well taught”. The issue of the quality of teaching and learning in vocational education came to me during the making of the report that I chaired, sponsored by NIACE, the 157 Group and the Association of Colleges, in looking at the role of FE colleges and their communities. That particular report picked up in many senses the same issues as this one—namely, that FE colleges have new flexibilities. An element of deregulation has taken place, and they now have much greater flexibility to decide on their own courses. One aspect of this is the need for these colleges to be seen to serve their communities, in two senses. One is that the student body represents the community, and colleges must do the best that they can for that student body. Secondly, if they are to do the best that they can, it is important to train those young people for the jobs available in their communities. Therefore, there must be a very close liaison not only with the employers in their communities but with the other public sector bodies in their communities, such as hospitals and the police force.

It became clear, as we wrote that report and talked about the potential of colleges to provide a degree of leadership within those communities that we needed to look at a new pedagogy. The changing circumstances of further education and adult education in this world require us to look again at the whole body of teaching and what goes on there. So we need high-quality teaching and learning that moves with the times. That is why this report from the City & Guilds centre is extremely useful to have. It gives us a template on which to build and think about a new pedagogy. In itself, it does not really provide us with the pedagogy as such. The noble Lord, Lord Lucas, drew attention to the diagram on page 47.

What one learns from this is that vocational education needs to be taught within the context of practical problems. It is best when it is hands-on, practical, experiential and real world. It involves feed-back, questioning and reflection, and the application of theoretical as well as practical explanations. It needs tried and tested teaching methods—learning by watching, learning by imitating, learning by practising, and trial and error in real world situations, feed-back, conversations, listening, transcribing, critical thinking, drafting and sketching.

Picking up on the need to consider the world of vocational education and training within the changing context that we face, we must also consider the role of the internet and the increasing use of distance learning and social media. One of my commissioners was very concerned about the curriculum, in which pedagogy played quite a part. Sally Dicketts, the principal of the Oxford and Cherwell Valley College said that we need a curriculum that is any time any where. This is a vital subject. OECD recently produced a report on the UK remarking, once again, on low levels of productivity. It identifies three key issues as influencing productivity: first, and above all, investment in infrastructure; secondly, investment in R&D; and, thirdly, once again, investment in education and training. The deficit lies in training in vocational areas up to level 3 and level 4. It is absolutely crucial to our future and vital for productivity and growth in the UK that three-year apprenticeships to level 3 and the skills required at HND level should be taught well.

16:17

[Lord Lingfield]

My Lords, I add my thanks to those of the noble Baroness, Lady Sharp, to the noble Lord, Lord Lucas, for initiating this debate about a sector which is too often the Cinderella sector of education and on which, however, we shall rely, if our economy is to grow again, for the creation of a technically accomplished workforce for the future, as the noble Baroness, Lady Sharp, mentioned. I pay tribute to the noble Baroness because her work in further education is much admired throughout the sector.

I, too, declare an interest as a fellow of the City & Guilds of London Institute and as chairman of the Government’s review, Professionalism in Further Education, which was published late last year. This was conducted against the background of the Government’s policy of giving as much autonomy as possible to FE institutions, be they in the public or private sectors. I give my earnest thanks to those professionals who comprised the panel that sat with me and to the many who gave evidence to us throughout that time.

It is impossible in the short time that we have to comment on all the findings of the review and how they touch on the work of the City & Guilds, which I much admire. However, one that is hugely important concerns the occasional difficulties caused by the current funding system which requires FE institutions to work with at least two agencies—the Skills Funding Agency and the Education Funding Agency. It would be preferable, in my view, for post-compulsory education to be seen as more distinct—I know that not everyone will agree—from secondary education policy and procedures.

At the moment, FE providers are often undergoing mission drift. One of the reasons is the easier availability of grant funding for courses for the under-18s as opposed to older vocational students. In my view, a review is necessary to remove these unintended distortions from the system and to look forward to a single post-compulsory funding system with an aim of giving the highest quality of vocational education to all, whatever age they may be. I firmly believe that it is right to give the managers of our FE providers as much independence as possible. They are the professionals on the spot and they deserve the authority to match their great responsibilities. Only they should set the spending priorities of their colleges and decide the age groups which they feel will most benefit from available funds, free of central bureaucratic controls and constrictions.

However, autonomous institutions have to have touchstones of quality against which they must measure themselves, and I welcome the Government’s acceptance that there should be created a royal chartered body to which colleges and other providers can apply for corporate membership. They would be admitted on criteria concerned with the high quality of their pedagogy, their governance, their financial management, their results in the qualifications that they offer to the young people and their response to the autonomy on which the Government’s policy is currently founded. Institutions admitted would thus enhance their status and perhaps earn the freedom from inspection already granted to a few—a very few, as we have heard—outstanding colleges. It seems to me essential that the credibility of such a royal chartered body and its potential to raise the professional standing of all who teach in its member institutions will be secured by eventually placing it at arm’s length from government, for it will need to be both professionally authoritative and independent. It will need to take into important account the words to me last year of a young FE lecturer. He said, “I have two interwoven careers to develop: first, I am a teacher and I want to learn the very best pedagogical techniques to let me enable my students to learn at the highest level. But, as importantly, I am an automotive engineer and I want to ensure that I keep absolutely up to date in current practices. It is no good being a good teacher if I am teaching the mechanical techniques of five years ago”. This is touched on, on page 25 of the City & Guilds report. It is hugely important and I hope that central to the mission of institutions in membership of the proposed royal chartered body will be a total commitment to the professional updating and development of their staff.

Further education, as the City & Guilds report implies, is the most diversified of our sectors and that is one of its strengths, but it also can be one of its weaknesses, for, as we have heard, it is estimated that it deals with some 3 million students each year studying for an incredible 17,000 or so vocational awards. Alas, such a plethora is rarely understood by students and particularly not by employers. Some clear rationalisation is needed and, in my view, we need the establishment of a simple set of high-quality benchmark qualifications readily understood and valued by all.

My review found some superb practice within the sector. The reforms which I have just outlined would help to spread this much further and help this country to outperform its competitors in today’s extremely difficult economic environment.

16:24

[Lord Addington]

My Lords, when I saw that this debate had been tabled, I initially put my name down for one reason—to have a slightly more detailed dig about the development of, for instance, those with special educational needs and their way into further education. That was as a result of my experience of dealing with the new apprenticeships and the problems there associated with dyslexia, although apparently there are problems with dyslexia in other sectors as well. However, as I started to read through the report, I was also convinced that I should put my name down to speak because of the use of the term “coaching”. I know rather more about coaching in relation to sport than I do about coaching in relation to any aspect of further education, but I appreciated that it was a new way of learning and one that I knew something about. It involves a different process of imparting and using knowledge and teaches people how to apply that knowledge.

My noble friend Lord Lucas started with examples of trying to make training appropriate. The example we use in the documentation is a plumber. You take information, you approach how it is integrated and you go back and through. My very distant noble kinsman Lord Lingfield spoke about keeping people up to date, making sure the information is ongoing and how to learn and approach others. This approach is more appropriate for people who are not really designed for being in a classroom receiving facts and figures, which surely must be one of the primary differences between further education and the schoolroom. The connection between the two and acknowledging that there are differences between them is a very positive step forward. You create a different learning process to which those who have not enjoyed school or had great success there will find themselves more open, particularly if this different approach is explained to those on entering it.

The briefing for this debate mentioned the Wolf review. I became less happy with aspects of it, particularly going back to the insistence on GCSE passes when we brought in apprenticeships under the previous Government. I remember hearing that employers want people who can pass English and maths, but they also want people who do not put in for overtime, do not have time off, do not have children who get sick and so on. They really want people who will turn up and work for nothing; they have no right to expect that. They have the right to expect somebody who will able to do the job at least competently, who has a decent approach to what is coming next and who will not be rude to clients and fellow workers. That is what they have a right to expect.

Although City & Guilds has done good work, it is one of the bodies I had disagreements with. I discovered considerable resistance to the idea that you could change the way exams are taken. It had to catch up with the fact that the rest of the education system acknowledges things such as dyslexia, dyspraxia and dyscalculia and allows people to take qualifications and different ways forward. One example of that is telling people that they cannot have differently formatted online exams for security reasons. It might be a bad thing if somebody gets hold of the answers in advance, but it is not a nuclear strike. Other examination bodies, such as universities and GCSE and A-level boards, manage this process consistently and have done so for years. How are we going to make sure that the further education sector gets itself more up to date on taking on a mass group and giving meaningful qualifications, and how you let those people in?

The groups that I am talking about should be over-represented in the general population in this process of education. Let us take dyslexia, which is the biggest group; it affects 10% of the population. The first example I saw of somebody failing in a skill that requires using your hands due to what was key skills then—it is functional skills now—was a hairdresser who had won an award but could not pass the English assessment. You can get a degree with dyslexia by using assistive software. It is available for free on the phone I have on the desk in front of me; that is how common it is. I draw attention to my interests in the fields of both technology and dyslexia, but they are both predated by my interest in this subject—or my interest in the subject predates them. I am sure that Hansard will have fun with that.

However, the further education sector has to grow up and become part of the mainstream about bringing these groups in. It has not done very well as a starting point. If we could hear from my noble friend that she can build on what she said at Question Time today about making sure that they all take on board the fact that they must bring in these people, I would be a much happier person. This was not a confrontation I looked for and it was one which I thought would be over and done with by now. I have on one occasion had a Minister of State shouting at officials, “Sort it out, it’s ridiculous”. That was nearly 18 months ago. There does not seem to be an embracing of the fact that we have a legal framework that says that those with hidden disabilities should be brought into the mainstream. They should not be left on the side.

We do not want to create a situation where more people find greater difficulty with employment because they cannot access the very basic and fundamental forms of qualification, which we need now in finding employment—or at least to change employment frequently, as we seem to have to do. Unless we can start to address this and work it in with that very welcome change towards coaching and a more flexible approach to learning and teaching, we will just create more problems. I hope that my noble friend will be able to give me a positive reply. Indeed, I hope that the noble Lord, Lord Young, will give us an idea about where he thinks it should develop, because I recognise his expertise in this field as well.

16:32

[Lord Young of Norwood Green]

My Lords, I, too, thank the noble Lord, Lord Lucas, for ensuring this debate. If nothing else, it forced me to look up “pedagogy” and find out what it meant. I thought I knew but that, being a fully paid-up member of “Pedants are us”, I had better know the precise meaning. I am also grateful to the City and Guilds Institute, for two reasons. First, the only qualifications I have are from it, so I have some reason to be grateful to it. Secondly, I am grateful for the report, although when I looked at its equilateral triangle that promised to identify the three types of vocational education I did not quite understand it, so it is back to the drawing board for me.

I was tempted to ask the noble Lord, Lord Lucas, for the name of the plumber. If he was as good as that, everybody would want him. Unfortunately, not all of them measure up. I remember seeing a television programme which showed far too many of them saying, “Your boiler’s had it and you need a new one”, when it actually had quite a simple fault. Of course, a plumber these days is not just a plumber. A plumber is required to have knowledge of electronics and chemicals, plus the basic plumbing techniques, so I do not knock that.

My party’s approach to vocational education is, briefly, that we want to develop a transformational 14 to 18 education system featuring a quality technical baccalaureate at 18 for those achieving a rigorous vocational qualification, a work experience placement and achievement in English and mathematics. That is taking into account the point from the noble Lord, Lord Addington, about having different methods for those who have real problems in approaching exams in the standard way. The TechBacc would sit alongside those A-level programmes. We want more and better vocational education up to 18, with all young people undertaking some vocational learning from 14 and compulsory work experience for all 16 to 18 year-olds. I am rushing this because we have only a short time.

One of the smarter things that we did in Government was, I felt, that instead of raising the school-leaving age we raised the participation age. All Governments make mistakes, but I thought that was a good one. One of the mistakes we made was in picking a random figure and saying, “We want 50% of young people to go to university”, which somehow implied that the other 50% had failed in some way. Eventually, we realised that that was not the case and we put a lot of effort into both FE and apprenticeships, but I feel that it was a sort of catching-up process.

There are many of these reports but, looking at the Government’s response to the Wolf report—whether or not we like every aspect of it—it was a significant report. The Government identified a number of things that they felt were failures, and I agree with them. They include perverse incentives created by the performance and funding systems and encouraging the teaching of qualifications that attract the most performance points or the most funding, not the qualifications that support young people to progress. I saw evidence of that in my brief ministerial career, so I do not in any way blame it on this Government—we are all on a journey trying to improve quality. The failures also include students without a solid grounding in the basics being allowed to drop the study of English and maths. We know that they cannot do that. Many potential employers say, “If they want to progress, they’ve got to have a basic grounding in those subjects”. Therefore, we are looking to improve the quality of FE, and we know from the Ofsted review that it needs to be improved.

I was attracted to the point that the noble Lord, Lord Lingfield, made about giving institutions more autonomy. However, with autonomy comes responsibility. Before he said that, I thought that I would not give them autonomy unless they came up to a certain standard. The noble Lord then went on to talk about the royal charter, which I think is a good approach.

When you go into FE colleges—and I have visited quite a few—you can see that when they work, they work really well. One college that I went to had a department dealing with painting and decorating. It worked well because the college had managed to attract a local painter and decorator who ran a highly successful business. It had initially lured him into the college on the basis that he would be coaching, but it trained him in teaching and he created a fantastically successful department. I instance that because we need all colleges to have that relationship with the business community, as the noble Lord, Lord Lingfield, mentioned, as well as the local community.

In the brief time available to me, I want to touch on a couple of other things. We have a concern about the looming introduction of FE loans for all courses at level 3 and above for those aged 24 and over. There is already some evidence that that might prove to be a disincentive. We live in a society where we know that people are not going to retain one job throughout their life and that they are going to have to retrain, and that is something that the Government may need to reflect upon.

Something else identified in the Wolf report is that we can have the best further education but if it does not lead to work experience and apprenticeships then we are in trouble. It is not that the Government are not focused on apprenticeships—I pay tribute to some of the work they have done—but there is still some way to go on quality. Just quoting numbers is not enough, as a lot of the figures relate to adult apprenticeships. The area where I think we need to focus is the 16 to 18 age group, and I say that because of youth unemployment. Although the unemployment figures may be coming down, youth unemployment is still a serious problem. The number of firms employing apprentices is still pathetic. I think that only about a third of the FTSE 100 companies have apprenticeships, and the average is somewhere between 4% and 8%. I fail to understand why the Government do not insist that if you want a public procurement contract, you have to specify the training and the number of apprenticeships. I have just been invited to a Crossrail apprenticeship award event. Crossrail has 400 apprentices because we insisted on it, and the same applied to the Olympics. I do not understand why the Government will not go down that road.

We are in an ever-changing environment—the noble Baroness, Lady Sharp, mentioned further education, distance learning and social media—but we are also in an era when UTCs are on the scene. One question that I used to ask when I went around schools, colleges and universities was, “How many apprentices do you, as an institution, have?”. Often I might as well have asked them how many people from their college had landed on Mars because they did not seem to understand that it is no good teaching about apprenticeships if you do not have any yourself. It is important to encourage them to recruit not just as one school or one college but together as a group. We have ATAs and group training associations, which have been identified in the government report, and every local authority ought to ensure that GTAs operate within their area working with schools, colleges and further education colleges. They are part of the solution to this problem but we have a long way to go.

As part of the Lords outreach programme, I will be speaking to some sixth-formers tomorrow. They are all bright-eyed and bushy-tailed, and we cannot help but think that they are about to face reality. They will be trying to enter the world of work, assuming that they do not go on to university. Even those who go on to university are now wondering whether it is the right journey. We have a huge challenge and responsibility. We cannot afford to fail to create not only apprenticeships, which are fundamentally important, but work experience. If further education colleges are able to apply their pedagogy in an environment that will produce results, they must be able to give confidence to young people that they will find work and work experience out there. Those are some of my brief reflections. This has been a very worthwhile debate, and the subject merits a much longer debate at some time in the future when we can pursue some of its complexities. I look forward to the Minister’s response.

16:41

[Baroness Garden of Frognal]

My Lords, I am grateful to my noble friend Lord Lucas for initiating this debate. Vocational pedagogy is an issue seldom discussed in your Lordships’ House, but it is a legitimate area of concern for both the House and the country.

I declare an interest—a number of interests have been declared in this debate—in having been associated professionally for more than 20 years with City & Guilds, and it was the City & Guilds Centre for Skills Development that produced the report under debate. It is clear from reading How to Teach Vocational Education that the institute maintains its standards of expertise and insight in relation to vocational teaching and assessment. It has been tremendous this afternoon to hear people coming from all sorts of backgrounds talking with the same enthusiasm and passion for vocational education.

I can assure my noble friend Lord Lucas that the Government welcome the report and the evidence that it provides to inform the work of the Commission on Adult Vocational Teaching and Learning. The Government are not alone in this. Both the Institute for Learning and the Learning and Skills Improvement Service have also applauded the report as a valuable contribution to work on this theme. As the originator of the Good Schools Guide, my noble friend Lord Lucas is fully aware of how fundamental standards of teaching are to eventual learning outcomes. What constitutes good and effective school teaching is, rightly, a topic to which your Lordships’ attention is frequently drawn and on which this House can boast substantial expertise. However, too little attention has been paid both in government and in the education sector as a whole to the quality of the education and training offered to young people and adults after compulsory school age.

Teaching adults and teaching vocational subjects call for different skills and present different challenges from those required in school classrooms. For example, learners’ ages may vary from 14 to over 90. The experience they bring with them may be as a complete beginner in the subject, as someone working towards a first step on the career ladder or as someone who may have worked in an area for years and is looking for the certification required for career enhancement. They may also want to learn for personal satisfaction, and that, too, is worth while. The task of teaching children successfully is hard enough, but the range of variables with which teachers of adults must cope potentially extends so much more widely. They tend to be better disciplined, which I suppose is one of the advantages of teaching adults, and their motivation tends to be higher than for those still of compulsory school age.

Two key factors have a bearing on the quality of the results that vocational education produces. First, there is the standard of qualifications to which it leads and the degree of confidence that employers have in those qualifications. My noble friend Lord Lingfield mentioned the importance of benchmark qualifications and the ease of understanding quite what the qualifications represent. City & Guilds, as befits an organisation founded by the livery companies and the Corporation of the City of London, has been delivering these since 1878. In the aftermath of the Wolf review, this Government have sought more and better ways to encourage more employers to become involved in the design and delivery of vocational qualifications as a guarantee of quality and workplace relevance. The noble Lord, Lord Young, gave a telling example of the local painter invigorating a class of people who were learning that craft.

Secondly, and equally crucially, there are standards of teaching and learning. For this, we look largely to the commitment and expertise of the further education sector. I echo the views of the noble Lord, Lord Lingfield, and those expressed by other noble Lords, and I pay tribute to the dedication of governors, leaders and, of course, teachers. On the comment that my noble friend Lord Lucas made about FE colleges, my understanding is that 66% of colleges are currently judged as good or better and that around 13% hold an outstanding grade, which is encouraging.

As the report makes quite clear, the sector has successfully adapted its methods to the subject in hand and to the diverse characteristics and aspirations of learners. Success depends not on new orthodoxy or dogma but on awareness and creativity. FE has responded, for example, to the way that e-learning has grown in recent years—as my noble friend Lady Sharp set out clearly—in recognition of the technology-dependent lifestyles of today, especially among the younger generation.

The previous Government took welcome steps to guarantee the quality of adult learning. I acknowledge the contribution of the noble Lord, Lord Young, to the developments and progress made during that time. The coalition Government are building on that but, equally, we are trying to tackle the bureaucracy. We believe that one of the most useful sources of expertise is to be found among teachers and so, rather than impose central targets, the Government’s most effective role is to help the sector to identify and share good practice wherever it exists. We can see from the report that those directly involved in further education, individual learners and their eventual employers will all be the beneficiaries of high-quality teaching leading to high-value qualifications.

As noble Lords will know, the Government announced in December 2011 that they would establish a new Commission on Adult Vocational Teaching and Learning under the chairmanship of a distinguished college principal, Mr Frank McLoughlin CBE. My noble friend Lady Sharp made reference to this. Input to the review came from a wide range of sources, including this valuable report and, crucially, real-life observation of adults learning.

The main findings, influenced by this City & Guilds research, concluded that vocational education and training programmes should be characterised by learning with a clear line of sight to work, and that specialist vocational teachers and trainers should be at the heart of this system. To ensure that knowledge and skills are always current, strong links with employers should be maintained and further developed. In connection with this, following the review of professionalism of the noble Lord, Lord Lingfield, the Government are developing new professional qualifications for the FE workforce, and the new FE guild will take that forward.

Ofsted’s new inspection regime has a greater focus on the quality of teaching and teachers—my noble friend Lady Sharp referred to this—and will report on the contributions of colleges to their communities. As to teachers with dual professionalism, which the noble Lord, Lord Lingfield, highlighted, the commission sees this as a fundamental element of the future development of the FE workforce. Its recommendations advocate equal focus on developing teaching and ongoing professional skills. It has long been one of the strengths of the further education sector that the practitioners were also frequently the teachers, and that brought reality and relevance to their teaching of students.

The commission will also set out the standard for what an adult vocational learner should expect and define a range of effective pedagogical approaches that make full use of the potential of technology—because, of course, technology has made an enormous difference in life.

On the points made by my noble friend Lord Addington, I recognise his concern about the requirement for people with any form of learning disability or disadvantage to be allowed to reach their full potential without any barriers which particular forms of assessment may present. I assure him that this is constantly under review. Ofqual is in regular contact with disability interest groups, to which I pay due tribute for the expertise and passion they bring to ensure that the groups they represent are not unnecessarily disadvantaged by things which could be removed.

Ofqual is looking very closely at the different methodologies for assessment. My noble friend—I know of his particular interest in dyslexia—mentioned the different ways, such as computer aids and software applications, which can enable learners to demonstrate that they can attain the standards of the qualification, albeit by a somewhat different method of assessment. The awarding bodies and, of course, the colleges have to maintain an interest in the qualifications, when they are awarded, representing a pure standard of achievement. A great deal of work is going on—and my noble friend deserves thanks for the way in which he champions disadvantage—to try to make absolutely sure that these different methods can be brought in. Many colleges already have strategies and technologies to support learners with special needs. We expect that some of the results coming out of the commission will address this, and we will have further information to support that. The websites of the Government, of Ofqual and, indeed, of the awarding bodies are available. My noble friend mentioned particularly City & Guilds. I know that all the awarding bodies have an interest in ensuring that special educational needs are met. I am sorry that he has found difficulties dealing with that, and we hope to take forward any specific cases that he can bring forward to try to ensure that those are fully addressed.

My noble friend also mentioned the importance of coaching. The other volume that comes with this report is The Role of Coaching in Vocational Education and Training, and we know how vital that is. It is always good to have a reference back to the Olympics and Paralympics in any debate, so why not in this one?

An interim report was published last December. Consultation on the commission’s conclusions is now nearing its end, with the final report due towards the end of March. The Government will look forward to considering that report and responding to it in due course, bearing in mind, of course, the development of the FE guild. With the interest in this subject around your Lordships’ House, that response may well provide an opportunity for the House to return to this vital subject at a later stage.

In closing, I again thank my noble friend for initiating a debate on this instructive report, and I thank all noble Lords who have spoken. They have brought a wide range of expertise and enthusiasm to this subject and have made incisive and informed contributions.

[The Deputy Chairman of Committees (Lord Colwyn)]

My Lords, that completes the Grand Committee business for this afternoon.

Committee adjourned at 4.52 pm.