Grand Committee

Tuesday 19th March 2013 Grand Committee

Tuesday, 19 March 2013.

15:30

[The Deputy Chairman of Committees (Baroness Andrews)]

If there is a Division in the House, the Committee will adjourn for 10 minutes.

Official Statistics Order 2013

Tuesday 19th March 2013 Grand Committee

Considered in Grand Committee

15:30

Moved By

[Lord Wallace of Saltaire]

That the Grand Committee do report to the House that it has considered the Official Statistics Order 2013.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments.

[Lord Wallace of Saltaire]

My Lords, all Members of the Committee will be aware of the important work being done by the UK Statistics Authority. This body was created in 2008 with a statutory responsibility to,

“promote and safeguard the production and publication of official statistics”,

which includes monitoring of and reporting on official statistics.

Under the Statistics and Registration Service Act 2007, statistics produced by the Office for National Statistics, government departments, the devolved Administrations and other Crown bodies are automatically deemed to be official statistics. The Act also makes provision for identifying other organisations as producers of official statistics. This is important, as it enables their work to fall within the remit of the authority and the public to have added confidence in their statistics. The purpose of this order, which is subject to affirmative resolution, is to specify these organisations.

The UK Statistics Authority has been consulted in preparing this order, in accordance with the Statistics and Registration Service Act, and is content for it to be laid. The Cabinet Office has laid this order on behalf of government departments, in preference to each department laying an order for the bodies for which it is responsible. This approach saves considerable parliamentary time.

This is the fourth use of this order-making power by a Minister of the Crown, and revokes and replaces the one that came into force on 3 December 2010. The previous order contained 57 bodies. The 2010 order was amended by Article 17 of the Education Act 2011 (Consequential Amendments to Subordinate Legislation) Order 2012. This omitted entries relating to the Qualifications and Curriculum Development Agency and the Training and Development Agency for Schools, which were abolished by the Education Act 2011. It will also be amended by the Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013, which will come into effect on 1 April. This will reflect the change in name of the Financial Services Authority to the Financial Conduct Authority, which comes into effect on the same day.

In arriving at the current order, 21 bodies have been removed from the previous order and five new bodies have been added. Much of the reduction in the number of bodies is due to the recent reforms to public bodies. As noble Lords will recall, in 2010 the Government announced plans to reform 481 quangos to help reinvigorate the public’s trust in democracy; to ensure that the Government operate in a more efficient and businesslike way; and to radically increase the transparency and accountability of all public services. A number of these changes will come into effect on 1 April this year. It is important that these reforms extend to areas such as official statistics. Therefore, some of the changes have led to the streamlining of some statistics but those most important to public life have been preserved. The longer-than-usual hiatus between this order and the previous one has been to ensure that the new order fully captured these reforms.

In summary, this order reduces the number of bodies that are subject to the UK Statistics Authority’s oversight; those bodies listed on the order will have to work to the new code of practice for official statistics; and their statistics will have the potential to be nominated for formal assessment by the authority to be national statistics. I reassure the noble Baroness that I have discovered the difference between an official statistic and a national statistic, even though it took me some time. This House agreeing the order is a vital part of enhancing public confidence in official and national statistics, and I beg to move.

[Baroness Smith of Basildon]

My Lords, I thank the noble Lord for his introduction and explanation of this order. Perhaps the only point he missed was to stress the importance of always having accurate statistics, and indeed that is implicit in bringing forward the order today. It is a sign of the times that public confidence is higher and trust is greater in statistics if they are seen to be produced independent of government, and I think we should put on the record our praise of the UK Statistics Authority and of the Office for National Statistics, which is part of the executive wing, as it were, of the Statistics Authority. In many ways, the authority acts as a check and balance on some of the important areas of the economy. It is helpful that the Statistics Authority can look at statements and figures so that the policies of all political parties can be held to account. We can ask the Statistics Authority to check the accuracy of any statement that is made.

However, this is not just about the face value of statistics, but how they are used and how they can be misinterpreted either accidentally or deliberately. We have seen that recently. The Minister may be aware that the Statistics Authority had to write to MPs. Any of us can make a mistake, and in this case it was made in a Conservative Party political broadcast on 23 January. It got into a muddle between debt and deficit, and that had to be put right. My understanding is that the broadcast said that it had gone down, but information from the UK Statistics Authority showed that net public sector debt in June 2010, the end of the second quarter, was £811 billion, which represents 55.3% of gross domestic product, and that by the end of the fourth quarter 2012 it had risen to £1,011 billion. We should thank the Statistics Authority because it is able to make corrections to statements made by politicians of any party because it has the confidence of the public behind it.

I know that the noble Lord has worked through the order and looked at the different definitions. As a former Minister who was in the same position that he is in now, perhaps I should not have been puzzled by this, but I want to ask about the Statistics Board. The order refers to consultation with the board and it is referred to in the legislation, but it is actually the UK Statistics Authority and the ONS. The only reference I can find to a board is to the Board of the UK Statistics Authority, whose membership includes people from the ONS—the chief executive, the National Statistician and the Director General. I am slightly puzzled about why the order refers to the board when the entity is in fact the authority, but I hope I am correct in assuming that the board he is referring to is the board of the authority. It would be helpful if he could confirm that.

The board was consulted and I assume that the response to the changes being made was positive. It would be helpful to have the complete list in the schedule, but 21 organisations were removed. If I understood the Minister correctly, he has already answered part of my question in his opening. Part of that arises from the Public Bodies Act, about which he will understand we have mixed views, in particular with regard to the changes being made. If those organisations are no longer able to produce official statistics, does that mean that there is now a lack of available statistical information, or has the work of those 21 organisations which are no longer on the approved list been allocated to other organisations? Are we still able to get the kind of information that was being produced? Further, is the Minister able to provide a list of the 21 organisations? It would be helpful if he could write to me.

The explanatory note also said that the charities being included as producing official statistics will have no official burden placed on them. Does that imply that they have previously produced statistics of use to government and held in public regard, but that have not been regarded as official? If the Minister can say something about that, it would be helpful.

I was puzzled to find that two organisations were not on the list. As I mentioned to the Minister, later on today we will have a debate on crime statistics. It is helpful to have this debate today to help inform that debate later on. In my reading for that debate, it was clear that the UK Statistics Authority says that there are two sources of official figures for crime statistics: one is police records from individual police forces and the other is the British Crime Survey. Individual police forces are obviously not on here, I assume because they feed information to the Home Office which then issues that information. If I am wrong about that, I would be happy to be corrected. But the British Crime Survey is not here. It is interesting if the UK Statistics Authority recognises the British Crime Survey statistics as being very useful, if not “official”—because that is a legal term. If it uses those statistics, I wonder if it would be appropriate for the survey to be on the list. Why is it not?

My final point is on another organisation that I doubt has been missed: the Office for Budget Responsibility. When they came into power, the coalition Government were clear that they wanted to see independent figures and assessment of the economy, and set up the Office for Budget Responsibility in response to that. That was widely welcomed. Yet it is not included in the list. Clearly, it is highly regarded—as is what it produces. Like the UK Statistics Authority, it is a check and balance. The Prime Minister said in a speech on the economy:

“As the independent Office for Budget Responsibility has made clear, growth has been depressed by the financial crisis, by the problems in the eurozone and by a 60% rise in oil prices between”,

and he gave the dates.

“They are absolutely clear, and they are absolutely independent. They are absolutely clear that the deficit reduction plan is not responsible; in fact, quite the opposite”.

The head of the Office for Budget Responsibility then had to write to the Prime Minister to make clear that that was not the case. He said:

“I think it is important to point out that every forecast published by the OBR since the June 2010 Budget has incorporated the widely held assumption that tax increases and spending cuts reduce economic growth in the short term”.

Clearly the OBR has the authority and credibility to write to the Prime Minister when he gets something wrong in talking about statistics and the economy, but it is not listed as an official statistic-producing body. It would be useful were the Minister able to help me understand the reason for that.

Those are the only questions I have. Clearly, it is helpful to have the list and we are obviously supportive of the order. It would be helpful to have the responses to the questions I have asked.

[Lord Wallace of Saltaire]

My Lords, I thank the noble Baroness for her constructive speech. Of course, I should have said that this is very much an all-party set of issues. The last Government introducing this new system of greater independence for statistics was a very valuable contribution to more informed debate. I am in some ways a great admirer of the Daily Mail and its uses of statistics, and the wonderful way it manages to imply that statistics mean something entirely different from what most of us understand them to mean. Usually you have to read down to the tenth paragraph on the second page to discover that actually the story is not as good as it seems. In politics, we want an independent body that can point out that statistics cannot be twisted in that way. That is what this current system most attempts to do.

[Baroness Smith of Basildon]

Just as an aside, I owe the noble Lord an apology. In the last debate we had, I accused him of being a Guardian reader. I now appreciate that he is in fact a Daily Mail reader.

[Lord Wallace of Saltaire]

I do my best to skim through several newspapers of one sort or another.

The Explanatory Memorandum for this order lists the 21 bodies that are disappearing. I know that the noble Baroness will be deeply familiar with a number of them, such as the British Educational Communications and Technology Agency, the National College for Leadership of Schools and Children’s Services Limited, the National Patient Safety Agency, the National Policing Improvement Agency and so on. In almost all respects, the functions of those bodies have now been transferred to other executive agencies and the statistics which they were responsible for producing will thus be provided by the new agencies. However, I will check to see whether there are any holes in that and will, of course, write to the noble Baroness.

My understanding is that the Office for Budget Responsibility—again, I will check this and write to her to confirm it—rather like the National Audit Office, is an independent body and is thus responsible for its own quality assessment rather than being a government agency which has to be checked by the UK Statistics Authority. Similarly, the Bank of England’s statistics are not checked by the UK Statistics Authority because the Bank is an independent body which is responsible for its own statistics and their quality. That is my understanding on the OBR, but again I will check on that.

I will have to check which agency is now responsible for providing the crime survey. I suspect that it is under the Home Office, which will therefore be responsible for it.

15:45

[Baroness Smith of Basildon]

I am grateful to the noble Lord for looking into this. As regards the 21 that were off the list, if he can write to me to clarify any gaps, that would be helpful.

I think the noble Lord will find that the British Crime Survey does not come from the Home Office. I drew a distinction between the police force figures, which I think may be produced by the Home Office, and the separate, more independent British Crime Survey. If the figures are used by the statistics authority, I wonder why they are not included in the list. I am very happy for the noble Lord to write to me on that.

[Lord Wallace of Saltaire]

I will check on that. It is absolutely right that we should use a case like this as a chance to check that reliable statistics on important matters are coming from agencies which we all respect.

Having answered those questions, I thank the noble Baroness for her comments and very much hope that the Committee will be willing to accept the Motion.

Motion agreed.

Electoral Registration (Disclosure of Electoral Registers) Regulations 2013

Tuesday 19th March 2013 Grand Committee

Considered in Grand Committee

15:47

Moved By

[Lord Wallace of Saltaire]

That the Grand Committee do report to the House that it has considered the Electoral Registration (Disclosure of Electoral Registers) Regulations 2013.

Relevant document: 21st Report from the Joint Committee on Statutory Instruments.

[Lord Wallace of Saltaire]

My Lords, in moving the Electoral Registration (Disclosure of Electoral Registers) Regulations 2013, I wish to speak also to the Electoral Registration (Postponement of 2013 Annual Canvass) Order 2013. The Electoral Registration and Administration Act 2013 received Royal Assent on 31 January. It marks the first legislative step towards fulfilment of the coalition Government’s commitment to speed up the implementation of individual electoral registration (IER) so that it takes place in 2014-15, a commitment reaffirmed recently in the Government’s mid-term review.

The principle of IER has won cross-party support. Indeed, the change to individual registration was introduced into the Political Parties and Elections Act 2009 in your Lordships’ House with cross-party support. In passing the ERA Act earlier this year, Parliament showed its intention to see the implementation done using a different plan and a different timetable. The transition to IER will begin in the summer of 2014 and the Government are planning that it will end with the publication of the first IER-only register in December 2015. I know that this is familiar to all those present as we spent a great deal of time debating all these issues. The legislation was altered in your Lordships’ House so that the end may come in either 2015 or 2016, with an order laid by the Secretary of State of the day required to conclude transition. I reaffirm the Government’s commitment to concluding the transition in 2015 in accordance with the implementation plan already published.

The two statutory instruments before the Committee today are key components of the transition to IER in preparing for the confirmation data-matching process. It is one of the important changes from the transition envisaged by the PPE Act 2009.

In their official response to pre-legislative scrutiny on IER, the Government announced that part of the transition would be a data-matching stage whereby all electoral registers in Britain would be matched against trusted public datasets. Where a positive match is made between an entry on the register and information in the dataset, that person may be “confirmed” as having an IER entry on the register because the electoral registration officer can have confidence that they exist and reside at that address. These people will not have to supply their personal identifiers—their national insurance number and date of birth—unless they move house and apply to register at their new address.

Preliminary findings from pilots of this data-matching system have been published on the gov.uk website, and suggest that approximately 70% of existing electors will be confirmed on the register through data-matching. This is slightly higher than the results of previous pilots, with results suggesting that we can be confident in the accuracy of the matching, both of which auger well for the success of data-matching in the transition to IER. Both instruments being considered today support that data-matching element of the transition in very important and practical ways.

Regulation 2 of the draft Electoral Registration (Disclosure of Electoral Registers) Regulations 2013, if approved, will allow EROs, working with the Government, to carry out a dry run of confirmation data-matching, so that we can be even more confident that the new system will work when it goes live in the summer of 2014. The regulations would enable the Lord President of the Council to require electoral registration officers to disclose the information on their electoral registers to him through a conduit specified in writing for the purposes set out in paragraph 1A of Schedule 2 to the Representation of the People Act 1983.

The conduit will be the IER digital service, which is currently being developed and will be able to carry out the secure transfers of data required for IER, including the confirmation data match. The service is not identified specifically in the regulations in order to allow for flexibility to handle risks around this data transfer, whereby any problem that arose in using the digital service could be dealt with by using a different conduit for data transfer without the need for changes to the regulations. The Information Commissioner’s Office has advised us that this is the best way to legislate for this kind of digital data-transfer system.

Regulation 2 also provides for the sharing of the information on the registers with the Department for Work and Pensions, where it may be compared against certain data held there and matched against the names, addresses and dates of birth. Date of birth is included because this is held by EROs in relation to attainers—those under 18 who will become electors during the life of the current register.

The personal identifiers that will be used as part of the verification process for IER—the national insurance number and date of birth—will not be disclosed under these regulations because they do not appear on the electoral register, with the exception of attainers’ dates of birth. This is also true of the full confirmation process in 2014, meaning that considerably fewer items of sensitive personal information will be transferred through the IER digital service and matched with DWP data than would be the case if confirmation data-matching was not being used as part of the transition to IER. Once the information has been matched at DWP, a match result will be sent back to the ERO. In the full confirmation process in 2014, this result will assist the ERO in deciding whether the person can be confirmed on the register, or if they should be invited to make an IER application.

In the dry run later this year, however, there will be no contact with electors. Instead, the EROs will have an indication of what their overall match rate for their local authority area will be in 2014, and therefore the extent to which they are likely to need to invite and process IER applications. They may also find that certain areas in their zone have lower match rates than elsewhere. In this case, they may, for example, feel that they can focus resources in areas with low match scores during the canvass period to ensure that the information on the register for those areas is up to date for the 2014 confirmation data match.

In order that this dry run and the 2014 confirmation data match can take place, these regulations would also allow local authorities to build up their IT resources and connect to the secure IER digital service in order that they can disclose their registers in the format and through the conduit specified by the Lord President, as they will be required to do Regulation 2(3). By setting up this IT infrastructure and having a dry run of the process this year, we can be confident that all the component parts are in place and all EROs are securely connected to it before the transition to IER and the full confirmation data-match in summer 2014.

Under the Electoral Registration Data Schemes (No. 2) Order 2012, this connectivity is already being set up in 22 local authorities in which pilots are being conducted. That work, under that order, will cease at the end of 31 March this year, though, and these regulations will enable it to continue in those authorities and to be rolled out to the rest of Great Britain. It is vital that this work is continued uninterrupted in the pilot areas and begins as soon as possible elsewhere, with these regulations in force from 1 April 2013.

Having described the context for the draft regulations at length, I now turn to the draft Electoral Registration (Postponement of 2013 Annual Canvass) Order 2013. The postponement of the annual canvass was also outlined in the Government’s response to pre-legislative scrutiny in February 2012. The purpose is to ensure that confirmation data-matching in summer 2014 is done using registers that are as complete and accurate as possible. We know that the completeness and accuracy of registers deteriorates over time at a rate of around 1% per month, so reducing the gap between the compilation of the register and the point at which the data are matched should improve match rates.

We announced that the canvass due to take place in autumn 2013 would be postponed so that the revised register would be published in early 2014, rather than December 2013. The draft order sets out the specific dates for the canvass and the publication, with canvass activity beginning from 1 October 2013 and the revised register being published on 17 February 2014 in England and on 10 March 2014 in Scotland and Wales. These publication dates represent the best balance between the benefits of delaying the canvass to improve the match scores and the need for electoral administrators and political parties to have the revised register published prior to local elections and European Parliamentary elections, due to take place in 2014.

The different dates for England and for Scotland and Wales reflect this point. As there are local elections due to take place in England on 1 May, the register will be published earlier there, whereas there are no such elections in Scotland and Wales so the register can be published later, as long as they are available in time to prepare for the European Parliament elections.

It is worth noting that, while 1 October is given as the date from which canvass activity may begin, this does not mean that registration officers must begin on that date. Indeed, many may feel that a shorter period, beginning in late October or early November would be more suitable for their district. By setting 1 October as the date after which canvass activity may take place, we are allowing EROs to be flexible in planning for their district. The October to February and March time frame is akin to the longest period in which we are aware of EROs carrying out canvass activity at present, from July to late November.

As set out in the Explanatory Memoranda for these instruments, formal consultation has been conducted with the Electoral Commission on both instruments, and with the Information Commissioner’s Office on the regulations. This is in addition to informal and ongoing consultation on these instruments and other delegated legislation with these organisations, as well as with the Association of Electoral Administrators, the Scottish Assessors’ Association, and the major political parties and other stakeholders.

These two statutory instruments, if approved, will play an integral part in preparing for the transition to individual electoral registration in 2014. Between them, they would set up the IT infrastructure for confirmation data-matching in summer 2014, enable a dry run of the process to be conducted in advance, and ensure that the registers used for the 2014 data-match are as complete and accurate as possible.

We have been through much of this in previous debates and, while passing, working through the ERA Act. I hope that Members of the Committee will recognise that the Government are continuing to work as well as possible, and as actively as possible, to make sure that we end up with as complete and as accurate an individual electoral register as possible, as we move through this transition.

16:00

[Lord Tyler]

My Lords, I have only a very small contribution to make, but with one practical improvement, which I hope the Minister will take back to those responsible, my contribution might be even more succinct and brief.

I am a member of the informal cross-party group of parliamentarians which advises the Electoral Commission and therefore very aware of the concerns the commission has had during this process. The Minister may know that both here, in Grand Committee, and in the Chamber I have been living with IER even longer than he has and it is beginning to wear me down. I hope that we are not going to have too many more of these splendidly erudite occasions.

My problem is the way in which consultation is undertaken. The Minister referred to the consultation with the Electoral Commission and this is referred to in the explanatory notes on the statutory instrument referring to disclosure of electoral registers in paragraph 8(1), where it reads:

“The Commission has recommended that it should be under an express duty to evaluate the confirmation trials, with a power to require those concerned to provide relevant information. The Cabinet Office and the Commission have discussed this point and have subsequently agreed that the general power to require a report, set out in primary legislation, is sufficient”.

Neither the explanatory note nor the document to which I am about to refer from the commission itself is dated; we do not know which comes before which. If that was the conclusion of the consultation with the Electoral Commission, it is therefore surprising that in the last few days those of us who are interested in these matters received directly from the Electoral Commission a document saying the following:

“We have asked the Government to confirm that it will request the Electoral Commission to evaluate the confirmation trials … in the debate on this Order in the House of Commons on 11 March, the Government did not give such assurances. The Commission cannot undertake the necessary evaluation without a direction from the Government. The Government should confirm that it intends to require the Commission to prepare a report under Section 53(6) of the Representation of the People Act 1983 on the operation of the confirmation process trials under these Regulations”.

My noble friend has laid great stress on the importance of these confirmation trials; I entirely agree with him and endorse everything he said. Who though will judge the validity of those trials if it is not the commission? As I understand it, from this brief from the commission, which as I say is not dated either, I do not know which comes before which. Was there a happy and successful conclusion to the discussions between my noble friend’s colleagues and the commission or was there not?

I am afraid the same problem arises under the other draft statutory instrument that we have before us, although perhaps on a more minor point. This is the very important question of what flexibility is given to the EROs to decide the gap between making their canvass in the autumn of 2013 and the new register in February 2014. The undated Explanatory Memorandum from my noble friend’s department says:

“The Commission recommended … the Order should be amended to specify that canvass activity should not begin before 1^st November 2013, so reducing the period between the start of the canvass and the July 2014 confirmation exercise while still allowing meaningful canvass activity to start before Christmas 2013”.

That is at variance, again, with the advice given in the undated advice from the Electoral Commission in the last few days, where it still sticks to the point that it thinks the gap may well be too long and that giving flexibility to the ERO may actually cause the eventual result statistically to be less accurate and less effective.

My speech could have been cut into a quarter if these two documents had been properly dated. We are always asking for documents put before your Lordships’ House to be properly dated. It would seem to be the most basic and simple administrative convenience for Members of your Lordships’ House to know which document comes before which. I make that plea again and I hope that my noble friend, who is amazingly effective in getting civil servants to do what we expect of them—to be as efficient and effective as they usually are—will be more successful on this occasion than previously.

[Baroness Hayter of Kentish Town]

My Lords, I have to say that if the noble Lord, Lord Tyler, has really been worn down by all these debates on IER, he is showing no sign of it whatever.

I thank the Minister for introducing these measures. I turn first to the disclosure regulations. The Committee will recall that we welcomed all the efforts made to locate and contact eligible voters absent from the register, and to confirm those already on the household list. We therefore fully support this dry run, which will assist EROs to compare their data against datasets kept by DWP and to test the confirmation exercises.

Noble Lords will not be surprised that I have a number of questions. I had hoped that if the exercise had revealed the names and addresses of people not on the current list, the ERO would then be able to write and invite them to register. The Minister said that there would be no contact, but I do not know whether that means that even if an ERO finds from DWP material someone who is not on the register, the ERO will be unable to approach that person. Perhaps the Minister can clarify that.

We know that the Minister in another place confirmed the Government’s confidence that everything, including the resources, is sufficiently in place for this work to happen within the required timescale. Perhaps he can repeat that assurance for the benefit of the Committee, together with any comfort that he has received from the Electoral Commission.

The other issue that I had intended to raise was that mentioned by the noble Lord, Lord Tyler—to ask Minister to confirm that the Electoral Commission will be required to evaluate these pilots and therefore to report back to the House.

Will the Minister also confirm that the regulations will give the necessary authority for all the relevant parties to release the data necessary for this work? Perhaps he can also assure the Committee that all the relevant parties involved will be clear about their duties and responsibilities under the Data Protection Act before any data-sharing begins. Perhaps he can set out what safeguards are in place to protect individuals’ data security. We noted in previous discussions on individual registration that some people, including those in your Lordships’ House, tend to register their vote at one address but use another address for correspondence. That will clearly be a major issue when using the DWP material. Perhaps the Minister can outline how this is to be dealt with in the pilots.

I turn to the second measure, on the postponement of the 2013 household canvass, which is now to be published in England in February 2014, and in March in Scotland and Wales. The Minister will recall my sadly unsuccessful attempt to remove from the then ERA Bill the ability of the Secretary of State to abolish the canvass. That is an indication of how important we see this tool in seeking out and registering all citizens with an entitlement to vote. Clearly, this will be even more important in the move to IER, which will fully replace the household register only in 2016. I ask the Minister to confirm that he is confident that the Government’s plans will ensure that by 2016 we will have a better register than we have at present, and that the Government remain clear that there will be no dropping of the household register before 2016.

We are very content that the Government push ahead with locating non-registered but eligible electors, so that by 2016 we have the maximum possible number of individually registered electors by a variety of means and no one is inadvertently denied their vote in 2016. But we seek assurance that any such work is not with the idea of bringing forward sole reliance on the individual rather than household-registered electorate. In the mean time, however, while we remain with household lists, as the Minister has said that registers decline in accuracy by about 1% a month, we are content with the canvass taking place slightly later—provided that the information is then made available to political parties as soon as possible thereafter, so that their work on the lists can begin, as he mentioned. This is key. The Committee knows that much of the business of alerting voters to the fact that they are or are not on the electoral roll is done by political parties, as the voting cards tend to go out only a short time before an election. It will be more and more important, with the gradual shift to IER, for parties to have early and easy access to the new registers so that they can undertake their canvass work and so that anyone left off can be identified in time to rectify that absence. We also need, as early as possible after the delayed canvass, publication, perhaps monthly, of a rolling register, showing IER flags.

We know that the ERA allows for transfer to IER to be completed by the end of December 2016, which is a sensible date. The Committee will understand that we remain a little nervous. The Act retains a power to hurry it through earlier than that, but we hope that the Government are not trying to do that, given the risk of losing eligible voters. We would also query—and this was another point raised by the noble Lord, Lord Tyler—whether there is a satisfactory way in which to judge whether the 2016 date is appropriate to complete the transition. We would like to know what criteria would be applied and what would be the role of the Electoral Commission in such a process. Under the Labour Government’s legislation on IER, the Electoral Commission had a pivotal role in deciding whether progress had been sufficient to create safe conditions for the final move to be made. This Government removed that role, but surely the commission must have a duty to press the “Go” button, if that decision is to clearly non-political and based on solid data.

Perhaps I could use this opportunity to ask the Minister two questions.

[Lord Wallace of Saltaire]

Two more?

[Baroness Hayter of Kentish Town]

Yes, but I once asked the noble Lord 16.

First, are the Government committed to the December 2016 timetable? Secondly, will they await a commission pronouncement on whether the conditions are right before making the final transition to IER? We assume that a core criterion for assessing those conditions is whether, as the Minister says, the electoral register is at least as accurate as the current register, but we need that to be judged by an independent body, which surely can only be the Electoral Commission.

Finally, we return to the point of which we were reminded by the noble Lord, Lord Tyler, that the Electoral Commission remains concerned about an October rather than November start date. I noticed that, in introducing this, the Minister seemed to say that a later date might be more suitable. Perhaps he could clarify whether that reflects discussions with the Electoral Commission.

[Lord Wallace of Saltaire]

I thank the noble Lord and the noble Baroness for their contributions. I should say to the noble Lord, Lord Tyler, that this may not be the last SI on this subject and it is important, since this is such a key element, that we make sure that we have all-party confidence in the process as we go through. We are dealing with data-sharing in some sensitive areas, so we need to make sure that everyone is carried along.

16:14

Sitting suspended for a Division in the House.

16:19

[Lord Wallace of Saltaire]

My Lords, some of the questions raised are familiar to us from previous debates and will no doubt be repeated in further debates. Let me summarise: of course we want to ensure that, as we go through this important transition, we carry all parties and stakeholders with us, that confidentiality of data in terms of data-sharing is maintained, and that the Electoral Commission is fully engaged throughout the process.

On the flexibility of electoral registration officers in deciding on the canvass, as I said in my speech, some will decide not to start until November. I am tempted to say to those who live in the lush south, such as my noble friend Lord Tyler, that “it’s grim up north”. Canvassing in north Yorkshire in January and February is not always easy. My mother-in-law, when she lived in Upper Wharfedale, was usually snowed in for at least six weeks during that period. It will differ from area to area and this is why we are allowing EROs a certain amount of flexibility.

I say to the noble Baroness, Lady Hayter, that this is a dry run. It is not intended to involve contact with electors. It is a confirmation test of how far we can get matching data with the DWP database and others so that we have a better indication of the scale of the remaining chunk of the electorate who need to be visited or contacted one way or another. That is the whole purpose of this activity. I repeat the assurance that we are on track. We are confident that we will be able to carry through this process by our preferred date of December 2015 rather than delaying until 2016. However, as the noble Baroness is well aware, we will be monitoring this as we carry it through. If we discover that there are delays along the way, there is the potential in the Act for that delay.

I have confidence in the Government’s digital service in terms of data sharing. I have spoken to staff in that service on a number of occasions and am very impressed by what they are doing. There are some larger questions here about data privacy, data sharing and data use. The Cabinet Office is in the process of setting up a briefing for Peers on the digital revolution. One of the issues that we will cover for that will be precisely data privacy and data protection. I hope that we will get a good audience for that because there are some much broader issues here than simply this Act which I think it will be useful to explore.

I was asked whether the new register will be better than the present one. Given everything I have seen about the long-term deterioration of the current register’s accuracy, I say cautiously that our aim is that the new register will be at least as good as the one we have now, and we will end the long-term process of deterioration from which the register has been suffering. The Government are thus confident that we will come through this process with as accurate and complete a register as possible.

The suggestion of flagging the status of the register on a monthly update is one that we will take away and consider further. On the question of annual canvasses, I reassure the noble Baroness that we have no plans to abolish the annual register to identify potentially eligible electors and invite them to register. However, as we have discussed on previous occasions, the process of doing the annual canvass is becoming more difficult over a long-term period. It is also getting more difficult to recruit people to do the annual canvass. That is something we need to bear in mind as part of a much longer-term transition of how we manage a process which was, after all, set up in the early 20th century and may not be entirely suited to the sort of built environment which we have in many areas of Britain. The resources are in place. The Government are committed to concluding the transition by the end of 2015, if all is in place. That will, of course, be subject to everyone with a stake in the process having confidence that this has been completed, certainly including the Electoral Commission, which has been closely involved so far and will rightly continue to monitor and comment as we carry through the process. I hope that I have answered all the questions. I will write to those who have contributed if there are any further questions that I have not answered. I commend the regulations.

Motion agreed.

Electoral Registration (Postponement of 2013 Annual Canvass) Order 2013

Tuesday 19th March 2013 Grand Committee

Considered in Grand Committee

16:30

Moved By

[Lord Wallace of Saltaire]

That the Grand Committee do report to the House that it has considered the Electoral Registration (Postponement of 2013 Annual Canvass) Order 2013.

Relevant document: 21st Report from the Joint Committee on Statutory Instruments.

Motion agreed.

[The Deputy Chairman of Committees (Baroness Andrews)]

My Lords, we will adjourn for five minutes to give the noble Lord, Lord Hunt, a chance to get here for the next debate. There has been a long Division, so he is possibly stuck somewhere. We will resume at 4.35 pm.

16:30

Sitting suspended.

Children: Developmental Care and Autism

Tuesday 19th March 2013 Grand Committee

Question for Short Debate

16:35

Asked By

[Lord Maginnis of Drumglass]

To ask Her Majesty’s Government whether they have made any recent evaluation of the efficiency of administrative health units with regard to the provision, assessment and diagnosis of developmental care for children with special needs, particularly in relation to Autism Spectrum Disorder.

[Lord Maginnis of Drumglass]

My Lords, I appreciate the opportunity to raise the albeit touchy issue of government and administration—from my perspective, perhaps I should say government versus administration—particularly in so far as it impacts on the delivery of health services. Despite having been married to a nurse for the past 52 years, my analysis will not presume to deal with matters clinical but will very much deal with delivery, especially concerning early intervention and diagnosis relating to children with special needs.

Autism spectrum disorder—ASD—is an area that increasingly confronted me as a Member of Parliament in days gone by, when parents would come to me in desperation. Despite Kanner having defined the condition as long ago as 1943, I was unfamiliar with it even though I trained as a schoolteacher 15 years after that. I realised that there was virtually no departmental provision of any consequence. Therefore, when the Northern Ireland Assembly eventually got going and I was fortunate enough to have a colleague, Michael McGimpsey, as Minister of Health, I prevailed on him to such an extent to carry out an independent review of autism services that he asked me to chair it.

In response to a Parliamentary Question during direct rule, I had been told that in Northern Ireland there were 686 children waiting up to 35 months for assessment and diagnosis. That meant that children were virtually in school before they had the benefit of any meaningful interventions. Three years, often more, were lost—developmental years that could never be retrieved. I want to put on record my gratitude to Angela McLarnon, who at that time headed up the Northern Ireland cohort of around 600 health visitors; she was the one who made things happen. As a result of the review we carried out, we now have uptrained all our health visitors. No child waits more than 13 weeks before assessment and diagnosis, and every child gets a home visit for general developmental assessment at two years old.

I want to say two things at this point. The ratio of health visitors to the birth rate in Northern Ireland is roughly 40:1, while here in England it is 83:1. I know there is an idea that the number of health visitors will be increased by roughly 50% here in England but I contend that this country needs to be aiming at something like a 100% increase in health visitors if it is to have the same service as we have in Northern Ireland. We all know the lifelong importance of early intervention in special needs cases. Before anyone dismisses that idea on the basis that England is more urban than Northern Ireland, I will partly concede that point—but only partly. I calculate that the planned increase is at best 50% too little and that assumes that there is a comparable and specific ASD uptraining in place for all health visitors. Is that the case? I am sorry to bore everyone with statistics, but the situation and outcome needs to be assessed on the following basis. Health visitors in England should, on top of their other responsibilities, aim to make one general developmental assessment home visit per working week. This requires a maximum ratio in terms of annual live births to health visitors of 45:1; it should be no greater than that. I am talking about 16,000 health visitors, not the proposed 12,000 and certainly not the current, unacceptable 8,000 plus.

That is not the whole story, however. Given that 1.2% of live births will be children on the autism spectrum, English health services will cater for roughly 8,700 children with that condition every year. Extrapolate that to school age and each health visitor is being asked to monitor five children with ASD on an ongoing basis, which is twice the number we in Northern Ireland consider practical and acceptable. As a schoolmaster, I believe there should be an overlap between health and education, which does not properly exist today, particularly in this specific area. We should be talking about a monitoring process up to the age of eight. I do not expect the Minister to give me a detailed answer, but I hope that she will at least be able to reassure me that her department will take note of something that in my experience will help to meet our responsibility to those with ASD.

One final thought. Just like the rest of us, those on the spectrum fall within the normal bell-shaped curve; 7.5% brilliant, 7.5% significantly disabled and 85% who can live very normal lives. I am sorry to put it as crudely as that, but it is the challenge facing us today. The two year-old general development assessment is the key, not only to autism, but to a multitude of other conditions. I will not go through them all but they are conditions such as dyspraxia and dyslexia, which are often classified under the term “comorbidity”. Sadly, we no longer have answerable and responsible government as I once knew it. Over the past 20 years we have a mere delegating procedure and this is the challenge I ask the Minister to address today. Where among the disparate layers of the arm’s-length administration can we address this issue on a co-ordinated and cohesive nationwide basis? Is it among 10 strategic massive health authorities or among 151 primary care organisations that vary in population from less than 100,000 to more than 1 million?

I will conclude. If it is not the Government who are going to preside over and be answerable and accountable among this mish-mash of administrative units, are we condemned to another postcode lottery? The Minister knows that I am not targeting her personally, but if we are to have effective, early-life healthcare her department needs to face up to the real challenge of there being too many managers and not enough workers and to feel the accountability that pervades most of society today, not least our health service.

16:43

[Lord Addington]

My Lords, the noble Lord, Lord Maginnis, returns to a subject different facets of which I have heard him talk about before. Primarily, it is based on the self-evident fact that if you identify a problem early you stand a better chance of reaching a better outcome. So much for the rocket science involved in this, but it is quite obvious when you are doing that.

How do we do this? There is an assessment at about the age of two. The briefing I received referred to classical autism: those with certain patterns and conditions such as low IQ and behaviour that occurs. You are able to spot that by about the age of two. That probably fits more neatly into what the noble Lord was saying than anything else we will get across. Then, as the noble Lord again pointed out—he can feel free to shoot my foxes as there will always be another one coming along—that will not apply to everyone throughout the process, so assessing until the age of eight is another good idea. If somebody does not fit neatly into that classical band, it is not very obvious that they have a problem. For instance, if that person does not get much pre-school training, education et cetera, their problems may only manifest to a noticeable degree later on. Also, the level of training of the person observing them has to be fairly exact. As you go through the educational process, many people in the higher-functioning part of the autism or Asperger’s spectrum have problems that a teacher will observe not in the classroom but in the playground because that person will not socialise normally.

There has recently been a little splurge of information about autism in the papers. Some of it was accurate and some of it was not. Even a little test in the Times asked how far on the spectrum you were. If you got to 15 on this test, it said “Don’t worry, you are still quite normal”. I, in a dark moment on a train, took the test thinking, “I wonder how strange I will come out”. I only got 12, thought that was a bit low, went back and discovered that I should have marked myself at 10: it is one problem I do not have. But if we are going to do this, we need a way of assessing at various points where that intervention comes in. One of the classic ways for adults to be discovered on the Asperger’s spectrum is when they develop mental health problems: people who cannot cope with a normal environment.

Effectively, there are huge savings here for government. I thought all Governments were interested in savings, or should be. Let us face it, this Government will be more interested than most. That is not a position I particularly relish but it is the fact of the matter. If you get in reasonably early, you stand a better chance of being able to maintain the person throughout their education and working life. Indeed, there is a better chance of them being able to handle the bumps and bangs of relationships later on. Will my noble friend give us a rough guide as to what the level of intervention will be beyond that initial assessment at age two? If we just concentrate on autism, because other conditions will come in, exactly how much training will be required at the various stages of the education process? How much assessment is going on?

The National Autistic Society suggests that at least the SENCO in every school should have specific training in how to spot autism. Autism may not be the highest-occurring hidden condition, but it will certainly be there regularly throughout a teacher’s career. There should be better basic training so they are able to spot a condition and refer on—we do not want to create experts. They must also understand when they are given advice. Parliament is one of those places where occasionally, from a standing start, we are told, “Go and make yourself an expert”. Every person who has stood on their hind legs in this Palace has had that experience with something they had not come across. We all know that it takes time to get your head around a new problem or way of thinking. Unless that is instilled throughout the education and health services, with a basic level of understanding where one knows where to refer back to and where to refer on, you will not be able to do this. It would help if my noble friend could give us an idea of where we are on this and where we are going. This should not be a party political point or football. It should be a point of basic principle because unless you have just enough knowledge to be able to access and call in the help, you will miss this and do it late, causing secondary damage to that person’s life and costs to society.

16:49

[Lord Hunt of Kings Heath]

My Lords, I, too, thank the noble Lord, Lord Maginnis, for allowing us to have this important debate. He made some important points in his opening speech and I, too, should like to focus on early intervention. Both noble Lords made it clear that they regard it to be of importance. I agree.

I should also be interested in the Minister’s response to the point made by the noble Lord, Lord Addington, about the need for regular assessment after the initial early intervention. I was particularly taken with his remark that if you can have early intervention and regular assessment, your chances of helping people to have much better life outcomes is good not only for them, their families and loved ones but in terms of the likely demands on the state over the years. There must be a persuasive economic case for up-front investment. Perhaps the noble Baroness can respond to that.

As to the experience with health visitors in Northern Ireland and the comparison with England, it was extremely interesting to hear the ratios mentioned by the noble Lord, Lord Maginnis. I suppose that it raised a bit of prejudice about the funding that goes to Northern Ireland, but I shall desist from making further comments on that. Does the noble Baroness recognise those ratios because, on the face of it, your chances in Northern Ireland of having health visitor support is clearly much greater and more intense than in England? I do not know if the noble Lord knows the answer to this but, given the importance of speech and language therapy, I wonder if there is a similar issue about the number of those important professionals who can make a huge difference to people affected by this condition.

[Lord Maginnis of Drumglass]

I cannot help the noble Lord with figures, but we are certainly able to concentrate the demand for those interventions. They may relate to sensory issues, speech or all sorts of things. Those interventions can often be carried out in the home or school environment; they do not always require a medical practitioner—although, on occasions, they do.

[Lord Hunt of Kings Heath]

I am grateful to the noble Lord. One of the powerful points he is making is on the number of professions there are. It is also a question of organisation, and I should like to come back to that issue because I think he is suggesting that in Northern Ireland the stability of the organisation of health and social care enables a much more co-ordinated response to be given.

I want to come back to the English situation, which is worse than he stated because of the changes that are to take place from 1 April and are apposite to his comments. We have been given a very good research paper by the Library in anticipation of this debate. The briefing note refers to the report from Brian Lamb commissioned by the previous Government, the follow-on in this Government’s initiatives, and the identification in March 2011 of some of the problems—particularly of,

“parents having to battle to get the support their child needs … SEN statements not joining up education, health and care support … multiple layers of paperwork and bureaucracy”,

and,

“a confusing and adversarial assessment process”.

Clearly, it is very important that all these issues are tackled. We welcome the prospect of legislation and the publication of draft clauses, as well as the work done in Parliament to comment and reflect on those draft clauses.

I want to express some concerns, particularly in education. The Government have clearly identified gaps in services between different sectors, education, health and care support. My concern is with the demise of local education authorities as significant players in education in England. I remember when we debated the new Government’s first children Bill that there was particular concern about provision of SEN under the new structures. Does the Minister think—and how does she think—co-ordination of SEN in local authority areas is now happening with the reduction in authority of LEAs and the freedom of academies and free schools to plough their own furrow? I know that academies operate in accordance with the individual funding agreement and obligations are imposed on them, but it would help the Committee to know that the Government believe there is machinery at local level to ensure that there is proper co-ordination between schools, linking into the health service. I point out to the noble Baroness the recent Ofsted reports on the first tranche of free schools is not exactly encouraging about their performance. Could she help me in relation to whether Ofsted was able to comment on those schools’ responsibilities in relation to SEN?

It is clear, too, that the health service has much to do, and I fully accept that. Co-ordination between health, education and social care services is very important indeed. The noble Lord, Lord Maginnis, referred to the English situation as of now and to the 10 strategic health authorities and 190 or so primary care trusts. He referred to that as being a bit of a mess—but if we were coping only with the current structure. The fact is that from 1 April we are losing strategic health authorities and primary care trusts and replacing them with clinical commissioning groups, which are untried and untested. We are losing the essential leadership role of strategic health authorities, which are being replaced by local area offices of the NHS Commissioning Board. All the signs are that those local area offices neither want to nor have the capacity to give the kind of leadership that is required. So at the local level, within each local authority area, we have a worrying picture of, on the one hand, local education authorities losing a lot of the levers that they used to have, and, on the other, of a health service being broken up between lots of new and different organisations. It is very worrying in terms of the co-ordination required. Will the Minister reflect either now or in writing on how she thinks one can achieve a co-ordinated approach in relation to SEN, particularly in relation to the group that the noble Lord is mostly concerned with, in the new structures? That is the only way in which to get early intervention and the continuous assessments, which noble Lords believe should be produced.

16:58

[Baroness Northover]

My Lords, I am very grateful to the noble Lord, Lord Maginnis, for raising this issue and for introducing it so effectively. The noble Lord is right to emphasise the importance of this disorder, and he and my noble friend Lord Addington, as well as the noble Lord, Lord Hunt, are all absolutely right to stress the importance of picking it up early and supporting people from the earliest stages. As my noble friend Lord Addington points out, it is important to pick it up later and monitor the progress of a child.

I want to place special emphasis on the role that the new commissioning bodies will have in ensuring that children with special needs, including autism, receive the care that they need. I hope that I can reassure the noble Lord, Lord Hunt, in this regard. We know that there is a need to improve the early identification and assessment of special educational needs and thus remove the duplication and frustration which many families have encountered in securing an assessment. That is absolutely vital. We have already made progress in delivering the necessary improvements. For example, we have introduced an early years progress check for children at the age of two in order to pick up problems early and tackle them. Several noble Lords have mentioned this assessment. It is extremely important in terms of the early identification of autism. We recognise the importance of a key universal service for improving the health and well-being of all children through health and development reviews, immunisation programmes and so on. Between the age of two and two and a half, a child will have a full health and development review at which parents will have the opportunity to raise any concerns, ask questions, and prepare for the next stage of their child’s development. This can trigger the need for a formal SEN assessment which must include doctors, educational psychologists and paediatricians if that seems to be necessary.

[Lord Maginnis of Drumglass]

Before the Minister moves on, can she clarify one point? Is this a procedure whereby parents will be aware that they can shop, if I can put it like that, for this sort of support or is it something that every single two year-old will be given as a matter of course?

[Baroness Northover]

It is planned that every two year-old will have that kind of assessment. It is extremely important not only in terms of autism, but for picking up other problems.

The noble Lord, Lord Maginnis, asked about the availability of health visitors. To support the delivery of the Healthy Child programme, we are committed to expanding the number of health visitors—he is quite right about their importance—by a further 4,200 full-time equivalents by 2015 and to develop health visiting services in order to improve health outcomes and reduce inequalities.

We recognise the pressing need for a new system of commissioning special educational needs provision, so I hope that noble Lords will be pleased to hear that the Children and Families Bill will introduce this. The provisions of the Bill will build on the new approach to commissioning introduced by the Health and Social Care Act 2012. They will introduce an integrated approach to meeting the needs of children and young people with special educational needs, requiring CCGs and local authorities to make joint commissioning arrangements and focusing on a single, co-ordinated assessment involving a range of professionals. Moreover, these arrangements can include people up to the age of 25. It is extremely important that they should go beyond the transition points that others have found to be problematic. The assessment process will result in an individual education, health and care plan. I hope that noble Lords are pleased to hear about this because it will bring together the health and education sides. The process will be focused on improving outcomes for the child. The commissioners, working together, must agree their relevant contributions to delivering the plan, and they will have to work out who is going to be responsible for the different elements.

These plans will not be developed in isolation, of course. The boards and the CCGs will co-operate with relevant local authorities and participate in their health and well-being boards. Each board will provide a forum for the effective assessment of local need, and special educational needs will be part of that so as to ensure the translation of those commissioning plans and arrangements into something that is effective. Health and well-being boards will undertake a joint strategic needs assessment and a joint health and well-being strategy for the local authority area. The CCG will draw on this in developing its annual commissioning plans. Moreover, health and well-being boards will help to ensure the accountability of CCGs by giving their opinion on the extent to which the commissioning plans take account of the local strategy and how the CCG has contributed to its delivery. Noble Lords need to bear in mind that special educational needs are in there, and they have to assess what is being provided against that.

The new arrangements will be introduced in 2014, depending on the passage of the Bill, but a number of pathfinder local authorities are working with local children and their families in piloting new approaches. As the noble Lord, Lord Hunt, will be aware, the mandate for the NHS for the next two years has indicated the particular need for improvement, working in partnership across different services in supporting children and young people with special educational needs and disabilities. In particular, it gives the NHS Commissioning Board the objective of ensuring that children have access to the services identified in the agreed care plan. I hope that that will reassure the noble Lords, Lord Maginnis and Lord Hunt.

We are also amending the Children and Families Bill to place a duty on CCGs to secure the necessary health services in an education, health and care plan. This is a significant step, and highlights how much importance we attach to ensuring that the NHS delivers the right service for children with special educational needs.

We want to ensure that CCGs and local authorities, as commissioners, and the health and care professionals who provide assessments and diagnoses are supported, particularly in relation to their education and training. The noble Lord, Lord Maginnis, is absolutely right to stress the need to link up health and education.

For the past two years, the Department for Education has been funding the Autism Education Trust to develop tiered training materials for schools, as well as national standards for provision for children with autism and a competency framework for those who work with children with autism. These are relevant points for the noble Lord, Lord Maginnis, and my noble friend Lord Addington.

The new qualified teacher standards came into effect in September 2012. These have sharpened the focus on meeting the needs of children with SEN and disabilities. The Government have also strengthened initial teacher training and continuing professional development provision through the publication of additional online training materials for teachers of pupils with the most common and complex special educational needs, including autism.

We have also highlighted the importance of having good quality data that measure the outcomes which are most important to children and young people and their families. The work of the Children and Young People’s Health Outcomes Forum has informed actions across the health and care sectors to identify the best indicators of outcomes for this group, particularly in relation to the time taken from first presentation to diagnosis. The noble Lord, Lord Maginnis, highlighted this as being a problem, particularly in the past, which we certainly do not want to have repeated; we want to address that. One element of this is ensuring the effectiveness of transition at different life stages, particularly from children’s to adults’ services.

The recent University of York report into transitions for young people with autism highlighted that we need to do much more to support young people in planning for leaving school, gaining employment and living independently, while maintaining good health. The NHS Outcomes Framework for 2013-14 includes the forum’s proposal that all data should be presented in five-year bands up to the age of 25 to enable the effective monitoring of that transition. That is quite a significant change. Here, too, I want to reassure my noble friend Lord Addington in relation to those children whose need for support does not become apparent until they are well established in school. The Government’s approach is to strengthen awareness in schools through staff training; for example, extended placements in special schools for trainee teachers. We want to ensure that needs are detected as early as possible, but I emphasise that at any point the school can request an assessment by the local authority. The education, health and care plan approach provides a basis for taking an all-round view of the children’s needs across different sectors. Of course, schools are providing additional support for many children through teaching assistants.

[Lord Addington]

My Lords, teaching assistants have rather a patchy record when it comes to implementing the current statementing system. For instance, there is a nasty tendency for them to become a babysitter for a child who is having trouble within the class. I suggest the Government should look at this because it is something that has been going on for years. Unless you get that person trained to at least implement the strategy across all disabilities, it will not deliver the required outcome but may simply keep the child out of the way of the teacher.

[Baroness Northover]

The teaching assistant may be assisting with other children while the main teacher focuses on those with particular needs. My noble friend is absolutely right that it is extremely important that the right and appropriate support is given according to what a child needs, which is why those plans I mentioned are so important.

Partnership working will be the key to making a difference. We want to work closely with partner organisations, such as the Council for Disabled Children and the National Autistic Society. However, the most significant partners, if you can call them such, will be the patients and their families. The joint arrangements for assessment will be built around the individual; it is a bespoke plan tailored to the needs of the individual and agreed with them and their family.

I am afraid I am running out of time and I will write on any points that I have not picked up. I want to emphasise, however, that clinical commissioning is built upon patient involvement particularly for this group, whose needs have not always been well met in the past. This will perhaps be the most important factor in ensuring they get the care and support that makes the difference to them.

Police: Performance Indicator Management

Tuesday 19th March 2013 Grand Committee

Question for Short Debate

17:11

Asked By

[The Earl of Lytton]

To ask Her Majesty’s Government what is their assessment of the response of United Kingdom police forces to performance indicator management with particular reference to the reliability of published United Kingdom crime figures.

[The Earl of Lytton]

My Lords, I am very grateful for the opportunity to debate this issue and to those noble Lords who have added their names to speak. My interest in policing is a parliamentary one; the police interest in me, I hope, is no more than my firearms and shotgun licences. However, were it not for the work of the late Lord Corbett of Castle Vale, to whom I pay tribute, I doubt if I would be speaking on this subject today.

We have heard a great deal about the police recently but I would not wish to appear anti-police. I am certain that the vast majority of serving officers are diligent and honest. Rather, my Question is about the organisational environment in which they operate. Many corporations use performance management but the public service often lacks suitable external benchmarks. Dr Barry Loveday, professor of criminal studies at the University of Portsmouth, in a 2008 article in Policing magazine, described performance management as,

“commitment not to an organisational vision but to conformity in both running and delivering services … The primary emphasis here is directed to the effective management of targets rather than on qualities of leadership”.

He goes on to say,

“‘Gaming’ techniques now characterise the operation of most public service managers … the primary purpose is not … to demonstrate leadership … but to ensure conformity to the target culture by ‘managing’ such data in order to reach targets set”.

However, it is also the collectivisation of risk, anonymity, abrogation of individual responsibility and denial of leadership. The police are not alone; large parts of the public sector, especially in areas of health and education, are affected. Under the Police Reform Act 2002, the Secretary of State sets National Policing Plan objectives and priorities but there is no benchmark equivalent to the hospital standardised mortality ratio.

“Gaming” is academic speak for numerical, definitional or behavioural means of presenting figures to suit outcomes and its use in police recording of crime is the specialist research subject of Dr Rodger Patrick, a former detective chief inspector in the West Midlands force. I have seen his doctoral thesis, his evidence to parliamentary committees, noted the coherence of his analysis and the absence of contradiction by others. His referees testified to his credibility. I therefore invited him to address interested Peers last month and have placed in the Library my note of his talk with its links to further information.

He identified four categories of “Gaming”. There is “cuffing”, so called after the magician’s act of making things disappear up the sleeve; in other words, making crime figures disappear altogether by, for instance, not recording some types at all. In “nodding” figures are enhanced, notably by getting offenders to admit by a nod to other offences to be taken into consideration, or TICs. “Stitching” is coercing suspects to confess to guilt under threats or perhaps promises of more lenient treatment. “Skewing” involves applying resources solely to whatever targets are being measured to the exclusion of others; it is the principle of “what does not get measured does not matter”.

Such issues were brought to the attention of HM Inspector of Constabulary as long ago as 1998, but little if anything has altered since. In its 1999 report, HMIC repeats the police viewpoint that:

“Any bending of the rules is ... seen as ... not being for personal gain but to protect society, and therefore not at the worst end of corruption”.

It rejected this justification but recognised the problem.

Dr Patrick has attempted to quantify the effects of gaming. His conclusion that it is an endemic organisational phenomenon rather than the activities of a few officers makes for uncomfortable reading. The Office for National Statistics thought that cuffing alone might cause a 16% underrecording of crime; Dr Patrick considers that it is likely to be far higher. The truth is that we do not know and the change from an evidential to a prima facie basis of crime recording further confuses the issue.

Unsurprisingly, last January’s ONS national crime survey was received with disbelief by criminologists and it was subsequently admitted that the recorded figures might be defective. But the ONS relies on police figures and the appearance of a decline in crime fits the purposes of many others. Did Her Majesty’s Inspectorate of Constabulary advise Home Office officials about the extent of a problem going back many years? If so, why has so little changed? Can we be sure that the figures form an adequate basis for analysis? If they are not founded on fact, truth and logic, how can Ministers and Parliament rely on them? Furthermore, what is the role of Home Office officials and statisticians in the oversight of police recorded crime, given the ONS admission? Is it true that cross-checks on police recording, formerly part of the British Crime Survey process, have been discontinued, and if so, why? If the figures are in doubt, what else may be in question?

The list of high profile cases reads like a roll call: Hillsborough; North Wales care homes; the Bradford sex trade; the theft of child identities; the retention of body parts without consent and falsification of evidence; the sale of confidential information to the media; and the cases of Michael Atherton, Andrew Mitchell, Jimmy Savile and Lynette White. All identify procedural, evidential and investigative failure and have attracted public criticism. In the Daily Telegraph of 22 December last year, Andrew Gilligan pointed to seven police forces where sackings, forced resignations, suspensions and criminal investigations of chief constables had occurred, with almost as many more deputies and assistants under a cloud. He put the level of “infection”, if I can call it that, at 20% of police forces. I am hoping that other Lords will pick up on the issue of informal cautions, local criminal records and non-sanction detections. I would simply ask Her Majesty’s Government: what data do police hold on people and what independent oversight exists? Have things improved since 2007 when the matter was raised with the Information Commissioner?

Even if the position has been exaggerated, it adds up to a very disturbing picture with significant implications for the taxpayer, national policy, the maintenance of law and order and, last but not least, public confidence. On regulation and oversight, I note that the Home Affairs Select Committee recently described the Independent Police Complaints Commission as,

“woefully underequipped and hamstrung in achieving its original objectives. It has neither the powers nor the resources that it needs to get to the truth when the integrity of the police is in doubt”.

While the Home Secretary moved with what I can only describe as commendable speed to strengthen the commission, I must question whether she went far enough to address all the issues.

As to HMIC, its report of a review into allegations about intelligence concerning the Jimmy Savile case highlighted failings in the quality of investigations and sharing of information. However, it has repeatedly expressed concerns on similar matters since the late 1990s. What is this? Is it a resource issue? In July 2011, it was asked to review police integrity. Can the Minister tell us where that review has got to? I believe it is too early to expect the police and crime commissioners to have taken significant action, but I hope they will be reading this debate carefully and that these matters do indeed lie within their remit. We learnt only last week of some close relationships between health service employees and allied business and procurement services that might be a conflict of interest. Are the Government satisfied that this is not also a factor in the police?

I now refer to the Association of Chief Police Officers. It is more than just the senior policeman’s trade association and, until recently anyway, has been in receipt of substantial public funding. It makes strategic policing decisions, guides policy and issues procedural guidance. It is immensely influential on police force co-ordination and in international crime. In some respects its work is akin to that of a government agency and its relationship with government should be open. Even now, as its direct funding is reduced, I learn that it is asking police forces for a large increase in its subscriptions. But this is still taxpayers’ money and requires full accountability.

I am led to believe that fees for security checks and the like end up in an ACPO unit or subsidiary, that there are several operating under its umbrella and that significant sums of money are involved. I am also told of persistent resistance to Freedom of Information Act requests. It is time for full disclosure of ACPO’s affairs, its companies, subsidiaries, directorships, accounts and activities—everything that either involves taxpayers’ money or is as a result of a public or quasi-public activity. Can I have the Minister’s assurance that this will be done?

I do not have a problem with commercial activities offsetting costs to the public purse but I take issue with the involuntary merchandising of personal information other than in the clearest overriding public interest. I take exception when the process lacks transparency.

17:20

Sitting suspended for a Division in the House.

17:29

[The Earl of Lytton]

My Lords, continuing where I left off, I was talking about the commercial activities and how I took some exception to the fact that the process lacks transparency and oversight. I also point to the secretive nature of some of these activities, which suggests something to hide.

Many other issues have come to my attention, including: tow-away, vehicle recovery and storage contracts; insurance industry concerns; and a degree of partiality, particularly as evidenced in the BBC programme “You’ve Been Trumped”, where police simply failed to protect residents from the most serious bullying and harassment by golf course developers.

If the Home Secretary’s statement on police integrity was intended to draw a line in the sand, I hope that the Government realise that nobody is fooled and there is very much more to be done. If the police are not straight with us on the crime figures, how on earth do we know what is going on? Secrecy has no benign purpose here. We need transparency, good professional practice as the norm, compete legality and accurate recording as a basis for policy decisions, and we need it now.

17:31

[Lord Whitty]

My Lords, I will make one or two of the same points as the noble Earl, Lord Lytton. Unlike some other Members who are going to speak today, I do not have great experience or expertise in this field. With one or two exceptions, my relationship with the police has been generally okay. I am merely a concerned citizen here, in that I really want to know what is happening to crime in this country. Politically, both this and the previous Government congratulated themselves on a falling level of crime. I did not seriously query this claim until recently.

Of course, government and police claims of crime reduction have always been treated with a degree of cynicism by the general public. Public perception of crime rates in all neighbourhoods tends to exaggerate the degree of actual crime. Of course, there are horrendous crimes, which receive massive publicity. Although harrowing to those immediately concerned, as I know, these are probably not typical. There is a general public perception that the level of particularly low-level crime is higher than the police and the Government claim.

Sometimes the police go over the top. I am told that the South Wales Police notepaper says that crime is the lowest for the past 30 years. I doubt that anybody in south Wales actually believes that—nor would people in Dorset or the City of Westminster. There is a credibility issue underlying this, and some of it has a good statistical basis because of the way in which the police record crime as against, for example, the crime survey and the way that victims see their complaints. So there are some rational explanations for it.

However, I was quite alarmed to see that the ONS itself was seriously querying the degree of crime reduction. That is probably where I am. I probably logically accept, despite the psychology of it, that there has been some reduction, but it is the degree. There was quite a significant difference between the police figures and the other figures to which the ONS referred. The ONS gave a number of quite good reasons for this but at the same time I became aware of the work of Dr Rodger Patrick, to whom the noble Earl, Lord Lytton, has already referred.

According to Dr Patrick’s analysis, some crimes are no longer recorded on the basis of reporting by victims or the public but on the evidential assessment of police officers and on the balance of probability. That was always the case with third party reporting but used not to be the case where victims themselves reported. Other cases are lumped together and given the same crime number to appear only once in the statistics. Minor crimes can go unreported altogether: some are on a local crime data list; some are subject to informal caution and are cleared, one way or another, and do not get into the national statistics.

Meanwhile, on the detection side, issues such as “take into consideration cases”, to which the noble Earl, Lord Lytton, referred, are sometimes lumped together as solved or cleared as a result of a deal with a defendant or prisoner, without real conviction and due process. I have read parts of Dr Patrick’s analysis, and I have no way in which to assess the validity of all this or how widespread it is. But it is also true—and this is in the title of the debate—that with some crimes under the last Government there was a drastic fall, following the introduction of targets and performance management criteria. That might mean different things: it might suggest that the target culture was instantly incredibly successful in increasing overall efficiency against targets; it might suggest that the priorities and resources were, as in other public services, concentrated on those areas that were measured and defined as targets while other areas were left underresourced; or it might mean—and this is something that we regrettably know about in bits of the NHS—that figures were reclassified or manipulated to exaggerate performance improvement.

What we need to know from the Minister tonight is two-fold. Does he recognise the figures on descriptions of malpractices in individual police forces to which the noble Earl referred? What arrangements for quality control and challenge of statistics coming from individual police forces are there in England and Wales? Secondly, I recognise that the Home Office and the ONS give guidance to the police on how to record crime, but who checks the compliance? Is it the police authority, the new police commissioners or the Inspectorate of Constabulary? What is the role of the Police Support Unit—or is it the ACPO high command, or the Home Office itself? How does it work and, in particular, how far is it guided, checked and quality controlled by non-police bodies, or is the guidance and advice from ACPO to chief officers dominant? Like the noble Earl, I have some concerns about the role of ACPO in this area.

There are also reports that those who query the current system, whether from within the police force, from community bodies or even from the Home Office, suffer repercussions—they have been victimised or moved to other duties. Is the Minister aware of such allegations, and what would he instruct the Home Office to do about such allegations? I have to phrase this in the form of questions, partly because of the difficulty of proof and partly, frankly, because of the litigiousness of some of those who defend their position. But these are questions that the Ministers in the Home Office and, perhaps, the Ministry of Justice, need to ask.

The present Secretary of State has made two key decisions in relation to crime statistics and performance. First, she transferred responsibility for oversight and reporting of crime statistics after 2011 from the Home Office to the ONS. That is a very sensible move, which will probably pay off in the long run. However, the ONS analysis is only as good as the statistics that come in. Unless we can improve the accuracy and integrity of all sources of information and eliminate natural bias and contrived distortions, the ONS and Ministers will still be working on flawed systems of statistical records, and hence a flawed evidence base. Secondly, the Home Secretary determined that the police service should move away from target-based performance indicators and, in the light of experience, we would probably think that was the right move as well. But local commissioners will still need authentic, undistorted statistics on which to make their decisions. If not, we are going to end up in the worst of possible worlds, where there are no performance targets, but the police go on recording the same statistics in the same way.

It is time that we had a proper analysis of this—the review by the ONS goes just so far. But as the noble Earl said, unless we are confident in the statistics that we receive, bad statistics will distort the basis for operational decisions by chief officers and strategic decisions by police commissioners and distort the very basis on which Home Office Ministers and officials make national policy in England and Wales. We need a new, expert review, probably judge-led, without an axe to grind, distinct and separate from the police force itself, and we need it soon.

[Earl Attlee]

Can the noble Lord conclude his remarks very soon, because he is completely out of time?

[Lord Whitty]

If I am completely out of time, I shall just say that a push for such an outcome needs to start from the proceedings here today.

17:39

[Baroness Harris of Richmond]

My Lords, I thank the noble Earl, Lord Lytton, for bringing forward this important debate this afternoon. Before I begin, I remind your Lordships of my former interests in policing matters. I have been involved in policing for over 30 years and a member of my police authority for 20 years, chairing it for eight of those. I was a deputy chair of the Association of Police Authorities, a member of the Police Negotiating Board and the Service Authority for the National Crime Squad and I sit on the Independent Police Commission. Of course, I speak here in a personal capacity only.

The Home Office ostensibly set only one policing target when the current Government came into power: to cut crime. The previous Government did much the same: to improve confidence in policing. Yet under both these seemingly simple and unbureaucratic targets lay a plethora of indicators, with more targets, measures, priorities and the like. Police authorities were bewildered by their complexity but had to comply with them through their policing plans for their local communities.

Then, about a year ago, the Home Office handed all responsibility for analysing crime statistics to the office of the National Statistician, the ONS. The idea was to make the collection and analysis of data more transparent and at a stroke reduce public scepticism about crime statistics. We must not kid ourselves that the Home Office does not continue to collect large amounts of performance and crime data. It needs to, to inform the collation of performance statistics nationally. Some of these data are used to support the crime mapping tool on www.police.uk that enables local people to check crime in their area. That is a very good thing. The data inform the national performance monitoring functions of Her Majesty’s Inspectorate of Constabulary—HMIC. There is also the Crime Survey for England and Wales—formerly the British Crime Survey—which is carried out independently.

Historically—certainly during my years working in the policing environment—there have always been problems with the way in which crimes are recorded in different forces. The former Audit Commission and more recently HMIC noted significant variations in practice and an unacceptable level of mistakes, as we have heard. Commenting on the analysis of variation in crime trends published by the ONS in January this year, the Association of Chief Police Officers—ACPO—recognised possible reasons why the variations existed. It cited,

“potential over-zealous recording practices in the early years of the national standard in crime recording being introduced as well as the move to neighbourhood policing teams resulting in more low-level crimes being dealt with informally and outside the formal crime recording system”.

Be that as it may, the general public need to be assured that crime figures accurately reflect what they see happening on the ground. It would appear that there is a great deal more work to be done to convince people that the police are performing at a consistently high professional level. In some parts of the country, that clearly is not happening. We know from the many recent press reports that concerns are being widely expressed about significant underreporting of crimes such as rape and violence against women, about 101 calls not being answered in a timely and professional fashion and about complaints about police corruption not resulting in any prosecutions, et cetera.

The flurry of media reports of bad policing up and down the country—more in the past two years than I can ever remember during the whole of my time on a police authority—truly grieves me. It is shocking to read of the bad behaviour of some police officers, possible corrupt practices and abuse of the very special powers of a constable. These people have no place in today’s police service and should be rooted out quickly so that the vast majority of utterly professional and dedicated police officers—who, incidentally, deplore this behaviour but seem powerless to stop it—can do the job that they are asked to.

Which forces are using these methods and what will the Government do to get to the heart of these allegations? Will the Government conduct an assessment of the policing and crime plans due to be published imminently to see whether there are any patterns, commonalities or significant areas of difference emerging, especially in those forces where problems may have arisen? Can the Minister say what has been done to encourage other government departments to promote the duty to co-operate with the police and crime commissioners among partner organisations? My feeling is that they will need to be able to develop a coherent range of cross-sector services, matched to the needs of their local communities. It should also help working with other agencies to try to answer some of the concerns that have been expressed here this afternoon.

If it is a matter of culture change—how often have I heard that expression over my years in policing?—the College of Policing must begin to address this as a matter of critical importance. Will the Minister ensure that, where actions need to be taken in regard to forces within which rogue officers are found, they are undertaken as a matter of urgency, and will he seek the help of HMIC to consider undertaking thematic inspections of those forces where these problems appear to be arising?

17:45

[Lord Maginnis of Drumglass]

My Lords, I am grateful to the noble Earl for raising an issue that, however one dresses it up, amounts to a system that encourages carelessness, misrepresentation and possibly even corruption among today’s police service. I come here with more than 50 years of policing experience. I first donned a police uniform when I left college in 1958 and I served until 1965. Then, as a commissioned Army officer from 1970 for almost 12 years I liaised daily with the RUC and, when I came to Parliament, I acted as its parliamentary adviser. My natural instinct is pro-police.

I spoke during the previous debate about how arm’s length government has now become, and how remote and ineffective are the multiple layers of delegated accountability so that most of us no longer believe that the Home Office is in control. Certainly the elected commissioner aberration, rather than representing better management, is but another waste of resources, as the electorate have made very clear.

I want to give a practical example of how command responsibility has been eroded to a point where accountability has become little more than a paper exercise and, bluntly, of how this is leading to carelessness, mistakes and, ultimately, corruption. I am not even talking about a Hillsborough or a Savile. I want to talk about a conman called Mark Heslehurst, who has been able to use the Cleveland Police for nigh on a year in order to persecute a local councillor, Councillor Joan McTigue, because she, although initially sympathetic to his story that his son has been abducted to Cambodia, eventually saw through his intrigue and challenged his attempts to extract money from a sympathetic community.

Quite independently of Councillor McTigue, I met Heslehurst, made a few simple inquiries and came to a similar conclusion. I do not have time today to go into his cover story in detail. My complaint is that Cleveland Police have, on behalf of Heslehurst, exclusively concentrated their inquiries to the point of harassing a local councillor, a lady who worked in education and is now semi-retired. Yet Heslehurst, using various aliases—for example, Ian Blagg, who by coincidence tweets with exactly the same grammatical and punctuation errors as Heslehurst—is allowed free rein to publish outrageous claims against this lady and against me.

Community compassion has enabled Heslehurst to travel to the United States and to stand for the Middlesbrough parliamentary seat after the death of our late friend, Stuart Bell, an individual who, like Councillor McTigue and me, was badmouthed by Heslehurst because he was too astute to fall for this conman. Enough about Heslehurst—I am running out of time, but I can provide the Minister with literally reams of evidential material.

What I must ask is why Cleveland’s Sergeant Copley seems to concentrate only on the actions of Councillor McTigue, to the extent that he has seized and held this lady’s computer for the past four months, but has found no reason to do likewise with Heslehurst’s, despite the fact that she and I are blackguarded on an almost daily basis. When I spoke about this to Inspector Wrintmore, he told me that the matter was awaiting a decision from the north-east Crown Prosecutor’s office and that it had asked for more information. However, that is not true. Let me read from two letters that I received from the CPS. On 19 February the deputy CCP wrote to me saying:

“I confirm that the CPS has now given the police early investigative advice … I appreciate your concern regarding the impact of the case on Cllr McTigue … the matter now rests with Cleveland Police”.

Just a few days ago, on 14 March, he wrote again, saying:

“As the only offences under consideration are triable in the magistrates’ courts, the decision as to whether someone should be charged falls to the police”.

After months of aggravation, this was very useful in terms of police statistics but of absolutely no public benefit.

If I had time, I could tell a similar story about an 83 year-old lady in the North Yorkshire Police area, where police have conspired to ensure that she is kept out of her home and where those who have tried to help her, particularly a Tim Hicks, have been threatened with arrest, only to find out when he came on an errand from Luxembourg to face that charge that it was merely an intimidating bluff.

In conclusion, I had similar personal experiences with the Met and the PSNI when I was threatened with arrest due to totally unsubstantiated complaints of assault. Do I look like I would assault anyone? I shall leave that. Once in a Committee Room here, it was alleged that I assaulted someone and that there were more than 45 witnesses, but not one turned up. It also happened once after I gently reprimanded a road hog. That is two more non-offences solved. I rest my case.

17:51

[Lord Condon]

My Lords, I am not sure how I follow that, but I will do my best.

I thank the noble Earl, Lord Lytton, for raising this important issue and I am sure that he will not be surprised if I do not buy entirely into his rather pejorative view of modern policing. Even though I am 13 years into retirement, I still believe passionately that the vast majority of police officers are honest, decent people doing a very good job. I declare my registered interest in policing and as a former police commissioner.

Performance management is vital in the public and private sectors, both of which I have worked in for the past 40 years. Performance management drives improvement, can provide transparency and comparability, and ultimately assists accountability. However, I agree with others that for too long reported crime figures have been overrelied upon as the most important police performance measure, despite their fragility as a true reflection of crime levels and their vulnerability to manipulation and massaging by rogue police officers. Others have spoken about that.

Many years ago, as a young and new Chief Constable of Kent Police, I tried to broaden the basket of police performance measures beyond the traditional crime figures. After wide consultation with the public in Kent, three additional measures were regularly published by my force: first, on the police response to emergency calls; secondly, on visible and reassuring police presence and availability on the streets; and, thirdly, on overall public satisfaction with Kent Police. That force became the first and only police service to be awarded a Citizen’s Charter for its overall service to the public, and I think that that was partly because we did not overrely on crime statistics.

Reported crime in recent years, however, has fallen throughout the developed world. Despite wide variations in police resources, methods and accountability, there has been a relentless fall in reported crime in all the major developed countries. Why has crime fallen? Policy, police and government issues have clearly helped, but I firmly believe that the main reason is the significant advances in technology and product development that have dramatically changed the volume and patterns of theft. For example, new cars are now very difficult, if not almost impossible, to steal. Pin numbers and other anti-theft characteristics have dramatically reduced the motivation to steal electronic goods. If you cannot use or sell an item you have stolen, what is the point of stealing it? The volume crime of theft has dropped dramatically throughout the developed world.

Similarly, and even slightly frivolously, there is scientific speculation that the removal of tetraethyl lead from petrol and the consequential reduction of harmful pollution to babies has led 20 years later to reductions in violent crime levels in developed countries such as the United States, the United Kingdom, Canada, Australia, New Zealand, France and West Germany. There are very strong correlations between improvements by not using lead in petrol and dramatic reductions in violent crime.

Moving on to police manipulation, the perhaps understandable but flawed overreliance on crime figures has also led to the manipulation and massaging of crime figures by some rogue police officers. During my first few weeks as Chief Constable of Kent, I had to deal with a major discipline case involving Kent detectives who had been visiting convicted burglars in prison. Through various inducements such as taking them out for the day, letting them meet their girlfriends and extra cigarettes, the detectives got them to admit to crimes they had not committed, thus fraudulently improving the Kent crime detection figures.

There is an overreliance on crime figures with not enough being done to prevent fraudulent behaviour. What should be done to improve the situation? I think that the Government have already taken some important steps, including the transfer of responsibility for the independent reporting of national crime statistics to the Office for National Statistics. That is vitally important. Improvements have been announced to the British Crime Survey. Transparency through making changes to the collection of crime statistics is, as I say, very important. I also welcome the statement by the Minister for Policing and Criminal Justice earlier this month about changes to police recording practices and how crime will be recorded. Some of those changes will come into effect from April of this year, with others to follow in April next year.

In conclusion, it is vitally important for all stakeholders in this arena to acknowledge the strengths, limitations and frailties of recorded crime statistics. Crime figures must not be the only significant proxy for police efficiency. Of course good policing and intelligence-led policing help to reduce crime, while equally, bad policing and confused priorities allow crime to flourish. However, reported crime is only a part, albeit a vital part, of measuring police performance. It does, has not, and will never provide the full picture. ACPO, the inspectorate, the Home Office and now the new police and crime commissioners must accept the limitations of crime figures, and they must give clear and unambiguous signals that only the highest ethical standards are acceptable in recording crime and detection figures. They must be ruthless in dealing with malpractice by rogue police officers, whatever the motivation for corrupting crime figures. It is wrong, however they try to justify it, such as by using the euphemism of “noble cause corruption”. These abuses must be exposed and dealt with.

I am confident that the Minister will be able to reaffirm the Government’s commitment to improving standards in this area and that, with the support of the police service, further improvements will be made. This is a vital area which impacts on public confidence in policing.

17:59

[Lord Laird]

My Lords, I, too, thank the noble Earl, Lord Lytton, for securing today’s debate. It is a good opportunity to express some opinions that a lot of us feel strongly about.

I have become increasingly worried about the build-up of resentment over actual or perceived corruption among police forces the length of this country. Corruption, where it exists, affects only a tiny part of the police service. Thankfully, this point has already been made. The majority of police are honest and decent, and it is for that majority that I would like to know from the Minister if he will set up a whistleblowing scheme for officers, preferably independent from the police service.

I have been made aware that some South Wales Police officers have contacted non-Welsh Members in the other place with their concerns over the improper actions of supervising officers or undue pressure to undertake actions that conflict with their oath to Her Majesty the Queen or their professional judgment. These actions have done much to damage the image of the police.

I am told that the police nationally now adopt a process of informal cautions. This apparently allows them to hold a database of information as a local criminal record. Does this enable them to circumvent the DNA issue and to hold such material indefinitely? Such local data are not accessible via the police national computer and do not necessarily show up on a standard Criminal Records Bureau check or on enhanced disclosure or subject access requests. Persons entered on these databases usually have no idea what is logged or why, and cannot challenge the accuracy of something that could easily affect their personal finances, employment or later be dragged up in court proceedings or other activities.

This practice has apparently been going on since 1997 and was raised in correspondence in early 2007 between Ken Jones, ACPO’s president, and Richard Thomas, the Information Commissioner. I gather that even a fixed penalty notice or a police warning letter is sufficient to trigger a “non-sanction detection” and resultant entry on a computer. Needless to say, the Information Commissioner was most concerned and I would like to know if this issue has been addressed. Does the Home Office know how many such databases are operated by police forces or associates, what they are used for and how they are authorised, and will it ensure from today that all data are disclosed to those whose names are so held? Further, is it going to regulate the activity and insist on a formal register?

I now turn to south Wales and a matter that I last raised on 15 May 2012 in a debate on the Queen’s Speech. It would appear that little attention was paid by the Home Office to my comments, nor did it take steps to use the powers it already has or, if necessary, to seek new regulations. South Wales, its police force and the independence and governance of its commissioner concern me. It seems that the chief constable, Peter Vaughan, was part of the selection panel for the deputy and assistant commissioners, the deputy being a political appointment. I do not feel comfortable with this, or with the appointment of his former ACC, David Francis, as assistant commissioner. Surely this process should have been free of cronyism? I thought that the idea was to introduce independence and new ideas.

What I previously called systemic corruption by a small number of that force’s officers seems to have been endemic in the area for many decades, and now appears to have been compounded. I wrote to Assistant Chief Constable Matt Jukes on 17 July 2012 and in that letter I included a number of FOI requests, which he neither answered nor acknowledged receipt of in his reply of 10 September 2012. I therefore submitted a complaint to the Information Commissioner for him to pursue answers in full. The answers to the FOI requests appear to have been blocked by the sector inspector for east Cardiff, Inspector Nicky Flower, whose actions and management they concern.

An appalling case happened in south Wales that was very similar to the type of case that the noble Lord, Lord Condon, was referring to in Kent. A young person was taken out of the prison in Bridgend and treated in the sort of way mentioned by the noble Lord, Lord Condon, except that he was plied with four cans of cider and then asked to agree to a considerable number of “taken into consideration” dwelling burglaries that he had not committed. Unfortunately for the police officers doing the questioning, the young chap was actually in police custody on the days concerned. The two detectives received written warnings only as a result of the IPCC investigation; the chief constable would have exposed himself if he had committed the officers to trial. Why am I not surprised? How long do we have to wait for a criminal judge or judges to be appointed by the Home Office to carry out a root-and-branch investigation of that force?

18:05

Baroness Smith of Basildon: My Lords, this has certainly been an interesting and very wide-ranging debate and we should be grateful to the noble Earl, Lord Lytton, for giving us the opportunity to look into these issues and get some response from the Government, who I understand also have concerns. He certainly raised some significant concerns about the accuracy of crime statistics, which have been endorsed by other noble Lords. It would be helpful if the Minister could say whether he intends to pursue this further.

I will not repeat what has been said but will instead look at some of the evidence for the points made, particularly concerning the accuracy of statistics. The UK Statistics Authority recognises two main sources of crime statistics: police-recorded crime and the national crime survey. Although they have different numbers, the trends are often very similar as to whether certain categories of crime are rising or falling and to what degree. It was therefore quite worrying to read a BBC report that said falls in crime in England and Wales may have been exaggerated by the police. According to the report, the Office for National Statistics said the “rate of reduction” in recorded crime “may overstate” the decrease. It went on:

“The ONS compared certain categories of crimes and found police-recorded offences had fallen by 33% over the previous five years, while data from the Crime Survey of England and Wales”,

which is used by the UK Statistics Authority, is highly regarded and is recognised as an accurate method of counting,

“suggested a decline of 17%”.

That is a significant change.

My colleague David Hanson MP has asked the HMIC to look into these discrepancies. It was interesting to try to get some information from the Office for National Statistics about why there could be a discrepancy and what was the real issue about the falling level of crime, which all of us want to see. I agree with the noble Lord, Lord Whitty, that we want to believe that crime has fallen. I suspect it has been doing so for some time now, but to what degree and how accurate are the figures? That impacts on the kind of crime strategy that we have. One reason given by the ONS for underrecording is that more low-level crimes are being dealt with informally and outside the formal crime recording system, with officers being given greater discretion to do so. The Office for National Statistics spokesman added that it was also “possible” that lower budgets and fewer police meant that less crime was being recorded—basically, there are not enough police to record and act on all crimes.

There are different ways to deal with low-level crimes. At present there is a very streamlined process of out-of-court disposals, which are non-judicial measures available to the police, such as cautions. I am sure that the noble Lord is aware that the Magistrates’ Association has raised concerns about out-of-court disposals being used far more widely than was originally intended. In response to a Home Office consultation on this issue, it said:

“In our view the use of non judicial disposals is being promoted for economic reasons”.

This comes back to my question about whether there are enough police to deal with all the crime that is being reported and dealt with.

With that process being available to police, it is difficult to understand why other low-level crimes have not been recorded by the police in official statistics. However, if we look at some of the figures from industry, the British Retail Consortium has reported a 15% increase in the cost of retail crime and yet there has been a drop in the proportion of crime reported by retailers from 48% to 16%, which is highly significant.

It is difficult to get to the reasons for this, but it is clear that the police are under increasing pressure. There are fewer officers, and that could play a role. The Home Office recently published the summary of a consultation titled A Revised Framework for Recorded Crime Outcomes. The Government looked at the change in the way that crimes which have been cleared up by the police are actually put into the framework:

“Since April 2011, to address the fact that the current framework does not recognise informal disposals, the Home Office has been receiving data … on crimes ‘cleared up’ by the application of local community resolution or restorative justice disposals”.

Can the Minister assure me that these informal reports are actually recorded as crimes in the official statistics from police forces? I suspect they are, but I would like an assurance that this is not a way of sliding statistics in another direction.

It has been recognised for some time that there is a lack of confidence in crime statistics; it is nothing new. In May 2010, as one Government left and another Government came into office, the UK Statistics Authority produced a report. I have to admit that I was the Minister responsible for the statistics authority at the time, but I was not responsible for implementing the report. Titled Overcoming Barriers to Trust in Crime Statistics, it recognised the problem of lack of trust in statistics on crime and made recommendations for enhancing public confidence and the government action to be taken. Many of them dealt with making published statistics easier to understand and increasing clarity on how the information could be used. Transparency often means producing lots of statistics that no one can get to the bottom of or understand. Real transparency means that people know what the figures mean. Of the recommendations made by the authority in 2010, how many have been implemented and how many others are being acted on now? If the Minister cannot respond today and wishes to write to me, I would appreciate that.

Finally, I turn to the comments made by the noble Lord, Lord Condon. In any debate about crime and crime statistics, there has to be room for reference to the statistics on crime detection, which are an extremely important measure of crime. They concern how many criminals are brought to justice, which is the reason we support our police service. Last year, some 30,000 fewer crimes were solved. Does the Minister have any information on why that is?

I have many other points that I would like to make, but time is short, and I am sure that there will be plenty of other opportunities to debate this issue. However, I will say finally that it is important that the Government should get a grip on the issue of confidence in the accuracy of crime statistics. Data transparency is not enough; there has to be public confidence and the Government have to be aware that this is an issue. The 2010 report will be helpful in this. If the noble Lord is able to give us some reassurances and can address the points made by the noble Earl, Lord Lytton, that will be helpful.

18:12

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

My Lords, I begin by thanking the noble Earl, Lord Lytton, for tabling this Question.

18:13

Sitting suspended for a Division in the House.

18:20

[Lord Taylor of Holbeach]

My Lords, I began my few words before the Division by thanking the noble Earl, Lord Lytton, for tabling this debate. It has proved to be really interesting, quite hard-hitting and in many ways quite outspoken, but not any the worse for that. It is good that we have been able to air these issues in such a frank way. It says a lot for this House that we can do so. I hope I will be able to reassure noble Lords that what is on the agenda at the Home Office is what all noble Lords have indicated as being the direction of travel that they believe policing in this country must go in.

A lot of points have been raised. I doubt that I will cover everything but I will write a general commentary on the debate and circulate it to all Peers who have spoken so that everybody can see the responses to those matters to which I do not know the answer or have not had time to provide an answer.

I start from the position of being very proud of our police officers. Every day they put themselves in harm’s way to protect the public. Thanks to their hard work and the reforms that the Government have brought forward in the police service, the police are succeeding in their core mission to cut crime. I do not think there is any dispute about that achievement. They are also coping with a difficult financial situation. All public services—and, indeed, business as a whole—are having to cope with the economic situation and the need for deficit reduction.

Before going into the detail, it might help to place the importance of the integrity of crime recording within a wider context. As noble Lords know, this Government have undertaken a radical programme of police reforms that have placed local crime concerns and priorities at the very heart of policing. Our reforms have put an end to Whitehall interference and bureaucratic accountability and introduced a new era of democratic accountability based on locality. We have scrapped national targets. I think most noble Lords recognise that that has probably been a great stimulus to adopting a more local focus and a more straightforward approach to these issues. We want the police to respond to local concerns. We have given the public better information about crime in their area and we have changed how forces are held to account. As noble Lords will know, the website means that people are now aware of crimes in their community.

In order to empower communities to hold their local forces to account, we must strive for greater transparency. The public must have a clear and accurate picture of the issues that affect their community and what is being done about them. The noble Lord, Lord Condon, with his professional experience in this area, made a very thoughtful speech. I reassure him that we have already announced that we are replacing detections with a wider framework of outcomes, because outcomes matter, removing the incentives to manipulate those figures to meet locally maintained targets.

I say to the noble Baroness, Lady Smith, that informal disposals are included in the crime figures. The crime maps, to which I have already referred, enable people to compare their area with other areas. I think all noble Lords are aware what a great hit this has been. Crime data have never been more transparent to the public. People can see where crimes have been committed, not only in the area in which they live but in the areas in which they shop and work. Therefore, the integrity of crime recording and the overall integrity of the police service are interlinked, particularly in the eyes of the public. Recording crime properly is essential to maintaining public trust in policing and ensuring that victims of crime get the best possible service.

This Government take crime recording very seriously and we are committed to improving transparency and building public trust in the figures. That is why we transferred the publication of crime statistics to the independent Office for National Statistics. The Government also agreed to the establishment of an independent advisory committee to scrutinise the statistics and advise Her Majesty’s Inspectorate of Constabulary on issues that need further examination. The new committee will examine the statistics and advise on areas that HMIC should be auditing. That is a new development, which will put increasing pressure on accuracy. As the noble Baroness, Lady Smith, knows, the ONS is independent of government and has an independent role in informing government and the electorate of the accuracy of figures.

The HMIC review of crime recording found that the majority of forces perform to a reasonable standard, and the ONS has recognised that the quality of crime recording by the police remains among the best in the world. The noble Lord, Lord Whitty, was anxious about the figures that we have talked about with regard to a fall in crime, and the noble Earl, Lord Lytton, was also concerned that we made sure that the figures were accurate. Crime is down according to both measures that we use; according to the Crime Survey for England and Wales, it is down by 8%, while police-recorded crime is down by 7%; the Office for National Statistics, too, has recognised that crime is falling. UK crime recording is recognised, in an international context, as being among the best in the world, as I have said.

Every police officer has a duty to record crime accurately, which is made clear in the guidance and regulations that cover their conduct. Police officers are required to report colleagues whose behaviour breaches the standards of professional behaviour. I reassure my noble friend Lady Harris of Richmond that when crimes recorded by the police do not reflect local crime experiences, we expect the police and crime commissioners to hold their forces to account on those issues. We continue to work with HMIC to improve the quality of crime recording and build public trust in national crime statistics.

Every organisation has bad apples, and the police are no different. Noble Lords have cited some examples today. But it is important to remember that the vast majority of police officers serve and protect the public with honour, bravery and integrity. Noble Lords have mentioned a few specific cases, such as those in south Wales and Kent. These are all historic examples of where those concerned have been dealt with and lessons have indeed been learnt. I hope that noble Lords understand that the purpose of all investigations and inspections is to help to maintain high standards. Recent reports by Lord Justice Leveson and Her Majesty’s Inspectorate of Constabulary have found no evidence that corruption is endemic in the police. However, with every accusation of corruption or that forces are gaming or manipulating their crime figures, public trust in the police is eroded. So I recognise the seriousness of this issue. The Home Secretary retains powers to commission HMIC to undertake urgent work if there are pressing systemic or serious issues, which, as noble Lords will know, she has recently used in the Savile case. These powers exist and are indeed being used by the Home Secretary.

Policing integrity is at the heart of public trust and confidence in the police. Without it, the police cannot do their job effectively or legitimately. If the public were to lose trust and confidence in the police, they would take years to recover. A significant minority of the public do worry about police corruption, and we must do more to tackle it. When police corruption and misconduct occur, that lets down victims, it lets down the honest majority of police officers, and it undermines public confidence in the police.

We heard from the noble Lord, Lord Maginnis of Drumglass, of his concerns, and I am very happy to talk to him about the cases to which he drew our attention. I hope that he will take advantage of that. Perhaps I may say that the charging responsibility for summary offences such as those to which he referred in his own circumstances rests with the police. However, all these matters can be dealt with through the IPCC, which has the power to investigate. Therefore, opportunities to challenge decisions are in fact available to the noble Lord and to all members of the public.

The Government have achieved considerable reforms of the police. Elected police and crime commissioners are now in place and the police are more accountable to their communities. There is a new College of Policing to professionalise the police and drive up standards, and a strengthened, more independent HMIC, led for the first time by a non-policing figure. However, we must do more to improve standards. That is why last month the Home Secretary announced a comprehensive package of measures to root out corruption and misconduct from the police.

There are a number of issues that I have not been able to address in the time available but I hope that noble Lords will accept that the measures the Government are taking will make the police much more transparent, with clearer rules on how officers should conduct themselves and stronger systems to investigate and punish officers who do wrong. The measures will also ensure that the organisations we ask to police the police, such as the IPCC, are equipped to do the job.

I hope I can say with confidence that this Government can look back with pride on what has been a time of fundamental reform of policing in this country. Thankfully, police corruption and misconduct are rare and we should not let them detract from the success of the honest majority who work so hard to protect us. I thank all noble Lords and I am sorry if I have not covered all the points. I will be writing.

Health: Diabetes

Tuesday 19th March 2013 Grand Committee

Question for Short Debate

18:39

Asked By

[Lord Morris of Aberavon]

To ask Her Majesty’s Government what is their assessment of the cost to the United Kingdom of type 1 diabetes; and what plans they have to improve treatment of that disease.

[Lord Morris of Aberavon]

My Lords, the question for this debate on diabetes follows on from the debate on diabetes initiated by my noble friend Lord Harrison on 29 November, when the House had a caring, helpful and painstaking reply from the Minister—who of course is responsible for health only in England. However, since the preponderance of contributions then were on type 2, it was not surprising that the Minister’s reply on diabetes type 1 could be measured in half a column of Hansard.

I shall particularise again on type 1, about which I have already declared a family interest. In sheer numbers, the lion’s share of the diabetes problem is type 2, where some individual action can be taken by those who suffer. Not a great deal can be done for type 1 except a great effort to mitigate the problem by management of the disease, including the use of insulin pump therapy where appropriate. I make three points. First, 400,000 people are currently affected by type 1, of which 29,000 are children, and incidence is growing at 4% a year. Secondly, lifestyle intervention will not prevent the increase in the number: obesity is not the problem. Thirdly, only research will find a cure for type 1. It is at present incurable and can strike at an early age. My aim in raising the subject is to seek once again to disaggregate the cost of diabetes type 1 from type 2, both in the cost of treatment and the provision of funds for research to find a cure. I have so far failed. The Department of Health does not currently calculate the cost in the way I would hope. Why can it not do so in future? That is my first question. Specifically, what are the obstacles?

We have estimates. The direct and indirect cost of treating type 1 is said to be of the order of £1.9 billion. With the projected increase of sufferers, the cost will be even more astronomical. Until the department is able to tell us what, in its view, is the order of expenditure, we cannot hope to make good decisions as to what expenditure is appropriate. We now have the opportunity of the shortly-to-be-born National Health Service Commissioning Board to look afresh at the two different types of disease. Aggregation of expenditure under the general figure of diabetes will not help the boards, as the Minister said, to,

“guide local commissioners to improve outcomes for people with the condition”.—[Official Report, 29/11/12; col. 333.]

I rely on those words. I am advised that representations were made to the Department of Health that type 1 sufferers are a small group—though not so small at 400,000 people—with the need for highly specialised support. However, the request that type 1 sufferers be commissioned separately or at least differently has not been approved. How is that decision justified? That is my second question. Since this is the second time that I have raised this matter in debate, perhaps the Minister could expand his reply tonight by writing to me with the department’s detailed reasoning. I would like that.

It can be of enormous material help to type 1 sufferers to provide insulin pump therapy and its monitoring as an option. There is immense international variation in the provision of pumps. In this country, as with the management of diabetes type 1 care there was a postcode lottery in the past. I was encouraged by the Minister’s reply that 8% now had pumps here in this country. He went on that,

“we still need to go further to achieve the 12% to 15% advised by NICE”.—[Official Report, 29/11/12; col. 336.]

I welcome what he said.

Specifically, what are the obstacles to enable this and why have we been so slow? It is estimated that the savings to the National Health Service that could be achieved by reaching the NICE benchmark would be £30 million and £60 million a year. We are talking about big sums of money. I am told that in the United States, probably 40% use the subcutaneous infusion. Norway, Austria, Germany and Sweden have higher figures of use than us, while of course other countries have lower ones. I have already questioned why the then health Minister, Mr Paul Burstow, was able to write to me on 25 April last year saying, “that we were generally in line with the United States”. That was a significant reply which took a great deal of wind out of my sails as I had relied on anecdotal accounts of disparity. It was a crucial response. How could the department have advised him to write as he did? Given the evidence that has emerged, that is now my third specific question for the Minister.

I come now to research. In addition to government funding, a great deal of work is done by charities, and I welcome the work of the Juvenile Diabetes Research Fund. I understand that the Wellcome Trust is also active in Cambridge, Oxford, UCL, Leeds and Hanover in Germany. Since the last debate, I have been to Oxford to discuss with Professor Paul RV Johnson, the director of the Oxford pancreatic islet transplantation team, its work on an artificial pancreas. JDRF believes that research into closed loop glucose control stands on the cusp of a breakthrough that will represent the first step towards improving the lives of millions of people with type 1 diabetes. They will be provided with an artificial pancreas. This is where we are and that is what they believe.

Progress can be achieved by a partnership between experts in various disciplines and industry for development, along with the regulatory agencies to ensure safe management. The need for disaggregation is exemplified by the fact that in 2009 the government spending bodies committed £51 million to fund research into diabetes, but of this only £6 million was applied to type 1 diabetes. I was encouraged by the progress being made at Oxford and the successes achieved with adults so far. I am sure I shall be further encouraged when I visit Cambridge and discuss the matter with the team led by Dr Roman Hovorka. While both the Government and the charities have to exercise care in the funding of projects, I hope that the Minister will himself examine whether there are any bureaucratic problems over the supervision of the spending of research funds, both public and private. It would be a pity if researchers had to spend an undue amount of time meeting overprescriptive requirements regarding the minutiae of how money is spent.

I made this point in the last debate, but I shall repeat it. There has never been a real budget for type 1 diabetes services. They have been developed on the back of academic interest and the clinical recognition of need. What has been done so far is a great tribute to the professionals. I earnestly hope that the commissioning boards will not miss the opportunity properly to recognise that type 1 diabetes is a disease with many different causes and characteristics from those of type 2 diabetes. We should ensure that the good research work now in hand is encouraged and adequately funded so that fresh hope is brought to the 400,000 sufferers of type 1 diabetes—and their number is growing each year.

18:49

[Lord Harrison]

My Lords, it is a great pleasure to follow the noble and learned Lord, Lord Morris, who is a distinguished member of the All-Party Parliamentary Group for Diabetes, so admirably led by our colleague in the Commons, Adrian Sanders.

The noble and learned Lord highlighted the amount of money being spent on type 1 and type 2 diabetes, which is familiarly known as some £10 billion a year, but evidence from a European study that I am going to quote in a minute suggests that it could be nearer £14 billion a year. This illustrates the theme of the noble and learned Lord, Lord Morris, that there is a large degree of uncertainty about the knowledge and facts that we have in this field and it is something we need to repair, which I will turn to shortly.

Having said that, we should have an update on the debates we have had in the past with regard to the treatment of diabetes. It is an odd circumstance that as diabetes becomes an epidemic in this country it has been largely neglected. Much more concentration has been on the repair of cancer or the attack on heart diseases and so on. I do not know whether the Minister has a reply to that but it is something that we need to turn our attention to.

I am very grateful that the Government have reiterated their desire to maintain the same levels of health spending as in the past. Nevertheless, cutbacks are beginning to happen. One of the most worrying themes, which I hope the Minister will address, is the decline in the cover of diabetics. We are beginning to lose the annual check-up, which is typical of what we have had. There is a tilting over to relying on the patient to bring to the attention of the GP a problem for the GP to refer on. The problem with that is that it is the middle-class, knowledgeable patient who understands that—so often at the cost of neglecting those who do need the annual check-ups and the variety of check-ups that were put in place by the previous Labour Government.

I encourage the Government to spend wisely. For instance, I have made this plea before about the DAFNE programme, which provides structured educational courses for type 1 diabetics. It is claimed, and I believe it may be true, that it pays for itself in four to five years, but it is not generally applied throughout the United Kingdom and that is a bad thing.

The general rush to do away with bureaucracy sometimes has a fatal element to it. I saw one of my many health advisers on Monday and at the end of the consultation she looked at the screen and said, “We no longer have the appointments done elsewhere and a paper notification for you”. She has to do it. It took her about six minutes, typing away. Of course, she is taking on administrative duties that take away from her skills at the coal face. I hope that the noble Earl, Lord Howe, will ensure that we leave the bureaucracy to the bureaucrats and that the health specialists have the opportunity to do what they do best.

I want to turn to a study by LSE Health at the London School of Economics, Diabetes Expenditure, Burden of Disease and Management in 5 EU Countries, which was published last year. It makes very informative reading. Noble Lords will know that I am a passionate pro-European. One reason for that is the ability to compare and contrast the practice of the 27 countries of the European Union. This is a study of the five biggest countries, but it offers us insights that we can adopt and adapt here, or which they can adopt and adapt in their countries.

I was surprised to note that the study firmly declared that blood glucose monitoring is a cheap and hugely effective way of ensuring the health of diabetics. The Minister will recall arguments we have had in the past over testing strips, for instance. He will remember that he responded to a debate in which I tried to highlight diabetic foot care, which I have always thought was quite expensive. I am clad in shoes which are appropriate for my very strange feet as they give protection which enables me to continue to do the kind of stuff I am doing, as is the case with thousands of other diabetics throughout the United Kingdom. I know that the noble Earl is familiar with these debates. I sometimes think that he has been answering them since the time of Galen.

The study looks at Germany, the UK, France, Italy and Spain and quantifies evidence and data. It notes:

“There is increasing concern amongst government officials and public health agencies about diabetes care in Europe. Both diabetes prevalence and spending appear to be increasing. … Diabetes prevalence has been increasing steadily over the past two decades, along with an aging European population, increasing, high obesity prevalence and changing ethnic make-up. This study estimates that Germany has the highest diabetes prevalence at 8.9%, followed by Spain (8.1%), France (6.4%), the UK (6.1%) and Italy (4.8%)”.

It is interesting to ask why these differences arise. The study continues:

“Only three countries have national diabetes programmes”.

I am glad to say that that includes the United Kingdom, along with Italy and Spain. The study notes that France’s programme,

“has not been operational since 2005”.

It continues:

“Germany has Diabetes Disease Management Programmes (D-DMP), however, not all patients with diabetes are registered. None of these strategies have hard targets to achieve ideal diabetes management”.

It would be interesting to learn more about that. In 2009, the United Kingdom introduced screening for high-risk patients. We have done well in regard to screening for retinopathy. It is imperative to maintain that momentum.

The study states:

“All countries have care guidelines, the UK’s being the most prolific, but none have guidelines written for patients”.

That is interesting. I wonder whether we can elaborate on that as I am not sure that that has been adequately dealt with. I have mentioned the DAFNE and DESMOND training protocols. The study continues:

“None of the governments collect diabetes spending accurately”.

There is no doubt about the difficulty of doing that because it is such a complicated matter. The study estimates that,

“in 2010, the direct cost burden of people with diabetes was highest in Germany … at €43.2 billion, followed by the UK (€20.2 [£13.8] billion), France (€12.9 billion), Italy (€7.9 billion) and Spain (€5.4 billion)”.

There are some strange discrepancies there which might be worth looking at.

I would like to draw your Lordships’ attention to other facts and figures but we need improved diabetes data so that we can construct more useful policy initiatives. The study has very little information on the indirect costs of diabetes. Can the Minister provide information on that?

I am coming to a close and should say that only France, Italy and the UK regularly collect and publish monitoring data. France did so intermittently, in 2001 and 2007. Thankfully, Italy and the UK do so annually but that is apparently not the case in Germany. Other elements in the collection of data are missing or overlooked and ought to be repaired. My general plea is—to embellish what the noble and learned Lord, Lord Morris, has said about spending—let us look and learn from our neighbours and improve what we can, but there has to be a fundamental drive towards better knowledge and data on type 1 and type 2 diabetes; otherwise, we will fail and misdirect the funds available to us in battling a disease that has become of epidemic proportions.

19:00

[Lord Hoyle]

I am pleased to join in this debate. Like the noble Lord who has just spoken, I have had diabetes that has responded to treatment. It is possible to treat diabetes, and I thank my noble and learned friend for bringing about this debate. I have supported him in previous debates and am pleased to support him on this important matter because there are some 300,000 people with type 1 diabetes in this country and no one is sure what causes it. My noble and learned friend is right to say that more research is needed and the Minister, when he replies, can perhaps give us some assurances on that.

Most type 1 diabetes occurs in people before they are 40 but I am extremely concerned about the rate at which it is increasing in children. That in itself is causing problems because people whose children have diabetes very often find that they have to give up their job in order to attend school. I hope that the Minister will come in on this: there surely ought to be more collaboration between the health service and education. I tabled a Question to the Education Minister and I must say that the reply did not provide any more information. He said, “Yes, there ought to be programmes”, but there must be more collaboration because unless that happens, help will not be available to people with children.

We have said this because the cost of types 1 and 2 diabetes to the NHS amounts to £10 billion every year; and the direct patient costs of type 1 alone is £1 billion. Indeed, care for the illnesses induced by diabetes that make it necessary for people to take time off work if they are not treated properly—all sorts of things occur to them—costs £0.9 billion. We ought to be doing a lot of things about diabetes, and that is why it is important to have debates such as this which attract attention to the issue and raise its profile. As my noble friend said, there is no reason why people who are well treated cannot live healthy lives. Not enough of them are getting direct help and care. As I have said before, that often affects their work and their careers. They need a little more help from the health service.

How many people are receiving the nine tests that are available to them? In particular, how many children are receiving their annual tests? These tests should be given annually. Why is that not occurring? I say again that this matter should be given the priority that is needed. There is no doubt that if people are given the special care that should be available to them they can continue to hold down a job and have a career and a healthy life.

The other big concern that I have is with some of the side effects that occur from diabetes. There is no doubt that people are not receiving the education that they need; it is very patchy in relation to how many get it, but if they do get the education programmes, it helps them enormously. The 2009 data that I have seen show that of 6,500 people diagnosed with diabetes—the Minister may dispute my figures—only 180 received offers of help with education, and only 30% of those diagnosed attended a course. Surely we can do better than that—I should think so.

I would like to refer to the mental health side, because the figures show that people with diabetes are more likely to suffer from depression. Poor mental health has a very negative effect on people, as we know, and it is likely to need more care and attention from the NHS. Surely, we could offer people psychological care as well. That is a very important part of the treatment, and I do not know whether the Minister has any figures to show how many people are receiving that, or not. Like other noble Lords, I am disturbed by the idea that diabetes may be pushed further down and may not be receiving the attention that it should receive in the NHS. I was interested to see that there has been a new appointment of a national clinical director for obesity and diabetes. I welcome that appointment, but I hope that it is not only going to be about obesity, which is very important—but so is diabetes. I would like an assurance from the Minister that this new director will be concerned equally with diabetes as he is with obesity. Having said that, I welcome and look forward to the Minister’s reply.

19:07

[Lord Collins of Highbury]

My Lords, I have no doubt that my contribution will be interrupted very shortly. I, too, thank my noble and learned friend Lord Morris for initiating this important debate. As a type 2 diabetic, I am acutely aware of the possible causes of my condition and how lifestyle changes can improve matters. That is not the case with type 1 diabetes, which is a chronic, life-threatening condition with a lifelong impact on those diagnosed and their families. It cannot be prevented and there is no cure. No one is quite sure what causes it; possibly it is triggered by an auto-immune disease. It does not involve lifestyle factors such as poor diet or lack of exercise, as my noble and learned friend has said.

Although the major increase is in type 2 diabetes, type 1 is also rising. As my noble and learned friend said, estimates suggest that between 300,000 and 400,000 people living with type 1 diabetes in the UK, which accounts for around 10% of all people with diabetes. People with type 1 diabetes are at greater risk of dying younger. The first ever report into mortality from the National Diabetes Audit was published just over 18 months ago, and I referred to it in the previous debate. It found that up to 24,000 people with diabetes are dying in England each year from causes that could be avoided through better management of their condition. About three-quarters of those are aged 65 and over. However, the gap in the death rate between those who have and who do not have diabetes becomes more extreme when comparing younger people. It is truly shocking to learn that so many young people are dying from diabetes. Type 1 is a particularly difficult condition to live with, as my noble and learned friend pointed out. We need to raise awareness and campaign to help to prevent and detect diabetes, as my noble friend Lord Hoyle said. I am therefore sorry that the Government decided not to accept the Public Accounts Committee recommendation on this particular aspect of its report about mounting public campaigns.

According to the 2012 Impact Diabetes report, the current cost of direct patient care for those living with type 1 diabetes is estimated at £1 billion, along with indirect costs of just under £1 billion related to increased death rates and illness, work loss and the need for informal care. Last year’s Public Accounts Committee report also recognised that while the department had improved information on diabetes, it was not being used effectively by the NHS to assess quality and improve care. It recommended that the department should work with the NHS to ensure that the costs of diabetes are fully captured and understood in order to promote appropriate services and better outcomes for patients. In their recent response, the Government agreed with the committee’s recommendation. I would therefore like to ask the noble Earl what progress has been made in implementing it, especially on the further work required to improve the underlying financial information collected at both the local and national level, and how quickly this will be made available to commissioners.

As we have heard, people with type 1 diabetes can live long, healthy lives if their condition is well managed. However, too many are not getting the help and care they need, leading to devastating complications, avoidable deaths and greater costs to the NHS. Everyone with diabetes should receive the nine agreed care processes recommended by NICE as part of their annual review. However, two-thirds of those with type 1 diabetes do not receive all nine. Can the noble Earl give more detail on how the target of 80% coverage by 2018 given by the department in the PAC response will be met? The concern is that the disbanding of NHS Diabetes may result in a number of established work programmes either not continuing or being suspended. It is really important that these programmes continue. They include integrated care supporting self-management, clinical safety, paediatric care and education, specialist foot care, older person’s care, inpatient care and, as we have heard from my noble and learned friend, insulin pump networks. Will the noble Earl support further development of these work programmes with the input of clinicians and patients to drive quality improvement?

Data from the National Paediatric Diabetes Audit show that only 6% of children and young people whose checks are being recorded are getting all of the recommended diabetes care, services and support that they are entitled to. Over 85% of children and young people over the age of 12 have blood glucose levels higher than the recommended targets. As many noble Lords here will know, on 13 March, Diabetes UK launched its type 1 essentials for children and young people campaign. In seeking to help end the variation in levels of diabetes care, the organisation wants to see specific diabetes leadership and a diabetes service improvement function in the new NHS improvement body. Assuring the effective commissioning of integrated models of diabetes care across primary and specialist services by working closely with clinicians and patients is vital.

Despite the fact that type 1 diabetes is a condition which people have to live with every day of their lives, my noble friend Lord Hoyle pointed out that education for people with diabetes is not universal or guaranteed. NICE guidance recommends that people with type 1 and type 2 diabetes should be offered patient education programmes to help them understand more about their condition and develop the skills needed effectively to self-manage their diabetes. An economic analysis performed by the York Health Economics Consortium, referred to by my noble friend Lord Harrison, revealed that DAFNE, a structured education course for people with type 1 diabetes, would pay for itself within four to five years due to the reduced complication rate expected from improved management of an individual’s diabetes.

As my noble friend Lord Hoyle said, the National Diabetes Audit has been collecting data on structured education in England and Wales since 2005. However, the completeness of the data is limited and therefore has not previously been reported nationally. The 2009 data show that of the 6,444 people who were diagnosed with type 1 diabetes during that year, just 180 recorded offers of education. In Diabetes UK’s 2009 membership survey, only 36% of people had attended a course to help them manage their diabetes since diagnosis. All people with diabetes, whether recently diagnosed or those with pre-existing diabetes, should receive access to the education and support they need to enable them to manage their condition. It should be available in their local area and be accessible and flexible enough to meet their individual needs. Like other noble Lords today, and like Diabetes UK, I welcome the appointment of Dr Jonathan Valabhji as the National Clinical Director for obesity and diabetes for England. However, I would seek from the Minister an assurance that type 1 diabetes will not be forgotten and that it will remain a core part of the new director’s responsibilities. I have completed my speech without interruption.

19:16

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, I congratulate the noble and learned Lord, Lord Morris of Aberavon, on securing this debate and on his authoritative speech and major contribution to raising the profile of diabetes, especially type 1. Diabetes is a major challenge for this country and that is why it is a key priority in the mandate for the NHS Commissioning Board. We are clear about the need to improve diabetes outcomes through better care, and we regard diabetes as a key marker of improvement in the NHS as a whole.

We are helped by having strong advocacy, as has been mentioned. I would like to commend the work of Diabetes UK in raising awareness of the early signs of diabetes in children, and support its new Ten out of Ten campaign: Type 1 essentials for children and young people.

19:17

Sitting suspended for a Division in the House.

19:25

[Earl Howe]

Type 1 diabetes is an autoimmune condition that causes failure of insulin production. It cannot be prevented or cured. Individuals usually develop the condition in childhood or early adulthood and require lifelong insulin treatment.

I therefore commend the Juvenile Diabetes Research Foundation for funding international studies in type 1 diabetes, having spent over £1 billion on research that seeks a cure or better treatment. It is a mark of the international standing of diabetes research in the UK that JDRF spends a relatively high proportion of its funding on type 1 diabetes research in this country.

We know that diabetes has a significant cost to society. The current payment systems in the NHS do not differentiate between the costs associated with type 1 and type 2 diabetes. The National Audit Office estimates that the NHS spends at least £3.9 billion a year on diabetes as a whole and its complications.

The noble and learned Lord asked what the obstacles were to counting the costs of type 1 diabetes separately. It is simply current accounting practice that prevents this. There will be new opportunities, with the NHS Commissioning Board and CCGs taking responsibility. I understand that as we speak work is under way that looks at the coding of diabetes care in primary care and how this is collected via computer systems.

The noble Lord, Lord Harrison, mentioned the indirect costs of diabetes. We know very well what those indirect costs look like in personal terms. One in 20 people with diabetes require support from social services. People with diabetes are twice as likely to be admitted to hospital than those without it. Complications increase the cost of NHS care fivefold. People can lose a leg, or their vision. Their kidneys can fail, they are vulnerable to infection, and their hearts can fail. These are serious complications. Diabetes is also a major factor in premature mortality.

We need more proactive management of the condition and its complications, starting with prompt diagnosis. Once diagnosed, people must have access to the best care and support in living with and managing this long-term condition. We need to make sure that management is in line with the latest clinical guidelines. To that end, the department has taken a number of steps to improve diagnosis and management of type 1 diabetes. We have collaborated with NHS Choices so that its website now has clear advice for parents on identifying the signs of diabetes and the actions required.

The NHS has clear statements of good-quality care for people with type 1 diabetes. These include the NICE quality standard and NICE clinical guidelines for all ages, which are being updated. The NHS is expected to follow NICE guidance as part of its general duty to secure continuous improvement in quality.

From April 2013, the best practice tariff for paediatric diabetes will ensure that the NHS offers all children and young people with diabetes appropriate education, support and management. All paediatric diabetes centres must belong to regional paediatric diabetes networks. Those paediatric networks will continue to function.

Like all pupils, children and young people with diabetes deserve full educational opportunities unhindered by their condition and their daily medical care. It is worrying that so many pupils experience preventable problems at school because of their diabetes, whether through barriers to insulin administration or even being banned from school trips. I am glad to hear that the honourable member for Yeovil and my honourable friend for Central Suffolk and North Ipswich have considered this in the context of early years and the minimum health offer in schools.

From April 2013 we will also introduce a best practice tariff to ensure good specialist care for severe insulin lack, called diabetic ketoacidosis, and for insulin excess or hypoglycaemia. These are potentially fatal crises if you have diabetes and can usually be avoided.

The Quality and Outcomes Framework, or QOF, rewards general practitioners for providing the nine care processes for people with diabetes. Since 2003-04, QOF has encouraged steady improvements in these annual checks. At the same time, the percentage of people diagnosed with diabetes has more than doubled. We want this improvement to go faster. For this reason, NICE has been asked to review the Quality and Outcomes Framework and diabetes indicators within it, and we await its response.

Last year, the National Audit Office published its review of the management of adult diabetes services in the NHS. While this report acknowledged the progress made over the past 10 years, in particular in the information we have about diabetes, it also highlighted the extent of variation in services across the NHS and the significant challenges that we face over the next 10 years. The Public Accounts Committee subsequently made a number of recommendations. The Government accepted all but one. We also set clear objectives for the NHS.

For the last few years, this work has been led by Dr Rowan Hillson as national clinical director for diabetes. Since her appointment in 2008, Dr Hillson has made enormous strides to improve the care and management of all those with diabetes. She retires at the end of this month from this role and I take this opportunity to pay tribute to her and thank her for all she has done, which is a very great deal. From April, Dr Jonathan Valabhji will take up the challenge on behalf of the NHS Commissioning Board as the new national clinical director for obesity and diabetes. I wish him every success in his new role. I can tell the noble Lord, Lord Hoyle, that Dr Valabhji is a consultant diabetologist and fully aware of the needs of people with diabetes. He will give them appropriate attention in the balance of his work.

I also thank the NHS Diabetes team for all their hard work. NHS Diabetes has made a major contribution to improving diabetes care nationally. The team will be absorbed into NHS Improving Quality in the NHS Commissioning Board next month. It is good that the excellent work of the National Diabetes Information Service will continue in Public Health England. The prime objective of the NHS Commissioning Board will be to drive improvement in the quality of NHS services. The board will be held to account through the NHS mandate. Diabetes is relevant to all parts of the NHS outcomes framework, through which we will track progress. In the NHS, diabetes is everybody’s business.

I agree with the noble Lord, Lord Collins, that structured diabetes education is essential. NICE has specified this and I support its guidance. The noble and learned Lord, Lord Morris, asked what we were doing to increase the use of insulin pumps. The national clinical director chairs the Insulin Pump Working Group, which met today. It exists to increase pump use and provided the insulin pump audit showing that 8% of adults and children in the UK have pumps. Within that figure, it is 6% of adults and 19% of children, but the work of that group continues. I am happy to write with a full and detailed response, as the noble and learned Lord asked.

The noble and learned Lord also quoted from a letter he had received from my honourable friend Paul Burstow, which indicated that we in this country were in line with the United States. I confess that I am puzzled by that, as he is. The figures that I have are that the United States has around 30% coverage. That compares to Spain, Finland and Portugal at around 5%. We are, as I say, at 8%. I will look further into that situation and write to him as appropriate.

The noble Lord, Lord Harrison, referred to blood glucose monitoring, which is, of course, essential to managing type 1 diabetes safely and well. The national clinical director and the chief pharmaceutical officer wrote to all doctors to remind them of that this year. Dr Hillson recently wrote to the NHS on behalf of the Minister for Public Health, highlighting the Minister’s concerns, and reminded the NHS of the importance of appropriate prescribing and management.

The noble Lord, Lord Harrison, also asked about guidelines for type 1 patients. NICE produces patient-friendly summaries which I believe are very helpful, while NHS Choices includes information about type 1 diabetes. The National Clinical Director for Diabetes has worked with Diabetes UK to produce its guidance and we support the organisation’s 15 healthcare essentials checklist. He also asked why everyone with diabetes does not get an annual check. In the Government’s response to the Public Accounts Committee we set clear objectives for the NHS Commissioning Board and we will monitor them closely.

The subject of research was raised by the noble and learned Lord and the noble Lord, Lord Hoyle. Recently, the Government announced that £775 million would be invested over five years through the National Institute for Health Research to drive innovation focused on major diseases, including diabetes. The department is currently supporting more than 60 studies into type 1 diabetes through the Diabetes Research Network. Diabetes research in the UK punches well above its weight and the results are seen prominently in international diabetes meetings. The noble and learned Lord also asked why type 1 is not included in specialised commissioning. I will write to him with an explanation on that point.

I would like to support very strongly the remarks made by the noble Lord, Lord Hoyle, about children with diabetes. Children with the condition should have equal opportunities in schools. Collaboration between children’s diabetes services, children’s carers and education services is absolutely key to allow children to achieve their full potential. All local authorities and schools should be encouraged to read the Managing Medicines in Schools and Early Years Settings booklet. He asked how many people are getting the nine care processes. The answer is 54% of adults, but I regret to say that it is fewer than 10% of children. However, as I mentioned, we now have the Paediatric Diabetes Best Practice Tariff, which demands better care in regional paediatric diabetes networks.

My time is up. I have more to say and I will write to those noble Lords whose questions I have not answered. There is good and bad here. We have vast amounts of data for this condition. We know what needs to be done and where. The challenge is for clinicians and commissioners to ensure that everyone with diabetes has good care.

Committee adjourned at 7.37 pm.

House of Lords

Tuesday 19th March 2013 Lords Chamber

Tuesday, 19 March 2013.

14:30

Prayers—read by the Lord Bishop of Bristol.

UK: Ageing Population

Tuesday 19th March 2013 Lords Chamber

Question

14:37

Asked By

[Lord Filkin]

To ask Her Majesty’s Government whether they will publish their assessment of the implications of the ageing of the United Kingdom’s population and their response to those implications; and, if so, when.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

We welcome the committee’s report on the ageing population that was published last week. We will consider its recommendations carefully and respond in due course. Effective reform of public services is critical if we are to meet the needs of an ageing population and ensure long-term sustainability. We have put in place an ambitious programme of reform across a wide range of government policy areas, including pensions, health, social care, housing and employment.

[Lord Filkin]

I thank the Minister for his reply. As the House may know, the committee found that our society and Government were woefully underprepared for this major social change. To focus the supplementary question on health, out of courtesy to my colleague, the report found a massive increase in demand and cost driven by the increase in long-term conditions. In the committee’s view, this posed perhaps the biggest challenge the NHS has ever had to face. Will the Secretary of State set out his assessment of these challenges and what he proposes to do about them?

[Earl Howe]

My Lords, we know that to adapt and respond to future need, the health and care system needs to change. The conclusions of the noble Lord’s report correlated in many ways with our own analysis in this respect. The challenges that the report sets out create an opportunity for the NHS and local authorities to innovate and explore new ways of working together to meet the needs of their local populations better and to optimise the use of resources, which is of course critical. We think the NHS and local authorities are best placed to understand the opportunities that exist in their areas, and we are committed to supporting them in that regard.

[Lord Mawhinney]

My Lords, will my noble friend undertake to intercede with the usual channels so that your Lordships’ House can have an early and full debate on the report from the Select Committee on Public Service and Demographic Change, given the highly significant consequences that would flow if the committee, of which I was a member, even got it half right?

[Earl Howe]

My Lords, I can say to my noble friend that I will certainly do that, because this is a very important report. I thank not only the noble Lord, Lord Filkin, but all members of the committee, who worked extremely hard to prepare a very well thought out set of conclusions.

[Baroness Greengross]

My Lords, does the noble Earl agree that social care has been the poor relation for so many years and that we need integration as soon as possible with health and housing? To achieve that, would he commit to the Government mandating integration and earmark sufficient funds so that this care can be a reality as soon as possible for older people with chronic conditions?

[Earl Howe]

My Lords, I very much agree with the noble Baroness. It is our ambition that people should receive high-quality, integrated, person-centred services that deliver the best outcomes to the service user. Making the service as a whole more efficient is the other benefit of integrating service. There is no single definitive model of integration. Some localities are further advanced than others in thinking about new ways of delivering it. We are developing the concept of pioneers to support the rapid dissemination and uptake of lessons learnt across the country, but we want to encourage local experimentation as much as we can to allow local areas to provide integrated care at scale and pace.

[Baroness Jolly]

My Lords, there are several common themes between the report from the noble Lord, Lord Filkin, and his group, and that of the scrutiny committee of the draft Care and Support Bill, which was published today. One of those themes is the funding of personal care, which has to be shared between the individual and the state. As recommended by the Dilnot commission, will the Government invest in an awareness campaign to inform people of this situation and the importance of planning ahead?

[Earl Howe]

I am sure my noble friend is right that there is a job of work to do to inform people about the new arrangements that we are bringing in to implement the Dilnot recommendations. My right honourable friend the Chancellor’s announcement at the weekend confirms that we will introduce a cap on care costs and extend the means test upper capital threshold at the earlier date than previously announced, namely on April 2016. The reason for the change in date is to bring it into line with changes to single-tier pensions. We will need to disseminate this information sooner than we would otherwise have done.

[Baroness Bakewell]

My Lords, when I was appointed the voice of older people in 2009, these issues were already well appreciated. It is now 2013. This is an excellent report from the House committee, which everyone recognises, but I am afraid that it joins many other reports on my shelf that have been published since 2009. Will the noble Earl please tell me why he thinks change is so slow?

[Earl Howe]

My Lords, change is an increasing imperative, at least in my judgment, at local level. I talk not only to professionals in the health service but to local authorities, which will very soon be charged with looking in the round at the needs of patients and service users in their area. They know that with the financial constraints that are upon us, services need to change in order to remain sustainable and affordable. That will be a very strong driver to ensure that some of these very good recommendations are driven forward at pace.

[Lord Hunt of Kings Heath]

My Lords, the Opposition warmly welcome the report. I am sure that it will be influential in the way we develop policies in the future. I was interested in the noble Earl’s response when he talked about public sector reform. Does he agree that the overwhelming message of the report is the need for a fully integrated health and social care system? Is he not as worried as I am that the changes in the NHS that he is introducing on 1 April will in fact lead to a disintegrated system in which, instead of co-operation and integration, competition will become the name of the game?

[Earl Howe]

No, I do not agree with that. We have always said that competition is but one tool in the armoury of commissioners. It is not a panacea by any means. As for disaggregation, I see the opposite at local level. Health and social care, public health and patient organisations are getting together for the first time to break down silo barriers and the traditional divisions that have existed.

Homeopathy

Tuesday 19th March 2013 Lords Chamber

Question

14:46

Asked By

[Lord Taverne]

To ask Her Majesty’s Government why the Department of Health removed from the NHS Choices website the advice that there was no good quality evidence to show that homeopathy was more successful than placebo.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, NHS Choices consults the Department of Health as necessary to ensure the consistency of its information with government policy. A recent review of the homeopathy web pages led to a change in the way the evidence was presented. Following concerns that the changes were unclear, NHS Choices has further clarified this information.

[Lord Taverne]

My Lords, I am delighted to hear that the passage has been restored. However, it is disturbing that inquiries made under the Freedom of Information Act revealed that officials deleted the passage as it stood in response to lobbying by a charity founded by the Prince of Wales. They seemed to be more concerned not to offend that formidable lobbyist than to listen to the advice of their Chief Medical Officer, who declared in a recent statement to a House of Commons Select Committee:

“I am perpetually surprised that homeopathy is available on the NHS”.

I have only recently learnt that a BBC South West programme found that Prince Charles’s favourite pharmacy has been selling sugar pills as vaccines against some serious diseases. I am sure that my noble friend, to whom I could not give notice of this point, will look into the matter. Will he assure the House that the policy of the Department of Health is to promote evidence-based medicine and not treatment based on nothing but water?

[Earl Howe]

My Lords, I shall certainly look into the particular matter raised by my noble friend. The change in the way the information was presented on NHS Choices was as a result of a formal review, which happens automatically to all NHS Choices pages every 24 months. The page on homeopathy reached the formal 24-month review point in January 2011. The policy of NHS Choices is to provide objective and trustworthy information and guidance on all aspects of health and healthcare, and the page on homeopathy does exactly that.

[Lord Walton of Detchant]

My Lords, more than 10 years ago I chaired an inquiry conducted by your Lordships’ Select Committee on Science and Technology into the field of complementary and alternative medicine. We examined the evidence in favour of homeopathy, accepting that certain well qualified doctors believed in its use. However, at the time we did not discover any convincing research evidence to suggest that it was better than placebos. Over the centuries, many medicines have been used that have been shown to be no better than placebos. Therefore, has the time not come when it is appropriate for the Government to recognise that, in the light of recent research, there is no evidence whatever to support the continued use of homeopathy in the NHS?

[Earl Howe]

My Lords, we have been consistently clear that no treatments should be arbitrarily rationed on cost grounds. The NHS constitution sets out that patients have a right to expect local decisions on the funding of drugs and treatments to be made rationally following a proper consideration of the evidence. More importantly in this context, it is the responsibility of the NHS to make decisions about commissioning and funding of healthcare treatments and not for Ministers to second-guess that process.

[Lord Winston]

My Lords, perhaps I may be permitted to help the Minister. Many years ago, there was a very interesting study in Wales of a placebo-controlled trial that showed that, whatever was given, the best chance of a treatment working, placebo or not, was whether the doctor who was giving the medicine actually believed in it. Does the same apply for homeopathy and the Secretary of State?

[Earl Howe]

My Lords, the best way I can answer the noble Lord is to refer him to the page on NHS Choices that explicitly refers to the placebo effect. As he will know, the 2010 House of Commons Science and Technology Committee report on homeopathy said that homeopathic remedies perform no better than placebos. It is important to emphasise that message. On the other hand, many people have found benefit from homeopathic medicines and, in a way, that is their privilege and right.

[Baroness Gardner of Parkes]

My Lords, is the Minister aware that homeopathy started at a time when the one treatment they gave people was to bleed them? It was effective because they did not bleed them and allowed them to recover normally; I was on the board of the Royal London Homeopathic Hospital for a good many years, where I learnt that. Does the Minister not think that, faced with a situation where antibiotics have been used too casually, it is time to look at what we should not be taking? Does he think it important that patients should have the right to whatever treatment they choose provided that homeopathy does not allow them to escape proper diagnosis for cancer or some other tragic condition, which could be overlooked if it is not combined with ordinary medicine?

[Earl Howe]

My noble friend makes an important point. We are clear in recommending that patients should talk to their GPs before stopping any treatment that has been prescribed by a doctor in favour of homeopathy and before they start taking homeopathic remedies. It is important that people understand that homeopathy may not be effective in many situations.

[Baroness Corston]

My Lords, given that many GPs ask for training in homeopathy and become homeopaths using both conventional and homeopathic medicine, and speaking as someone who personally uses homeopathic remedies, will the Minister ensure that the views of people such as the noble Lord, Lord Taverne, with which we are all familiar, are not given such credence within the National Health Service that those who wish to use homeopathic remedies do not have that choice?

[Earl Howe]

My Lords, I take the noble Baroness’s point. Again, we have consistently said, in this and in other areas, that clinical responsibility for an individual’s health condition rests with their GP, who must therefore be able to justify clinically any treatment to which he or she refers someone. As she said, there are GPs who have a speciality in homeopathy. We recommend that a patient who is interested in homeopathic treatment should go to such a GP.

Visas: Chinese Visitors

Tuesday 19th March 2013 Lords Chamber

Question

14:54

Asked By

[Lord Lee of Trafford]

To ask Her Majesty’s Government what is their assessment of the effect of current visa restrictions on visitors from China to the United Kingdom for tourism and commerce.

[Lord Lee of Trafford]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as chairman of the Association of Leading Visitor Attractions.

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

There has been continued and significant growth in Chinese visitors coming to the UK, demonstrating that we support growth through the visa system. In 2012, UKBA processed almost 300,000 visa applications from Chinese nationals, and the number of visas issued to Chinese nationals increased by 7% in the year to December 2012.

[Lord Lee of Trafford]

The reality is that between 2004 and 2011, while the United States saw a growth in Chinese visitors of over 400%, we managed just over 50%. Overall, the United Kingdom’s share of Chinese tourism has declined by one-third during the past 10 years.

Turning to non-tourism activities, is the Minister aware that, for example in our superyacht-building sector, the chief executive of the British Marine Federation said recently:

“Chinese tourist restrictions are a straitjacket on the UK marine industry which is harming businesses, sapping the economy, and costing local jobs”.

The president of Sunseeker said:

“Sunseeker’s Chinese clients and potential buyers are having extreme difficulty in obtaining a visa to visit the UK, being laborious at best and often declined”.

When is the Home Office going to get real and stop disadvantaging UK tourism and UK commerce?

[Lord Taylor of Holbeach]

My Lords, my noble friend is quite right to exhort us to greater effort, but he should be well aware of the work that is being done through our network of BritAgents throughout China and indeed our partnership with British Airways, which is opening a new route from Chengdu to London this year. This partnership and the way in which we are building our relationship with Chinese visitors are proving successful. Indeed, the most recent International Passenger Survey data revealed a 24% increase in the number of Chinese visitors in 2012 compared with 2011.

[Baroness Liddell of Coatdyke]

My Lords, is the Minister aware that the most recent World Economic Forum analysis of tourism competitiveness showed that Britain’s visa regime has gone from 22nd to 46th? Not only that, we are 139th out of 140 for the charges at our airports and on tickets because of our old friend air passenger duty. Last week, we had the debacle around Brazilian visas added to the current difficulties with Chinese visas. There are people out there desperate to come to Britain. They spent £18.7 billion in Britain last year, 4% more than the year before. Why are we making it so difficult for them?

[Lord Taylor of Holbeach]

I am afraid that I cannot agree with the noble Baroness. She paints a pretty dismal picture, but I do not recognise that from the reality. Of the applicants for visas, 97% are processed within 15 days and of those, 96% are successful. Having sought the opinion of Chinese visitors, 90% are very satisfied with the service provided by the visa service.

[Lord Tanlaw]

My Lords, I have just completed an extended tour of Singapore, Taiwan, Hong Kong and China, where I have a manufacturing interest. Is the Minister not aware that there is a lot of resentment and disappointment with this country because of the difficulty with visas? It is also affecting inward investment to this country. Is he aware of that? It is affecting the number of students who are coming here. Students are going to Australia and America instead. This thing is real, as the noble Lord, Lord Lee of Trafford, has said. Will something be done about it?

[Lord Taylor of Holbeach]

We are trying to make the visa application process as customer-friendly as we can. The form itself is available in Chinese so that applicants can complete it in Chinese and online. We are dealing with a real issue. Either we have visa controls or we do not. I am sure that this House would not suggest to Her Majesty’s Government that we drop visa controls. Indeed, we review visa controls, but for China we require them. The most important thing is that we have a system in place that reflects the interests of this country in protecting its borders and the interests of those who want to come here. They will be welcome for business, tourism and indeed for study.

[Lord Geddes]

In his first Answer to my noble friend Lord Lee, the Minister gave statistics for the number of visas issued. To what extent was that split between those from Hong Kong and those from mainland China?

[Lord Taylor of Holbeach]

There are no visas for Hong Kong or for Taiwan.

[Baroness Smith of Basildon]

My Lords, I am disappointed that the Minister sounds extraordinarily complacent on this issue. He has heard from all sides of the House that there is a serious problem, and it is not the case that people are saying there should be no visas. It seems that we are making matters extraordinarily difficult for people from China and, as we have heard, from Brazil who would contribute to the economy of this country. Does the Home Office or any other part of government undertake an economic assessment of the impact these visa regulations are having?

[Lord Taylor of Holbeach]

My Lords, there are no visas for Brazil, and there is no plan to introduce them. That decision was made last week, and an announcement was made to that effect.

I am not complacent about this issue. I see the enormous potential of tourism and commercial links with China. I think it is a very important area of activity. However, as I explained in my answers to noble Lords, we need to maintain a visa system for our own border security. Having decided that we need to put one into place, and I am very pleased to hear that the noble Baroness, Lady Smith, agrees with that decision, the task is to try to make sure that the processing is as straightforward and easy as possible.

I have given illustrations of the figures. We should talk in figures and not in speculation. I have given the figures that 97% of visa applications are processed within 15 days and that our charge of £81 compares with the £126 it costs a UK citizen for a visa to go to China. We try to keep our service as competitive as possible, and it is right to do so.

Bank of England: Monetary Policy

Tuesday 19th March 2013 Lords Chamber

Question

15:02

Asked by

[Lord Barnett]

To ask Her Majesty’s Government whether they intend to give more powers over monetary policy to the Bank of England.

[Lord Newby]

My Lords, the Bank of England Act 1998 already gives powers of operational responsibility for monetary policy to the independent Monetary Policy Committee of the Bank of England. The Act requires the Treasury to specify the objectives of the MPC at least once every 12 months. The Chancellor set the remit for the MPC at Budget 2012 to target inflation of 2%, as measured by the 12-month increase in the consumer prices index.

[Lord Barnett]

My Lords, there have been widespread reports that the Chancellor was looking at that remit with the possibility of changing it. I appreciate that it may have been only a Lib Dem Budget leak but is it true and, if so, what does he propose to do about that kind of leak? Does the Chancellor, as has been said, believe in a looser monetary policy, and has he told the new Bank governor that that is what he wants him to do?

[Lord Newby]

My Lords, as the noble Lord will be aware, it is Budget Day tomorrow. That is the day on which the Chancellor will re-express the remit for the Monetary Policy Committee. I am afraid the noble Lord will have to wait for 24 hours.

[Lord Higgins]

Does my noble friend agree that there is sometimes confusion between interest rate policy and monetary policy? Can he say what the Government’s policy is in relation to their own actions and those of the Bank of England as far as the quantity of money is concerned?

[Lord Newby]

My Lords, as I said in my original Answer, operational responsibility for monetary policy is a matter for the independent Monetary Policy Committee of the Bank of England, not for the Treasury.

[Lord Peston]

My Lords, bearing in mind that Section 19 of the Bank of England Act 1998 gives reserve powers to the Treasury to give directions to the Bank of England, am I right that those powers have never been used? I am pretty sure that I am right. Does it not follow that the failure—despite the fact that the Act says that this is the MPC’s objective—to hit the inflation target for three years without the slightest sign that it will be hit for the next two years, coupled with monetary easing, is down to the MPC?

[Lord Newby]

My Lords, inflation has been higher than the 2% target for a number of years. The MPC has taken the view that the target would be met in the medium term and that, because the principal reasons for inflation did not include excessive domestic demand and are therefore less capable of being moderated by increases in our own interest rates, it was wiser to “see through” the temporary increase in inflation above 2% but to work, as the MPC has, on the basis that, in the medium term, inflation would indeed come down to 2%.

[Baroness Kramer]

My Lords, Paul Tucker has floated the notion that the Bank of England could charge banks for holding reserves at the Bank as an incentive to get them to lend to the real economy. Is that an issue that has been actively discussed with the Treasury and what is the Government’s view?

[Lord Newby]

My Lords, again, that is a matter for the Bank of England. To the extent that the Chancellor—and the Treasury—wishes to change the way in which the Bank of England operates, he will have an opportunity tomorrow to set out what any changes might be.

[Lord Eatwell]

My Lords, from what the noble Lord has said, the Treasury has clearly been content with the policy pursued by the Monetary Policy Committee over the past three years. Is the noble Lord also content with the impact of that policy on pensioners’ annuities?

[Lord Newby]

My Lords, the Government’s view is that it is in the long-term interests of everybody, including pensioners and families, that we deal with the deficit and get growth going on a sustainable basis. In the short term, the Bank has taken the view that to keep within the inflation target and, subject to that, to support the economic policy of the Government, including their objectives for growth and employment, it should keep interest rates low.

[Lord Vinson]

My Lords, does the noble Lord agree that many people increasingly feel that the brief given to the American Fed, which is rather wider than the brief given to our Monetary Policy Committee, would be advantageous? Instead of looking solely at inflation, it would enable the Monetary Policy Committee to examine the effect of high interest rates on the rate of exchange. The pound has been kept higher than its purchasing power parity for years and, as a result, we have a huge trading deficit. A trading nation really ought to look seriously at its rate of exchange, which ought to be one of the factors that a new remit should cover.

[Lord Newby]

My Lords, when the previous Government established the independent Monetary Policy Committee, they decided not to follow the remit given to the Fed. No Chancellor since 1997 has decided to change that remit.

[Lord Hughes of Woodside]

My Lords, has the Minister noticed that the Deputy Governor of the Bank of England has floated the idea that banks should be entitled to charge negative interest on savings? Even the new Governor of the Bank of England, when he was in Canada, was apparently within days of allowing such a policy. This would be immensely damaging to savers. Will he put this to rest, immediately and unequivocally, and say that there is no possibility of the Government sanctioning any such idea?

[Lord Newby]

My Lords, an awful lot of ideas have been floated recently but the key remit for the Bank of England is set by the Chancellor. Within that, the Bank has operational independence on how it follows that remit. The remit has not changed but the Bank of England, with or without a new governor, always looks at questions in the general area of monetary activism.

Representation of the People (Election Expenses Exclusion) Order 2013

Tuesday 19th March 2013 Lords Chamber

Motion to Approve

15:09

Moved by

[Lord Wallace of Saltaire]

That the draft order laid before the House on 30 January be approved.

Relevant document: 19th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 March.

Motion agreed.

Welfare Benefits Up-rating Bill

Tuesday 19th March 2013 Lords Chamber

Report

15:10

Clause 1 : Up-rating of certain social security benefits for tax years 2014-15 and 2015-16

Amendment 1

Moved by

[Lord McKenzie of Luton]

1: Clause 1, page 1, line 4, leave out “by 1%”

[Lord McKenzie of Luton]

My Lords, I will also speak to Amendments 5, 7 and 10 in this group. These amendments stand in my name and in those of my noble friend Lady Sherlock, the noble Lord, Lord Low of Dalston, and the right reverend Prelate the Bishop of Leicester. I say at the start that we view the amendments as consequential on Amendment 1, and we are advised that should these amendments be carried, they do not pre-empt a discussion on the subsequent amendments on the Marshalled List.

Amendments 1 and 7 would remove the reference to 1% in Clauses 1 and 2, and hence would remove the 1% cap on the uprating of the relevant sums and amounts. Amendments 5 and 10 would delete the prohibition on uprating such sums and amounts under the annual uprating of benefits and tax credits. As we explained in Committee, we fully intend these amendments to negate the fundamental purpose of this Bill, which is to lock in real-terms cuts to a range of benefits for the two years to March 2016. This follows on from the equivalent cut for next year, which has been implemented by statutory instrument.

The uprating of benefits and tax credits should proceed in accordance with the existing statutory framework, whereby the Secretary of State is required each year to review the rates of various benefits and tax credit components to see whether they have retained their value in relation to the general level of prices. There is no general requirement to fully uprate, but there is an obligation to assess on the basis of up to date information on the cost of living.

On these grounds alone, the Bill is completely unnecessary. If the Government are intent on three years of cuts by 1% uprated, they can use existing mechanisms, just as they have for 2013-14. They would then at least retain some flexibility to revisit the policy, especially if inflation were to surge above currently expected levels. If the Bill stands, there is no certainty about the level of real cuts that have been imposed on some of the most vulnerable people in our country.

The government assertion that committing these cuts to primary legislation is crucial to giving confidence to the markets has no credibility. It is frankly untenable to suggest that by locking into legislation these estimated benefit savings, which amount to less than 0.1% of government spending, the markets will be assured and comforted. It does not seem to have cut any ice with the rating agencies.

Let me reiterate Labour’s position. We will make no commitment now on spending or tax for the next Parliament, and we will set out our spending plans at the time of the next election. However, right now, we would uprate in line with inflation. I will come in a moment to how the Government can plug the hole in their increasingly fragile finances.

This Bill is misdirected on several other counts. We are told by the Secretary of State that cutting benefits and tax credits is necessary in advance of universal credit, as a contribution to fiscal consolidation. However, it does nothing for the deficit or borrowing. Indeed, by withdrawing real resources from low-income families, which of necessity have the highest marginal consumption rates, it is damaging demand. It ignores the IMF warning that the fiscal stabilisers should be allowed to operate. Just last week, the FT joined an increasing chorus of those pointing out that fiscal tightening could raise the debt ratio in the short term, as fiscal gains are partly wiped out by the decline in output.

We also had the spectacle of the Prime Minister being rebuked by the OBR for asserting that the Government’s debt-reduction programme had not affected growth. Its justification is supposed to be that there needs to be some correction for the fact that benefits have been uprated at a faster rate than earnings over the past five years: essentially, that those out of work have done better than those in work. It is perverse, therefore, that some two-thirds of those hurt by the 1% restriction are those who are actually in work.

Looking at percentages rather than cash amounts is misleading. One per cent of a small number is a very small number. Indeed, specifically included among the cuts are in-work support such as working tax credits, SSP, SPL and maternity pay, as well as in and out of work benefits such as housing benefit: the very support that enables individuals to sustain employment and manage work and family responsibilities. We are told that the Government are committed to eradicating child poverty, and of course we would accept that child poverty is not only about income levels, but improving income and relative income is an essential component of tackling poverty, and matters are being made worse by this Bill, with another 200,000 children being drawn into poverty. Compared with CPI uprating, this Bill and the 2013-14 order mean that 30% of all families are affected, losing on average £156 a year.

15:15

Worst of all, at a time when this Bill is reducing the living standards of the very poorest, the Government are rewarding those with the highest income, including some 8,000 millionaires, with a generous tax cut. The contrast could not be greater: a £2,000 a week tax cut for some; a 71p a week rise if you claim JSA.

By leaving inflation risk with claimants, this Bill is creating greater risk for the poor and uncertainty about their real incomes. The 2012 Autumn Statement cited energy and fuel prices as a source of potential risk over the coming year. It estimated that inflation would be higher in 2013 and 2014 than originally announced due to rises in domestic energy prices and food commodity prices: the very costs that hit the poorest hardest. Sterling has fallen some 8.5% against the dollar since the start of the year, pushing up import prices. All these matters will now affect the incomes of the poorest, and they are things that they have no way of influencing. They are being cut further adrift from the mainstream of society.

Uncertainty is compounded by there still being no cumulative impact assessment for the raft of benefit and tax credit changes that have been introduced so far by this Government, including council support changes and the bedroom tax, which are about to become a horrible reality. The IFS has analysed the effect of the 2013-14 tax and benefit changes in its 2013 Green Budget, concluding that the,

“broad pattern of tax giveaways and welfare takeaways means that the changes, on average, reduce net incomes towards the bottom of the income distribution and increase net incomes in the middle and upper parts of the distribution”.

It states that below-inflation uprating is the predominant cause of the losses in the bottom half of the income distribution and the reduction of the top rate of tax from 50% to 40% the main gain for the richest. So the rich need more to motivate them and the poor need less.

Our opposition to this Bill is clear. We oppose it locking in indeterminate cuts to real incomes through to April 2016. We argue that the normal uprating process should operate and have been clear that, right now, we would support uprating by inflation. We will continue to argue for the reversal of the proposed tax handout to the very rich. We heard the Minister at Second Reading and in Committee suggest that the saving that such a reversal would produce would be illusory because the rich would order their affairs to make sure that the will of the Government was defeated. We would maintain that the Government do not have to acquiesce in this. If they believe in tackling tax avoidance, they could secure the revenues that reversing this tax cut should generate. We are told by the Secretary of State that other countries have cut benefits. Well, so has this country. We have had cuts to contributory ESA, cuts to DLA, cuts to housing benefit, cuts to council tax support, cuts to child tax credits, cuts to tax credits and now cuts in this Bill, yet we still have no growth and debt continues to rise.

We are asked today to sign off this further three-year cut affecting the poorest, the ultimate real size of which we cannot be certain of—and this the day before a Budget that may well visit yet further cuts. I urge noble Lords to prevent this from happening.

[Lord Low of Dalston]

My Lords, I have put my name to this amendment and will briefly signify my support. There is not a lot that I can add to the comprehensive account given by the noble Lord, Lord McKenzie. The only point I would stress was made by somebody on television last night—that we now live in an environment where inflation is considerably higher than we were used to in the first decade of this century. We understand that the new Governor of the Bank of England advocates that the inflation target should be allowed to float free. We are in an environment where inflation is set to hover around 3.5% or higher with no prospect of it reducing. In these circumstances, to cap the increase in benefits at 1% is simply unjustifiable. I support the amendment moved so comprehensively by the noble Lord.

[Lord Forsyth of Drumlean]

My Lords, there is no one in this Chamber who would not like to see support for those on low incomes and families to be increased. What was striking when the noble Lord proposed this amendment was that, apart from a vague suggestion that it might be possible to find the money by pursuing tax evaders, there was no indication of where the £3 billion needed to provide uprating in line with inflation—assuming the Government’s forecasts are correct—could be found. That is deeply irresponsible and it is particularly irresponsible of an Opposition who will not say what they would do in government. In other words, while it is not their responsibility, their line is “You should spend the money”, but when it might be their responsibility, they are not prepared to say what they would do. That is completely dishonest politics.

We have a dangerous position in our country, partly caused by the present Government constantly harping on about how they have reduced the deficit by a quarter. According to a poll carried out by ITN and a separate poll by the Centre for Policy Studies, which may not be quite so objective, when asked the question, “Do you think by the end of this Parliament the national debt will have gone up by £600 billion, be just the same, or will have gone down by £600 billion?” only 6% got the answer correct: that it will have gone up by £600 billion. So here we are, living in a country where we have to make difficult decisions—this Bill is an example of having to make difficult decisions—and where the vast majority of people believe that the Government are cutting debt, when in fact all the Government are doing is reducing the amount by which the debt is increasing. I will wager that when we have a debate at the end of this Parliament and come the next election, the Opposition will pursue the same kind of irresponsible tactics which we see in this amendment. They will say, “The Government were elected to reduce the debt, but the debt has gone up by 50%. If we had been in government, it would have been different”. That is the politics of it.

Let us look at it from the point of view of people on low incomes—working or non-working—faced with inflation. If we follow the prescriptions contained in this amendment, the consequence will be that the pound will sink still further. The consequence of the pound sinking still further is that the energy and fuel costs that the noble Lord, Lord McKenzie, spoke of will go up. So how does it help people who are struggling to say “Your benefits will go up by inflation” if at the same time you pursue policies which will result in higher inflation and higher debt and leave an even bigger problem to solve at the end of the day, which will be solved on the backs of the poor?

The noble Lord said that the Government are handing out a tax-free benefit to the very rich. I remind him that when his party were in government, people on very high incomes were paying less in marginal rates of tax than they are now. I also remind him that the effect of cutting the top rate of tax from 50% to 45% will be, as has been proved over and over again in countries around the globe, that the revenue to the Treasury will go up. Although the noble Lord and his party quite rightly point to the excesses in the City arising from bonuses, and so on, they seem to forget that 52% of those obscene bonuses come back in tax and national insurance. Actually, it is more, because there is an employers’ contribution of 12%, so 64% of those bonuses come back to the Treasury in revenues.

The name of the game here is to increase revenues to the Treasury. Then we will be in a position to do something about welfare. We are now in this difficult position and my noble friend is having to take this painful legislation through the House. The Opposition should recognise that that is a consequence of their period in government. The noble Baroness shakes her head. While they were in government, welfare benefits went up by 60% in real terms.

[Baroness Hollis of Heigham]

To pensioners.

[Lord Forsyth of Drumlean]

Yes, the noble Baroness, Lady Hollis, makes the point that a large percentage went to pensioners, but I do not hear from the opposition Front Bench a cry that we should cut the benefits to pensioners to avoid this position. The very fact that she says that from a sedentary position indicates that she accepts that.

Whatever the merits of how the money was distributed, it went up by 60%. One pound in every £4 which this Government are spending—by the way, that is money which we have not got because we are having to borrow £150 billion every year to make that expenditure—is going to welfare. To argue that it is not necessary to constrain welfare expenditure in those circumstances is, frankly, totally irresponsible. It is the worst kind of politics.

The noble Lord seeks to present people on this side of the House as uncaring and unconcerned about the poor whereas, actually, if you are concerned about people who are hard up, you want to make sure that the costs of living for them and the stoppages in their pay packet are reduced to as low a level as possible. If we follow those prescriptions of continuing to spend money we have not got, of continuing to pay more in welfare than people are gaining in increased incomes in the private sector, that is the road to Carey Street and to undermining our whole welfare system of support.

The truth is that while Labour was in office, it was paying tax credits to people on up to £50,000 a year. It was a policy deliberately designed to create a client state, and it was a policy funded on the back of a bubble created by holding down interest rates. It was irresponsible economics and it was irresponsible public expenditure. A responsible Government, faced with the windfall tax revenues that they had, would have put some aside for a rainy day. Now we find ourselves with a huge, exploded welfare budget and difficult decisions that need to be taken.

I hope that the House will reject the amendment which, while we all appreciate the sentiment, would actually do down those who are hardest up in our society and having the most difficulty. The noble Baroness shakes her head. It is the consequence of spending money which we did not have.

[Lord Harris of Haringey]

My Lords, I hesitate to give the noble Lord a lesson in economics, but the problem that the Government currently face is a complete absence of growth. Further cuts in welfare benefits will make that worse. One thing that you can say for certain is that the people on the lowest incomes will spend that money and that that money will then feed into the economy, therefore doing something about the growth problem that the Government have exacerbated by what they have done in the past few years.

14:25

[Lord Forsyth of Drumlean]

I do not think that was a lesson in economics but a lesson in magic. If that is the case, why do we not just double welfare benefits? People will spend even more, the economy will grow and everything will be fine. The noble Lord nods his head in agreement. As an individual or as a household, you cannot continue to spend more than you earn without getting into the kind of problems that we have seen among people who have taken out payday loans.

This is the payday loan approach to government. You have a big debt, so you take out another one. You pay a higher rate of interest on it but you hope that somehow you will be able to pay it back. In the end you are able to pay only the interest. At the moment the Government are printing money to fund their expenditure requirements. That is quantitative easing. In 1997 the Bank of England held no government bonds. Now it holds 27% of the entire bonds in issue. When interest rates rise, those bonds will fall in value. How will the difference in value be made up? That will be a cost for the taxpayer. Our level of borrowing now, which will have gone up by 50% by the end of this Parliament, will have to be financed and that will come out of the future welfare budget.

The noble Lord is describing a way of robbing our children of their living standards and creating a bigger problem for the next generation to meet the needs of those who are most vulnerable. This is a way of making it more expensive to create the safety net that we all support. This is not a lesson in economics but in the kind of fantasy approach to politics that got us into this position in the first place. That is why the Government are right to persevere with this legislation. Indeed, they have been very reasonable in their approach. They have tried to protect the most vulnerable and have agreed to increase welfare payments by 1%. This is extraordinary, given that we have an economy that is not growing at all.

[Lord Harris of Haringey]

Exactly.

[Lord Forsyth of Drumlean]

The noble Lord seems to think that the reason why the economy is not growing is that the state is not large enough. How big does he want to the state to be? It is already taking nearly 50% of everything created by the Government and spending it, and that is not enough because they have to borrow on top of that.

If levels of taxation are high, which they are, and levels of regulation are high, we will not get the growth that is required. We need to constrain public expenditure to make room for the private sector to create wealth. Once we have a bigger cake, everyone can have a bigger slice, but if we try to proceed in this way we will end up with a smaller cake and those dependent on welfare benefits will be cruelly cheated. They will find their living standards destroyed by inflation, higher costs and the inability of the Government to finance the kind of programmes that Members opposite are prepared to say now that they would support, although they are not prepared to say so at a general election.

[Lord King of Bridgwater]

My Lords, I agree with a particular point that my noble friend has made and would like to add that the Bill has come forward on an especially interesting day. I refer to Cyprus. The warning is on the packet. There has been a certain amount of calm around, as though we had come through all our problems and were moving steadily forward into calm waters, and as though the eurozone was secure. The financial markets, with the euro increasing in value, may have had that illusion. However, it has all been blown away. I have not heard any recent news; I do not know whether there has been a decision yet about what Cyprus will do. We should remember that, at the moment, there is a very real risk. Clearly, people have been caught in Cyprus. If Portugal, Spain and Italy decide that this will be the European practice, people there may find that their savings and funds in their banks are not as secure as they had been assured they were. After all, everyone thought that there was a clear undertaking that below a certain level, around €100,000, their own bank accounts were at no risk. If that changes, we face a very serious situation.

There is complacency around, as I picked up from an article today by the chief economist of HSBC, as though with just a bit of going forward and a bit more luck we will be back on the old growth train and in the business that we were in before. What has been exposed is that over many years we have been living on borrowed money, on a construction boom in the financial services area and on public expenditure. Now that those have to be constrained, suddenly people are turning around and saying, “How, as a country, are we going to earn our living in future?”. We are finding that we have slipped in the leagues. In one of our most successful areas of overseas earnings, defence expenditure, we have now slipped a place and China has overtaken us. China is now taking away a number of the markets that our manufacturers used to serve extremely well. It is said that we hope to sell Typhoon to Oman, the UAE and one or two other countries, but the point has been made that its successor will be made in America, and that will be the end of one of our most successful overseas earnings. When you see where we earn our living in the world, we are not in a happy place.

That is why I very much agree with my noble friend Lord Forsyth. All of us in this House would like to say, “Let’s increase benefits. Let’s deal with all the hard cases and see how we can give people more money”. Look at the situation in Ireland, where benefits have been cut by, I think, 10%. There has been talk of cuts today but in fact we are taking about how big an increase the Government should impose, not an absolute cut in the amount. Other countries in Europe are cutting by 6%, 10% or 12% the actual amount that people are getting—what hardship that must represent.

This is not a pleasant speech to make. It is much more popular to say, “Let’s have some more benefit”. I say this against a background of a new situation that has suddenly come upon us: if this House—the unelected House of Lords—decides today to cut right through one of the decisions made as part of the prudent financial planning to find our way out of the problems that we are in, and if that triggers a loss of credibility in our national approach and the Government’s approach to tackling those serious problems, it will really be a problem for people on benefits if there is a run and we then find that the low interest rates that the Government have enjoyed for their substantial borrowing no longer apply.

I agree with my noble friend on this point. There is an illusion that somehow we are reducing our debt. We are not; we are reducing the rate at which the debt is increasing. One of the blessings that we have had is that at least we have been able to borrow at an extremely low rate because we had some credibility. If the House of Lords today kicks away one of the planks that help to shore up the credibility of a Government who have a plan to try to deal with our problems, and if those international interest rates are then demanded of the Government and the country when we try to borrow money, the problems that we will incur for all our people could be vastly greater. Look at the tragedies that exist now, such as the unemployment rates in Spain, which is 50% in certain age groups.

We have held things together so that we have a lower unemployment rate than the eurozone countries. There is so much that we have to hang on to. This is a dangerous time. I say seriously to your Lordships: do not tamper at this stage with this very difficult situation, at a time when we are least able to face it and when it could quite seriously endanger our whole economic structure. I do not think that people understand what a mess the world is in at present. There is a huge amount of complacency around. We are not by any means out of the woods yet, and it is our duty to ensure that we hold firm.

I intend to support my right honourable friend Iain Duncan Smith, whose commitment to this area I think we all admire enormously. He is doing the best that he can. He is agreeing to an increase in benefits for the most deserving people in this country, but not as large an increase as they might have hoped to see. That is the only realistic approach that can be taken at this time.

[The Lord Bishop of Leicester]

My Lords, I have lent my name in support of this amendment, and I am happy to speak in support of it.

This debate is about who should bear the greatest weight of the burden imposed by the Government’s need to reduce debt. I hope that the noble Lords, Lord King and Lord Forsyth, might consider accepting an invitation from me to come to the city of Leicester to explain to our local Child Poverty Commission why it is in the interests of children in poverty that they should become poorer at the moment because that will serve the national interest regarding debt, and that this House is working in their interests by reducing the uprating of their income to 1%, however much inflation rises. They might accept an invitation to explain that also to the unemployed and to voluntary associations in Leicester, which anticipate a tsunami of difficulties such as homelessness and dependence on food banks. They can come to listen to the response to this Bill from those who are dependent on benefits through no choice of their own, who can explain what that is like and how much harder it will get in the years ahead.

If the purpose of this Bill is to control welfare costs, this is not the right way to go about it. The key to reducing the benefit bill is to change the circumstances that lead many people to need benefits, such as the absence of job opportunities, too much short-term, low-paid work, the shortage of affordable housing, and expensive, patchy childcare. We should be focusing on those issues, not cutting benefits in real terms, which simply creates hardship without addressing the underlying issues.

This Bill is both unnecessary and ill conceived. It will harm the most vulnerable in our society and do nothing to promote work incentives. I have heard nothing at Second Reading, in Committee or today to make me change my view that this Bill ideologically shrinks the welfare state regardless of desperate need. Nor does it change my view that we are heading for a US-style welfare system that is dependent on food banks and hostels. We know that we can do better than this, we must do better than this, and we should amend the Bill.

[Lord Deben]

My Lords, I do not think that anyone could claim that I was other than at the wet end of the Conservative Party. I am perfectly prepared to say that. However, I have to speak after the right reverend Prelate because he has expressed exactly what the problem with Britain is: we are to spend money that we do not have on people who are in need, at a rate we cannot afford. That is not at all a Christian comment. In the end, we have to live within our means. For those of us who were brought up in the difficulties of a poorly paid Anglican parsonage, the first lesson that we learnt was to spend within our means.

I disagree with my noble friend Lord Forsyth, who said that the previous Government were not responsible. They are responsible, because they spent the money that was there and which could now be available for what we need. We were put in this position by the party opposite because it had the best inheritance of any Government, but it spent it and borrowed on top of it. I cannot find a single speech from any right reverend Prelate from that time that warns the Government of the dangers of spending money that they did not have, borrowed in a way that could not be repaid.

15:45

I believe in an old sermon of my father’s, which distinguished between love and sentiment because “love” is a very tough word. It does not pretend there is an easy way out of the problems with which we are faced. Love says that we have to do this in a way that safeguards the future and does not merely deal with the present problem. People sometimes talk as if those of us on this side of the House do not know the problems with which we are faced. Many of us have worked for years, trying to deal with those problems and being concerned about the poor. We have found, though, that you have to be honest. The reason we have to cut in this way—not cut, but cut the addition that might otherwise have been paid—is simply because we live in a country that has spent more than it has earned for so long that it can no longer go on doing it.

I have to say to the right reverend Prelate, who did not provide an answer, that the answer is not to make things worse. All the things he is asking for are being done at the same time. Those are precisely the Government’s policies for getting the economy moving. I beg him not to pretend to people that there is another means of dealing with these matters. If we do what he proposes, in two, three or four years’ time we will not be talking about decreases in increases but about the very cuts in welfare benefits that are happening in the rest of Europe. We are talking as though we are nothing to do with the rest of Europe. Some of my colleagues on this side of the House sometimes talk about that far too much. We are in exactly the same position, except that we have so far weathered this storm better because we have a Government who have behaved more sensibly right from the beginning. I beg the right reverend Prelate not to pretend to the world that there is a simple answer. The only answer is this tough one and I am amazed that it has not had to be tougher. Nobody can go on living on debt. I leave the House with the comment made by my noble friend: this proposal from the right reverend Prelate and the party opposite is a payday loan approach, and that is what is so serious about it.

[Lord German]

My Lords, in his speech moving the amendment, the noble Lord, Lord McKenzie, made it perfectly clear that it would break the Government’s policy proposal. There was no indication given of how much the benefit bill should rise, though the noble Lord, Lord McKenzie, indicated his preference. However, that is not what is in front of the House. If the amendment were to be passed there would be no proposal as to how much it should rise: 0.5%, 1.5%, 2%, 3% or whatever. Neither does the amendment offer any solutions: it does not offer any ameliorations, it does not seek any exemptions. However, Her Majesty’s Opposition say no to a 1% cap on working-age benefits, yet support a 1% cap on public sector workers’ pay. It is quite strange. I sometimes wonder whether we are living in a parallel universe where the economy is healthy, where there have not been any fundamental economic shocks and where Cypriots can get all their money out of their banks.

However, it is not like that and the Bill is not set in the sort of financial vacuum that some Members seem to think it is. I accept that borrowing is higher than it ought to be, though I wish it were less. I know that we have had to borrow in order to maintain the essence of our welfare state and I agree that growth is critical. However, in these tough times the Government have to take difficult decisions. These decisions are, no doubt, uncomfortable but it could have been worse. As I said at Second Reading, there were lots of things on the table for discussion which could have made this a much tougher prospect for us. As it stands, this is our biggest budget—the budget where we spend £1 in every £4 of government money—and, despite all previous efforts, it is still growing as a proportion of total government spend. Therefore, no matter what we may think, this budget has to make its contribution to helping to put our finances back on a sound footing.

Yesterday, there was a debate in the Moses Room in which the Government proposed a £2.545 billion reduction in the overall welfare spend for 2013-14. Her Majesty’s Opposition rejected this as “vicious” and “contemptible”. Today, we have before us in this Bill a budget proposal of £3.7 billion for the two years following, and that is also rejected by Her Majesty’s Opposition. Therefore, £6.245 billion of savings have been rejected in two days. Yesterday—I have not heard it yet today—I heard a vague assertion about tax avoidance, but it is my understanding that this Government are spending far more on tax avoidance than the previous Government did and putting far more effort into it. When she replies, perhaps the Minister can tell us how much success the Government have had compared with the previous Government.

However, we are talking about £6.245 billion of savings and, in return, the Opposition are offering a tax rise. I refer to the issue of the 50% or 45% rate, which at Second Reading the Minister stated the OBR said would raise £100 million. If you slice that £100 million per annum off the total in cuts which have been rejected over the past two days, that means that there is still £6 billion to find, just to round up the figures. Therefore, we should reject these amendments because they offer no solutions beyond borrowing even more, raising taxes significantly or making deep cuts elsewhere in government expenditure, putting the burden of raising the money to repay it on my children and grandchildren.

This Bill would, in the end, save more than £3 billion a year. In their final year, the previous Government were spending £4 for every £3 they raised from the people of this country in tax. In comparison, this Bill saves £3 billion, but that should be compared with the last year of the Labour Government, when they were borrowing £3 billion a week. This is not a comfortable position in which we find ourselves and I would prefer it not to be happening. I share the aspiration for growth and I want to see our country back on track again. However, as the International Monetary Fund said in its World Economic Outlook last October, Governments need to create the right conditions for growth. It said:

“To anchor market expectations, policymakers need to specify adequately detailed medium-term plans for lowering debt ratios, which must be backed by binding legislation”.

That is what the Bill proposes today and that is what the amendment just does not do. As we cannot get an answer to whether higher taxes, lower spending or borrowing alternatives—or a combination of the three—is being proposed, I have no hesitation whatever in recommending to my noble friends on the Liberal Democrat Benches that these amendments, should the Opposition put them to a vote, should be rejected.

[Lord Bates]

My Lords, the noble Lord, Lord German, referred to the Opposition’s support for the cap on salary increases at 1%. I rise because I came across an interview that the shadow Chancellor, Ed Balls, gave when that policy was announced. This policy will impact on people with a salary above £21,000, below the benefit cap. When pressed on the “Today” programme about how he could justify limiting salary increases in the public sector to 1%, he said:

“And if people expect the Labour Party to say ‘We’ll just oppose’, we can’t do that. [It] would be irresponsible because the priority has got to be getting people into jobs rather than people being paid more”.

That is quite an interesting statement for the shadow Chancellor to make because, in my view, it very much reflects the purpose of this Bill and this amendment.

I do not think that my noble friends on the Front Bench have made life easy for themselves by making this a stand-alone Bill. It certainly should not be viewed that way. It needs to be viewed in the context of the introduction of universal credit, which will bring about benefits of £168 a month to 3 million families. That, because of the wage incentives and the attractiveness of work, will lead to an estimated 300,000 more people finding their way into employment. We need to be very clear that, in all of these measures, whether it be raising tax thresholds, universal credit or this Bill today, we are saying that the best route out of poverty is undoubtedly work.

The scale of the challenge we have in doing that is quite immense. Prior to the recession, unemployment in this country was around 1.62 million. It rose very sharply and when the party opposite left office the rate was 2.49 million. It continued on a trajectory up to 2.68 million. However, it has started to fall and has been coming down quite steadily for a few months and is now down to 2.5 million. The figures show that there are 1 million extra private sector jobs, and that is to be welcomed. Benefit changes that encourage growth and help people find their way into employment are surely things we ought to support.

It would also be nice to ask some of those who supported this amendment where they were last year when benefits were increased by 5.2% and salaries for the lowest paid went up by 1.7%. Where were their voices then? What is so compassionate about paying child benefit to people earning more than £50,000 or letting people earning up to £70,000 receive tax credits? We need to change the configuration so it is always in the interests of people to work and then we need to work to ensure that the jobs are there.

How do we create the jobs for that to happen? Clearly we need to get public spending under control so we can raise tax thresholds for individual workers and reduce corporation tax thresholds. We know that that creates employment the world over. That is why unemployment in this country is falling while in so many other countries it is rising. I understand the points that have been made quite seriously and the concerns that have been raised, but they are looking at this in isolation and, placed in context, this is undoubtedly a measure that in the years to come will reduce the levels of poverty in this country.

16:00

[Baroness Stowell of Beeston]

My Lords, there have been some very powerful speeches in this debate. I am very grateful to all my noble friends for their contributions and for laying out so clearly and eloquently the economic case for this Bill and for what we seek to achieve. As they have been so clear, I will not repeat much of what they have said. However, I will start by making clear to your Lordships’ House that the amendments before us would, in simple terms, remove the commitment to a 1% uprating from the Bill. The noble Lord, Lord McKenzie, said in Committee:

“We fully intend these amendments to undermine and negate the purpose of the Bill”.—[Official Report, 25/2/13; col. 855.]

My noble friend Lord Newby said in reply that these are the sort of amendments that equate to,

“a vote against the Bill at Second Reading”.—[Official Report, 25/2/13; col. 866.].

It is important that we understand what these amendments seek to do.

As has been made clear by my noble friends, these are not decisions that we take lightly. I do not deny that they will have impacts on those who receive the benefits in question or that those impacts will not be easy. However, we have made a conscious decision to protect those benefits which reflect the additional costs that disabled people face, while also protecting pensioners through our commitment to the triple lock.

The right reverend Prelate the Bishop of Leicester is right to highlight those in need and I am glad that he does. It is important that we all remember and are conscious of the people affected by some of these changes. However, I ask him and all noble Lords not to forget that, as part of the Government’s wider reforms, we are prioritising resources towards measures and reforms that support families and help to change lives.

Let me name just a few of those measures. We are expanding early-years education to ensure that children have access to early education and to support parents in work. We are attaching additional funding to disadvantaged pupils through the pupil premium, which will rise to £2.5 billion a year by 2014-15. We have protected the schools and NHS budgets to ensure that these vital services continue to support families. More than £1 billion of investment will go into schools. We are introducing universal credit—a new, radically simpler benefit payment designed to ensure that work pays.

As my noble friend Lord Bates already has acknowledged, this last change is about transforming our welfare system. It will significantly increase the incentive that people have to work. Indeed, we estimate that it will lead to up to 300,000 more people moving into work. It is important that we focus on that point for a moment. As my noble friends have already indicated in their speeches, we must not look at the changes that we are discussing today in isolation; we must see them in the wider context of the changes that the Government are making. They reflect the fact that this Government’s focus is on how to help people off benefits and into work.

We need to be aware of the level of support that people can receive while they are on out-of-work benefits. For many, this is supposed to be a temporary state—an interruption between periods of work. By making the system simpler, by reducing the risks from people moving into work and by making work pay, we can reinforce that temporary nature and ensure that more and more people are moving into work. That is what we are seeking to achieve through universal credit and, as I have said, I ask noble Lords to bear these wider changes in mind when considering this Bill and all the amendments that we will debate today.

This Bill is a short-term change, made at a desperately difficult time, as we seek to rebalance the public finances. However, in our other reforms we have made a huge commitment to the long term, a commitment to changing lives through helping people back to work. Although we still have challenges in the labour market, the fact is that more people are moving into work already. Unemployment is falling. Private sector employment is up by more than 1 million since the election and the number of people employed is at its highest level ever.

We are continuing to provide for a 1% increase in these benefit rates. As my noble friends have said, this will mean that the value falls in real terms, which is not a decision that we take lightly, but it is an increase and we must compare this, as some of my noble friends already have, with what is happening elsewhere. Ireland has cut unemployment benefit by 4% a year for two years since 2010. Portugal has cut unemployment benefit by 6%. Spain has cut payments to people who are unemployed for more than six months by 10%. Let me remind noble Lords that the UK’s deficit in 2010 was larger—I repeat, larger—than the latter two countries. I am not saying that that justifies the measures we are discussing today; they are justified by the need to rebalance the public finances. However, it is, I hope, a reminder that these are very difficult times. The actions this Government have taken and continue to take to reduce the deficit are helping to secure economic recovery, but there are still tough decisions to make.

While this group of amendments seeks in simple terms to remove the 1% figure from the Bill, as many of my noble friends have already pointed out, it does not suggest an alternative. It should be noted that if the amendments before us were to pass, they would make it possible for the Government to increase benefits by any amount that they wanted in the years in question, without reference to prices or any specified factors, including uprating by less than 1%. Let us assume that the intention would be to upgrade in line with CPI. That would mean that the £3 billion in savings from the Bill would not be delivered. I appreciate that the decisions we have made in the Bill are not easy. We never claimed that they were. However, they are absolutely necessary. This was made clear by my noble friends, who made contributions that were much more powerful than I could have made.

Let us not forget that the central purpose of the Bill is to set out clear plans on uprating that deliver significant and vital savings that will help us on the road to economic recovery, along which we simply must travel if we are to preserve for the future the kinds of things that we value and from which we will all benefit: a stable economy, a growing labour market and opportunities for the next generation.

When the noble Lord, Lord McKenzie, moved the amendment, he said that all the amendments in the group were linked and were consequential one on another. Perhaps it is premature for me to make this point, but I will make it clear that in the Government’s view the amendments are not consequential one on another. If Amendment 1 is agreed, the Government will not oppose Amendment 5. However, we will oppose Amendment 7. It is important to make that clear.

I have made the case for seeing these changes in a wider context, and my noble friends have made powerful contributions about the wider economic context. It is clear that the changes, while painful, are necessary. Therefore I urge the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I start by thanking the noble Lord, Lord Low, for his support for the amendments in this group. He made the very important point that we are potentially moving into a period of greater inflation. This point was made last week by the FT, which talked about the risks of stagflation in this country. I also thank the right reverend Prelate the Bishop of Leicester for his support. He posed the key question: how will making these people poorer help the national interest? What we heard from noble Lords who oppose the amendment did not help us on that point.

I say to the Minister and to the noble Lord, Lord Bates, who prayed in aid universal credit, that it would be good to know that universal credit is on track because from everything we hear it is not. Even with universal credit as proposed, we know that something like 1.8 million people will have their benefits from work reduced in comparison to their current position.

I stress that the amendment challenges the locking-in over a three-year period of the restrictions on uprating. Uprating by less than the rate of inflation is a real-terms cut. We should recognise that it is a cut in people’s benefits. The fundamental proposition in the amendment is that these things should be looked at in the normal way on an annual basis by reference to what is happening to prices.

The noble Lord, Lord King, and the Minister said that other countries are cutting benefits. Benefits have been cut in this country, too. Council tax benefit, housing benefit, DLA, ESA and tax credits have been cut by something like £18 billion to date.

[Lord Newby]

Will the noble Lord confirm that no benefits in this country have been cut in cash terms, as they have widely been in the rest of Europe?

[Lord McKenzie of Luton]

Housing benefit is one such benefit. Council tax benefit has been dumped on local authorities with a 10% restriction on funding, which means that people’s support will be cut in cash terms. That is absolutely happening.

I say to the noble Lords, Lord King and Lord Forsyth, that it seemed that the mention of Cyprus was meant to lead us to a conclusion that bears no relation to reality. We are not dealing with a situation here that would take us anywhere close to the situation in Cyprus. We are talking about restrictions on uprating which, on the Government’s own figures, would amount to something like £1.9 billion.

[Lord King of Bridgwater]

The Government’s ability even to pay this level of benefit will partly depend on our ability to borrow enough money at low enough rates to continue the policy. Is the noble Lord not aware that there is a big shiver going through the eurozone about the financial situation? It has suddenly come back into the headlines. If it was thought at this moment that the Government were going to deviate from their previously planned approach—if it was voted down by your Lordships’ House—it would have a serious effect. Then the problems faced by some young people and people in poverty at the present time, as spoken to by the right reverend Prelate, could be seriously aggravated. Our job is to try to make the best we can of a very difficult situation.

[Lord McKenzie of Luton]

My Lords, of course we are aware of what is going on in Europe, and I shall come on to issues of borrowing in a moment. We are talking here about an amount that is less than 0.1% of total government expenditure. The noble Lord cannot seriously be arguing that taking our position rather than that of the Government would bring the whole edifice crashing down. That simply does not reflect reality.

The problem that the Government have is that because they have failed to deliver growth in the economy there is a real risk—this is what is happening—that their austerity programme is making debt worse. This was again a point made in a very powerful article last week in the FT.

We have heard a great deal about the Labour Government’s record. When the Labour Government left office the economy was growing again and it was the austerity measures which choked off that growth. As to the Labour Government’s record on debt, before the international crisis hit, our debt levels were the second lowest in the G7, lower than when we came into office in 1997, I believe.

[Lord Forsyth of Drumlean]

I am following the noble Lord’s argument very carefully. If he is saying that we can get growth again by spending money uprating benefits in line with inflation, why will he not therefore make the commitment that a Labour Government would do that?

[Lord McKenzie of Luton]

My Lords, I make the commitment that we should review on the usual basis at each uprating period. No Government or Opposition immediately prior to a general election are going to pre-empt the programme they would have. The noble Lord knows that full well. He is making a silly political point.

There is a real risk that by cutting back you make the debt situation worse. It depends upon the multiplier. There have been some recent studies which suggest that it is made worse because the multiplier effect would mean that if you did not cut back you could create growth greater than the saving you are seeking to make. We shall hear from the Chancellor tomorrow about his view on borrowing for capital spend, for example. The relative merits of that depend upon the multiplier effect.

Ultimately, the argument in favour of the Government’s Bill as it stands is that it is locking in an unknown. You cannot know in year two or indeed the next year what the rate of inflation will be and you cannot know, therefore, the extent of the cut you are visiting on the poorest people in our country. That is what we object to in this Bill.

We could go on for ever in an economic debate, but I think it is time to test the opinion of the House.

16:14

Division 1

Ayes: 206

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Labour: 157
Crossbench: 36
Bishops: 5
Independent: 3

Noes: 275

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Conservative: 155
Liberal Democrat: 69
Crossbench: 39
Democratic Unionist Party: 1
Independent: 1
UK Independence Party: 1
Ulster Unionist Party: 1

16:30

Amendment 2

Moved by

[The Lord Bishop of Ripon and Leeds]

2: Clause 1, page 1, line 4, at end insert “save for the exclusions specified in section (Protecting children’s benefits and tax credits)”

[The Lord Bishop of Ripon and Leeds]

My Lords, I will also speak to the other amendments in this group. Amendments 2 and 8 are paving amendments for a new clause to protect child benefits and child tax credits from the effects of this Bill. The substantive amendment to which they refer is Amendment 11. This follows extensive discussion in Committee, and is designed to halt the disproportionately negative effects of the Bill on children and their welfare. Amendments 13, 14 and 15 are consequential, and no doubt the noble Baroness, Lady Meacher, will speak to her Amendment 14A.

The Bill affects 30% of all households. Of those with dependent children, it affects 87%. Of lone-parent households, it affects 95%. Conspicuously, 11.5 million children suffer as a result of this Bill. This is in addition to the effects that our austerity measures have already had on children. In 2012, the Institute for Fiscal Studies estimated that there would indeed be a reduction of 0.9% in real-terms income for all households from 2010 to 2016. For a couple with two children, that fall will already, without this Bill, be 4.2%: equivalent to a fall of £215 per year for a couple without children, or £1,250 for a couple with two children. This Bill adds to that discrepancy, and it is that which cannot be fair.

It is true that we need particular concern for those in or on the verge of poverty. This Bill fails that test, too. For the poorest 20% of households, the IFS estimates to which I have referred suggest that the reduction in income is 7% from 2010 to 2016. In addition, 60% of the Bill’s savings come from those in the poorest third of our population, and 3% from those in the richest third. This will mean that, on the Government’s estimates, 200,000 more children will be in poverty, half of them in working families.

That in itself must make us pause to see what other ways there are to make the £0.9 billion savings which the child-related parts of this Bill are designed to produce in 2015-16. It is not for us today to declare what those alternatives should be. However, they do exist. Whether through reducing tax reliefs on pension contributions for the wealthy, or through introducing national insurance contributions on employer pension contributions, there are a number of different ways in which we could explore raising this money, which would not affect children in the ways in which this Bill does. We need to find a way for the burden of our fiscal challenges, so well described in the previous debate, to fall on those who, like me and many Members of this House, can afford to meet it, rather on than those who cannot. The noble Lord, Lord Newby, spoke in Committee of the importance of reviving the economy for the benefit of the future. That is absolutely right, but not at the expense of children’s needs now.

The major thrust of these amendments is to defend the nine out of 10 children in this country who are affected by the Bill. This effect is cumulative; it comes on top of the reductions already made. It has been argued that since many people are currently seeing wage increases of only 1%, benefits should also rise by only 1%. However, this Bill is an additional blow for those with children whose wages have increased by only 1%. Not only are their wages declining but, by this Bill, provision for their children will decline, too. These benefits affect those in work just as much as those who are not in work. None of the benefits referred to in these amendments is an out-of-work benefit. This is a transfer of the burden from all of us to those with children, and that increased burden on children cannot be right.

I continue to be particularly concerned at the continued gradual erosion of child benefit. The 1% cap comes after three years of the freezing of child benefit, so it is a cap on a figure that has already been reduced. From 2011 to 2015, the increase in child benefit will be 2%, rather than the estimated 16% of CPI over that period. Therefore, a couple with three children with one earner, such as a corporal in the Army, will lose £552 a year by 2015. A couple—one a childminder, let us say, earning £240 a week and the other a postal worker on £395 a week—with two children will lose £3.51 a week by 2015.

Child benefit has long been a crucial part of the support for families in our culture. That is particularly so for those on low wages. For very many families, child benefit is explicitly set aside to provide for children. Parents will struggle by making savings on their own lifestyle, sometimes even by going without meals themselves, but they will ensure that the child benefit that they receive is spent on their children. We owe it to the next generation to ensure that this element of our society, our children, is not disadvantaged, and certainly not disadvantaged by so much more than households without children.

In addition, child benefit plays a particular role in support of those in work because it acts as an earnings disregard in the calculation of housing and council tax benefits. Any reduction in child benefit is therefore a disincentive to returning to work. For a two-child family in work, on a low income and living in rented accommodation, the cut between 2010 and 2015 is not only the £4.80 a week in child benefit but an extra £4.10 in lost benefits. This working family on a low income therefore loses almost £9 a week.

I need to refer briefly to the third element in this package, that of the lower disability addition of universal credit. That is already being reduced from its current £57 a week to £28 a week under universal credit. Now it will be reduced further by this Bill. It seems extraordinary to reduce a benefit before it has even come into effect, especially when it provides for the needs of disabled children and their extra financial demands. These children need our support so they can live full and creative lives, and therefore benefit not just themselves but all of us. Children already contribute more than their fair share to our austerity burden. This Bill adds to their burden. I hope that we shall at least remove this extra pressure on them by accepting this amendment. I beg to move.

[Baroness Sherlock]

My Lords, I thank the right reverend Prelate the Bishop of Ripon and Leeds for introducing this amendment. I also congratulate him on continuing to press his concerns in this area after failing to receive any comfort at earlier stages of the Bill. I congratulate the Lords spiritual in general for being willing to stand up for what they believe, despite the inevitable volley of artillery that came their way the moment they dared to raise their heads above the cathedral parapet. It may be that we have them to thank for the extended interest in welfare benefits, which is much more than we see normally. I am delighted to see it.

As we have heard, this amendment would remove a number of children’s benefits and credits from the scope of the Bill. Since we on these Benches wish to remove all benefits and tax credits from the scope of the Bill, we are pleased to support it. We have heard at different points in the passage of this Bill that it has a disproportionate impact on families and children. The Government’s impact assessment shows that two-thirds of households affected are families with children. We also know that the Bill will have a direct effect on child poverty in Britain. Ministers have previously announced—as the right reverend Prelate noted—that this Bill alone will put a further 200,000 children into relative poverty.

In Committee, I asked the Minister to tell the Committee what the impact would be on the three other poverty measures in the Child Poverty Act. I got nothing back at all. Now the Child Poverty Action Group has dragged some information from the Government by means of the Freedom of Information Act—although it should not have had to use a FOI request to get it. I would have hoped the Minister could have told us the information when I asked for it in Committee. The Government have not yet offered a narrative assessment even of measures, for example, of material deprivation. However, they were forced to admit what would happen to the number of children in absolute poverty. In response to that FOI request, the DWP admitted for the first time that it estimates that around 200,000 more children in Britain will be pushed into absolute poverty by this uprating policy.

This is a shocking figure, which reveals the depth of what is wrong with this policy. It also removes the Government’s defence that the problem is with the relative poverty measure, rather than with the impact on children themselves. On the back of those figures, some new analysis for the Child Poverty Action Group by Landman Economics found that an increase of 600,000 children in absolute poverty is likely between 2010 and 2015, and that is net of any improvements as a result of universal credit.

As we have heard at many stages of this Bill, too many parents go without to ensure that they can heat their homes and feed and clothe their children. As the costs of food and energy have soared, more parents spend more of their money on these basic costs. Yet vital support that they depend upon is being cut in real terms in order to hand a tax cut to the very richest. It is not only the Church of England that has come out against these priorities; Archbishop Peter Smith, vice-president of the Catholic Bishops’ Conference of England and Wales stated:

“It is unjustifiable that the poorest children, who often have no other safety net, will be left bearing the brunt of economic difficulties as a result of significant real-term cuts to social security”.

The archbishop noted something that many of us know: that like many other charities across the country, Catholic agencies supporting parents find themselves ever more confronted with parents unable to afford even basic essentials, such as healthy meals or warm clothes for their children. That would be exacerbated by this Bill.

The real shame is that so many of those families have no alternative way of reducing that problem. Most victims of this Bill are working families. The parents are already doing the right thing; they are out working. One of the real disappointments about the debates we have had is the failure to acknowledge that, far from this being something that penalises only people who are not working, it is in fact the very same people who have had below-inflation or no pay increases and who have struggled repeatedly to get out, get work and get hours, who are hit by these cuts to tax and benefit support.

The Bill is a completely inappropriate way to address the uprating of essential state support for families. We already have perfectly good mechanisms to uprate annually in the light of inflation and prevailing economic conditions. These are poor choices for the Government to be making. The families who will be hit are not responsible for the failure of the Government to get the economy growing again. They are just doing their best to manage in difficult times, but the Government are planning to cut the value of the help that they get from the state to fund a tax cut for people earning £1 million a year. We should not be doing this, and we on these Benches are pleased and proud to support the amendment.

16:45

[Lord Forsyth of Drumlean]

My Lords, this amendment is simply a variation on the previous amendment. In the previous debate, we went through the arguments for why it is economically impossible to sustain inflation-related increases. I do not propose to repeat the arguments, but this amendment would result in exactly the same position, given that the exceptions proposed by the right reverend Prelate constitute a large part of the Bill. It is just a way of saying that, if one was going to make the same savings, one would have to make bigger reductions in the increases for everyone else, or else one would have to find the money. Once again, the right reverend Prelate did not tell us where the money would come from.

[Baroness Hollis of Heigham]

He did, actually.

[Lord Forsyth of Drumlean]

I am happy to give way to him if he wants to explain where the money would come from, but I suspect not. A large part of his flock of the clergy will be recipients of benefits because of the wages that they are paid by the Church of England. Everyone is in the same boat here. The noble Baroness, Lady Sherlock, argues that somehow it is possible to find money which we have not got and that she is proud to support the amendment because of the reduction in the top rate of tax paid by those who she describes as millionaires. I remind her that those people are paying 5% more in tax than they did under her Government. I also remind her that the effect of cutting those high rates of tax has been to increase revenue and therefore to make it possible to do more in that respect.

Surely, by now, we have learnt that lesson. It is a cheap political argument to say that it is possible to create money out of thin air and that this Government want to protect the rich at the expense of the poor. If we want to help the poor, we have to get the economy growing again. The noble Baroness says that the economy is not growing because of this Government. The economy is not growing because of the burden of debt which she and her fellow members of the Labour Party ran up.

[Lord McKenzie of Luton]

The noble Lord keeps going on about debt. Is it not right that, because of the failures of the noble Lord’s Government, the lack of growth has meant that borrowing is now about £200 billion more than they planned when they came into being?

[Lord Forsyth of Drumlean]

I am utterly amazed by the noble Lord. He is now criticising us for spending £200 billion more than we planned, when part of that money is being used to provide the 1% uplift in benefits. Talk about wanting to have it both ways. On the one hand, he is criticising the Government for not borrowing enough, but now he is criticising the Government for borrowing more than we planned. The reason why we are having to borrow more than we planned is because of all the commitments made by the previous Government without a clue as to how they would fund them. That includes commitments on welfare. Welfare spending accounts for £1 in every £4 that the Government spend.

On the basis of the noble Lord’s criticism that we are spending £200 billion more, that would mean that £50 billion is going on welfare. In all the time that I have been involved in both Houses of Parliament, I have never seen a more irresponsible Opposition. It is not good enough for the right reverend Prelate to come to tell us that we need to do more to help working families with young children without explaining from where the money is to come or addressing the main problem.

[Lord Griffiths of Burry Port]

My Lords, I have taken no part in this debate so far. Has the noble Lord not suggested somewhere where the money can come from; namely, that people like us could pay it? If children would benefit I am prepared to pay it. Is he and are we?

[Lord Forsyth of Drumlean]

My Lords, I am grateful to the noble Lord, Lord Griffiths of Burry Port. I did not think that he was a bishop and I was addressing my remarks to the Bishops’ Bench, but I say to him that the burden of tax has gone up substantially, and the reductions in government expenditure have so far been quite limited. We are discussing not a cut in government expenditure but limiting the increase in government expenditure to 1%.

I have had several goes at persuading the right reverend Prelate to indicate where the money for his proposal might come from. One possibility might be for people to put wages up. If the Church of England were to put up its clergy’s wages, less would be claimed in benefits and more would be available for others, but that is not a practical proposition for the church because the church, like the Government, is faced with a financial crisis and has to live within its means. What is good for the church is good for the Government and is good for particular families.

The most irresponsible part of the arguments that have come from the Bishops’ Bench this afternoon is about what happens if inflation is allowed to let rip. I fear that that may be about to happen as we continue to print money and borrow. As the noble Lord, Lord McKenzie, pointed out, we are borrowing far more than we planned to meet our commitments and to be fair to the most vulnerable. What happens when inflation takes off? I remember the 1970s, when inflation was running at very high levels, at 20% and more, and interest rates were at 15% and more. Who suffered? Children, the poorest and families suffered. There is nothing Governments can do to protect them once inflation takes off.

We do not want to go back to that kind of society. It tried to cope with inflation by protecting people through indexation, but it was unable to keep up with it and the result was, as the then Labour Prime Minister put it so eloquently:

“Inflation is the father and mother of unemployment”.

Jim Callaghan said:

“We used to think that you could spend your way out of a recession, and now we know that you cannot”.

Those words were said as the Labour Government left in 1979, leaving another Tory Government to clean up the mess, just as we are doing now.

The right reverend Prelate’s amendment of course carries great emotional impact. We would all like to see working families with children have a higher standard of living, but the way to do that is to create the wealth that enables us to support those families and enables them to get the levels of income and employment that they need. You do not do it by shaving the edges of the currency, allowing inflation to take off and committing those families’ children as adults to a debt burden that, frankly, will be impossible to pay off. They would be paying the interest for the rest of their lives, and that would disadvantage their children. In rejecting this amendment, as I hope she will, my noble friend is speaking not just for our children but for our grandchildren, who are entitled to expect responsible government in these straitened times.

[Lord Bates]

My Lords, I support what my noble friend Lord Forsyth said. When the right reverend Prelate comes to respond to the debate, I would be grateful if he would comment on the following point. He made great play, and I do not underestimate this, of the effect and impact of limiting the uprating of child benefit and child benefits generally to 1%. According to Appendix 3 of the helpful Library note on the Bill, regarding the child tax credit element, in 2011-12 the child element of child tax credit increased by 11.1%, a significant sum. That followed significant increases of 13% in 2008-09 and 12.5% in 2004-05. If one is to argue that limiting that increase now to 1% would have a significant effect, if you take it as a snapshot, that may be the case, but if one looks over time, one has to factor in those significantly higher-than-inflation increases that have occurred in the child tax credit element in the past.

One of the problems with trading figures with regard to child poverty is that you get some curious results. One of the most notable is that in 2010 there were 300,000 fewer people in poverty because the recession had caused the median income to drop—in other words, children were said to have been pulled out of poverty not because anything had changed in their lives but because the rest of society had got poorer. We have to be clear about what we are arguing for when we talk about the interests of children, which of course should be paramount.

I turn again to a theme in the debate on the previous amendment: one cannot just take this in isolation. One needs to look at what the Prime Minister has announced today on childcare, for example, which will make a significant difference to people by enabling them to move into employment. One needs to look at the pupil premium or the raising of tax thresholds, which means that someone on the minimum wage has seen their tax bill halved under this Government. One has to look at these things in the round. Unlike the Opposition, we have ring-fenced the budget for the National Health Service, on which people significantly depend. Again, in the round, we need to get this absolutely correct.

I will react to the charge that somehow there is an easy pot at the other end of the income scale to be tapped into. As a result of this Government’s actions, the richest pay more tax on capital gains, more stamp duty on their homes and more tax on their pensions and are less able to evade tax than was the case before. These factors need to be borne in mind in the broad reach of these changes that I know when taken in cold, clinical isolation, one year at a time, without reference to trends over time, may allow one to draw one conclusion but should be placed in the proper context. I seem to recall from my youth the good theological concept of placing individual verses in context in order to understand their meaning, and one might think it was a good idea to place this one measure in the broader context in order to understand what the Government are doing to bring people out of child poverty, which we accept is significant. Other measures, such as limiting the proposed increases in fuel duty—another factor that has a big impact on the poorest in society, particularly those with families—and caps on rail fares and on council tax, all seek to address the issues.

We also need to recognise that child poverty has a wider set of causes than cash payment alone, and in many ways, we are focusing here on cash payment on its own. We need to place in context the fact that the children’s opportunities and their likelihood of being in poverty are affected primarily by the extent to which they live in a workless household. Therefore, all our efforts to get people into work should be welcome.

17:00

A child may live in a family with problem debt. One would therefore think that noble Lords would welcome the measures that we are seeking to take to reduce indebtedness and to encourage people to live within their means, with universal credit being paid on a monthly basis so that people get used to being responsible. A child may live in poor housing or in a troubled area, have an unstable family environment or attend a failing school. His parents may not have the skills to get out and get the job that they need, or they may be in poor health. These are a broad range of issues that ought to be reflected in our debates about child poverty. In that context, I believe that in time, primarily through encouraging more people into employment, we will see the child poverty targets in the Child Poverty Act, which this Government signed up to and agreed to, achieved by their set target date of 2020.

[Lord Newby]

My Lords, the whole House can agree on one thing. We all want to support families with children and ensure that children in this country have the opportunity to fulfil their potential. We have been discussing how we attempt to achieve that in the extremely difficult economic times in which we live.

I will spare noble Lords my speaking notes on the economic context, as we have already had a full debate on that. The only point I make in passing, in respect of the Opposition’s policies on deficit reduction, is that they passed legislation saying that by the forthcoming financial year it would be illegal not to have halved the deficit. It is therefore particularly surprising that they seem to have had no plan at the time to do it and have given no indication since of how they might have done it.

However, I must remind noble Lords again of the baseline from which these savings are being made. Tax credit expenditure increased by 340% under the previous Government compared to the benefits they replaced. Eligibility for tax credits was extended to nine out of 10 families with children and tax credits and child benefit accounted for £42 billion this year, which is over 40% of working-age welfare expenditure.

I will give noble Lords one other piece of context. The latest OECD figures show that of all the developed countries the UK, along with Ireland, spends the highest proportion of its national income on family benefits. We are not a country that takes these things lightly or a country that has not given very high priority to supporting families. We believe that that is absolutely a right priority and we support families with children as much as we can in the circumstances. Child benefit and tax credits exist to do that. However, as we have said, we have to focus resources where they are needed most.

A number of noble Lords, including the right reverend Prelate the Bishop of Leicester and the noble Lord, Lord Bates, have mentioned that this Bill is only one of a large number of measures that the Government are taking which affect families with children, in particular poor families with children. The noble Lord, Lord Bates, referred to the pupil premium, which will cost the Government £2.5 billion by next year. This will be worth £900 per disadvantaged child—and that is £900 in hard times. We are extending flexible support for early education. Since 2010, all three and four year-olds have been entitled to 15 hours of free childcare and we are extending this to 260,000 disadvantaged two year-olds from this year. This is immensely important to these families and it will be worth around £2,900 a year for the poorest families who benefit—£2,900 extra per family. We have found these hugely significant sums of money by making reductions elsewhere, because we place such a large priority on the poorest families.

As the noble Lord, Lord Bates, said, we protected the schools budget and the NHS budget. We are spending £1.2 billion on capital expenditure in schools. However, as the noble Lord, Lord Forsyth, has said, one of the most important things we have to do is leave our children and grandchildren with a lack of deficit or a deficit that they can manage. The savings in the Bill attempt to begin to do that.

The first group of amendments would remove child benefit, child tax credit and the lower rate of disabled child addition in universal credit from the Bill. This would remove nearly half the savings from the Bill, which is around £900 million in 2015-16. I should like to make a further point on universal credit, although it has not been the subject of much debate in this group of amendments. I am sure we will be dealing with this important issue in more detail when we debate Amendment 3, to which my noble friend Lady Stowell will respond. Suffice it to say that part of the principle underlying the decisions we have taken on disability and universal credit is the need for simplicity and our desire to target support to the most severely disabled children.

The right reverend Prelate the Bishop of Ripon and Leeds referred to child benefit and expressed his concern that it had been frozen or taken away from the highest earners. What he did not say was that the Government have increased child tax credit by £180—more than inflation—to more than cover, in the first few years, the reduction in child benefit. Taking child benefit and child tax credit together, we have tilted the expenditure away from affluent families and put more of the cash into poorer ones. I think that is a sensible priority and I am surprised that he appears not to agree.

A number of noble Lords have talked about the impact of the Bill on child poverty. As has been pointed out, the Bill is forecast to increase the number of children in absolute poverty by 200,000 and the number in relative poverty by 200,000. For the avoidance of doubt and in answer to the point made by the noble Baroness, Lady Sherlock, my noble friend Lady Stowell wrote to the noble Lord, Lord McKenzie, copied to other noble Lords, on 13 March. Her letter contained the figure about absolute poverty so, far from seeking to avoid mentioning it, we chose to circulate it. I am not saying that absolute poverty is not something we should be extremely concerned about but the term does not mean what most people think of as absolute poverty. The definition of absolute poverty is 60% of the median income in 2010-11 uprated to take account of inflation. The 200,000 children mentioned in respect of absolute poverty are very largely the same as the 200,000 who are mentioned in terms of relative poverty. You certainly cannot add those two numbers together.

At previous stages of the Bill, we have discussed the definition of child poverty and the importance of tackling child poverty. We know that if we focus on the relative income line we get some very odd results. We have pointed out previously that in 2010 300,000 fewer children were said to have moved out of poverty, not because anything changed in their lives but because the rest of society got poorer. The estimate on the impact of this Bill does not take account of policies which would cause child poverty figures to move in the other direction, such as universal credit which is expected to lift up to 250,000 children out of poverty, depending on the effect of the minimum income floor. We take the issues of cash and poverty, as currently defined, very seriously, but we also think that we need a broader definition of child poverty. That is why the Government are currently consulting on a wider definition. As I set out two weeks ago, and repeat today, this Government remain committed to eradicating child poverty. We believe that income will remain an important part of any new measure on child poverty, but focusing our resources on benefits alone is not enough. We have to take action to tackle the root causes of poverty, some of which I have described today.

I also take this opportunity to mention, as an example of what the Government are doing to support children and families in work with children, the announcement made today by the Prime Minister and Deputy Prime Minister concerning increasing eligibility for support to five times as many families as is currently the case through a new tax-free childcare scheme. Families where the parents are in work will be able to claim 20% of their childcare costs—equal to the basic rate of income tax—up to £6,000. The scheme will be phased in from the autumn of 2015. More than 2.5 million hard-working families will be eligible to benefit from these new proposals, compared with existing schemes offered by fewer than 5% of employers. Families on tax credits will be eligible to receive support for 70% of their childcare costs, and we have already committed an additional £200 million in universal credit, helping 100,000 more working families.

Today’s announcement of that further £200 million of additional support in universal credit will provide working families with the equivalent of 85% of their childcare costs where the lone parent or both parents pay income tax. That additional support will improve incentives to work and ensure that it is worth while for low and middle-income parents to work up to full-time hours. It will be phased in from April 2016 when childcare support moves from tax credits to universal credit. Together, these proposals will help to ensure that working families are not held back by the costs of childcare. They will remove disincentives to work for many mothers and provide flexibility and support for businesses to generate employment.

I hope I have been able to provide some reassurance that, although we are taking difficult decisions on welfare, they are necessary decisions. We are prioritising limited resources so that they go to measures that help families with children as well as those who aspire to work hard and get on. I therefore ask the right reverend Prelate to withdraw his amendment.

[The Lord Bishop of Ripon and Leeds]

My Lords, I am grateful to all those who have taken part in this debate and, indeed, to the Minister for his extended response to the discussion. I am grateful to the noble Baroness, Lady Sherlock, for her support and for the information that 200,000 children will be in absolute poverty as a result of the Bill. We have also recently had information from the Trussell Trust about the number of children who are now being fed through food banks.

I thank the noble Lord, Lord Forsyth, for his contribution, but this is not simply a variation on the previous amendment. For one thing, it would cost only half as much at £0.9 billion, rather than the £2 billion to £3 billion which has been mentioned in relation to the whole Bill.

There have been a number of suggestions—not just from me but from a collection of other people—as to how this money could be raised. At an earlier stage in our discussions on the Bill, I made suggestions and the noble Lord, Lord Newby, responded that they were indeed possibilities but not ones that fitted in with the Government’s current priorities. That is a perfectly fair response but it is not fair to say that taxing the winter fuel allowance or dealing differently with things such as free television licences, tax relief on pension contributions, national insurance contributions or employer pension costs and so on are not possible. They are possibilities. I was not quite sure what—

17:14

[Lord Forsyth of Drumlean]

I am most grateful to the right reverend Prelate. My criticism was that he did not say which of these he wanted to do. If the church’s position is that it wants to tax winter fuel benefits, please say so and say that the money from that could be used for this purpose. As for increasing taxes on pension contributions, he may not have noticed but the Government have already done that.

[Baroness Hollis of Heigham]

My Lords, I would have thought that the right reverend Prelate’s point was that we are facing political choices, not ones of financial necessity. We can make choices here and we are choosing instead to go after poor children.

[The Lord Bishop of Ripon and Leeds]

I thank the noble Lord and the noble Baroness for the answers they have given each other on this. It really is not my duty, as a Prelate in this House, to give the church’s view on exactly how the money should be raised. It is a task to say that there are alternatives and, indeed, to make suggestions as to how the money might be raised. There is no policy on exactly how it should be and I do not think that it would be for me to try to produce the solution to what we are doing. There are alternatives. I do not believe that they should be placed on children.

[Lord Deben]

I wonder whether the right reverend Prelate will understand this point. He is making specific remarks as to how we should spend the money. Is it not reasonable to say that he should take the responsibility for making specific suggestions as to how we should save the money?

[The Lord Bishop of Ripon and Leeds]

My Lords, I have made a number of specific suggestions as to ways in which this money could be provided from elsewhere. My basic point continues to be that it should not be raised by putting the pressure on children and their families. I am grateful to the Government—and to the noble Lord, Lord Bates, for raising the matter—for the child tax credit increase of £180 in 2011. It has to be said that that was, at the time, only the first of two announced upratings. The second, of £110, never happened because of the economic state in which we find ourselves. That above-inflation increase in child tax credit did something to ameliorate the pressure put on those in most difficulty, particularly children, by various other provisions made over the past few years.

I am grateful, too, for the announcements that the Minister has made this afternoon. However, one could say that if 20% of childcare is to be covered, that still means that those receiving that childcare need to find the other 80% in order to get the 20%. I absolutely agree with the Minister when he speaks of the need to tackle root causes and to make sure that more people are in work. I commend any efforts of any Government which lead in that direction.

However, these amendments are about children and we have moved much more widely in our discussion of them. I am still stuck with the statistic that the decrease in income for a couple without children will be 0.9% over the five years, but for a couple with two children it will be 4.2%. It is the differential between those two figures that we need to tackle. I recognise that attempts have been made to tackle them but they have been stubbornly unsuccessful so far. In view of the various things that the Government do for children—I certainly accept that they have a concern for children—I am sorry that they cannot accept the amendment. In the light of that, I wish to test the opinion of the House.

17:20

Division 2

Ayes: 221

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Labour: 163
Crossbench: 37
Bishops: 5
Independent: 5
Ulster Unionist Party: 1
Liberal Democrat: 1
Plaid Cymru: 1

Noes: 261

---

Conservative: 158
Liberal Democrat: 66
Crossbench: 29
Democratic Unionist Party: 1
Independent: 1

17:35

Amendment 3

Moved by

[Lord Low of Dalston]

3: Clause 1, page 1, line 5, at end insert—
“(1A) Any mandatory 1% up-rating stipulated in subsection (1) shall not apply—
(a) to any components of the employment and support allowance (including personal allowances);(b) to sums specified in regulations under section 10(3) of the Welfare Reform Act 2012 in respect of an amount to be included under section 10(2) of that Act.”

[Lord Low of Dalston]

My Lords, Amendment 3 would remove from the 1% uprating cap all aspects of the employment and support allowance, including the personal allowance component, the support group component for those in the support group and the work-related activity group component for those placed in the work-related activity group, which I may shorten to the WRAG as “the work-related activity group” is a bit of a mouthful and I do not wish to take up too much of your Lordships’ time—no more time, at any rate, than I need to. Paragraph (b) of the amendment would also remove the child disability addition under universal credit from the cap.

The Government have given the impression that disabled people are protected from the restriction of benefit increases to 1%, but this is not the case. Some disability benefits are protected—notably disability living allowance—but that does not mean that disabled people are protected from the restrictions introduced by the Bill as a whole. The only disabled people who are protected are those who receive no benefits other than the disability living allowance. The impact assessment makes clear that households where someone describes themselves as disabled are more likely to be affected than those where there is not a person who describes themselves as disabled: 34% of households as against 27%.

Even some benefits specifically targeted at disabled people are not protected. This applies particularly to employment and support allowance. ESA is paid at two different levels according to whether claimants are placed in the support group, meaning that their impairment or condition is such that they are not expected to look for work, or the WRAG. Both groups receive a personal allowance of £71 a week but those in the support group receive a support group component which is paid at a higher rate than the comparable component paid to those in the WRAG.

The Government have given the impression that those in the support group are protected from the 1% uprating cap but, in truth, only their support group component of £34 a week is protected: rather less than one-third of their benefit. This means overall that disabled people in the support group will see their ESA payments rise by only 1.4% rather than by inflation, not a lot better than if increases in the whole of their benefit were capped at 1%. As a result, a disabled person in the support group will be £62.76 a year worse off. Capping increases in their benefit at 1% will mean that households receiving ESA in the work-related activity group will be £87.65 a year worse off.

However, it is worse than this. Although some disability benefits and some disability elements and components may be protected, disabled people may lose out overall because of the complex interaction of different benefits and components. Disabled people do not only receive disability benefits; they have children and rent houses, and so they are not immune from restrictions in the uprating of children’s benefits, housing benefit and so on.

If a claimant in the support group does not have any other income, they are also likely to be entitled to housing benefit and council tax benefit. If they have children, they will also be entitled to child benefit and child tax credit. It can be seen that protecting the support group component protects only a small proportion of their overall benefit. For example, a lone parent who is in the support group and has two children will have lost £18 a week or almost £1,000 per year by 2015 compared with their position in 2011, simply due to uprating changes.

The amendment is essential if the Government are to fulfil their pledge to protect disabled people from the 1% uprating cap. A third of disabled people in the UK were found to be living in poverty before the global economic crisis. Disabled people routinely experience higher living costs associated with their disability, on things such as equipment, personal assistance and special diets, for example. In Committee, the Minister said that ESA for those in the WRAG group is intended to be a short-term benefit:

“Those who are placed in the work-related activity group are there because they have been found able to prepare for work”.—[Official Report, 25/2/13; col. 881.]

However, that does not make sense in terms of work incentives. People’s impairments often make it very difficult for them to work. Where this is not the case or the difficulties can be overcome, discriminatory attitudes in the workplace can present insurmountable barriers. In the current state of the economy, there just are not the jobs.

Finally, as we know, the work programme, by which the Government set such store, is just not working. In Committee, the Minister questioned the rationale for including the personal allowance in the amendment and for not subjecting it to the 1% cap. She said that treating the personal allowance differently from that in other parts of the benefit system would add an element of complexity and undermine the coherence of the system as a whole. That strikes me as a comparatively technical objection. If that is her principal concern, I ask her to look at the position again with me before Third Reading to see if we cannot find a way of achieving the purpose of the amendment without giving rise to the technical difficulties to which the Minister pointed.

The second limb of the amendment would remove the 1% uprating cap from the lower child disability addition under universal credit. The right reverend Prelate also spoke about that. This part of the amendment is particularly necessary given that rates of support for children in this group are already intended to be halved under universal credit. At present, families with a disabled child for whom they are in receipt of some level of disability living allowance may be entitled to receive support through the disability element of child tax credit, currently worth £57 a week. Under universal credit, that support is to be provided through disability additions within household benefit entitlements. But it is proposed to cut this support in half to just £28 a week. This change will affect all families with a disabled child unless the child is receiving the high-rate care component of the DLA or is registered blind.

In Committee, I spoke about the evidence in the Holes in the Safety Net review from the noble Baroness, Lady Grey-Thompson, of the impact of universal credit on disabled people and their families. I will not repeat the detail now but, in a word, it was that the effects would be disastrous. The Institute for Fiscal Studies estimates a growth in the number of children living in poverty of 400,000 between 2011 and 2015 and 800,000 by 2020. The Minister said in Committee that we cannot set too much store by such predictions because we do not know what direction government policy will take. But government policy seems to follow only a one-way direction of travel in this regard. We do know that the Government intend to take a further £10 billion out of welfare. The upshot of that can be only one thing: more child poverty. This measure can only serve to increase that; indeed, the Government have acknowledged that it will add 200,000 to the numbers of children in poverty—100,000 of them in working households.

The Children’s Society estimates that the cost of removing child disability addition from the cap would be just £2.4 million in 2014-15 and £4.2 million in 2015-16. In the scale of public expenditure, that is a trifling sum and I really hope that the Government see their way to thinking again on this aspect of my amendment at least.

The case for the amendment is compelling. It seeks to do no more than the Government already claim to have done by exempting from the cap a particularly vulnerable group among those who receive benefits—disabled people—and I hope that the House will support it. I beg to move.

00:00

[Lord Brooke of Sutton Mandeville]

My Lords, my noble friend Lord Deben is not in the Chamber, although I had a word with him outside. I am not sure that he was fair in asking the right reverend Prelate the Bishop of Ripon where he would find the money on the previous amendment. However, when we get into the guts of this amendment, it would be reasonable to expect the Official Opposition at that stage to explain where they would find it.

My memory goes back to Grand Committee on a couple of Bills in the final two years of the previous Government. They were held in the Moses Room; one was on housing and the other was on planning. I recall that the second one occurred in the very first week of the then Governor of the Bank of England—who is still the governor—who expressed anxiety that a recession was now becoming a real possibility. I asked why the Government, in their explanation of the text of the respective Bills on housing and planning, thought that future conditions would be like conditions in the past. I was told by both the Minister and knowledgeable government Back-Benchers in Grand Committee that I was not to worry my head about these things. There was no acceptance that the economic ice was beginning to thin and, specifically, I was told that the recession had not yet happened.

It was only later that I recalled a new year message in the 1950s or 1960s in the Observer by its essayist Paul Jennings in his weekly article. He explained that the new year had come in over a weekend and he had therefore had the opportunity to use the weekend to explore in his diary what the publishers thought he needed to know in the coming year, which they had not supplied in the previous one. It transpired that the answer was the thickness of ice. He explained that he was now in a position to tell the Observer’s readers that you required half an inch of ice to sustain a duck and an inch of ice to sustain an infant, going up in a series of categories until you reached 16 inches for a County-class locomotive and 24 inches for a regiment of foot. It was on reaching the statistic for a regiment of foot that Mr Jennings began to wonder how they knew. He imagined a scene in the Crimea when not much else was happening. The same young Mr Hemmings who took part in the film “The Charge of the Light Brigade” was riding up to Lord Raglan with the news that they had just lost another battalion of the Grenadiers.

If I move from that analogy to the departure of the previous Government, I recall that Mr Byrne, the Chief Secretary to the Treasury, left a note for his successor saying that there was no more money. As a message, that seems to me as daunting for a new Chief Secretary as the news to Lord Raglan that he had lost a battalion of the Grenadiers during what must have been the Crimean War. It is therefore reasonable to ask the Official Opposition where they would find the money for their support for this amendment. Indeed, perhaps the Official Opposition might express some regret for their mistakes in government and explain to the Bench of Bishops what went wrong in their economic policies.

In the same context as the intervention by the noble Lord, Lord Griffiths, I shall personally look forward in the hope that we will be able to come back to that subject on a future amendment, in which I would much enjoy joining with him.

[Lord McKenzie of Luton]

My Lords, we have added our names to this amendment moved so comprehensively by the noble Lord, Lord Low. It requires that all the components of ESA—the personal allowance and the additional component for those in the work-related activity group, as well as those in the support group—are taken outside the 1% cap on uprating. As we have heard, the amendment rightly includes provision for children to be made under universal credit, although it remains to be seen how much progress the faltering universal credit will have made by the time the Bill is spent.

As we have argued on previous amendments, it is the vulnerable who are most affected by the Bill. This is particularly so for those on ESA for two specific reasons. They are much less able to increase their income through work and their living costs are generally higher. This is particularly so for those in the support group, who are furthest from the labour market, but also for those in the WRAG. It is worth remembering that there is a rigorous testing process for people who are unable to work due to ill health or disability. We know that the gateway to this benefit is tough. Although the process involving Atos has been improved, there are still many who end up on ESA only after a successful appeal.

Although individuals in the WRAG are closer to the labour market through their conditionality or otherwise, the route to paid work is not easy, as the noble Lord, Lord Low, said. We know that the Work Programme has not covered itself in glory in this regard. As things currently stand, individuals in the WRAG will lose something like £191 a year by 2015 as a result of this Bill. Those in the support group will fare little better in terms of income, being some £138 a year worse off by that date.

Macmillan has specifically drawn our attention to how these measures will affect people with cancer. Its estimate is that in excess of 40,000 cancer patients will be claiming ESA by 2015 with the presumption that they will be placed in the support group. Macmillan particularly stresses the impact of rising energy bills on this group. Like the noble Lord, Lord Low, I remind the Secretary of State that he should fulfil his commitment to make sure that people on ESA are being fully protected.

The noble Lord, Lord Brooke, challenged me to say where we think the money should come from. I thought I made it clear in the first debate that we think the Government should not proceed with the tax cut that is proposed for those earning £150,000 a year. The proposed tax cut from 50% to 45% would be a source of revenue. The Government say that this will not produce very much, but that assumes that people can get away with planning their income to defeat the thrust of that change. If the Government are alert to that, they could garner that revenue and we believe they should.

There is a wider argument about the extent of debt that can be sustained. The point I come back to is that the greater the failure of the Government in their economic policy—the greater the paucity or lack of growth in the economy—the more it will be necessary for the Government to borrow. If the Government can get growth back into the economy, that begins to ease the debt burden. There is another source there.

I also remind the noble Lord that these amendments take ESA out of the fixed uprating—the collar that this Bill puts around them—so a judgment would have to be made for each uprating period. Traditionally and rightly that has been an increase by the rate of inflation of one sort of another. That is what these amendments are doing. They are not technically, of themselves, proposing a different rate, although I made it clear that we support uprating by inflation for the year that we are about to enter.

It is clear from that combination of reasons that this proposal can and should be supported. It is not constrained by the economic position of the Government. It is the Government that have got themselves into a bind because they have failed to generate growth in the economy.

[Lord King of Bridgwater]

As the noble Lord understands some of the complexities of this matter which many others may find more difficult, what does he assess the cost of this amendment would be over the next few years?

[Lord McKenzie of Luton]

The total cost is certainly less than that proposed for the totality of the arrangements in the Bill. It would be a portion of that. The number of people in the support group is something like 200,000 and there are around 300,000 in the WRAG. If you assumed you were looking at a difference between uprating by inflation and uprating by 1%, that would be the calculation. I stress that this amendment is saying that you simply take ESA out of the 1% collar, and it leaves open the question of whether uprating next year and the year after should be by whatever inflation is then. However, this amendment does not put a figure on it.

[Lord King of Bridgwater]

The noble Lord is a signatory to this amendment. He is speaking for the Official Opposition and it obviously represents a cost. I wonder what that cost is. I do not see how the House can vote if it is not clear what extra costs are envisaged. If he is suggesting that there is no extra cost at all, I do not imagine the Government will find great difficulty with the amendment. Presumably there is a cost; I wonder if he knows the figure.

[Lord McKenzie of Luton]

It depends on what the alternative proposition would be. I have tried to stress that this amendment takes ESA outside this 1% fixed uprating—outside that collar—so we would have to judge the impact at each uprating period thereafter. A judgment would have to be made in the light of inflation and general economic circumstances at that point in time. That seems a very clear proposition, is it not? It is certainly a basis on which we are very happy to support this amendment.

[Baroness Stowell of Beeston]

My Lords, all of us want to protect those who are furthest from the labour market or who have additional costs because of disability, and I think that all of us who have contributed to this debate so far and all of us in the Chamber today share that view. There is no disagreement among us on that.

That is what the Government are doing. We have not included key disability benefits, including disability living allowance and attendance allowance in the 1% annual uprating decision in the Bill. Nor have we included the disability premiums in working age benefits or the disability elements of tax credits in the Bill. We have also excluded the support group component of employment and support allowance and the higher of the universal credit disabled child additions. All these benefits will continue to be uprated by CPI. We have protected them because they help support those who are furthest from the labour market or who have additional costs because of disability.

In one of the exchanges that has just taken place, the noble Lord, Lord McKenzie, referred to cancer sufferers and made the point that we want to make sure that we provide them with the support that they need. It is worth reminding noble Lords that earlier this year, in January in fact, we introduced changes that will mean that more people with cancer will now qualify for the support group, which is protected, whereas before they might have been placed in the work-related activity group. We have taken on board the concerns in that area. They were valid concerns, and we were glad to be able to act on them.

18:00

Let me explain, however, why we have included the personal allowance and the work-related activity component of ESA in the Bill. The ESA personal allowance, which is subject to the 1% cap, is there to provide temporary basic support for everyday needs. It does not reflect disability or the additional costs of disability: hence it is set at the same rate as the personal allowance for the other working-age benefits such as jobseeker’s allowance, income support and housing benefit. The work-related activity group component—the additional component on top of the personal allowance—which is also subject to the 1% cap, is paid to those who are able to take steps to prepare for a return to work. As such, they will be referred for appropriate support, training and provision to ensure that they get the help that they need. It is the support group component that is paid in recognition of the fact that more severely ill and disabled people are less likely to be able to increase their income by moving into work and may have additional needs. That is why it is paid at a higher rate than the WRAG component, as the noble Lord, Lord Low, referred to it, and why it has been excluded from the Bill.

I will give noble Lords some comparison. The WRAG component goes on top of the personal allowance, which for a single person at the moment is £71 per week. For those who are considered perhaps to be ready, with some support, to be able to start thinking about moving back into work, that is £28.15 a week at today’s rate, while the support component is currently £34.05 a week. The noble Lord, Lord Low, questioned whether we were right to describe the work-related activity component of ESA as a temporary benefit. He may find it helpful if I remind him and other noble Lords that when the last Government introduced ESA—it was a new benefit that they brought in—the Command Paper that they published said:

“For the vast majority, ESA will be a temporary benefit as people recover from, or adapt to, their condition and prepare for a return to work”.

It also said that the support group should be the element that provides,

“security for the most severely disabled people”.

That is what the then Government set out when they introduced the new benefit.

Reference has been made to universal credit and to the component of it that is paid to parents of disabled children. In universal credit, a similar distinction is drawn between people who are in what we are currently calling the WRAG group and those who are in the support group: hence, the disabled child additions and their adult equivalents in universal credit are to be paid at a lower and a higher rate. The lower rate of the disabled child addition reflects that the parents are more able, with the right support, to move towards work. That is why it is part of this Bill. It is a payment that is made to the parents of children. However, the higher rate of the disabled child addition reflects the fact that parents of a severely disabled child who are entitled to the higher rate may not be able to increase their incomes through work. That is why it is not part of the Bill. That distinction is mirrored across into universal credit.

However, because I recognise the concerns that noble Lords have raised, I will stress again that the personal allowance—the payments for which increases will be capped at 1%—are not those that are paid to cover the additional costs associated with a person’s disability. There are fundamental distinctions here between additional cost disability benefits, such as DLA, which we have protected, and employment and support allowance; between the ESA support group component, which we have protected, and the WRAG and the personal allowance; and, finally, between parents providing care to a child receiving the higher rate of the universal credit disabled child addition, which we have protected, and the lower rate that is paid to parents who, with some support, could return to work.

Because all of us are concerned to see disabled people receive the support they need, it might be helpful for me to outline for noble Lords some of the wider support that the Government provide for disabled people. The Government are spending nearly £50 billion a year supporting disabled people. One of the ways in which we are doing this is by investing £320 million on disability employment programmes. I hear the comments that were made by the noble Lords, Lord Low and Lord McKenzie, about the Work Programme, but I disagree with them. I would also say that we have a scheme for disabled people called Access to Work, which in 2011-12 supported over 30,000 people at an average cost of over £3,200. We have invested more, another £15 million, in this area for this spending review. We have another programme called Work Choice, which provides tailored support to help disabled people facing the most complex barriers to employment find and stay in work. It is voluntary, and payable regardless of any benefits being claimed.

I know that many noble Lords are very familiar with the detail of different benefits that apply to disabled people and have been involved in debates and decisions in this area for many years. None the less, it is worth me making the wider point that the latest OECD figures show that the Government spend a higher proportion of GDP on disabled people’s benefits and services compared with the rest of the EU. Of 34 countries, only Norway and Iceland spend more. We take this responsibility very seriously and ensure that the support that disabled people rightly need is provided.

This Bill seeks to make savings where we can, while protecting benefits that reflect additional costs. The Bill is expected to create savings of around £3 billion over the two years in question. My noble friend Lord King asked the noble Lord, Lord McKenzie, whether he was aware of the cost of the amendment that we are debating. It would reduce those savings by around £400 million, which would clearly put additional pressures on public services.

I believe that our proposals are proportionate and fair. I recognise, of course, that there are people who are affected by the changes that we are making here, but I hope that I have been able to demonstrate that, when seen in the wider context, we are also providing comprehensive support to people who are disabled, which is right and which we will continue to do. I hope, therefore, that the noble Lord, Lord Low, feels able to withdraw his amendment.

[Lord Low of Dalston]

I am grateful to all those who have spoken and to the Minister for her full reply. A fair amount of the discussion has been taken up with where we are going to get the money. It is certainly not my job to answer for the Opposition as to where they would get the money from, but I would say here that without wanting to open up a general discussion again on the management of the economy, especially at this stage of the debate, I do take the view that you can borrow your way out of a recession. This is a paradox, of course, and it is not clear how it is the case at first blush. However, running a national economy, where one person’s expenditure cut is a cut in someone else’s income, is different from running a domestic economy.

There is a clear difference of view here with those on the Benches to my left. I am not an economist but I would ask people to accept that there is a very respectable and quite populous strand of opinion that supports the proposition that I have just enunciated. It is not so self-evidently barmy, as was suggested earlier in the debate, to say that the Government would be able to meet the cost of these amendments by borrowing more. There is respectable opinion to support that. To those who say that the Government are already more in debt and borrowing more than they would like to be, I simply say that there is no reason why they should not borrow a bit more. If the amount of extra borrowing that they are engaging in is still not achieving lift-off for the economy, they just have to borrow a bit more until they do. I know that that will not commend itself to this side of the House, but it is a respectable point of view and it is the position that I take.

We have been asked about the cost of the amendment. As the noble Lord, Lord McKenzie, has said quite clearly, that obviously depends on a range of factors. One of those factors is certainly the rate of inflation. Therefore, it cannot be precisely quantified. In any case, the question about what we would do to get the extra money is answered by what I have already said in response to the Minister. A more pertinent question than how one would find the money is when one would find the money. The answer of the noble Lord, Lord McKenzie—a year at a time—is perfectly reasonable. Labour is prepared to say that it would uprate at the rate of inflation in the first year that we are talking about.

The only other thing I want to say in response to the Minister is that the Government have essentially been peddling a myth when they say that they are protecting disabled people in this Welfare Benefits Up-rating Bill. They are only partially doing so. The Government ought to be straight with the British people. I repeat: they are only partially protecting disabled people. It is because I believe that the Government should deliver on their pledge to fully protect disabled people with this benefits uprating measure that I have brought this amendment to the House. It is also why I ask the House to support it, and why I would like to test the opinion of the House.

18:12

Division 3

Ayes: 198

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Labour: 156
Crossbench: 25
Independent: 5
Bishops: 3
Ulster Unionist Party: 1
Plaid Cymru: 1

Noes: 253

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Conservative: 154
Liberal Democrat: 70
Crossbench: 21
Democratic Unionist Party: 1
Independent: 1
Ulster Unionist Party: 1

18:20

Amendment 4

Moved by

[Lord Kirkwood of Kirkhope]

4: Clause 1, page 2, line 2, at end insert—
“( ) Subsection (1) does not apply in relation to a tax year if, on the review in that tax year under section 150(1) of the Social Security Administration Act 1992, the Secretary of State determines that the general level of prices, measured by the Consumer Price Index, for Great Britain has increased by 3% or more over the period under review.”

[Lord Kirkwood of Kirkhope]

My Lords, my Amendments 4 and 9 in this group take us into much lighter territory. I hope that the noble Lord, Lord Forsyth of Drumlean, will understand and relax, because the purpose of the amendments is not to attack the savings which it is the principal purpose of the Bill to achieve but only to protect the position of benefit recipients should the Office for Budget Responsibility’s estimates for inflation be exceeded by 3%, which is the figure that I have chosen for the purposes of the amendments.

The amendments are different from those which have gone before because, apart from anything else, they are much less susceptible to attack on grounds of financial privilege. A problem that I had with some of the earlier amendments, and I share some of the analysis, was that they were prone to attack on those grounds. I think that those of us who participated in consideration during the passage of the Welfare Reform Act last year felt that financial privilege was being used rather rashly in the other place, but the purpose of this House is to persuade the House of Commons perhaps to think again about some of the legislation that comes to us.

Amendment 4 would simply disapply the 1% limit on benefit uprating in the event of inflation reaching 3%. I would be interested in the view on this of the noble Lord, Lord Forsyth, because he knows a lot more about it than do. Judging where inflation will come out in September 2013 and September 2014 is an inexact science. We will learn tomorrow what the Office for Budget Responsibility and the Chancellor think about the situation, but the two years covered in the Bill, September 2013-14 and September 2014-15, are considered to be facing inflation increases of 2.6% and 2.2% respectively. The purpose of the amendment is to ask what happens if those estimates are wrong. They are forecasts; they are not scientifically worked through. We have therefore to ask ourselves what we do as a legislature if inflation reaches 3%.

Change in the real-terms value of benefits is very sensitive to inflationary increases. I have said that the Office for Budget Responsibility’s baseline is 2.6% for September 2013 and 2.2% for September 2014. That reduces the real value of benefits by 4% and produces a saving of £3 billion; that is already agreed and is in the Bill. However, checking Library figures, I am advised that if inflation exceeds Office for Budget Responsibility estimates by 1% in the two years covered by the Bill, it will reduce the real value of benefits in the hands of claimants by 6% and result in a windfall saving to the Treasury not of £3 billion, which is what the deficit reduction programme is looking for, but of £5.1 billion. You can multiply the figures. If the OBR baseline is exceeded by 2%, that reduces the real value of benefits by 8% and produces a windfall saving for the Treasury of £7.2 billion. I have no way of knowing whether any of that will happen. All I seek with this amendment is to ask what the Government will do if it does.

The financial context is slightly worrying and has been getting worse since the coalition Government promulgated this policy some months ago. We will learn more about this in the Budget tomorrow. The Budget may well be—and some of us will argue that it should be—looking to promote growth and loosen some of the constraints on inflation that the Bank of England’s Monetary Policy Committee is required to oversee. However, we have a Bank Governor-designate in Mr Mark Carney, who comes with a reputation of being prepared to live with higher levels of inflation. If that happens, then the 3% figure in the amendment may well be breached sooner rather than later. In some of the earlier debates the noble Lord, Lord McKenzie, rightly adverted to the fact that the markets are already pricing in higher inflation in the short term over the two years that the Bill covers.

As a legislature, we now face an increasing risk of inflation for these two financial years; I put it no higher than that. We very much need to take that into account. The CPI calculation of inflation is a national figure, worked out with average figures on a statistical basis, but someone said to me the other day that childcare costs have gone up 6%, as anybody who has studied the incidence of rising costs on low-income families will know. That is a long way in excess of the general CPI rates that we face, as with food prices, rents and energy prices, particularly for the low-income families that I am concerned about.

I am grateful to my noble friend for the considerable discussion that we had about this. He was generous in considering what I said, but it would be helpful if the House knew what the Government would do if the 3% inflation figure was breached. I am reasonably content that there are overriding powers in the Social Security Acts, but I do not think there are in the Tax Credits Acts; I might be wrong about that. What happens if something untoward happens to inflation and we end up in the 2014 and 2015 fiscal years with something unexpected suddenly coming over the horizon? Surely some of these reductions in the value of benefits that I have alluded to would be quite unconscionable as a windfall increase to the Treasury’s coffers in a way that is not intended, as I understand it, but may well happen by mistake?

[Lord Forsyth of Drumlean]

I have looked carefully at my noble friend’s amendment and listened to his speech with care, but he does not provide the remedy in the amendment. It simply says that the uprating limited to 1% is cancelled if inflation reaches 3%. Would he indicate why he chose 3% and what the remedy would be? If he specifies a remedy, then we are back into the argument about cost.

[Lord Kirkwood of Kirkhope]

The remedy would simply be that if 3% was breached, then the clauses in the Bill fall and there would be the default position of an annual uprating process. It would be at the Secretary of State’s discretion with the usual provisions of Section 150 of the Social Security Administration Act 1992. It would be taken year by year and would say that inflation was forging ahead in an unforeseen way. For myself, I would listen to an argument that said that we should stick to 1% on costs shown in those circumstances, but if 3% was breached we would go back to the status quo. That does not have a cost at all.

The noble Lord, Lord Forsyth, and I have been doing government uprating statements for 30 years together and I have never known a Government not get an uprating statement that they wanted if they had a majority. That is what I think would happen in these circumstances. However, the Secretary of State would be obliged to come back and say to both Houses that the circumstances were not what he had anticipated or what the Office of Budget Responsibility had calculated and that therefore there would be a chance for reconsideration. That is all I ask.

In fact, Clause 1(5) and Clause 2(4) of the Bill give the Treasury power to protect itself from the downside. These clauses say that if inflation falls below 1% it will not admit the full 1% uprating and will reserve the right to adjust it. Yet there is no limit to which the Treasury will allow inflation to increase before it comes back and argues its case in Parliament one way or the other. There is a 50:50 chance of this happening. I believe in my heart of hearts that the Government would respond to that. I do not believe it would be at all conscionable to leave 3.5% or 4% inflation with these 1% caps for the two years in this Bill.

We need more than that. We need some inflation-proofing and protection for recipients of benefits in the two years covered by the Bill if inflation races ahead. That is the burden of the argument. It is no more and no less than that. I do not think that it would be attacked on the grounds of financial privilege. It has no direct effect, as I see it, on deficit reduction. I am content that the Government get £3 billion in savings, but not content that they get £5 billion or £7 billion, because that is not what the Bill is designed to do. I argue in this amendment that there is no protection in particular for low-income families. I hope that my noble friend will give me some reassurance about what the Government will do in these eventualities. If he is not prepared to accept this amendment, I may well be tempted to test the opinion of the House. I beg to move.

[Baroness Morgan of Drefelin]

My Lords, I am not an economist. I declare an interest as chief executive of a cancer research charity. My concerns are similar to those voiced by the noble Lord, Lord Kirkwood. The Bill locks in the 1% and does not contain a very important review provision. I am sure that my amendment is so anodyne that the Minister will say either that it is unnecessary or that he will accept it.

For that reason, I will be brief. It is important once more to challenge the myth that disabled people will be protected from the measures in the Bill when that is so clearly not the case. Let us remember that, by 2015, in excess of 40,000 cancer patients will be claiming ESA. It is the main benefit claimed by cancer patients, as we have already heard. For those cancer patients in the support group, only a proportion, the support component, of what they receive, will be protected, while their core payment will rise by only 1%, as my noble friend Lord Low mentioned.

Overall, cancer patients in the support group will see their ESA payments rise by only 1.4%, rather than by inflation, and Macmillan Cancer Support has estimated that, by 2015, cancer patients will be £138 worse off each year than if they had received the 2.2% rise which could have been expected with the CPI level as was in September 2012. I cite the £138 figure, but I am conscious that we do not yet know the true effect of the Bill. That figure shows how far ESA will fall behind inflation if the consumer prices index were to remain at the September 2012 level of 2.2%. However, it has now risen to 2.7%. If, as we have heard, inflation were to rise to 3% over the next three years, the loss to cancer patients and others in the ESA support group would be even greater. The actual impact on cancer patients and others supported by those payments is just as uncertain as the level of inflation itself.

In its current form, the Bill leaves no flexibility to protect vulnerable groups such as cancer patients if there is a significant rise in inflation over the next three years. For that reason, I support the amendment moved by the noble Lord, Lord Kirkwood. I fully expect the Minister to say that he will accept my amendment or that it is unnecessary because it is a matter of course that there will be a review by the Social Security Advisory Committee if we have such a rise in inflation. I very much look forward to hearing the Minister’s remarks about how the Government aim to continue to protect cancer patients as much as possible.

[Lord King of Bridgwater]

I should have asked my noble Lord friend Lord Kirkwood, this; he is an expert on uprating. The noble Baroness said that this is an anodyne amendment. I am not an expert on how uprating works, but does her amendment provide that if inflation is above 3%, the Bill does not apply and it will then be up to the Secretary of State to decide what increase he tries to get through both Houses of Parliament, which could in fact be 1%, if the economic situation is as it is? So it does not automatically provide that the current rate of inflation has to be included. Have I got that right?

[Baroness Morgan of Drefelin]

That is correct. As normal, the House would receive an annual uprating SI, there would be a debate in the normal way and, if the Government of the day wanted to propose a particular uprating, there would be the normal impact assessment. The noble Lord, Lord Kirkwood, may want to clarify his amendment, but my amendment states that if we have a significant increase in inflation, we need the experts to conduct a review to say what will be the impact on benefit recipients.

18:45

[Baroness Masham of Ilton]

My Lords, I have my name to Amendment 12. I support what my noble friend Lady Morgan of Drefelin said.

The Bill could see vulnerable cancer patients and other seriously ill patients losing out on almost £500 per year if inflation rises. That is a great deal of money for people who are not working and who are ill. I hope that the Minister will give some hope that those vulnerable people will not suffer and that he will support this helpful amendment.

[Lord Forsyth of Drumlean]

My Lords—

[Lord Foulkes of Cumnock]

Oh!

[Lord Forsyth of Drumlean]

The noble Lord, Lord Foulkes, normally cheers when I get up to speak, but not on this occasion, perhaps because we have found something to disagree on.

I must congratulate my noble friend Lord Kirkwood on this very ingenious amendment. I suspect that he started from a position opposed to the Government’s proposals, knowing his long and distinguished record in supporting people on low incomes. I am sure that he would have preferred that the status quo had a rival—

[Lord Kirkwood of Kirkhope]

Since the noble Lord asked, let me tell him. I am looking him straight in the eye. I have voted for the Government all through this afternoon against my better judgment, but I say this to him: if any further cuts are introduced by the coalition Government for the rest of this Parliament, he can forget any support coming from my direction for the next two years.

[Lord Forsyth of Drumlean]

The noble Lord and I both have our crosses to bear in the coalition. I am grateful for his confirmation that he does not support the principle. This is just a very clever device to try to get us back to where we started from without making a commitment to spend money. The amendment states that the provisions in the Bill which limit the benefit increases to 1% can be set aside if inflation reaches 3%. That is for very good reasons. The noble Lord argues the case about people on low incomes and the effects of inflation. The noble Baronesses, Lady Morgan and Lady Masham, in their amendment, have highlighted the desperate impact that inflation has on cancer patients who are not working.

The best way to protect those people is to ensure that inflation does not rise to 3%. The idea that it is inevitable that inflation will rise to 3% is deeply damaging.

If the noble Lord, Lord Foulkes, wishes to interrupt, I will be happy to give way, but otherwise I would be grateful if he did not make remarks from a sedentary position, which is distracting me from my argument—which of course, was his intention.

The best way to protect people is not to have inflation. One thing that sets inflation running uncontrollably is people’s expectations of inflation. When the noble Lord makes a speech saying, “I think that inflation is going to be more than 3%”, people hear that and think, in their wage negotiations, “Lord Kirkwood says that it will be more than 3%; the Government say that it will be two and a bit per cent”. Expectations drive the inflation rate, and inflation is devastating for the poorest in our society and for people on fixed incomes.

Therefore, we need to follow a policy that will limit the possibility of large increases in inflation. That is where we have a problem. To do that, we must show that we have control of public expenditure and have plans in place that can be relied on.

If the amendment were accepted, anyone looking at the Government’s plans for financial responsibility over the next two years would say, “They have marked down that social security and benefit payments will be this, but, of course, because of Lord Kirkwood’s amendment we cannot rely on that because if inflation is above that figure, the Secretary of State will need to take a decision”. They will note that he will be taking a decision in the run-up to an election and will therefore draw conclusions about what the pressures on the Secretary of State might be.

The amendment drives a coach and horses through the Government’s finances for anyone looking at whether they can rely on the Government delivering.

[Baroness Hollis of Heigham]

Can the noble Lord help me? Is he arguing that the best way to protect people against inflation is to have no protection against inflation?

[Lord Forsyth of Drumlean]

Yes, got it in one. The one thing that we learnt in the 1970s was that indexation, like other palliatives, is absolutely disastrous, because it sets the ball rolling, which gets faster and faster with people chasing inflation. Of course that is exactly what I am arguing.

[Baroness Hollis of Heigham]

If the noble Lord follows that argument through, is he therefore saying that, should inflation happen, that is just tough luck, and the poor cannot not have the possibility of any protection from the Secretary of State doing what he would now do, which is to consider all the options in the circumstances?

[Lord Forsyth of Drumlean]

I have the highest regard and respect for the noble Baroness, Lady Hollis. She knows more about social security and understands the issues better than anyone else. I wish that she was on the Front Bench. If she was, she would be putting forward alternative proposals that might be more attractive and meet some of the points that are being considered, but she is not on the Front Bench and there are no alternative proposals.

We have to contain public expenditure not to within our means, because we are spending more than our means; the noble Lord, Lord McKenzie, pointed out that the Government are already borrowing and spending £200 billion more than was planned. I am simply arguing that if we continue like this the pound will continue to sink. The cost of energy, which, as the noble Lord, Lord Kirkwood pointed out, is a major cost for families, will go up. He supports windmills and other forms of energy generation that are the most expensive known to the planet and which are put on people’s bills without their knowledge as a tax and add to the pressure on these families. That is another example of where, if he is worried about poor households, he should abandon his attachment to windmills and other things that are raising energy costs and adding to inflation. The name of the game is to contain inflation by not having daft policies such as windmills and other energy policies. It is to act in a responsible way so that people will not decide that they do not wish to buy government debt, which is already a problem, and will not result in further pressure on the exchange rates.

I am sympathetic to the points that the noble Lord, Lord Kirkwood, has made and with which the noble Baronesses, Lady Morgan and Lady Masham, are concerned in respect of the people who are affected. The problem is that the remedy that they propose would make things much worse. It is not a good place to be. We would prefer not to have started from here, but it was Mr Gordon Brown who put us in this position, ably assisted by the noble Baroness, and we must sort this mess out. Clever as it is, this amendment is a smart attempt to get round the basic purpose of the Bill, which is fundamental to protecting people on low incomes.

[Lord Bates]

I support the noble Lord, Lord Forsyth, but I want to go one step further. He has dealt incredibly effectively with the measured arguments put forward by my noble friend Lord Kirkwood in Amendment 9, but it does not quite hit the interesting amendment in the names of the noble Baronesses, Lady Morgan and Lady Masham. I want to make a couple of points drawn from the Office for Budget Responsibility report looking at this Bill and the impact assessment.

Front and foremost are two things. The first is the control of inflation and the second is the creation of employment. They will help the poor more than anything else. If we fail to tackle the debt, the cost of borrowing will rise, as my noble friend Lord Forsyth has said. If the cost of borrowing rises, inflation will rise on the back of it. Therefore it follows that tackling the deficit is the best thing that can be done to help the poor. In table 2 on page 6 of its forecast, the OBR estimates that inflation will be: 2.6% in 2013-14; 2.2% in 2014-15; 2% in 2015-16; and 2% in 2016-17 and thereafter. It is clearly assessing that the culmination of the effect of these and other measures being taken is to move us towards a situation in which inflation is on a steadily downward course. That is the OBR’s assessment, which was used as the basis of the 2012 Autumn Budget Statement. As noble Lords have said, we will find out tomorrow where we stand vis-à-vis that.

Other elements need to be taken into account. We have the Low Pay Commission’s report coming up shortly. The Low Pay Commission provides a report that influences the minimum wage. The report was submitted at the end of February. I do not know whether my noble friends on the Front Bench have had sight of that recommendation, but it, too, provides a lock. Despite in previous incarnations being against the minimum wage, the Government have said that they support the minimum wage and have always accepted the recommendations of the Low Pay Commission to increase income as a result. Taking that together with the changes to universal credit that are deemed to be providing additional benefits to people estimated at £168 a month for 3 million families and the likely increase in tax thresholds and their impact on the salaries and incomes of the poorest in our society, it seems fair and reasonable, as the noble Baronesses, Lady Morgan and Lady Masham, have suggested, periodically to undertake a review. Post-implementation reviews normally take place three to five years after implementation.

We are talking about some of the most vulnerable. I believe that the position affecting the poorest in our society will not be as great as some people anticipate and that the situation with the combination of policies that I have outlined will lead to an increase, but as we are not having the annual uprating review, some periodic review of how this is working against projections of inflation and of the impact on the poorest in society would be sensible. I encourage my noble friends on the Front Bench to support it if possible. Should such a review take place, it should not need focus on the one narrow measure that has been the theme of this debate but should assess the wider impact on the poorest in society, taking into account the other measures—the pupil premium, NHS, the lid on fuel increases, the increase in personal allowances, the increase in the national minimum wage et cetera—which we are talking about. With that, I support the noble Baroness, but I am afraid not my noble friend Lord Kirkwood.

[Lord McKenzie of Luton]

My Lords, let me make it clear that we support each of these amendments. The request in the amendment in the name of the noble Baronesses, Lady Morgan of Drefelin and Lady Masham of Ilton, that there should be a review seems modest and straightforward. If the Government should seek to resist that, or a reasonable and clear alternative, I would be amazed.

The case is the same with the amendment of the noble Lord, Lord Kirkwood. As I understand the proposition, he is saying that should in any year the current expectations of inflation be in excess of 3%, which we currently expect to be the case, the 1% automatic uprating would not apply and there has to be an annual assessment, as happens at the moment. That assessment might lead to a 1% uprating, or to some other form of uprating, but there would not be the automatic application of 1%. Who knows what will happen to inflation? I do not predict that there will be a surge in inflation but, if there were to be, is any level of real cut in the standard of living of poor people acceptable to the Government? Is that what they are saying? They would be if they rejected this amendment.

[Lord Forsyth of Drumlean]

Would the noble Lord apply the same principle to pay in the public sector?

[Lord McKenzie of Luton]

We are talking about specific provisions in the Bill about the uprating of benefits. The noble Lord has worked quite hard to differentiate himself from the noble Lord, Lord Kirkwood, and his amendments. The suggestion that somehow having this provision in the Bill will fuel wage inflation across the land, fuel expectations up and down the country and bring the economy to a halt is, frankly, frivolous and a nonsense. The noble Lord knows that full well. He is an experienced parliamentarian and an able debater, but I do not believe that he did himself justice in the way he sought to pick away at the noble Lord’s amendment.

19:00

[Lord Forsyth of Drumlean]

I was asking the noble Lord a straightforward question. He is enunciating the principle that if inflation were at 3% or more, it would be necessary to abandon a position that held the increase in benefits to 1%. I am simply saying that if that is the Opposition’s view, is it also their view in respect of public sector pay? If inflation turned out to be much higher, would the same apply to people working in the public sector? If not, why not?

[Lord McKenzie of Luton]

My Lords, we are debating a different Bill. If the noble Lord wants to debate a proposition about public sector pay, let us have some propositions and we can consider that. The noble Lord knows full well that he is trying to lead the Opposition in a particular direction.

I come back to the point that the amendment of the noble Lord, Lord Kirkwood, is very straightforward. It just says that an automatic 1% uprating would not apply automatically if inflation reached a certain level. That seems entirely unobjectionable and I cannot see why the Government cannot accept it. If the Government do not accept it, they have to say what level of inflation, what level of real decrease in people’s circumstances, they would find acceptable, because that would be the consequence of rejecting the amendment. This is a very modest proposition. I really am surprised at the trouble that the Government are having with accepting it. I would hope at least that the noble Lord’s colleagues would stick with him on this issue as the arguments that we have heard against it are quite spurious.

[Lord Newby]

My Lords, the first amendment in this group in the name of my noble friend Lord Kirkwood would mean that the Bill would apply only if inflation was below 3% for the purposes of uprating in that year.

I shall provide a reminder of what the official inflation forecasts currently show. While inflation is forecast to be above target—that is, 2% in the near term—it will fall back towards the target in the medium term. In the final year of the Bill, the current forecasts show that inflation for the purposes of uprating in that year will be 2.2%. That was the view of the Office for Budget Responsibility at the time of the Autumn Statement. The OBR produces independent and authoritative forecasts for the economy and public finances and we take decisions based on them.

However, the OBR is not alone in forecasting that inflation will fall back to target in the medium term. That is also the view of other major economic forecasters. I refer to the IMF, the OECD and the Bank of England. Indeed, the latest assessment of independent forecasters in February was that UK inflation would be 2.2% in the 12 months to quarter 1 of 2014 and in the 12 months to quarter 1 of 2015. That is an average assessment of people who make their living by doing this job.

The noble Lord, Lord Kirkwood, said that he thought there was a 50% chance of inflation being over 3% in the period covered by the Bill. I remind the House that that means a 50% chance that inflation will be over 3% by September 2014, because that is the last point at which the Bill has an effect in terms of benefit uprating. All I can say to my noble friend, for whom I have the greatest regard, is that his view is just not shared by any reputable international or national body that is making forecasts about inflation.

[Baroness Hollis of Heigham]

In that case, why do the Government have any problem in accepting this amendment?

[Lord Newby]

I am coming on to that. In fact, I will deal with it now. It is relevant to the point that was made by my noble friend Lord Forsyth. The purpose of the Bill, as we have debated about 20 times since Second Reading, is to give some certainty to the Government’s fiscal plans. The reason we are doing that is that a number of international bodies and rating agencies have said that this has a specific and significant impact on the way that they view the UK’s prospects. Entrenching something in a Bill has the effect of giving a degree of certainty, which is immensely useful with regard to the markets.

As my noble friend Lord Forsyth has said, there seems to be a sense that the markets think that we in the UK are in a very good position and that a little tweak here and there in terms of borrowing will make no difference. That is not the way the markets work. It starts off with a little tweak and then the markets feel that something is going wrong. Once that feeling takes hold, the markets can move very quickly.

As we have debated many times in your Lordships’ House, it does not need much of an increase in inflation to make a huge difference to the Government’s finances and the lives of ordinary people.

[Lord McKenzie of Luton]

Can the noble Lord tell me how the markets have moved in response to the Government borrowing £200 billion more than originally planned?

[Lord Newby]

The reason why they have not moved is that the Government have not changed our underlying policy.

The effect of a 1% increase in inflation on someone with a £100,000 mortgage is £1,000. These are big differences and a 1% increase in the interest rate is by no means out of line with the interest rates being paid by a raft of European countries whose borrowing as a percentage of GDP is significantly less than ours. The risk in terms of interest rates is real and present. It is not some airy-fairy possibility that would come into play only if the Government were suddenly to go mad and spend huge amounts of money. It can happen with a relatively small change.

The Government remain committed to low and stable inflation. As we have said umpteen times, it is good for individuals and for business and is a prerequisite for economic prosperity. That is why the Government set the remit for the independent Monetary Policy Committee to target inflation. The Chancellor will set the remit at Budget tomorrow, as usual. I do not know what the remit will be but I know it will not be, to quote my noble friend Lord Kirkwood, to loosen the constraints so that inflation rips. I am confident that the Government’s commitment to low inflation will remain.

My noble friend Lord Kirkwood and the noble Lord, Lord McKenzie, said, “What happens if, contrary to what the Government have said, inflation does rip? Suppose we have a circumstance that we don’t believe is going to happen”. If Governments legislated for every circumstance that they did not believe was going to happen, we would have Bills thousands of pages long. The Government can legislate and act only on the basis of a central assumption of what the future, in respect of the particular area of public policy they are dealing with, is going to be like, and that is what we have done here.

I turn to the issue that many people have faced and in many cases continue to face—real-terms reductions in pay. Inflation risk is something that everyone has to face in everyday life. We have been taking about public servants but let us just talk about them a bit more. Public servants have seen their pay frozen and then increased by 1%. When inflation rose to 5.2% in September 2011, many public servants were in the middle of a pay freeze. The Opposition supported that policy and there was no inflation guarantee within it. This includes, for example, many hard-pressed personal advisers in jobcentres who are on modest incomes and are having to see restraint in their pay in these very tough times. That is the right policy. However, the consequences have been that many out-of-work benefit recipients have seen higher cash—yes, cash—increases in their benefits payments over the past three years than many Jobcentre Plus personal advisers have seen in their salaries.

These are difficult but necessary decisions. We must remember the tough circumstances that many people in work have faced and continue to face across the country as we deal with the effects of the economic crisis. As I have said, we believe that this Bill is necessary to set out a clear and credible plan to make savings from welfare, help reduce the deficit and restore economic recovery. We are taking the tough decisions because it is necessary to give confidence to the markets. Adding to the Bill conditions such as those proposed by my noble friend Lord Kirkwood would diminish the confidence that we require.

I now turn to Amendment 12, in the name of the noble Baroness, Lady Morgan of Drefelin. This amendment would place a duty on the Secretary of State to instruct the Social Security Advisory Committee to commence a review of the level of uprating if inflation reaches 3.2% in any of the relevant periods as defined in the amendment. I hope that during this and previous debates both I and my noble friend Lady Stowell have been able to convey to the House that we understand and share noble Lords’ concerns about measuring the impacts of the Bill and all our reforms on individuals. However, as the noble Baroness slightly suggested in her speech, we believe that the amendment is unnecessary.

Noble Lords will be aware that we already have comprehensive arrangements in place to report on the impacts of government policy. First, we have already published a full account of the impacts of this Bill based on the forecast set out by the OBR. Again, these forecasts are broadly shared by the other main economic forecasters. Noble Lords will be aware that we have also published the child poverty impacts of the Bill. The Government already have a suite of ongoing reporting mechanisms in place and report on the levels of poverty every year in the households below average income series. It is only by looking at poverty issues in the round that we can have a meaningful debate about poverty. Noble Lords will be aware that the Government are currently analysing responses to their consultation on new measures of child poverty, measures that will attempt to capture the wider reality of poverty in the UK today.

Later this year we shall see the first of what will become an annual report from the Social Mobility and Child Poverty Commission, which will report on the Government’s progress towards reducing child poverty, in particular meeting the targets in the Act and implementing the most recent UK strategy. This commission, chaired by Alan Milburn, will report to Parliament and will enable detailed scrutiny of the Government’s work to eradicate child poverty.

Finally, the Government regularly produce an analysis of the cumulative impact of changes on households across the income distribution. This information is published by the Treasury at every Budget and other major fiscal events. This analysis will use updated inflation projections. We believe that it is a better approach than that in the amendment as it looks at the cumulative impacts of all changes rather than artificially isolating just one policy. The publication of cumulative impacts is a coalition initiative and was not produced by the previous Administration.

The Government have taken unprecedented steps to increase transparency and enable effective scrutiny of policy-making by publishing detailed distributional analysis of the impacts of their reforms on households. Our published distributional analysis goes further than that of any previous Government. Having these mechanisms in place means that we are confident that the Government will be able to scrutinise the effects of this Bill and of our whole suite of welfare reforms. I therefore ask the noble Baroness to withdraw her amendment.

19:15

[Lord Kirkwood of Kirkhope]

I think it is me, in fact, but let that pass. I am grateful to my noble friend. He and I had a good private discussion about this. I understand the Government’s position and he understands my position as well. I plead not guilty to his charge of being clever. All I am trying to do here is to get an insurance policy to protect people who are on benefits who may well need it. I hope I am wrong. He knows more about inflation than I do, but there is a real risk that in the demeanour of the coalition Government’s policy, which I would support, to try to attract higher levels of growth, it may be a price worth paying—not to let inflation rip, as my noble friend said, but to allow it to rise reasonably in expectation that growth would follow as a result of that. The shift in the policy changes that.

When the Bill was drafted we were in a different position. We are now—we will see tomorrow whether that is correct or not—in a position of the proposals of the noble Lord, Lord Heseltine, for growth, much of which I support. I must say to the noble Lord, Lord Forsyth, that I pay attention to what he says as Britain is a poorer place. These are huge sums of money and we need to work out collectively how we make provision for social protection in future. However, I say to my noble friend—I am looking him straight in the eye—that I cannot accept that this is a safe position to leave the House in. I want the protection—

[Lord King of Bridgwater]

Is not the key point here that the Government have to be able to convey credibility to those around the world who may lend us money? The noble Lord, Lord McKenzie, has made the point very well. We have to borrow a lot of money or there will be nothing like the present level of benefits if we find, as the Minister has made clear, that we are out on the market trying to borrow from countries and lenders who say, “I thought they had a clear plan. Now they’re qualifying it, they may not follow through”. I make this simple point. The noble Lord quite rightly talks about the risk of inflation rising. The risk that he is prepared to accept is that we lose our rating and then we will be in a very much worse state.

[Lord Kirkwood of Kirkhope]

I thought that we had lost our rating. I have now lost my drift.

This is very simple. This is a one-way bet for the Chancellor. If the Government end up with a windfall of £1 billion or £2 billion over and above the saving that I am supporting here, that is completely unconscionable. I am moving this amendment only to try to get an element of inflation protection for benefit claimants. I am grateful to everybody who has taken part in the debate, even the noble Lord, Lord Forsyth. I am sorry to do this to my noble friend, but I want to test the opinion of the House.

19:17

Division 4

Ayes: 173

---

Labour: 139
Crossbench: 22
Independent: 5
Liberal Democrat: 1
Ulster Unionist Party: 1
Bishops: 1
Plaid Cymru: 1

Noes: 220

---

Conservative: 142
Liberal Democrat: 64
Crossbench: 7
Democratic Unionist Party: 1
Ulster Unionist Party: 1
Independent: 1

19:29

Amendment 5 not moved.

Consideration on Report adjourned until not before 8.29 pm.

Ethical and Sustainable Fashion

Tuesday 19th March 2013 Lords Chamber

Question for Short Debate

19:30

Asked By

[Baroness Young of Hornsey]

To ask Her Majesty’s Government what support they will give to the promotion of ethical and sustainable fashion.

[Baroness Young of Hornsey]

My Lords, I am pleased to open this second debate on ethics and sustainability in fashion, especially as there is a full-page account of a round-table discussion on the subject in today’s Guardian. I am particularly grateful to colleagues on the All-Party Parliamentary Group on Ethics and Sustainability in Fashion for their hard work and to the Centre for Sustainable Fashion for providing a secretariat alongside MADE-BY. Special thanks go to Dilys Williams, the head of the CSF, for bringing me up to date on key developments.

Fashion is about so much more than the clothes we wear. It may be an expression of our professional and personal identities, an expression of where and how we see ourselves in relation to our peer group, our cultures, our families and communities, and an expression of our creativity and our sense of fun. However consciously or otherwise we do it, as we dress, so we make a statement, even if the statement is, “I don’t care or think about what I wear”.

In spite of its importance in so many people’s lives, the perception persists that fashion is frivolous and inherently ephemeral. However, better than most, the Minister will be aware of the size of the UK fashion industry and of its contribution to the economy. The estimated amount spent on clothing in the UK in 2011 was £43.9 billion. Despite the high level of garment manufacture carried out overseas, the estimated value of UK-manufactured clothing and textiles in the UK was £8.1 billion in 2011, and the overall estimated export value of UK clothing and textiles was £7.3 billion.

If we take the volume of clothing sales and look at the global nature of the supply chain, and then start to unpack what that means in terms of the relationship between the environment and consumption, a worrying picture emerges. The Waste and Resources Action Programme, known as WRAP, reported in Valuing Our Clothes that we have stashed away in our wardrobes some £30 billion-worth of clothes, unused for at least a year. About a third of the clothing we no longer need ends up in landfill—that is, around 350,000 tonnes or an estimated £140 million-worth of used clothes. On average, the global water footprint of a UK household’s clothing exceeds 200,000 litres a year—enough to fill more than 1,000 bathtubs to capacity.

We have to work much harder and be more creative and inventive about how we tackle these problems. Not enough of us make connections between “fast fashion” and climate change, environmental degradation, labour issues in developing countries and resource scarcity. This is not to suggest that nothing is being done. On the contrary, parts of the fashion sector supply chain and increasingly aware consumers, campaigners and legislators have embraced a range of measures, instruments and strategies to mitigate the damage caused by our current practices and processes.

Last month, I was in Copenhagen, where I gave a presentation to Danish MPs on the APPG on Ethics and Sustainability in Fashion, which I chair. Jonas Eder-Hansen, the director of NICE, the Nordic countries’ umbrella group promoting sustainable fashion, and Michael Schragger of the Sustainable Fashion Academy work with Ministers and MPs from Sweden and Denmark, as well as representatives from the industry, to develop and deliver sustainable business models and other strategies to take us forward.

Here in the UK, the work of Defra and WRAP in promoting the Sustainable Clothing Action Plan, known as SCAP, is seen as a model of good practice and held in high esteem internationally. Indeed, WRAP and Defra were presented with the Global Leadership Award in Sustainable Apparel by the Swedish Sustainable Fashion Academy in Stockholm last month. At the event, I found a strong appetite for collaborating internationally with politicians and the sector. All of us are aware that in our contemporary, globalised world, pollution and unsavoury labour practices are no respecters of national boundaries.

Industrial dyes are a case in point. For a start, fabrics are dipped or washed in dyes that are made using copious amounts of precious water. In spite of regulations intended to ensure that the excess, dye-laden water is treated before being disposed of, it is cheaper to dump the dye effluent than to clean and reuse it. The Wall Street Journal’s report on an instance of severe pollution in China where a river literally ran red makes chilling reading. Of course, by not treating water, costs are kept low, as demanded by large retailers wanting to sell cheap clothes to their customers in the USA and Europe.

Consumers need to make the links between their desire for cheap clothing and the loss of livelihoods through depleted, polluted fishing stocks and ever diminishing food and water resources. Add to that the fact that more than 400 people have died in fires in Bangladesh and Pakistan in the past six months, with at least one of the factories involved producing garments for a British retailer, and we have to acknowledge that our current mode of “enjoying” fast, cheap fashion makes no sense whatever.

Fashion today is both global and local, and even much of the produce of many of our high-profile “heritage” British brands, such as Burberry, Aquascutum and Crombie, is often all or mostly made outside the UK. The global nature of the fashion industry means that it is imperative that we work with colleagues internationally to secure more effective international standards on, for example, sophisticated factory inspection measures, labelling countries of origin, instituting traceability mechanisms and so on. Thanks to the horsemeat scandal, the general public is becoming acquainted with the unforeseen complications brought about by globalised processing and trading practices. The longer and more dispersed the supply chain, the more difficult it is to ensure transparency and accountability.

One equivalent to the horsemeat issue, if I may put it that way, in clothing terms is cotton. There are many people who would not wish to wear garments made from cotton harvested by children forced to work in the cotton fields of Uzbekistan instead of attending school—I should declare an interest here as a patron of Anti-Slavery International, which has worked ceaselessly to try to persuade Governments and the EU to work harder to stop this practice—but it is impossible to know the source of your shirt, skirt or trousers. Yet some of our largest fashion retailers will not undertake to demand that the companies in their supply chain stop using cotton gathered by state-sponsored forced labour.

Businesses and consumers alike can be powerful agents of change, and it is clear that education and awareness-raising have a crucial role to play. However, there is also a need for leadership from government in hosting platforms for initiatives, supporting change-makers and investigating the risks of not thinking through the consequences for environmental sustainability. This leadership role should also be concerned with working in partnership to educate consumers and skill up young people on manufacturing and other skills, as well as investing in sustainable fashion SMEs and other projects focused on a sustainable future still infused with excitement, individuality and style.

We have all the incentives we need to act and to act quickly, and we have the individuals and organisations with the talent, so what more can government and politicians do to enhance the effectiveness and reach of these people? Clear, vocal leadership is important, and government Ministers and their officials can fulfil a useful role in supporting initiatives across the spectrum of departments with a stake in finding solutions to the problems we have created. The Sustainable Clothing Action Plan is a good example of government leadership, with an NGO and industry working together to find solutions to complex problems.

I cannot mention all the different departments that could have some sort of purchase on this issue. Some time ago, DfID, for example, introduced the Responsible and Accountable Garment Sector Challenge Fund. Fashion, of course, lies within the DCMS’s remit. It is also within the BIS agenda because of the manufacturing element and also because of the potential of the Green Investment Bank. In fact, in November last year, Business Secretary Vince Cable promised government support to breathe new life into UK textile manufacturing as a study revealed that the cost gap with Asia is narrowing. Can the Minister tell the House how far such plans have gone and the extent to which sustainability and ethics in fashion is a priority consideration? Other departments, such as the MoD or the Department of Health, can support sustainable clothing via the purchase of uniforms and so on through ethical procurement procedures.

Will the Minister undertake to set up a meeting with me and other Members of both Houses on the APPG to discuss how we can best help to support the development of this part of the fashion sector? We need to get a commitment to develop practical, effective strategies across the different departments for realising the potential of rethinking how we “do” fashion. Because of its experience with the Sustainable Clothing Action Plan, Defra is perfectly placed to broker and animate the necessary discussions.

To end on a positive note, technological innovation is crucial. I look forward to the day when waterless production techniques, air-purifying textiles, as being developed by Professor Helen Storey and Professor Kate Storey, and closed-loop technologies, in which the garment is manufactured, sold and eventually reformed so it can go back into the manufacturing process, will be the norm. Then we will know we are getting somewhere. However, we should also acknowledge that there is no single magic potion that can cure our environmental excesses. We need multiple strategies and to work collaboratively and internationally to effect sustainable change.

At the British Fashion Council’s Esthetica Showcase at London Fashion Week last month, a young designer showed the collection with which she won a competition for fashion designers. The material she had to work with was the discarded clothing and waste materials of Veolia, whose employees collect our rubbish and sweep our roads. It just goes to show that with support, creativity, vision, skill and invention, even the fluorescent strips from a refuse collector’s jacket can be turned into a garment of true beauty.

[Baroness Northover]

I remind noble Lords that this is a time-limited debate and, if my maths is right, we have no spare capacity. When the Clock shows four, noble Lords have had their four minutes.

19:40

[Lord Young of Norwood Green]

My Lords, with that fresh in my mind I will endeavour to proceed without hesitation, repetition or deviation, as they say. If every Member in the Chamber could examine the labels in their clothing, it would reveal the global nature of high-street supply chains. I am not suggesting we do it as it might cause embarrassment for some. However, I checked my jacket—not that I pretend to be anything to do with fashion—and I noticed that it came from Morocco.

I want to focus on the ethical aspect of this debate. I declare an interest as the vice-chair of the Ethical Trading Initiative, a groundbreaking alliance of companies, trade unions and NGOs. The company members include a large number of high street fashion retailers, supermarkets and department stores, with a combined turnover of £166 billion. The trade unions represent 160 million workers around the world and a wide range of NGOs, large and small, is involved.

Every member is committed to the implementation of the ETI base code, which is founded on the ILO conventions. In brief, they state: employment is to be freely chosen, with no forced, bonded or involuntary prison labour; there should be freedom of association with the right to collective bargaining; working conditions should be safe and hygienic; child labour should not be used; living wages should be paid; working hours should not be excessive; there should be no discrimination; regular employment should be provided; and no harsh or inhumane treatment should be allowed. As you can see from the list, all the companies that are members of the Ethical Trading Initiative are on a journey in trying to ensure that workers throughout their supply chain benefit from these conditions.

If noble Lords think about some of the stories in the news, only too often unfortunately, such as workers being exploited and denied basic rights, and incidences of child labour, which have been uncovered in many of the supply chains of our high street companies, it shows how difficult it is to ensure that workers get a fair deal. These are workers whose lives are put at risk, as we saw recently in clothing factories in Bangladesh, where fire exits were locked. It shows what a long way we have to go. All of us in the Ethical Trading Initiative have embarked on a huge task in trying to open the minds of companies and consumers to the fact that clothes do not just arrive through a UK-based manufacturing process.

Many ETI brands and retailers which sell garments to UK consumers are engaged in activities that attempt to integrate respect for human rights and labour rights throughout their global supply chains. Working with sourcing states and civil society, UK retailers are at the forefront of focusing on the UN guiding principles on human rights. On that point, I know that the UK Government support the UN business and human rights agenda and that we are awaiting a document on the human rights and democracy programme from the Foreign and Commonwealth Office, which is co-ordinating the policies of 12 government departments. I wish it luck in this. Can the Minister tell us when the document is likely to be published?

19:45

[Baroness Parminter]

My Lords, on entering this House in 2010 I wore fur-free “non-ermine ermine”. However, I am not just passionate about cruelty-free fashion, so I thank the noble Baroness, Lady Young, for securing this debate and for chairing with such pizzazz the All-Party Parliamentary Group on Ethics and Sustainability in Fashion, of which I am proud to be an officer.

Sustainability, green, eco, organic and ethical are increasingly a part of the fashion conversation. That is to be welcomed although I am not sure everyone has the same view of sustainable fashion. Is it a timeless, classic handbag I can pass on to my daughter—the opposite of the cheap, disposal fashion epitomised by Primark? Is it a dress made from locally sourced materials, with limited transport and a light carbon footprint, or is it a Fairtrade cotton T-shirt produced in a factory where the needs of employees are taken into account?

The London College of Fashion defines “sustainable” as,

“harnessing resources ethically and responsibly without destroying social and ecological balance”.

I like that definition; it does not go so far as to pin it down but allows the creativity of individuals to flourish as they interpret what it could mean for their business. As the impacts of climate change hit harder, with resource constraints and more severe weather, we need the clothing industry to develop the necessary resilience to satisfy the colossal appetite for clothing sustainably. The commitments from the Business Secretary in support of the UK textile manufacturing industry are very welcome but more needs to be done to future-proof the industry and to support sustainable and ethical fashion.

Sadly, 20 years after the first child labour and labour standards scandals in our high street fashion chains, we still face the same problems. Clearly, current audit approaches are failing. They rely too much on cheap, bribable inspectors. It is analogous with food supply chain issues, reflecting huge pressures to reduce costs combined with an “unlikely to be found out so don’t worry” mentality. Some companies are trying hard to address these issues. One is BBC Worldwide, which refuses to rely on third-party certification and makes its own unannounced checks of its suppliers, has credible and enforced sanctions and promotes its speak-up line to managers and workers in supplying factories.

However, spot checks alone will not address all issues. The fires in a number of Bangladesh factories just before Christmas highlight a problem of ethical culture. During the audits the fire doors were open but when the fires happened they were locked. We need companies such as the GoodCorporation, which argues powerfully to encourage debate about ethics and culture in factories, to move away from blame, to push managers and to take more responsibility for standards.

We also need more opportunities to showcase best practice, such as the Estethica at London Fashion Week and the RSPCA’s Good Business Awards, which have supported the development of animal-friendly clothing policies. Can the Minister say what plans the Government have to address this and to help give companies advice and support as they develop the standards to take on the ethical and sustainability issues, and to provide more platforms to share best practice?

We need also to focus on clothing, from creation right through to disposal. With around £140 million-worth of used clothing going to landfill each year, we urgently need to address the issue of reuse, exchange and disposal of clothes. I was therefore very pleased to see that the Government’s consultation on waste prevention, launched last week, identifies clothing as one of the priority areas for action. We have come a long way with compassionate fashion, largely thanks to powerful campaigning by organisations such as PETA. Opinion polls show that 95% of Britons would never wear real fur and top designers including Vivienne Westwood, Ralph Lauren and Stella McCartney leave fur out of their designs. Even on the high street, icons such as Topshop, H&M and New Look are fur and exotic-free.

Green is not the new black; it is not just another trend to come in and go out with the seasons. I applaud the work of the all-party group with partners in industry and government to develop a new space for fashion which respects the need for social and ecological balance and can help create more British jobs.

19:49

[Lord Patten]

My Lords, the more alert of your Lordships may notice that I seem to be the only member of the Tory party Back-Bench fashionista tendency rising this evening. I do that for a number of reasons. One is that I admire what the British fashion industry produces. The noble Baroness referred to that in her introductory speech, and I will not repeat it. I also admire very much the creativity of the British fashion industry. About a month ago, I was very glad to be at my first ever London Fashion Week show, the Matthew Williamson show. I sat in rapt attention on the edge of the seat: indeed, the seats seem to have been designed to ensure that you sat in rapt attention during the whole show watching the models sashay past. It is no wonder to me that the British fashion industry is growing and is contributing so much. Certainly, it is one of the top 20 productive sectors in this country, which has to be a very good thing. The imagination of the British fashion industry is also good. We can see a Matthew Williamson or a Stella McCartney dress being paired with something from Primark or Topshop. That has gone all over the globe, which is much to the credit of those involved.

However, I agree that the ethical issues must be addressed, and I have four points that I wish to make. My first point is the only one which I believe is unique to the fashion industry; namely, that the fashion industry has done a bit, but not enough, to discourage the image of the thin, verging on anorexic, and therefore ill, model in its shows and photographs and the casting agencies which cast these models. Occasionally, there is a bit of breast-beating about it, but I do not think that there is a continuing programme to discourage 13 and 14 year-old girls and boys who want to be models one day. Its message should be to eat responsibly, just as the drink industry should tell people to drink responsibly. I urge the noble Baroness, with her influence in the fashion industry, to press this hard.

My second point is that I do not think there is anything peculiar or unique to the fashion industry in the need to manage the supply chain properly and responsibly. It is not just in fashion that we see these problems; it is in the use of children in other parts of the world in manufacturing carpets and toys, as well as in the use of young people who are not very well paid in putting chips into hand-held telephones. A responsible corporation monitors the supply chain and makes sure that it treats those who work in it properly. Much more needs to be done by good corporations in this area.

Thirdly, a very good tool is to hand in the condign punishments available under the UK’s Bribery Act and bribery legislation. UK companies which permit their supply chains to bribe and act in a corrupt way are those which do not treat their workforces very well. We should ensure that the Bribery Act provisions are implemented the whole way down the line. That would add to health and safety, and to better pay and conditions.

Fourthly and lastly, ethical and good companies are very appealing to customers, investors and the young of all sorts who go into the shops to buy those goods. Good corporations have the very highest ethical standards. The Prime Minister’s presently absentee guru, Steve Hilton—I believe that he is now in the west of the United States—used to run Good Business. It was founded on the highest ethical standards. I look forward to welcoming Steve Hilton back when he comes to re-guru for the Prime Minister next year.

19:54

[Baroness Prosser]

My Lords, I, too, thank the noble Baroness, Lady Young of Hornsey, for securing this debate. As has been mentioned, the all-party group has a very wide agenda. Included under the heading of ethics is, of course, the treatment of people engaged in the production, transportation and sale of textiles and clothing. Shortage of time requires me to concentrate my remarks on just one of those areas, and I will focus on those engaged in production.

Let me start with raw materials, in particular, cotton. One of the most disturbing and difficult examples is that of cotton picking in Uzbekistan, which has already been flagged up by the noble Baroness, Lady Young. Uzbek cotton accounts for 10% of the world’s harvest, ranking third in the world. It is, of course, a very important product for the country, making up 20% of its GDP and approximately 40% of its hard currency export earnings. The legacy of Uzbek’s history with the old USSR, with its continued command economy, does not provide a happy situation either for the farmers or the cotton pickers.

A production quota system is forced upon farmers and that, together with the government-set price, means that farmers cannot cover their expenses. Lack of profit leaves no money for investment in machinery, which leads to a continuing heavy reliance on cheap labour. Incidences of minimal payment or no pay at all means that many adults go elsewhere to find work, often to neighbouring countries. The Uzbek Government then step in with a system of forced labour, mostly, but not entirely, made up of children. Some schools in the cotton-growing areas are forced to close between September and November for the picking season so that children, some as young as 10 years old, can be sent to the fields to pick cotton for seven days a week. Children in rural areas are required to carry out weeding of the cotton fields during May and June. The children who pick the cotton have a quota to reach which varies, depending on the local circumstances, between 60 pounds and 110 pounds of raw cotton per day.

This is by any other name slave labour and it is not confined to children. The Government of Uzbekistan also forcibly mobilise teachers, public servants and employees of private businesses to harvest the annual crop manually. Failure to comply can mean the loss of employment and/or pension rights. The Cotton Campaign has a list of demands for Governments and companies, and, of course, cotton traders, calling on them to use due diligence in their supply chains, to demand respect for human rights and to require Uzbekistan to abide by the employment conventions of the ILO, to which it is a signatory. In 2008, the country ratified the ILO convention on the minimum working age and the ILO Convention on the Worst Forms of Child Labour.

I hope that the Minister will be able to reassure the House that the UK Government will use their best endeavours at the ILO annual conference to bring this issue to the attention of the global community. Uzbekistan cotton is, of course, not the only area of concern to those campaigning for better rights for workers in the textile and clothing supply chain. Labour Behind the Label, an NGO which campaigns for better terms and conditions for those employed in making our textiles and clothing, calls for improvements in wages and in health and safety. It has joined forces with Asia Floor Wage in calling for a living wage across the region and has now widened its embrace to include work with activists in the USA, North America and Europe, but western companies must be more vigilant of the supply chain and take personal responsibility for checking the veracity of locally made claims that all is well.

19:58

[Lord Stone of Blackheath]

My Lords, perhaps because of our society’s destructive obsession with speed and short-termism, fashion is often neither ethical nor sustainable. In many fields we fail to consider the long-term effects of what we do: in politics, it is the next term’s votes; in the media, it is weekly ratings; in business, it is tomorrow’s share prices; and in fashion, consumers want today’s new look. At Marks & Spencer, I was taught by the late Lord Seiff about good human relations in industry. We were not only concerned with the long-term satisfaction of our customers and of our shareholders who were often with us for life, we were also frugal with our use of resources. We used minimal packaging; we did not have fancy window displays; we used low-energy lighting; and even our relationship with our suppliers was that of a long-term partnership. We mainly bought our goods in the UK, but even when we moved some production abroad, we ensured that there was fair pay and good conditions in the factories that made our clothing. Home production is an issue to which I will return.

The consumer, too, has a role in this. How does he or she decide what to buy? A brilliant mind in this field, as was mentioned, is the designer, artist and academic, Professor Helen Storey at the Centre for Sustainable Fashion at the London College of Fashion. She is involved in a project that seeks to explore and understand more deeply the relationship between us and our desire to acquire. At the heart of the question posed by this debate lies our understanding of human actions in relation to material consumption habits. Here in the western world we are consuming and wasting at a rate that threatens our own health and that of the planet. The fashion industry exemplifies the complexity and extreme nature of human society’s obsessive cycle of creation and destruction, but it is also a great place to find solutions. Fashion sits at a point that crosses economics, aesthetics, psychology, creativity and our individual notions of who we are. This research will produce some really interesting results.

At this point I must declare an interest. I have three wonderful children. I tried to stop each of them following me into the shmatter business. Daniel and Jessica work respectively in charities and healing, but I failed with my youngest child, Susie Stone, who has a couture fashion business. She says that sustainable fashion requires us to buy less but wear it more and to spend more on good, bespoke, UK-made clothing, which in the long term will cost you less, suit you more and make you feel better about yourself.

On a grander, wider scale, the noble Lord, Lord Alliance, is working on a project to bring textiles back to Britain. He and his team have involved Manchester University, local businesses and regional and central government. This should be supported by regional investment and government grants. Tens of thousands of jobs could be created, so the investment would be cost effective. Within it, ethics and sustainability should be built into contracts to make them synonymous with “Made in Britain”.

A friend who has a new factory in the UK tells me that some awful UK factories bring in people at night to work the machines. They are paid by the illegal “cabbage” system. They have no right-to-work documentation to prove they are legitimate workers. We need this stopped so that ethical trading companies with audited compliance are not put at a disadvantage. As well as criticising other countries, we need to enforce ethical trading here in the UK.

Finally, I am afraid we have uneducated consumers in this field. They do not know what is involved in making clothes well from start to finish in terms of skills nor what the costs of a retailer are in terms of staffing, distribution and running stores. The public have never been exposed to this understanding. Many companies in the retail industry tick the boxes in terms of ethical and sustainable initiatives but do not have them high on their agenda because their one-year operating plans are dominated by recession survival and the complexities of multichannel retailing. As we found this week with controlling the press and media, we cannot wait for retailers and manufacturers to put in place voluntary, sustainable and ethical reporting practices. We need to create laws and ensure compliance with them.

After the unchecked industrialism of the 20th century and in order to advance sustainable and ethical fashion, there is a need for reinvestment in the textile industry in this country, for transparency and information from brands so that people can make informed longer-term purchasing choices and for legislation and compliance monitoring from Her Majesty’s Government.

20:02

[Lord Razzall]

My Lords, it is not possible to overestimate the importance of fashion design in this country. From Stella McCartney to Vivienne Westwood, we are clearly world market leaders. It is also important that we should highlight the importance of ethical fashion, which was brilliantly highlighted in this House by the noble Baroness, Lady Young of Hornsey, and outside it by Livia Firth, who is better known in this field than her famous actor husband.

We all remember the horrors of Primark, which were referred to earlier. It was accused of exploiting third-world employees to produce dresses that it was cheaper to wear once, throw away and replace with another than to dry clean. However, the big companies have begun to catch on. I commend to the noble Lord, Lord Young, and others—I do not know why I picked on him—the Gucci ecologically 100% traceable bag. It is not black but a burgundy brownish red because this is the best vegetable-sourced colour. The leather is sourced from cows reared without causing deforestation and the handle is made from bamboo that grows like a weed. Gucci may sell furs, but this bag is a start.

It is not only major companies that have caught on. The United Kingdom has Brora, which sources ethically produced fibre from the Mongolian goat and turns it into cashmere in Scotland. It also has People Tree, which started in 2001 and is recognised as a pioneer in fair trade and environmentally sustainable fashion. It both provides desirable fashion and works to improve the lives and environment of workers and farmers in developing countries. UK manufacturers do not just provide jobs. Barbour not only makes all its waxed coats in United Kingdom but is a major donor to charity. It has given away £8 million in recent years, including a recent grant of £1 million to Newcastle University for medical research.

What can the Government do? That is the Question put by the noble Baroness. I am not a great believer in government intervention, but if we accept that demand for high-end value manufactured goods made here rather than in China is good for the United Kingdom, the Government could, first, encourage universities to concentrate courses on manufacture rather than just design; secondly, following the reference to Vince Cable, contemplate the creation of manufacturing hubs, or “catapults” to use the jargon, to encourage manufacturing; and, thirdly, in their export drives, promote manufacturers and suppliers of ethically produced clothing that is made here. They could also, as the noble Lord, Lord Stone, indicated, give a lot of money to the initiative of my noble friend Lord Alliance.

20:06

[Lord Giddens]

My Lords, fashion is a huge global industry, as other noble Lords said, with a large carbon footprint. It has left behind it a trail of eco-destruction. Now, fortunately, efforts are being made to counter the existing structures of the industry. As usual it is the Scandinavians and not us who are in the lead, as they always are on environmental issues. I commend to noble Lords the work of the Nordic Fashion Association, which was briefly touched on in other speeches. It has a very wide range of projects and amazing coverage in the Scandinavian press. One of the main emphases of the NFA is eco-design: integrating sustainability into garments at the design stage.

Among high-profile figures in the UK, I commend in particular Vivienne Westwood for her work on climate change. A couple of years ago I went to speak at a literary festival in Hanover. I gave my speech on climate change. It was followed by the Handel opera “Semele”, performed in the same long, elegant gallery where Handel first presented it. This was “Semele” with a difference. It was called “The Semele Walk” and featured models parading in Vivienne Westwood costumes. All the singers in the opera were also dressed in Vivienne Westwood clothing. It was a brilliant adaptation. She chose “Semele” because it is about the battles of the gods, and climate change is about our battles with the immense forces that we have created.

Sustainability is becoming important in the fashion industry around the world. There are many initiatives in North America. The annual Eco Fashion Week debate has been going for six years and attracts 2,000 people from the industry. Even more important is China, where the picture is very mixed. In some respects this echoes what my noble friend said about another part of the world close by. The turnover of the garment industry in China is about $60 billion a year. Most of the money is earned from exports, mainly to the West. There are massive contradictions here. On the one hand, children work all hours to produce cheap garments for the western market. The film “China Blue” is a very good exposition of this. On the other hand, sustainable fashion is now talked of as widely in Hong Kong and Shanghai as it is in London. I admire the designs of Ma Ke, who makes beautiful, traditional clothing.

There are two questions that I would like to ask the Minister arising from this. First, all this is worthwhile but it seems to be nibbling at the edges of the global garment trade and it could degenerate into eco-chic concentrated at the high end of the industry. Is it possible to generalise it to the industry as a whole? Secondly, how do we get the big corporations more involved? As far as I can see, there are many corporations involved, but mainly their corporate responsibility department, which is usually a minor part of the business. We surely need companies to be much more integrated in the whole design process to transform it, and I would welcome the Minister’s comments on that.

20:10

[Baroness McIntosh of Hudnall]

My Lords, I join everyone else in thanking the noble Baroness, Lady Young, for securing the debate—it is indeed very timely, in view of the article in the Guardian today—and for her excellent and comprehensive overview of the issues. I am glad that the debate is to be answered by the noble Lord, Lord De Mauley, for many reasons, not least, and I hope he will not mind my saying this, because we could all agree that he is unarguably one of the most stylish Members of your Lordships’ House.

I had not intended to speak—I should be singing—but I wanted to make a couple of short points. However, they have all been made by other speakers and so I will quickly pick up on a couple of matters that other people have spoken to and expand them a little. My noble friend Lord Stone spoke about buying less and wearing it more. That is absolutely at the heart of how we change human behaviour in this area. It will be difficult because in the developed world we have become addicted to over-consumption, and fashion is no exception. I am a complete serial offender in this respect. I have that wardrobe full of misguided purchases, to which the noble Baroness, Lady Young, referred, which were bought in haste and without due consideration. I am very ashamed of it, but unfortunately that does not stop me doing it.

We buy too much of everything because we can and because the market is geared towards high volume and low costs, as we have heard from many other speakers. We have largely forgotten how to value, restore, maintain and sustain the clothes that we wear. We are shamefully and shamelessly profligate.

This is a difficult issue for Governments of all complexions because the prevailing economic orthodoxy says that consumption equals growth, and growth is the only game in town. I can see that we have got problems but we should surely be wondering whether that model is itself sustainable. I rather doubt that it is.

Fashion, of course, is very much about novelty and therefore inevitably about consumption. However, at its best it is also about beauty, craft, skill and durability, and it is often about small businesses doing one thing really well. Does the Minister agree that one of things the Government can do is to put as much support as they can behind small businesses in fashion, as well as trying to persuade the large businesses to change their practices, which I do not deny is extremely important?

We must not forget that sustainable fashion is, of course, about sustainability, but it is mainly about fashion. If we do not get the fashion part right—that is, if the fashion that comes as sustainable is not as good as, if not better than, other fashion choices we could make—then it will never get off the ground. That is why we need small businesses that have creativity built into them.

My final point goes to the heart of how we can keep those small businesses coming: our education system. The system that we have at present, as we have already heard, has allowed some very talented people to come through and has allowed the fashion industry in this country to be world beating in many respects. If we do not keep the education system balanced so that the creative education necessary to allow those talents to emerge is properly sustained and valued, we shall find in a few years’ time that we are not the world beaters that we once were. I would extend that into the higher education sector where, as I should probably have said at the start, I have a personal interest in the excellent work of the Centre for Sustainable Fashion, which has been mentioned many times today, because my son works for it. What he has learnt through being part of that team has engaged my interest and I hope that there will be more units like the Centre for Sustainable Fashion in future, and that they will themselves be sustained.

20:15

[Baroness Jones of Whitchurch]

My Lords, I add my thanks to the noble Baroness, Lady Young, for initiating the debate and echo the thanks for her enthusiastic leadership and for the fashion inspiration that she has given to the All-Party Parliamentary Group on Ethics and Sustainability in Fashion, of which I am also a member. I declare an interest as a board member of WRAP, which, among other things, as we have heard, manages the Sustainable Clothing Action Plan on behalf of the English, Scottish and Welsh Governments.

This is undoubtedly a complex area in which it is difficult to be an active and responsible consumer. In the short time that I have available, I will highlight a couple of ways in which government can make a difference at a UK level.

First, it remains surprising that the Government pay so little attention to the fashion sector, as it is a major player in our economy. As the recent WRAP report, Valuing our clothes, identifies, clothing accounts for around 5% of the UK’s annual retail expenditure, with consumers spending £44 billion a year on buying clothes, or around £1,700 per household.

Many UK clothing producers, particularly small businesses, as my noble friend Lady McIntosh identified, are putting ethical and sustainable fashion at the heart of their business models. They are making a point of celebrating quality manufacturing, greater longevity, respected craft skills and locally sourced materials. However, to expand further they need greater investment in production skills, improved training and a higher status, which would encourage the next generation to believe that the sector has a future. Will the Minister update the House on the steps being taken by BIS and other departments to build up our UK textile capacity and attract the brightest and best young people into UK sustainable textile production and design for the future?

Secondly, a wholesale shift towards sustainable and ethical fashion means that all the major production and retail businesses in the sector have to commit to change. I am very proud of the work being done by WRAP in the Sustainable Clothing Action Plan to sign up a list of companies prepared to work towards ambitious targets on sustainability by 2020. Already, major retailers such as John Lewis, Primark and Marks & Spencer are involved. Together they are addressing a range of environmental challenges such as the overuse of scarce water in production, the fact that a third of discarded clothing goes straight to landfill and the short lifespan of most clothing with resulting demands, as we have heard, for endless new purchases to fill the wardrobe.

The Sustainable Clothing Action Plan is providing businesses with practical tools to deliver change, such as how to accurately measure the environmental footprint of the clothes they produce, how to design clothes with a longer active life, how to give consumers consistent information so that they can see the benefit of changing their behaviour and how sustainable business models can bring financial benefits as well. For example, it has worked out the financial advantages of retailers providing repair services for their own garments, extending clothing hire services, offering a buy-back and resale section within their stores and providing clothing exchange events among consumers.

I echo the congratulations of the noble Baroness, Lady Young, to WRAP and Defra on being awarded the Global Leadership Award in Sustainable Apparel in Sweden in January. Will the Minister confirm that this work continues to be a priority for Defra and that WRAP’s work will continue to be funded? Will he reassure the House that, contrary to rumours, environmental sustainability will remain a key priority in Defra’s current review of its priorities?

20:19

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)]

My Lords, I thank the noble Baroness, Lady Young, for initiating this debate on the promotion of ethical and sustainable fashion. I have enjoyed the contributions of all noble Lords and I will try to respond in a moment to relevant comments raised during the debate.

Although I make no claim to be a fashion expert, I should declare a vicarious interest by virtue of having a wife who runs a small but, she tells me, successful business retailing fashion accessories. Her range includes, I am relieved to say, sustainable products, notably some in the shape of handbags made from recycled offcuts of leather. She tells me that they are highly desirable. Of course, I am very interested in the range of economic, ethical and environmental issues associated with the fashion industry, which have been so well covered this evening.

As several noble Lords have said, fashion is a vital part not only of our national but of the global economy. In 2009, the United Kingdom fashion industry was estimated to contribute more than £20 billion to our economy and to support more than 800,000 jobs, so this is indeed an industry worth talking about. About 90% of the clothing consumed in the UK is imported. Our consumption has positive economic effects in developing countries, but there are also a wide range of environmental and ethical implications to take into account. We need to consider the water, fertiliser and pesticides used when fibres are grown and the emissions generated when synthetic fibres are made. There are issues associated with access to markets and trade terms for producer farmers. There are concerns about labour conditions in clothing factories, sweatshop conditions and child labour.

As the noble Baroness, Lady Jones of Whitchurch, said, there are significant water as well as greenhouse gas impacts associated with washing and drying clothes and waste at end of life. As the noble Lord, Lord Young, said, we landfill around a third of a million tonnes of clothing every year. There are complex global supply chains. Although the issues are different, the recent and ongoing horsemeat saga has shown that we need to be able to trust all our supply chains, including, of course, the fashion ones. I will return to this in a moment.

We want to ensure that the fashion sector continues to grow. Several noble Lords, the noble Baroness, Lady McIntosh, in particular, spoke about small businesses, and I agree with her. I will return to that point in a moment. Last October, the Government hosted the UK fashion and textile manufacturing showcase. This was part of the Government’s Make it in Great Britain initiative, designed to dispel the myth that the UK does not make anything any more. UK Trade & Investment is promoting UK products and services to customers abroad and encouraging foreign investment in the UK through its GREAT campaign. I hope the noble Baroness, Lady McIntosh, will be pleased to hear that Creative Skillset, the sector skills council for the creative industries, recently launched its first higher level apprenticeship in fashion and textiles and is planning to deliver 500 apprenticeships. My noble friend Lord Razzall and the noble Baroness, Lady McIntosh, both spoke about higher education, and I will return to that, too, time permitting.

As for environmental improvements, my department, with WRAP, co-ordinated the Sustainable Clothing Action Plan, which several noble Lords referred to. This is a collaborative effort with businesses and third sector organisations to reduce the environmental impacts of the UK clothing supply chain. The organisations involved include high-street names such as Nike, Sainsbury’s, M&S, John Lewis and Primark, as well as clothing reuse and recycling organisations such as Oxfam and the Salvation Army.

This is a world-leading initiative, which has been recognised internationally. As the noble Baroness, Lady Young, said, Defra and WRAP have just received the 2013 global leadership award in sustainable apparel from the Sustainable Fashion Academy in Stockholm. I am proud about that and pleased that the noble Baroness was able to be there.

Government action to improve ethical standards in the fashion sector includes the creation of the Responsible and Accountable Garments Sector—RAGS—Challenge Fund. This fund helps projects that improve the conditions of vulnerable garment production workers. It is aimed at workers in low-income countries in Asia that supply the UK market.

DfID has also provided support to the Ethical Trading Initiative, an alliance that brings together businesses, trade unions and voluntary organisations and has developed a base code to define the minimum standards that member companies should reach. The nine provisions of the base code include that child labour shall not be used.

The Government, of course, need to look to their own procurement, too. The government buying standard for textiles was published in December 2010. It limits the levels of hazardous chemicals and encourages the consideration of durability, the use of recycled fibres, ethical standards and end of life disposal. We are now starting a review of this standard and plan to strengthen it and cover additional issues such as demand management, recyling and repair, and we will work with the Government Procurement Service to embed the new standard in the framework contracts for use across government. We are working hard to ensure that the climate is right for growth in the UK fashion industry, and at the same time are encouraging businesses to move UK consumption on to a more ethical and sustainable footing.

I will now address questions the noble Lords have asked. The noble Lord, Lord Young, referred to the number of government departments involved. Ethical and sustainable fashion is a complicated topic, and there are roles here for more than one government department. DCMS leads on the UK fashion industry, BIS on UK business, Defra on environmental policy aspects, and DfID on poverty reduction aspects. We work together to ensure that appropriate links are made without duplicating or generating unnecessary bureaucracy. There are cross linkages between the initiatives. For example, Fairtrade, the ethical trading initiative, and DfID are all members of the sustainable clothing action plan steering group. Many of the businesses involved in the Ethical Trading Initiative are also involved in sustainable clothing action plan, and there is a joint BIS-DfID trade unit. In many cases it makes sense to take a wider geographical approach. We look at the broad range of issues in a particular country and identify opportunities for reducing poverty and improving working conditions.

The noble Baronesses, Lady Young and Lady Prosser, raised the issue of child labour in Uzbekistan in particular, I think. In negotiations about eligibility for the EU’s generalised system of preferences, we understand that there are legitimate concerns about the use of forced labour during the cotton harvest season in Uzbekistan. There remains much to do, but we welcome this year’s progress; enforcing a ban outlawing the use of children aged under 15 in this year’s cotton harvest is a step in the right direction. We continue to monitor the situation and encourage further efforts towards full implementation of Uzbekistan’s obligation under the ILO conventions.

My noble friend Lord Patten asked about child labour, and other noble Lords have also referred to this matter. The Government are committed to ensuring that children are not engaged in work that is harmful or detrimental to them. We know that this is an ethical issue—perhaps the issue on which, as the noble Lord, Lord Young of Norwood Green, said, UK businesses already take action. I also agree with my noble friend Lord Razzall, who has congratulated several businesses that he has named. We help by supporting organisations that enable companies to demonstrate their commitment. I have referred already to several initiatives. Let me add to the Ethical Trading Initiative and Fairtrade the UN Global Compact, which is a call to companies everywhere to align their operations and strategies with 10 universally accepted principles, including abolishing child labour.

We are working towards long-lasting changes that tackle the poverty we identify as being at the root of the problem of child labour. The noble Lord, Lord Young of Norwood Green, referred to the launch of the UK business and human rights strategy. The Foreign and Commonwealth Office has led a successful process across government to agree the UK’s first strategy on business and human rights. Arrangements are being finalised for the launch in the near future. The UK has played a leading role in supporting the UN guiding principles on business and human rights.

My noble friend Lady Parminter asked about government advice to UK business on ethical issues relating to specific countries. I have already mentioned the strategy on business and human rights. This includes clear signposting to advice provided by different government departments responding to business feedback during extensive consultations when business requested clearer guidance on how to approach the Government for advice. The Government also provide guidance to businesses on how to carry out corporate social responsibility reporting on environmental and ethical issues. I think it is fair to say that UK companies lead the world on corporate and social responsibility reporting.

My noble friend also asked about audit and checks on the supply chains. Textile supply chains can be complicated, with many intermediaries, and UK businesses often do not have visibility along their whole supply chains or even beyond their tier 1 suppliers. That said, many businesses are working to improve this, and even without full transparency they can still influence the practices of their suppliers through their product specifications.

The noble Lord, Lord Stone, spoke about the role of consumers. I agree with him. Further action that consumers can take includes buying pre-owned clothing, choosing fair trade products, washing at lower temperatures and recycling textiles. He also asked whether the Government would introduce compulsory reporting on corporate social responsibility for all UK companies, particularly in this area. UK companies, as I have said already, lead the world in choosing to report on their contribution to social, ethical and environmental sustainability. We support mechanisms that help them to improve their reporting and are keeping a watching brief on current trends towards more mandatory reporting in some countries.

My noble friend Lord Razzall raised the issue of encouraging universities to support ethical fashion. London is seen as a global centre of fashion, with our universities attracting students from around the world. In 2011, almost 18,000 students were registered on fashion and textile courses, and there were 190 apprenticeship starts in the fashion and textile framework.

I will write to noble Lords if I have not answered all their questions. To finish, there is no simple answer to the many economic, environmental and ethical issues associated with the global fashion industry. However, I hope noble Lords will agree that we are taking action and are making progress.

Jobseekers (Back to Work Schemes) Bill

Tuesday 19th March 2013 Lords Chamber

First Reading

20:32

The Bill was brought from the Commons, read a first time and ordered to be printed.

Welfare Benefits Up-rating Bill

Tuesday 19th March 2013 Lords Chamber

Report (Continued)

20:32

Amendment 6

Moved by

[Baroness Sherlock]

6:After Clause 1, insert the following new Clause—
“Statutory maternity pay
Any mandatory 1% up-rating stipulated in section 1(1) shall not apply to statutory maternity pay.”

[Baroness Sherlock]

My Lords, I rise to move Amendment 6, which is in my name and that of my noble friend Lord McKenzie as well as the names of other noble Lords. We rehearsed this issue in Committee but I return to it on Report because, with apologies, I found the response from the Minister so disappointing. Because it is the last amendment of the day, I will be brief.

The Government estimate that some 232,000 families will claim statutory maternity pay, or SMP, in 2012-13, rising to 235,000 in 2013-14. Using the Government’s own inflation forecasts, the Children’s Society calculated that if a woman were on maternity leave now with her first child, and had her second child in 2015, she would find that she received about £184 less in real terms during her second period of maternity leave than her first. If her earnings were below the flat-rate level of SMP, that figure rises to £217. Just when a family needs money most, support is being cut.

This is by no means the first assault on the living standards of mothers of young children. In Committee, I recited the litany of cuts to support for parents of new children. I will spare the House the entire list but will just reprise one or two. We have seen the abolition of the health and pregnancy grant, the abolition of the Sure Start maternity grant for all but the first child, the abolition of the baby element of child tax credit and the cancellation of the planned toddler element, the abolition of the government contribution to child trust funds, cuts to the percentage of childcare help and much more. Since then, the Children’s Society has analysed in detail the impact of those changes. The results are shocking. They have calculated that a working couple about to have a second child in 2015 could find themselves over £7,000 worse off than they would have been over the following two years, simply as a result of changes since 2010. That is the context for this amendment and, indeed, for this Bill.

My second concern is that the Minister failed entirely in Committee to address the question that I raised as to the rationale for including SMP in this Bill. Noble Lords may recall that the Prime Minister’s official spokesperson responded to critics by telling the Telegraph that it was a “personal choice” for parents to decide whether to return to work or to stay at home after having a child. Of course it is, just like deciding where to go on holiday, where to shop, or where to buy your children’s clothes is a personal choice—if you have enough money, that is. If not, then it is George at Asda for you, rather than Giorgio Armani Junior. Money is what makes people have choices, not simply the fact of having a baby.

However, that was not the reason that the Chancellor gave when he announced this Bill back in the autumn. He claimed that the legislation was necessary to ensure that the welfare state was fair to working people, and not to those who lie in bed with their blinds down when their neighbours go to work. In Committee, I asked the Minister to explain how SMP fits with his argument. Let us recall that SMP is a contributory benefit, paid only to women who have given up work to give birth or to care for a new baby, after having been in continuous employment for the requisite period and earning enough to require their employers to pay national insurance contributions on their behalf. However, answer came there none. I therefore ask the Minister one last time: how does including SMP in this Bill fit with the Chancellor’s narrative, and why should pregnant women and new mothers pay the price for a tax cut for millionaires? I look forward to the answer. I beg to move.

[Lord Bach]

My Lords, I very much support what my noble friend has said in moving the amendment. The House seems very quiet this evening, following the shenanigans of this afternoon when it looked very much to some of us as though there was an organised group on the other side—many of whose members are no longer present, of course, it being after dinner time—who found a huge interest in this Bill in order to keep the Report stage going. Be that as it may, those times are obviously past.

If I read correctly, the Minister—to whom I attach no blame at all for what has been going on, of course—said in reply to my noble friend in Committee that the cost in the last of the three years of allowing this amendment would be around £50 million. Let me tell her one way, at least, that that £50 million could be found five times over. The communities department has £250 million to spend, and has done for some time, in order to make rubbish collections weekly rather than fortnightly. No doubt that is a priority for some, and no doubt it has a validity of its own. However, compared to the wrong which is being done by this Bill—and by others too—and in particular the wrong addressed by my noble friend in her amendment, could the Government not get some proper sense of priority as to what does and does not matter, even at this late stage? That is £50 million, compared with £250 million that is sorted away. This was not mentioned, of course, by the noble Lords who were this afternoon defending the Government’s position with such vigour, because it is an inconvenient truth that in government there is spend which could be much better spent on protecting those who are going to be hammered by this legislation. I ask the noble Baroness to answer my question: what is wrong with spending part of that £250 million, and agreeing to my noble friend’s amendment?

[Lord Bates]

My Lords, I was not intending to speak on this amendment, but I rise at the prodding of the noble Lord, Lord Bach, who seemed to suggest that some kind of operation was going on in the conduct of our discussion. If there was any operation, the strangest thing about it was that there was not a single speech from the Back Benches of Her Majesty’s Opposition. It is amazing. We are talking here about what we recognise as being critical issues. On each amendment, there were probably three speeches from the Back Benches here, but not one single speech from the Back Bench of the Official Opposition. If the noble Lord wants to come back on that, I shall be more than happy to give way.

[Baroness Hollis of Heigham]

I overheard one of the government Whips encouraging those who sit on the Privy Council Bench to speak and speak and to string out it out to delay the votes. I heard that myself. Those Members made their own decisions and I do not in any sense criticise the quality of their speeches. I also saw briefing being passed from the Minister and so on. Perhaps the noble Lord could not see from where he was sitting in the same way as we who have a front-stalls view of what is going on might have done, but, certainly, there was active encouragement of three privy counsellors, none of whom has been known to display any interest in social security hitherto—unlike the noble Lord. All credit to the noble Lord: he has stayed with us; he works on these matters; and he tries to take a balanced approach. I make no criticism of him, but, as to today’s proceedings, there was not a shadow of doubt. Perhaps the noble Lord was sitting in the wrong place, in more ways than one.

[Lord Bates]

That is a wonderful way of expressing it. The noble Baroness has been complimentary to me; let me reciprocate by stating a fact. She knows more about this subject than anybody else in this Chamber and everybody would immediately acknowledge that. Our previous discussions in Committee and at Second Reading were enhanced immeasurably by her thought-provoking contributions. Now, what is more unusual: that a few Members on Her Majesty’s Government’s side should rise to speak in support of the amendments or that the noble Baroness did not make one speech during their consideration?

[Baroness Hollis of Heigham]

I am grateful to the noble Lord for letting me come back on this. Today, we started with a key debate on whether it was right to tie future Secretaries of State’s decisions on the rate of uprating of benefits. My noble friend Lord McKenzie moved the relevant amendment and we had an extensive discussion. We then had a hugely important debate on children, a hugely important debate on disabled people and then an important debate led by the noble Lord, Lord Kirkwood. The noble Lord, Lord Bates, will know as well as I do that, as we had only effectively half a day—because people are not here after dinner—to discuss four key issues, either we had to postpone key debates to a period of time when no one would be here, including his Privy Council colleagues, to listen and take part, or we acted in a way that was self-disciplined in order that the arguments at least in their basic form could be heard, so that those who wished to—and there were not very many on his side—could come in and listen to those points being made to see whether they affected their vote. We were trying to act responsibly. Had we had two days on Report, we could have paced it differently and I for one would have been delighted to have spoken at least three times on each amendment and made a dozen speeches.

[Lord Bates]

I take the noble Baroness’s point and shall not pursue it further. I had not intended to make that point, but it is important. Perhaps I may say one other thing. Since I have trodden on a few toes, let me tread on truly sacred ground.

[Lord Bach]

I wonder whether the noble Lord is going to deal with the amendment in what he has to say.

[Lord Bates]

I am going to deal with it. I want to come back to the point that I was going to make previously, because I think it is relevant. For the first six weeks of the 39 weeks of statutory maternity pay, 90% of the benefit that is payable is linked to earnings. The point that I was going to make is that, while benefits have increased in line with inflation by 20% in the past five years, as we have heard many times, average earnings have increased by only 10%. In fact, according to the Centre for Social Justice, that increase for some of the lowest earners, particularly females, has been 7.8%. I wanted to make the point that in terms of helping with maternity pay at that particular point, the best we can do is see a growth in salaries. If salaries grow, it is axiomatic that the statutory maternity benefit in that first six weeks will be enhanced. The problem is that salaries have been suppressed.

The OBR report relating to the Bill that we are debating shows some quite encouraging signs. For the first quarter of 2014, we have a forecast of increases in the order of 4.5% per year, growing to 4.6% during the period of this Bill. Surely increases of that nature, when linked to the statutory maternity pay of which we are talking, must have some effect. In the same way, I inquired of the noble Baroness, Lady Sherlock, who introduced this amendment, whether the stark numbers that she presented to us contained any element that reflected the suppression of wages that we have seen over the past five years. This has been seen particularly in the private sector, although it has been in the public sector as well, where wage increases are subject to a 1% cap. That is the point that I ask the noble Baroness to clarify when she responds.

20:45

[Baroness Howe of Idlicote]

My Lords, it is good to get back to the subject of the Bill. I support the amendment of the noble Baroness, Lady Sherlock. Although everyone is inevitably suffering under this economic disaster, it is surely completely counterproductive for the Government not to make specific arrangements for those who produce and support children. This is a particularly important generation of children. We will all need to depend upon them and will need to help them develop to their full potential if we are to have a brighter and more economically successful future. Not to do so will also specifically disadvantage—I would argue even discriminate against—women.

Whatever hopes there are for both parents to share childcare in future, to include statutory maternity pay at present would clearly disadvantage women, on whom the main responsibility remains for their children’s upbringing. It will also particularly disadvantage single parents, the vast majority of whom are women. While 30% of all households with children are affected, 95% of lone parents—that is 2 million—are affected by the Bill. The Government have already estimated that the Bill will push a further 200,000 children into poverty, so what effect will this economic deprivation have on this vitally important next generation of children and their well-being?

First, there is their health: the 2010 Marmot review highlighted how poor health is strongly linked to low socioeconomic status. Children in the lowest-income households, for example, are three times as likely to suffer mental health problems as their more affluent peers. At the age of 33 they are at increased risk of severe long-term and life-limiting illness.

Next is their education. The link between economic disadvantage and educational underachievement is widely recognised by academics, as well as by parliamentarians. Children’s cognitive development, related to parental social status, is evident as early as 22 months. The earliest high-achievers from deprived backgrounds are overtaken at five years, with this gap widening by the time children reach 10. DfE figures also show that only 26.6% of secondary school pupils eligible for free school meals achieved five or more A* to C GCSEs, compared with 54.2% for all the rest.

In employment, inevitably, the educational and health inequalities drive a similar divide. Young people who are NEET are more likely to have grown up in socially disadvantaged households, for example, from single-parent households and those where parents also have low educational qualifications.

Finally, there are family relationships and children’s subjective well-being. Living on a low income is stressful and difficult and can, and often does, adversely affect family life and intra-familial relationships, as well as children’s assessment of and satisfaction with their lives. Poverty can make strong parent-child relationships more difficult, and research shows that children growing up in poverty are more likely to suffer from low self-esteem and to be socially isolated.

Having listened to the excellent speech of the noble Baroness, Lady Sherlock, and a range of other subjects also brought into the conversation, I hope that the Government will find a way to accept this very reasonable amendment.

[Baroness Stowell of Beeston]

My Lords, I must say to noble Lords on the Benches opposite that we have had a number of debates about the economic context in which we are making these changes, and I have been disappointed that more noble Lords have not found themselves moved to contribute to them so far. I am glad that there have been more contributions to this debate.

[Baroness Hollis of Heigham]

My Lords, I thought that we had discussed this already. Can the noble Baroness help me by describing how we could have made our contributions? As she knows, four or five of us have regularly taken part in social security debates—including my noble friends Lady Lister and Lady Donaghy, and me, among others. If we had made our contributions, does she think that we would have got to the important debates on disability and the 3% trigger amendment before dinner? If not, does she think that it would have been fair to disabled people to exclude them from the possibility of Parliament reconsidering a foolish decision?

[Baroness Stowell of Beeston]

In my short time in this House, we tend to sit until about 10 pm and have debates on amendments at all times that we are sitting. I did not realise that we were expected to have debates before a certain time at night.

Let us focus on statutory maternity pay. I remind the House that the UK has a strong and effective maternity and parental regime. The UK is significantly more generous than the requirements of the EU pregnant workers directive. The directive states that a woman should benefit from 14 weeks paid maternity leave; we provide 39 weeks. The directive states that a woman should receive at least the amount that would be paid for sickness; our standard rate of maternity pay and maternity allowance is £135.45 per week. That compares to the statutory sick pay rate of £85.85 per week. In addition, the latest available data from the OECD show that the proportion of our GDP spent on maternity and parental pay is higher than that in Germany or France.

It is also worth reflecting on the fact that in the past decade, the length of time for which statutory maternity pay was payable more than doubled. Under the previous Government, it was doubled. It is important to be aware of the baseline that we are starting from.

Yes, the decisions that we have to take on statutory maternity pay will mean a slightly smaller increase for people over the next few years, but that is in the context of a strong and effective maternity architecture in our country which will remain firmly in place. Indeed, the Government are committed to make this architecture even stronger. Noble Lords will soon be debating provisions in the Children and Families Bill which allow working parents to choose which parent takes parental leave and parental pay to care for their child in the early years.

It is also important to understand these changes in the context of other government reforms that support women, families and children and help make positive changes to their lives. I said this in Committee, but it is important, so I will repeat it. For example, a woman working full time at the national minimum wage for six months of the tax year who then receives statutory maternity pay for the next six months will still be better off overall as a result of changes to the income tax personal allowance.

We have debated universal credit many times before, and it is acknowledged that its purpose is to make it worth while for people to move back into work. Once universal credit is introduced, some 800,000 out-of-work lone parents would benefit significantly if they started to work just 10 hours per week. In nearly all such cases, these parents would see at least £40 more in their pocket per week than they would have done under the current system. Also as part of universal credit, £200 million extra is being spent to support families with childcare costs. For the first time, this support will be made available for families who work fewer than 16 hours per week. That means 100,000 more working families will be helped with their childcare costs.

Looking ahead, as my noble friend Lord Newby mentioned in one of the earlier debates today, we have set out changes that will increase eligibility of support to five times as many families as currently is the case through a new tax-free childcare scheme. As part of these changes, we have also announced today a further £200 million additional support in universal credit that will provide working families with the equivalent of 85% of their childcare costs where the lone parent or both parents pay income tax.

When referring to various different payments to families, the noble Baroness, Lady Sherlock, said that she could go on; so could I. There are other things that the Government are doing to support families and women. The support for families that the Government provide is about more than income transfers. I do not deny that families value them and they can make an important difference, but money is often better invested in interventions that really can change lives. In demonstrating this today, I have tried to explain what the Government are doing in addition to the comprehensive support that we provide to new mothers and to show how much there is in providing for families in the right way.

This amendment would reduce savings from the Bill by around £50 million in 2015-16. As I have said, we have taken none of the decisions in this Bill lightly, but we have to recognise that if the savings do not come from the measures set out in the Bill, that could clearly put additional pressures on to public services. The noble Lord, Lord McKenzie, mentioned alternatives that he would like to propose. They are not ones that I would point to because these amendments are part of a Bill that is about reducing by a smaller amount the increase that we pay in benefits.

To answer the noble Baroness’s question about why we are including statutory maternity pay, we have sought to address the very significant welfare bill, which I am afraid is unsustainable, but doing so in way to protect the most vulnerable. We discussed and debated that at length earlier today. Regrettable as it is to have to make any reductions or cap any of the increases in the way that we have, the infrastructure and architecture there for women and families are strong. They provide sound support that will make a real change to people’s lives. While I recognise that these are difficult decisions, I hope that I have provided enough assurance to the House to show that the Government take their obligations to parents seriously and that we will continue to provide a supportive environment for new mothers in the years to come. I hope therefore that the noble Baroness can withdraw her amendment.

[Baroness Sherlock]

My Lords, I am grateful to all noble Lords who have spoken in this debate, especially to my noble friend Lord Bach for his strong support, and to my noble friend Lady Hollis for her interventions. I am also grateful to the noble Baroness, Lady Howe, for a thoughtful and persuasive speech that highlighted the impact of these cuts on the next generation. I thank her for that.

In response to the noble Lord, Lord Bates, I would say three things. First, we have debated this a lot. We sat through the previous stages, and we have all contributed in long form to the Committee stage and reflected a great deal on this. I hope that we now know what each other thinks. Certain noble Lords contributed to every amendment but they did not make five speeches; they made the same speech five times. I am not sure that that took us much further. None the less, we are doing our best here today.

I say to the noble Lord that it is worth noting that the poorest mothers get the flat rate of SMP and are therefore unaffected by any impact on wage growth, so that point would not affect them. On the question of wage suppression, the consequence of that—in fact, of the whole Bill—is a double whammy for those who are finding that their wages are frozen or have been kept down, because these benefits and tax credits are the very things that will normally help to compensate the individuals as well as acting as stabilisers more broadly.

21:00

With regard to the Minister’s comments, I appreciate that she had been dealt a difficult hand and I do not envy her having to play it. She has given us a description of the baseline from which we are starting. The real baseline for this Bill is £15 billion of cuts to support for families by 2015—that is the point that we are starting from.

The Minister mentioned that there were all these benefits for parents. I was particularly confused by her citing the fact that lone parents could be better off if they work for 10 hours a week. We are talking about women on maternity leave. These are women who are already working but have given up work to have a baby. Although it may be interesting for other lone parents to work for 10 hours a week, that is hardly an answer to the impact of the Bill on people who are having babies.

The Bill is basically an assault on the living standards of people who are struggling to make ends meet at the moment, and I have heard nothing from the Minister today to make me feel any less concerned about the impact that it will have on mothers-to-be and women who have just had babies. However, given that it has been a long day and given the lateness of the hour, disappointed though I am once again in the Minister’s answer, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendments 7 to 15 not moved.

Crime and Courts Bill [HL]

Tuesday 19th March 2013 Lords Chamber

Returned from the Commons

The Bill was brought from the Commons agreed to with amendments. It was ordered that the Commons amendments be printed.

House adjourned at 9.02 pm.