Grand Committee
The Deputy Speaker (Baroness Fookes)
My Lords, first I must issue the usual reminder that should there be a Division in the Chamber, the Committee must adjourn for 10 minutes.
Government Spending Review 2013
(11 years, 6 months ago)
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Lord Deighton
To move that the Grand Committee takes note of the 2013 spending review.
The Commercial Secretary to the Treasury (Lord Deighton)
My Lords, last week’s spending round was a further step in the Government’s programme of returning the public finances to a sustainable position. Spending reductions are being achieved by transforming public service delivery, driving through efficiency savings and controlling welfare spending.
Through three years of reform and savings, the Government’s actions have brought the deficit down by a third; we are set to borrow £108 billion this year, £49 billion less than at the peak. We have kept interest rates at record lows, which is good news for mortgage borrowers as well as, of course, making a major contribution to keeping the Government’s own costs down. We have helped a record number of people into work. From the initial savings plan of £80 billion, we are right on target, having already delivered £53 billion of it. It has been well managed from the beginning.
We have to keep going. This spending round looked at taking £11.5 billion of savings out of departments. At the same time, we continue to meet our pledge to protect certain areas, the so-called ring-fence: the health service, the schools system and our overseas development budget. Because of the tough decisions that we have taken to be able to make economies elsewhere, we have been able to invest in education and accelerate school reform, so the Department for Education’s overall budget will increase to £53 billion and school spending will be protected in real terms. We have increased the health budget from £99 billion when we came into office to £110 billion in 2015-16. Capital spending in health will rise to £4.7 billion. We are proud to be able to fulfil our commitment to spend 0.7% of our national income on development. I do not think of those ring-fences as some sort of constraint on our ability to save but as reflecting our priorities and protecting what we have been able to accomplish in those critical areas.
We are reforming public services to get more for every £1 we spend of taxpayers’ money. Yesterday, I was at a Civil Service programme for staff members called, I think, “Be Exceptional”. The whole point was to clarify for everybody that this is a continuing and constant programme of reform and is now the way we do business: determining how we can deliver things differently and more efficiently. It is not something that you do as a one-off to meet a specific target but a continuing requirement for our Civil Service to be able to deliver and perform in a more effective way, utilising fewer resources.
As part of that, we are driving out costs, renegotiating contracts and reducing the size of government. We have cut spending on things like marketing and consultants. We are focused hard on what technology can do for us, and are consolidating procurement and negotiating hard on behalf of the taxpayer. We must also reform pay in the public sector by keeping pay awards under control and limiting public sector pay rises to an average of up to 1% for 2015-16. In the spending round, we announced that we are ending the automatic progression pay in the Civil Service by 2015-16.
We have already saved £5 billion, and this spending round found another £5 billion of efficiency savings; that is of course nearly half the total of £11.5 billion at which we were aiming. To give noble Lords a sense of where that is coming from, just under £2 billion comes from the departmental administration budgets in the year in question. That means that since 2010 there has been an overall reduction of around 40% in the cost of running Whitehall departments. That tells you on the one hand that it has been a very thorough exercise. On the other hand, it might tell you something about how efficiently we were positioned at the start.
We have reduced by £1.5 billion the Government’s projects portfolio, scaling back some projects and stopping other non-priority ones. That is just a question of being much more rigorous about prioritising, which you always have to do when budgets are tight. I talked about the Government being a much more effective procurer by centralising procurement using our immense bargaining power. We expect to squeeze a further £1 billion out of that. One example highlighted in the spending round is that we are bringing together health and social care to manage more efficiently the delivery of services to the home and over time provide a better service as well; it should help the NHS save something like £1 billion.
In 2010, the Government set out welfare savings worth about £18 billion a year. Last week, my right honourable friend the Chancellor of the Exchequer announced further welfare reforms. We have put in place new measures to support people to get them into work. It is all about keeping welfare spending under control and affordable. The changes involve making sure there is up-front work search and that all claimants prepare for work and search for jobs right from the start of their claim, and introducing weekly rather than fortnightly visits to jobcentres for half of all jobseekers. It is all about getting people back into work in the most efficient and effective way.
That is at the specific level. At the general level the Chancellor also introduced a new welfare cap. The theory behind this is to try to control the very significant overall costs of the benefits Bill. We have capped the benefits of individuals. This now is an approach to try to cap the system as a whole to keep our entire budget within what we can control. That cap will apply to what is effectively more than £100 billion of welfare spending and is another move to make sure that we are managing our budget in a consistent, rigorous and professional way and that welfare remains affordable.
The other half of the spending round statement was in Investing in Britain’s Future, which in effect lays out our plan for infrastructure. It demonstrates that right up to 2020-21 we will invest in infrastructure. It does a number of things. It gives a long-term spending commitment, which is the right horizon to provide for those kinds of long-term projects. We have been plagued by “stop, go, stop, go” historically. This gives certainty to an industry that needs that long-term investment in the right way. It also demonstrates that we are prioritising infrastructure and shows which infrastructure projects we are funnelling the money towards. That is what is done here.
Infrastructure is at the heart of our economic strategy. It is a key supporting foundation for what my right honourable friends the Prime Minister and the Chancellor always refer to as the global race. We need infrastructure in this country that can support industries that expected to be competitive on the global stage. This investment is critical because we have underinvested for generations now and we need to modernise our infrastructure and bring it up to date. We are talking here about transport, energy, communications systems and flood protection. The document also refers to our social infrastructure, both housing and schools. We are getting the right long-term approach to that. I do not think that there is any political contention about whether this is a good thing or not; it is all about how well and how effectively we do it. We will, I am sure, have a discussion about how well and effectively we are doing it and who had the good ideas first, but fundamentally it is really important that this country gets behind its infrastructure programme and delivers it as efficiently as possible. It is now all about delivery and making this programme happen.
To make a programme happen you need three things: a really good plan, the money and the capability to implement it. We are building on the original national infrastructure plan that was produced with the Autumn Statement in 2010. It is to be updated towards the end of this year and we will refresh the so-called construction and infrastructure pipeline, which is where we show the list of projects to industry so that it knows what we are doing and can make preparations to support it. Investing in Britain’s Future is in effect a supporting strategy document that lays out in each of the sectors what we are doing, why we are doing it, and what we think it takes to make this country competitive. To me, that is why what we have done in this spending review is potentially transformational. We are taking the right long-term strategic approach that thinks about the issues in the correct way.
The money is the next step in any plan. I have already referred to how parts of the infrastructure which the Government fund from taxpayer resources will be handled, and of course the majority of the focus in this document is on our roads and our rail system. I will not go through the numbers or the detail of the particular projects because they are all laid out in the document, but the road investment is more significant than anything we have seen since we put the major national structure of roads in place in the 1970s. The rail investment, which has already begun with Network Rail, marks a period of greater investment than anything since the Victorian times, and of course we have also put a comprehensive budget in place for HS2. Similarly, we have put long-term budgets in place for science, infrastructure and affordable housing, and to ensure that we finish off our digital communications programme so that we have very fast broadband coverage in the maximum number of locations as soon as possible. We are working closely with the private sector to accomplish that.
My final point concerns our own capability, which is an exercise that I have been very much involved in myself: making sure that the Government know how to be a good client when they are building infrastructure. We have reviewed the four major departments with infrastructure responsibility, which of course are the Department for Transport, the Department for Energy and Climate Change, Broadband Delivery UK, which sits within DCMS, and the Environment Agency, which sits within the Department for Environment, Food and Rural Affairs. We have looked at the commercial resources that they need to deliver the project portfolio in front of them, and we will work with them to supplement their own resources to make sure that they have people in place. Structurally, from an organisational point of view, the presumption is that we will manage these projects within organisations that are dedicated to project delivery. We will get them done urgently, with focus and for great value. An example would be that we are going to corporatise the Highways Agency so that it has the flexibility it needs to hire the staff it needs to do the job and has flexibility with its funding so that it can get on and be the most effective deliverer of roads that it can be.
Baroness Kramer
My Lords, I want to thank my noble friend Lord Deighton, who has done the heavy lifting in this debate by providing us with the details of the spending review and summarising them for us, so I will not try to repeat that. However, I want to confirm that I find myself very much in support of the general thrust of the two Statements, first on the spending round and then on infrastructure, because what lies beneath them is essentially a strategy of reducing revenue spending in order to allow a shift into infrastructure investment. That surely is what we need to achieve the growth that we require for this country.
I know that the Labour Party now buys into austerity, so I will be very interested to hear its comments, but I am still not clear whether Labour understands why austerity has been so necessary. We have seen the build-up of debt over more than a generation, but during those years Labour spent and borrowed as if we were at the bottom of an economic cycle when we were in fact at the top of one. When the inevitable bust came—it is always caused by one event or another, but cycles happen—the economy found itself so heavily overborrowed that many of the tools that would have been available in more rational circumstances were not available, leaving the Government with no choice but to cut sharply into structural revenue spending.
However, the coalition is also having to rebuild an economy that, in the view of many now, had been neglected for more than generation. It is hard to believe that manufacturing fell from 26% of GDP in 1979 to a low of 10.5% in 2009. The service industry grew but manufacturing did not grow alongside it as it should have done. However, that is only part of the imbalance that was allowed to develop. We became a largely public sector-driven economy, and it has to be excellent news that for every job that has been lost in the public sector, three have been gained in the private sector. Those are now sustainable jobs, which is what we need in order to build. How did we lose so many apprenticeships in the Labour years? How did we take so many young people through education but find that when they finished they lacked the skills needed to get a job? This spending round, again, has supported apprenticeships and protected, in real terms, spending on schools and the pupil premium, which surely is an investment in the future of our most disadvantaged youngsters.
How did we end up with a Government, although this concerns more than one Government, with a procurement process that simply is not fit for purpose? I congratulate the noble Lord, Lord Deighton, for bringing sense, skill and proper planning into government purchasing. I now understand that the infrastructure programme that he has laid out represents a steady rollout, year by year, which is exactly what we need in order to deliver infrastructure. Perhaps he could tell me whether I am correct in my understanding that the order of play of this rollout of infrastructure is to have an early focus on opportunities for fairly quick wins, such as broadband, school places and affordable housing, with the longer-term projects that need much more planning and preparatory work, particularly in transport, coming out over the longer term. We now have a path for that.
We are holding this debate just as increasingly positive news is creeping out; we are moving, as the Chancellor said, from rescue to recovery. Both the manufacturing and service sectors are growing, according to the PMI and the Bank of England. Very encouragingly, the headline small business index rose to 15.9 in the second quarter, up from 6.3 in the first quarter. Mortgage approvals are up and confidence is improving. The position with the silver pound, which is rarely talked about, is interesting. Projections show that spending by the over-50s—a group of people who have been far less hit than others in the population, especially younger people—is increasing steadily. We know that it is a group of people with the capacity to spend. Their spending was up from £250 billion in 2007 to £317 billion in 2012. The forecast according to Age UK is for a bigger number to be delivered this year. That seems to be an affordable place to go to see that kind of consumer stimulus.
I am particularly encouraged that exports are rising markedly. The BCC—the British Chambers of Commerce—reports that the growth in exports is at its fastest since 1989. The Government have taken on a really tough target of doubling exports to £1 trillion by 2020. Much of that will have to come from SMEs, which provide over half our exports today. I give credit to the noble Lord, Lord Green, but also very much to Vince Cable, for turning UKTI into an effective tool after a generation of neglect. This spending round provides more money for our embassies to work with UKTI and for increased export finance, especially to small businesses, which is surely vital. This is an area where scaling up has to continue. It must surely be one of the primary focuses now of economic policy.
The welfare changes in this spending review are, frankly, modest. That must be right, as we have to manage austerity in a fair way. I want us to monitor the impact of the delay in paying jobseeker’s allowance to see whether that has an untoward impact, albeit one that is unintended. As I say, the changes on the welfare side have been very modest. However, I have a point of clarification for the noble Lord, Lord Deighton, on the so-called welfare cap, which strikes me as less a cap and more a sensible management tool to capture key parts of annually managed expenditure: programmes such as incapacity benefit, which spiralled completely out of control under Labour even though there seemed to be no particular increase in either disabled or injured people. Will the Minister confirm my understanding that the cap is the OBR forecast of the cash cost of the included programmes? Does breaking the cap trigger a report to Parliament but not necessarily an automatic curtailment, unless there turns out to be an important need for underlying change?
I will talk briefly about infrastructure because the noble Lord, Lord Shipley, will focus his remarks on that issue, especially on housing. However, I take this opportunity to repeat a plea to the noble Lord, Lord Deighton, for increased flexibility for tax increment financing to allow local authorities to pick up the pace of investment in small-scale infrastructure. The very case that he makes for large infrastructure, involving the orderly rollout of schemes, certainty of funding and tapping into external financing applies just as much to the small and local. We have accepted that small is crucial in business and commerce; we now need to accept that small as well as big is vital in infrastructure.
All this has consequences for our financing system. The business bank is an important beginning, but long-term patient capital is still hard to find in the UK. I hope we will try to develop the capital markets to provide that capital. The noble Lord, Lord Davies, the noble Baroness, Lady Noakes, and I all attended a talk given by Robert Peston not long ago in which he pointed out that in the US, 80% of small business funding comes from the capital markets rather than the banks. The opposite is the case here. Therefore, when a bank is compromised, we are in a very difficult position. The major banks are going to be seriously challenged to meet lending demand, despite Funding for Lending, as growth picks up and firms chew through their cash reserves.
It is good news that RBS has asked Sir Andrew Large, former Bank of England deputy governor, to look at its lending practices, because when it says that it has £20 billion that it would love to push out of the door tomorrow morning but cannot, we all find that a fairly extraordinary statement. However, something is holding our banks back. I suspect that it is not the usual argument about capital but is much more about capability, and it would be interesting to find out more. The Government have done much to enable recovery, and this spending round is an illustration of that. However, we cannot let a weakened banking system derail these early beginnings for which the public have waited and worked.
Lord Risby
My Lords, it is a great pleasure to follow my noble friend Lady Kramer, who makes the very important point that unemployment has fallen and that we have seen growth in the private sector and the emphasis on infrastructure that has characterised the Government’s policy. I congratulate my noble friend Lord Deighton, who brings such enormous private sector expertise to the role that he is fulfilling, which adds huge value to what the Government are doing.
I think it is fair to say that all European countries are trying to restrain expenditure and look at how to generate economic growth. We are in the fortunate position whereby there are now signs of some economic growth. Indeed, most organisations believe that in the coming year we will have the highest rate of growth in Europe of all the major economies, albeit that there is still room to go much further. However, the truth of the matter is that we remain vulnerable. We are not tied to major currencies such as the euro and the dollar. We need to continue our policy of restraint to keep mortgage rates and borrowing costs low, as we still have to borrow an enormous amount. While the point of today’s debate is to look to the future, it is worth remembering that key element of the review, as we know that the markets can be fierce in their judgments, as we saw when they made a judgment some years ago about the competence of policy in this area and promptly devalued our currency by 25%. That has meant that inflation has continued at a high level, which we must never see again.
However, I should very much like to consider how we can stimulate growth from external activity and foreign investment, which were alluded to in the spending review. All Governments are of course trying to do this, but last week an interesting statistic from UNCTAD revealed that foreign direct investment into the United Kingdom rose by 22% in 2012 to the highest in Europe, £41 billion, compared with a drop of 18% in the world, 42% in Europe and, extraordinarily enough, 85% in Germany. It is clear that much of this investment arises from the fact that we have an open economy and are very welcoming, but it is also important to note the high level of re-investment that has been made by foreign-owned corporations in this country, which suggests that they have a high level of confidence. China, with which we have had some political difficulties, has continued to make major investments, and I hope that after the resolution of a recent difficulty this investment will increase further.
Nevertheless, our trade and export activities have been inadequate. For example, there was hardly any improvement in 2012 in our manufacturing and service exports when compared with the previous year. Of course, our European markets have been weak and we have tried and been successful in expanding our exports to countries such as Russia, China and India. Nevertheless, we could have done much better. This is now simply a necessity for us. Household budgets are of course being squeezed and European markets look to remain anaemic. Over the next two years, 90% of world demand will be generated outside the EU.
In the spending review, the Government have set a national challenge to double UK exports and to get 100,000 more companies exporting by 2020. In consequence, £140 million was announced in the Autumn Statement last year to help SMEs to export. I am pleased to see in the spending review that despite the pressures, funding certainty has been given to UKTI to continue with this policy, thereby maintaining the support for the next few years. Some £70 million was announced to package overseas export promotion more professionally, and a new unit has been formed—noble Lords will agree that this is important—to look at the attractions of investment in our financial services sector, again with particular emphasis on SMEs. The CBI welcomed all this by declaring:
“It’s right to link increases in UK Trade and Investment’s budget to improved commercial nous, at a time when it must be firing on all cylinders to boost exports and support the drive for growth”.
It is fair to say that all Prime Ministers have been for years trying to advance the promotion of exports from this country, but I should like to talk about an initiative that was brought into being in November last year, the creation of prime ministerial trade envoys. There are eight of us, six of whom are in your Lordships’ House and two of whom are Members of the other place. We were appointed on a cross-party basis. The whole idea is to assist UKTI, our embassies abroad, our export effort and, with the appellation of being called a prime ministerial trade envoy, get the highest possible access. As it happens, I am the trade envoy to Algeria. Perhaps I may touch on this for a few minutes. The role of the trade envoy is to enhance and develop commercial partnerships through the following: identifying commercial opportunities both for trade and investment, bringing together UK and target market business leaders to develop opportunities to secure the high-level access that I mentioned, and working with the export promotion activities of our embassies and UKTI. It is good that this is done entirely on a cross-party basis. Yesterday morning, we had a very good meeting in which we were trying to exchange best practice and to see how we can work together to really drive this element of our national life, exports, which have frankly been inadequate when compared with many other countries, even in Europe.
I should like to talk a little about Algeria because it summarises exactly what I am talking about. We have had no historical links to that country, but it has $190 billion dollars of reserves and a $300 billion infrastructure programme. We start from a very low base, but in the past 18 months there have been an enormous number of ministerial visits, which were very welcome, including that of the Prime Minister in January. We now have a clear partnership with Algeria. So many of the countries that we are talking to and to which we want to export feel, particularly after a post-colonial experience, that there should be a partnership in the fullest sense of the word. We now have, for obvious reasons, a security relationship and a defence relationship with Algeria, which is important. Every week, English-language schools are springing up all over the country, and we hope that during the course of the next month or two, hopefully in September, we will sign some major contracts. This has come about because of a concerted effort led by the Prime Minister and other Ministers. I pay tribute to a very dynamic ambassador in this regard.
This applies to my colleagues who are prime ministerial trade envoys. It is happening everywhere. It is part of a process, on which I hope everybody will agree, of reorienting our exports to more dynamic markets. It will not solve all our problems, but in the past we have seen erratic and feeble export promotion, and that is changing. This is happening at the highest level of government and is reinforced by the commitments made in this spending review. We have so much to offer. I talked about our open economy and the English language. We make a virtue of not paying bribes and not getting involved in anything like that. We have attempted to reinvigorate UKTI and there are trade envoys to support this. That is all under the direction of my noble friend Lord Marland.
This week, as my noble friend commented, the BCC reported a remarkable level of export activity among its members that showed a considerable increase in confidence to a six-year high. That was also reflected in the purchasing managers’ index, which showed an improvement. I hope that the efforts that are now being made will address a key element of our future growth, and I welcome the commitment given to this in the spending review and the Government’s commitment to try to make this happen.
The Lord Bishop of Truro
My Lords, I thank noble Lords for this opportunity to contribute to this debate. I am especially grateful to the noble Lord, Lord Risby, for his contribution, which helps us see matters from a wider perspective. In a debate such as this, we can sometimes focus too much on our own issues. With my tongue only slightly in cheek, as a Bishop who represents Cornwall, I wonder whether the noble Lord might represent to the Prime Minister the fact that we need a trade envoy from England to Cornwall. Having heard from the noble Lord, Lord Deighton, that infrastructure is an important part of the comprehensive spending review, I mention the dualing of the A30 in Cornwall and, knowing as I do that it is not all down to the Government, there might be something to be said for hoping that the good work that is being done to make the harbours better in Penzance and St Mary’s continues to a successful conclusion very soon to ensure a better and sustainable transport link between the mainland and the Isles of Scilly.
We have been abroad, but I want to spend a few minutes speaking from another perspective: that of the Children’s Society. I declare an interest as its chair. I cannot help but look at these big announcements from the point of view of children and families, especially the most vulnerable among them. According to the Government’s own figures, the combined effect of public expenditure cuts and tax and benefit changes is to make the poorest households nearly £1,000 worse off. The Chancellor pointed out that the richest 10% have paid the most, but he forgot to say that across the rest of the distribution it is poorer households that lose a higher proportion of their income. Low-income families with children in particular are bearing a disproportionate share of the burden of tackling the deficit.
Perhaps optimistically, I was looking for some good news this time around, and there is some. I welcome the Government’s continued commitment to free early education for all 3 and 4 year-olds and to extending this to around 40% of 2 year-olds in more deprived areas. The protection of the pupil premium in real terms is also welcome when so many areas of public spending are being cut. I am concerned about how much of this is actually reaching the most disadvantaged children whom it is designed to benefit. We will know more about this, I hope, when the Government’s evaluation of the pupil premium scheme is published shortly.
However, there are some worrying aspects of the spending round. I apologise to my noble friend Lady Kramer, but I want to use the word “cap”. The first is the overall cap on large parts of the welfare budget, covering housing benefit, disability benefits and tax credits, including universal credit. I am not here to defend social security spending for its own sake. Contrary to much political and media rhetoric, very few people want to be reliant on benefits to make ends meet. Nearly every family aspires to having a job that pays a decent wage and a home they can afford, but the reality is that many millions of people are unemployed or underemployed, wages have been stagnating in real terms for the last decade, and housing costs have soared beyond the means of many working families. Forcing Ministers to choose between the political embarrassment of breaching the welfare cap or meeting vulnerable people’s living costs could mean that many more people will be pushed towards doorstep lenders and food banks because the level of benefits is inadequate to meet their family’s basic needs.
Here I shall expand a little on a question about food banks that I put yesterday to the noble Lord, Lord Freud. From my perspective, while applauding the wonderful work of volunteers in setting up food banks, many of whom are Christians, I have to say that it is a complete scandal that we have any food banks at all in this country in the 21st century. There are over 20 food banks in Cornwall alone. What on earth is happening in our country? I ask the Government again whether we ought not to spend a tiny amount of money on some research. Certainly the anecdotal experience that I have and the stories that I hear make it clear that there are some real benefit issues, which is why many people are driven to go—they do not choose to go; they have to go—to food banks.
If the Government are serious about cutting the welfare bill, they need to address the underlying drivers of social security spending that lie outside the benefits system: a lack of jobs, low pay and a chronic housing shortage. Imposing an artificial cap on the budget risks shifting the blame and the burden on to the poorest families, who have done nothing wrong but who are being penalised for our failure to tackle the root causes of the problem.
This links to my second point, which concerns the low level of public sector net investment. Anyone listening to the Chancellor’s speech could be forgiven for thinking that we were about to embark on a massive infrastructure investment spree, suggested again by the noble Lord, Lord Deighton, this afternoon. But analysis by the Institute for Fiscal Studies shows that public sector net investment is not in fact set to rise, and will actually fall as a share of GDP in 2016-17 and 2017-18. This feels like a huge missed opportunity to make up for years of underinvestment in affordable housing, creating badly needed jobs in the short term and helping to bring down house prices and rents in the longer term, so that fewer people are dependent on government subsidies. The £3 billion capital investment in affordable housing announced by the Chancellor is a small step in the right direction, but it does not go nearly far enough to address Britain’s chronic housing shortage. Housing is arguably the UK’s biggest long-term policy failure. In the past year, there were 102,000 housing starts, less than half the 240,000 a year needed to meet estimated demand. It seems ludicrous to me that only 5% of public expenditure on housing goes on capital investment in new houses while 95% goes on demand-side housing subsidies.
Finally, I remain uneasy about the language used by the Chancellor in speaking about welfare, a concern that is shared by many of my fellow Bishops. This section of his speech starts by distinguishing two groups of people who need to be satisfied with the welfare system. The first group are,
“those who need it who are old, vulnerable, who are disabled, or have lost their job and who we as a compassionate society want to support”.
The second group are,
“the people who pay for this welfare system who go out to work, pay their taxes and expect it to be fair on them, too.—[Official Report, Commons, 26/6/13; col. 313.]
The first group barely get a mention in the rest of the speech, whereas three and a half pages of the transcript are dedicated to addressing the perceived concerns of the second group.
Making such a clear distinction between taxpayers and claimants creates the misleading impression that the welfare system involves a large one-way transfer of money from one group to the other. Far from stimulating compassion, it encourages resentment towards those who are seen to be living off the good will of others. It also ignores the reality that the vast majority of us both contribute to and benefit from the support provided by the benefits system at different points in our lives. For example, around half of all children will be in families that are entitled to universal credit when it is fully implemented.
Forgive me, as I conclude, for using a biblical reference to make my point. Paul, in one of his letters, used the metaphor of the human body to describe a Christian vision of mutual support and interdependency. He said:
“those parts of the body that seem to be weaker are indispensable, and the parts that we think are less honourable we treat with special honour … so that there should be no division in the body … if one part suffers, every part suffers with it”.
Paul was talking, of course, about the church community. I believe the same principles apply to the way we support one another through our social security system. We are in danger of dishonouring the less presentable parts of our society and as a nation we will become less healthy as a result. The Government’s spending plans should have the well-being and development of all our children at the heart of them. When millions of British children are left to grow up in poverty, everyone’s future prosperity suffers.
Baroness Noakes
My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Truro. My own remarks will be focused on rather different areas of the spending review. I was unable to be in the House when the Minister repeated the Chancellor’s spending round Statement, so I am grateful for the opportunity to speak today.
I start by congratulating the Government on sticking to their resolve to keep downward pressure on spending in order to eliminate the deficit. The update on GDP from the Office for National Statistics last week underscored the scale of the problems the Government inherited in 2010. The peak-to-trough deficit in 2008-09 is now calculated at an astonishing 7.2%. That alone vindicates the stern action taken by the Government when we came into power. The Benches opposite could barely conceal their gleeful anticipation of a triple-dip recession earlier this year. However, as last week’s figures confirmed, we avoided that. In addition, we now know that we did not even have a double-dip recession. The Government inherited an extremely poor hand of cards, but my right honourable friend the Chancellor has played them skilfully.
I fully support the Government’s approach on public sector pay. Continuing to limit pay rises to 1% is thoroughly sensible, especially as public sector pay has continued to run ahead of private sector pay in recent years. I also support the move to remove automatic pay progression. I understand that several central government departments have already done this and so I am unclear as to the savings that this move will generate. I could not find any figures on this in the Green Book and I echo the criticisms by the Institute for Fiscal Studies about the paucity of analysis in the Green Book. I hope my noble friend can give some analysis today. Will this apply to local government? What will be the impact on the NHS’s budget? What precisely are the Government’s plans and how much do they expect to save?
I have some concerns about the cost of public sector pensions that have not been dealt with. Public sector workers account for less than 20% of the workforce but are more than three times more likely to have current access to a defined benefit pension scheme than those in the private sector. This would not matter much if public sector pay scales fully reflected the value of the pension promise, but the plain fact is that they do not. The current Government, like the last one, have talked a good story about bearing down on the cost of public sector pensions. In 2011, they claimed that they had done such a good deal that it would last for 25 years and would save billions. That is fine if you have faith in 50-year projections based on heroic assumptions. Meanwhile the real problem, which the Government continue to ignore, is that public sector pension cash flows are now negative: pension payments exceed contributions received. In 2005, this cash cost was only £200 million, but it is now around £11 billion a year. According to the Office for Budget Responsibility, it is forecast to rise to more than £16 billion over the next few years, and this figure is likely to be even higher once the latest proposals for a flat-rate state pension and the related contracting-out changes are implemented. The spending round scraped together £11.5 billion of savings but failed to defuse the cash time bomb of public sector pension costs.
While I fully support the Government’s efforts to control spending, we must not lose sight of the facts that we are still borrowing money each year and that debt will not start to reduce until 2017-18. Furthermore, there are no overall cash cuts; we are spending more every year. In 2009-10, we spent £669 billion. In 2015-16 we are planning for £745 billion. This is not Greek-style austerity.
The Treasury has clearly been involved in tough discussions to cut expenditure, but I am reminded of the line from Horace:
“Parturiunt montes, nascitur ridiculus mus”.
The Treasury laboured but brought forth a ridiculously small amount of savings. We still have a huge problem. Expenditure is in excess of 45% of GDP and debt is north of 75% of GDP. On current plans, even after this spending round, the figures will be 40% and 85%. We are a long way from resolving our finances. It is not surprising that the Cabinet Secretary is warning of a 20-year turnaround timescale.
There is no paradigm shift in this spending round. I had hoped to see an end to salami slicing. International experience points to much tougher decisions, taking out whole programmes rather than bits of them. There are far too many government departments, and along with that far too many government Ministers and senior civil servants, together with their hangers on. Streamlining the machinery of government would be a good place to start.
If we are serious about reducing public expenditure, we need to look again at the sacred cows of education and health. Ring-fencing might be politically astute but is economic nonsense. The overseas aid budget is an extravagance that does not command even general public support. Many of the projects that sail under a green flag are not obviously value for money. I have particular concerns about the Green Investment Bank, which will not be run as a bank or supervised as a bank. I fear that the billions of pounds that are being thrown at it will end up as losses as it “invests” in unbankable projects.
I congratulate my right honourable friend the Chancellor for ignoring the Keynesian siren voices calling for more money to be thrown at infrastructure at the expense of even more debt. The announcements last week about infrastructure spending were, I believe, predicated on no new money. I do not criticise that. I am sceptical about the economic benefits claimed for public sector infrastructure spending, and it is absolutely essential not to abandon hard economic analysis when it comes to spending public money.
That leads me naturally to the High Speed 2 project, on which I find myself surprisingly in agreement with the noble Lord, Lord Mandelson. Last week, the Chief Secretary announced a funding envelope of £42.6 billion for the construction costs of HS2. What he did not say was that the £42.6 billion was one-third higher than the previous budget, as Transport Ministers had to admit the previous day. Two days ago, transport officials as good as admitted to the Public Accounts Committee in the other place that the benefits have been overstated. The benefit/cost ratio for the HS2 project was already low by transport standards and now looks to be completely bust. Even the CBI, usually a cheerleader for infrastructure projects, has called for a rethink. Today is not the day to debate HS2 itself, but these developments remind us that public sector infrastructure is not the panacea that some would claim for it and it does not unambiguously benefit the economy.
I am aware that we are debating only the spending round and not a full Budget or Autumn Statement. However, just let me say that while controlling expenditure is important, the supply side of the economy still feels neglected. We need much more tax reform, lower rates all round and a much simpler system, and we need to make far more progress on deregulation. We need to liberate and incentivise the private sector to create wealth. We need to keep Britain as an attractive place in which overseas companies can invest. In sum, we need a lot more than the spending round gave us.
Lord Higgins
My Lords, it is always a great pleasure to follow my noble friend Lady Noakes, and I very much agree with her general theme and her closing remarks.
As I am going to say quite hard things in the context of what my noble friend said, let me stress that I would not for one moment underestimate the difficulty of reducing a deficit. I began that a very long time ago as a new Treasury Minister. We were an incoming Government determined to cut the deficit and, indeed, public expenditure and the size of the public sector. I was sent to see the new Secretary of State for Education, one Margaret Thatcher, who was basically in favour of cutting back the size of the public sector but not her department. I arrived with a long list of cuts, including eliminating the Open University. In the end, after a lot of haggling, I said, “Margaret, we’ll give you a deal. You can keep the Open University and make all the other cuts, or you can make all the other cuts and keep the Open University”. To my astonishment, she said, “I’ll keep the Open University”, so I got my cuts and we and the country got the Open University, which was probably the right decision. The reason I stress this point is because we have to be a great deal tougher than we are being.
I am worried by the constant repetition—it is once again in the Chancellor’s speech—that we have cut the deficit by one third. That means that we are continuing to borrow at two-thirds of the appalling rate at which the previous Government were borrowing. I hope that we can get rid of that expression. It is interesting that it has not changed since this public expenditure round announcement. We are still saying the same mantra. I hope that we can get rid of it.
My concern is that in the light of that statement we can be complacent. We simply must not be complacent. There is nothing more important for the future of this country than getting the deficit down. I am a little worried about some of the presentational side of things. The public sector finance statistics have the heading, “Public sector net borrowing”. It ought to be, “Net extra borrowing”. We constantly hear figures from the Government that overlook the word “extra” when it ought to be there. There is also a very curious quirk in the figures. In the column for public sector debt, the figure is £1,103.6 billion in 2011, but in 2012 there appears to be a miraculous reduction. The statisticians evidently felt that they could not forecast the figure to the last decimal place so they moved the whole figure one place to the right. If you look down the column there suddenly appears to be an enormous reduction. Clearly they could not forecast it, but it is 10:1 that they would have got the last decimal point right if they tried. I hope that we can improve the statistics and that the Minister will bear that in mind.
In his speech, the Chancellor of the Exchequer made two important points. First, he said:
“We act on behalf of everyone who knows that Britain has got to live within its means”,
but he did not go on to say, “but we are still not doing so”. We are nowhere near doing so. This is a matter of grave concern. He went on to say:
“we have always understood that the greatest unfairness was loading debts onto our children”,
from one generation to another. We are making a massive intergenerational change, and we are not dealing with it as much as we should.
As for the overall figures, there is a problem with cutting. The reality is that the previous Labour Government under Gordon Brown raised a series of benefits and other concessions which people now expect. However, he did not have the money to pay for them and neither do we. It is immensely difficult to try to claw back the benefits and increases in public expenditure that he introduced.
We are faced with cuts of £11.5 billion but are told that there is an increase in spending of, I think, £10.5 billion on the high-speed rail scheme, so we are only about £1 billion better off. I may have misunderstood the figures but that is my understanding of the position. Therefore, we are making very little progress. There is clearly a distinction between expenditure on investment and cuts, but we are not doing as much as we should in this regard.
In addition, extra one-off items are included in the cuts to the Post Office pension fund. We have the assets but do not make explicit allowance for the liabilities, so there again we have a problem. The same is true of the arrangements for transferring balances from the Bank of England with regard to quantitative easing. Neither of those provisions is likely to be repeated, at least not on the same scale. We have also gained £5 billion in efficiency savings, much of which relates to public sector pay. I certainly welcome the provisions in the Statement on not awarding progressive pay increases simply on the basis of the length of someone’s employment.
I am also concerned about debt interest. The Chancellor laid great stress on the fact that we are paying £6 billion a year less to finance the debt. That is obviously a great advantage, but it rests on the proposition that interest rates will stay where they are. They might stay where they are for longer than we would like. We have only to look at the American experience to see that trying to unwind quantitative easing produces very emotional reactions in the markets. Therefore, low interest rates might be maintained, perhaps wrongly, for longer than we expect, but sooner or later they will have to go up. As for the public sector finance statistics, what assumption is made about interest rates when calculating the debt interest payments, which fluctuate widely? It would be helpful to know that. As I say, I do not underestimate for one minute how difficult this exercise is, but we need to renew our determination to reduce the deficit by substantially more than we are doing in the review.
Lord Shipley
My Lords, I am grateful to my noble friend Lord Higgins for raising the Open University, which requires me to declare my interest as a pension holder of that institution after some 34 years’ service. I am very glad that Mrs Thatcher had the common sense not to take my noble friend’s advice, because as we all know the Open University has been the most enormous success and a world beater and world leader. It is a tribute to all those involved in setting it up and making such a success of it.
I should declare that I am a vice-president of the Local Government Association. As an adviser on cities and deputy-chair of the regional growth fund advisory panel, I strongly welcome the Government’s direction of travel on local growth. I wish to comment on some strategic issues on public service reform which I hope the Minister will consider.
I start with the Scottish referendum on independence. In last week’s debate on the Select Committee on Economic Affairs report on the economic impact of independence on the United Kingdom, it was explained that while we know the public expenditure level on Scotland, we do not know the amount of tax raised in Scotland; the data are not collected other than on a UK-wide basis. There have been some private estimates, notably by Oxford Economics, as to the tax raised. In the context of all that the Government are now doing on devolution, decentralisation and the single local growth fund, the tax raised for the constituent parts of the UK needs to be known. Part of this is about how you measure success. We will certainly have a single local growth fund between 2015 and 2020 and the Government will have to measure success, and one measure will inevitably be the tax generated from growth. You have to have a base and work has been done with Greater Manchester on its city deal and the earn-back model, which I understand has now been agreed. Hopefully, that will be an exemplar of how tax can be measured.
The spending round has been difficult and we all understand the reasons for that. If there is a headline cut of 10% in local government, for authorities that have social care responsibilities—notably the counties and unitaries—the real reduction is 2.3% because of the extra £2 billion allocated to local authorities. I make the point to the Minister that if you ring-fence the National Health Service and are content with that, you have to ring-fence health more broadly. If you do not prevent ill health through the social care system, you end up with a cost landing on the National Health Service. I am pleased that the £3.8 billion in total in the spending review that has come to the health service and local authorities is extremely helpful. I hope that if the health service continues being ring-fenced, social care will be ring-fenced as well.
I have noted that there will be a council tax freeze for five years; of course, that depends on local authorities deciding to freeze their council tax, which will be up to them. I observe, however, that when central government permits a freeze of council tax, certainly over a period as long as five years, it makes local government more dependent in the long term on central government. I am not sure, given the Government’s direction of travel towards raising more tax locally and people being more responsible for their spending decisions locally, that there should be such central control of the allocation of money.
I believe strongly in localisation. I also believe strongly, for the avoidance of doubt, in the equalisation of funding on the basis of need. It is difficult to do either properly without knowing more about the tax base of an area to which power is being devolved. In England it is difficult to localise without knowing the current level of public spending in each area, either of local government—a council—or of a local enterprise partnership. Data are not being collected on that basis. They are collected on a regional basis, but they will have to be collected on a different basis to make devolutionary centralisation meaningful.
Data on tax income by local government area are simply not available at all. I hope that as part of public service transformation, the Minister will take on board the need to improve the tax income and public spending data which the Government produce. This is caused not least by the fact that community budgets—the tri-borough pilots in London, Essex, Greater Manchester and Cheshire West—have shown significant signs of savings being generated if public services can be planned together. The numbers are actually very large indeed. I am much encouraged by that. However, while this is partly about integrating health and social care it is also about integrating the work of the Department for Work and Pensions with the work of local authorities and local enterprise partnerships.
As a crucial step, I ask the Minister to look into the concept of total place accounting, which is not the same thing as total place spending. However, at the moment, departments, local authorities and those spending public money in a given locality are not accounting for their expenditure on a local basis. It is going to be important for all service providers in a local area to account formally for what is spent by them in that area and then to produce accounts that demonstrate that. It is two years before we get into the single local growth fund, but improving the data is starting to matter.
That takes me to the concept of the local treasury, because community budgeting is about all the funds available in an area for public investment to be jointly spent as a community budget. For a local treasury to succeed, we need to know what tax is raised and what public money is spent in an area, and then consider the gap so that a needs-based funding system can be applied.
According to the Local Government Association, which revised its figures yesterday on the basis of the spending review announcement, the position for 2015-16 is that some 56 councils in England will have only 86% of the money they need to meet existing commitments in 2015-16. One of the consequences will be a lowering of investment in prevention. You will see that happen despite the extra money going into social care. As I have said, if you do not prevent, you end up with a higher cost later. I have therefore concluded that community budgeting is the answer. There are other possibilities, and I fully understand why the Government do not go down the route of unitary councils in all parts of England. It is nevertheless my view that there are significant savings to be made by local government in the creation of unitary councils. I come from the north-east of England where we have only unitary councils. Some of the savings are demonstrable. The issue is, however, complicated, and such a move needs to be done with the will of those participating. Nevertheless, some of the financial problems that have been caused in some local authorities will mean that we need to do that.
I ask the Minister to read a report called Rewiring Public Services, launched yesterday at the Local Government Association conference. It is a hugely important read that extends the debate about how matters could be progressed. Here is a fact that is telling. By 2018-19, on current projections, council tax and business rates will total more than local government spending on services, excluding schools. We are close to making the central government grant obsolete and we could plan now to move away from local taxes being controlled in Whitehall towards financial independence of the sector, which itself is responsible for redistribution to meet needs. That whole issue could benefit from further work. I mentioned the local treasury concept, which would have at its disposal all the various pots of money and make the local spending decisions. A local treasury could have the power to create specific local taxes.
Finally, my noble friend Lady Kramer talked about housing. It is right to increase the housing borrowing cap for local authorities. The average debt on a council house is £17,000. There is significant headroom. We could build many more social homes by permitting local authorities to borrow more. Since April last year, the housing revenue account has been a trading account and we are the only EU country that treats borrowing in the housing revenue account as public borrowing. That need not be the case and we could build 20,000 or 30,000 houses, maybe more, if that borrowing cap were to be increased. I hope that the Minister will think further about that.
Lord Flight
My Lords, I hope it will be the privilege of all of us to live long enough to see the judgment of economic historians on the times in which we are living. The Chancellor is following blatant neo-Keynesian policies, with an ongoing deficit of £120 billion-plus per annum and printing some £370 billion of money. If I wanted a definition of neo-Keynesian, that would be it. No wonder the Opposition is flummoxed, because to recommend even larger Keynesian policies on top of that is patently unrealistic. Will that approach be vindicated or will the Hayekian school be right that the problem with such policies is that they make returning to normality in due course even worse than it would be if you took hold of the situation much sooner?
In the 1930s when Chamberlain as Chancellor took Hayekian measures and slashed public sector pay, spending and taxation, and unleashed a housing boom because there were no planning restraints, we had growth of 4% a year from 1935 to the start of the Second World War. It was the highest period of growth in the 20th century. Today, although growth and recovery have been disappointing, there are positives and we have heard quite a few of them this afternoon. Thankfully, we are not in the euro. The economy is doing markedly better. Indeed, there was 0.6% growth in the latest quarter. I would expect growth of at least 1.5% this year against falls in the eurozone of 0.6%. Certainly there is no double dip. Foreign investment in the UK is up substantially. As I think the noble Baroness, Lady Kramer, pointed out, there is really good news on the apprenticeship scheme. Exports are rising. In my little territory, EIS venture capital investment has doubled in the past year, as has equity money for new small businesses, and as well as congratulating the noble Lord, Lord Risby, for what he is doing in Algeria, a little bird told me that Algeria was going to apply to join the Commonwealth, so the noble Lord seems to have done extremely well.
There are some useful micro-points as well, which I certainly approve of. The ending of automatic progression in the public sector should at least reduce average nominal pay in the state sector, which keeps rising in a blatant breach of supposed pay freezes. Tougher eligibility rules for jobseeker’s allowance are necessary. Having to learn English makes good sense. Ending winter fuel payments in hot countries is surely a no-brainer. The welfare cap on housing benefit, tax credits, disability benefits and pensioner benefits, and bringing it all together to assess people’s needs, is sensible. Limiting to £2 million the funds to be made available annually for investment by local enterprise partnerships, as suggested by the noble Lord, Lord Heseltine, is a fairly sensible economy. I am particularly keen on the extra 180 free schools and the extra technical colleges. The technical colleges go hand in hand with the apprenticeships and are going to make a big difference to this economy and to the people who attend them.
There is a lot of good going on behind the question of how to judge the macro-stance. Even on the macro-stance it is amazing to have achieved a near political consensus on the need to reduce welfare spending, which is really what the situation amounts to. The state is slimming down modestly. Between 2010 and 2017 it is, I think, a 2.7% reduction in real terms. No one has achieved that in living memory. There is a modest shift from current to capital expenditure, and I am sure that the noble Lord, Lord Deighton, will make the very most of that in the rational management of the infrastructure scenario, which of course is still crucial. However, what about the future? Debt is piling up—it will be 80% of GDP by the end of the year—interest bills are rising, and as QE has to come to an end they are likely to rise dramatically further. We are stuck with a deficit compounding of £120 billion per annum.
In the announcement, there was little net new. Cash spending continues to rise; it will be £720 billion this year, £730 billion next year and £745 billion in 2015-16. Most of the figures have already been announced. There are major changes within spending divisions, but not in the aggregates. For the poor spending divisions affected, out of public spending of £720 billion only £204 billion was really up for cuts. Six of them had cuts of at least 10% of their expenditure. It has become obvious that to have a health budget of £127 billion, a education budget of £97 billion, and a welfare budget of £220 billion in effect not up for cuts is a mistake. I am afraid that the NHS has not been vindicated by all that has come to light.
There are two quite separate points. First, will running a deficit of this size prove the right thing to do economically? For me, the great disappointment is the missed opportunity for sorting out the public sector and shrinking the size of the state. Over 10 years ago, I spent nearly two years of my life organising the James review. A team of consultants looked at each area of the public sector, and the level of potential waste and cuts was then approximately £100 billion. That does not seem to have changed that much. The issue is the will to sort it out and to get the state right out of areas where it should not be involved. Those are the key areas that matter. The cost of health and welfare together is nearly £360 billion, which is more than half of total public expenditure. I think even Prime Minister Attlee would have been shocked if it had been more than half of public expenditure in his time.
The leakage is not allowed for. The noble Baroness, Lady Noakes, referred to the growing public sector cash deficit on public sector pensions. I have banged on about it before, but the real figure is likely to be about £25 billion per annum, and there is no provision for it. There was a quiet study of the student loan book, which is worth £83 billion in total. Some 40% will have to be written off, which is another £30 billion, and there is no provision for that. Is there any review of the whole area as to why that is the outturn? I am afraid not.
Astonishingly, welfare, health and education together account for £516 billion of £720 billion, which is why only £200 billion-odd is eligible for cuts. The harsh truth is that much of the public sector remains bloated and poorly managed and has falling productivity. Many noble Lords may have seen the latest Taxpayers’ Alliance report, which pointed to £120 billion of waste, much of it gravy-train expenditure. It is a drag on the 50% private sector. In fact, it is a huge tribute to the private sector that it managed to create 1.3 million jobs when its opportunity is thus limited.
One thing remains. It is always the case that public sector pay layer by layer should be about 15% below private sector pay, allowing for shorter hours, lower productivity, better pensions and better security of employment, but it remains about 15% above private sector pay layer by layer. There is a gap of 30% in aggregate, which is the result of the strength of public sector unions under the previous Government. In the area of health, we have the highest paid doctors, the worst provision of health, some £20 billion of claims for negligence and the legal costs going with them. It is a great pity that there has not been anything like an adequate resolve to get to grips and sort out the public sector.
I shall end by commenting on the elephant in the room, which is QE. It was very clear that money printing was needed in 2008-09 because the money stock was contracting dramatically and the money supply with it, partly the result of the wrong government policies, because just when we needed to support the money supply, moves against banks led to it contracting. However, this has been allowed to go on and on. Inflation has remained higher than planned. When interest rates return to real levels, they will increase government interest costs substantially and probably hit the housing market seriously.
The reality is that there is no way in which the Bank of England will suddenly be able to sell off £370 billion of gilts into a falling gilt market with rising interest rates. We will have the extra money stock there, and all that it will need is higher velocity of circulation to produce a massive increase in the money supply. One can see what is likely to happen: as and when the economy recovers sufficiently there will be strong pressure for wages to be increased. People have had real-wage cuts for quite a long time. I am afraid that the overall money stock will be there to finance that uncontrollably. No one knows when, but there is clearly a substantial risk of a period of high inflation at some stage in the next 10 years. The idea that new Governor Carney could pursue a more expansionary monetary QE is simply unrealistic. He will need all his wisdom and experience to steer the British economy out of QE over the next couple of years.
In conclusion, if there is no collapse in Japan, which is always possible, or a banking crisis and collapse in China or a break-up of the euro over the next two years, the dear old British economy will look a lot better by the time of the election, even though we have not tackled such major issues. The Government could quite easily win the next general election on the back of that, but what then?
Lord Northbrook
My Lords, after that global tour de force from my noble friend Lord Flight I am going to focus, rather more boringly, on the details of the 2013 spending review. Like my noble friend Lord Higgins, I do not underestimate the difficulties that the Government face in cutting the huge debt mountain that they inherited.
As part of the programme to cut the Budget deficit, the departmental cuts have been difficult but necessary. The deficit has now been cut by a third since the coalition came to power, which I also welcome, but with caveats I will come to later. As other noble friends have said, recent economic figures have been more encouraging, as has been the increase in the numbers employed in the private sector.
Current spending will reduce by £11.5 billion in 2015-16, allowing the coalition to increase capital spending plans by £3 billion a year from 2015-16 and by £18 billion over the next Parliament. The Conservative research department has estimated that the Government will invest,
“over £300 billion guaranteed to the end of this decade”.
I welcome my noble friend Lord Deighton’s expertise in this area, although having been to a recent seminar at the Royal Society the conclusion was, slightly depressingly, that all parties have to agree to this, like Crossrail, so that it is actually implemented. I will, however, argue later in my speech that further significant progress needs to be made in cutting annual managed expenditure so that total expenditure can fall.
The spending review ensures fairness for hard-working people by keeping council tax down for the next two years. This will mean nearly £100 off the average council tax bill over that period. NHS spending is being maintained. Efficiency savings are being reinvested in the front line. Part of the health and social care budgets will be merged, spending £3 billion on joined-up care. The tough new welfare cap, which applies from April 2015, is welcome. The new conditions that are being imposed on jobseekers and the seven-day wait before claiming are useful reforms.
The spending round also prioritises growth. There is a sensible increase in the transport capital budget to 2020, which will encourage road building. The BIS capital budget increase includes big investment in science and apprenticeship funding; and UKTI support for exports, as so clearly described by my noble friend Lord Risby, will be increased. Plans are being set out for the future to support £100 billion of private sector investment in the energy sector.
The IFS has published its usual forensic analysis of the spending review. I will focus first on the departmental spending figures. These show that there is a wide range of outcomes for different departments. There are no cuts overall in 2015-16 for international development, transport and health. Particularly with health, is there not a case for what I understand to be zero-based budgeting before the final figures are agreed?
The other extreme is a near 30% cut in the CLG communities budget. Overall, the IFS estimates that there is an average DEL cut of 2.1% in real terms across departments in 2015-16, on top of an 8.3% average cut between 2011 and 2014. However, capital spending has been increased while current spending has been cut, unlike in the 2010 spending review. Departmental priorities have been the same since 2010. Some departments are set to be cut by more than a third over five years. One issue confuses me, not being an economist. Can the Minister explain, if he agrees, why the IFS claims that public sector net investment is going to be broadly flat in the next four years when so many capital projects have been mentioned?
I now move on to annually managed expenditure, although I query the word “managed”. According to the IFS, this will increase by no less than 18% from 2013-14 to 2017-18. On the positive front, I welcome some major attempts to control this. The social rent uprating policy will save £1 billion by 2017-18. The seven-day waiting period for unemployment claims will save £765 million by the same date. I also welcome limits to public sector pay increases. Capping social security is a positive idea, but why do we have to wait until after the election to put these measures in place? If welfare spending has been allowed to rise undesirably, forcing an active decision could lead to better policy-making. Surely it is better to review all spending frequently, regardless of whether it is higher or lower than forecast, or at least to cap individual components. In addition, which areas exactly are being capped?
On the negative side, as my noble friends Lady Noakes and Lord Flight have already mentioned, public sector pensions will continue to be a huge burden on the state. They mentioned the figures. In a recent CPS publication in 2011, Michael Johnson stated that the shortfall between contributions and payments for public sector pensions was £8 billion. This figure, as my noble friend Lady Noakes mentioned, was fairly insignificant in 2005—about £200 million—but will rocket to £15.4 billion in 2016-17. Even that £15.4 billion figure is net, with the amount being paid by the employer—the state—deducted. The true figure, according to Michael Johnson, will have increased by £17.2 billion to £32.6 billion by 2016-17. My noble friend Lord Newby, I think, was asked during the passage of the Public Sector Pensions Bill what the government figure for this was and said he would look into it. As I understand it, we have not had any reply to that and I wonder whether we could have one from the Minister either today or in writing.
Mr Johnson believes that OBR figures do not take account of the DWP’s White Paper on the single-tier pension last January. This will add another £9 billion, due to some very technical but highly credible unforeseen changes in connection with NIC rebate circularity, single-tier pension transition costs and increased life expectancy. I will not burden the Committee with those details. Mr Johnson calculates the extra costs, within a decade, as being at least £41 billion, an increase of £1,600 a year for every household in the UK. Hence, if you strip out the benefit of transferring the Post Office pensions, where the Government have banked the assets of the scheme but, I understand, not the liabilities, the impact on actual public sector net borrowing position is such that the Chancellor, overall, is mid-way through a two-year suspension of deficit reduction.
The IFS concludes that further cuts are expected beyond 2016. Total spending is approximately frozen in real terms, but annual managed expenditure is increasing. In the absence of further policy action, this implies that there will have to be further departmental cuts. To avoid these would mean tax rises of £25 billion. If tax increases are not made and certain departmental spending continues to be protected—schools, the NHS and overseas development—other departmental spending would have to be cut by almost 15% over two years, which is 8% overall. I do not expect the Minister to give me a response as to which of the options will be taken, but these are daunting figures and choices.
Finally, I echo the comments of my noble friend Lady Noakes that on the supply side we need more tax reform and deregulation, and like my noble friend Lord Higgins, I do not underestimate the difficulties the Government face.
Lord Empey
My Lords, I should like to make a few comments in the gap. Like many people in this country, I am disappointed and to a certain degree angry that the United Kingdom finds itself in its current economic powerlessness around the world. This has major implications for our foreign policy, our defence policy, and for a number of other matters. While a number of noble Lords have pointed at former Prime Minister Gordon Brown and others, this situation has been developing over a substantial period of time. It did not happen overnight. I think that the rock we perished on really goes back to the 1960s and 1970s when we turned our back on manufacturing, thinking it was old hat. It was about dirty, smelly factories, and the new way to do things was in the service sector, with finance and so on. We moved away from a broad-based and balanced economy with a portfolio spread across a range of areas. Indeed, our outward-looking expertise and our contacts throughout the world were not exploited to the extent that they might have been.
I want to make a point about the rhetoric that we are currently using, which other noble Lords have referred to in the debate. We have been talking about “savage cuts” of this, that and the other. The arithmetic disproves that. Spending and borrowing are going up. I did a brief calculation and worked out that as a country we have borrowed around another £80 million since the debate this afternoon began. Anyone who suggests that we are in the throes of brutal cutbacks is simply not being realistic. There are many things that we would like to spend money on and there are many groups in our communities that we would wish to help, but unless we as a nation can make the money to pay for those benefits, clearly they are not possible. Everyone will suffer if we lose that capability.
I have one question in particular for the Minister on pension funds. I asked his colleague, the noble Lord, Lord Freud, about this and received a Written Answer the other day. Pension funds in other parts of the world can buy into our electricity and water sectors, transport, airports, all sorts of things. Why are our own pension funds not doing the same thing? The answer is that there are too many of them and they are too small, so they do not have the capability to do so. An example of this is the Ontario public sector workers’ fund. It has 400,000 members and a huge balance sheet. We now describe a large fund as one with over 1,000 members. That is just not competitive. I know that the Government are looking at this, but there needs to be a radical step change so that the pension funds in this country have enough firepower to make the purchases that will bring revenue into this country instead of being broken up into tiny funds that are of no significance whatever.
I want also to ask about our exchange rates, a subject on which I tabled an Oral Question last week. I know that the lowering of exchange rates can have inflationary implications, but we are not playing on a level field. Other countries are flagrantly manipulating their exchange rates. China has been doing it for years, and Japan is doing it at the moment. Its exchange rate with the dollar has dropped by 15% since the new Prime Minister was elected a few months ago. There is no point in playing by the Queensberry rules while someone is taking the very bread out of your mouth, and that is what is happening. Will the Minister tell us, if he can, whether the Government are looking closely at the issue?
My final point is this. If we are trying to stimulate the economy and achieve some of our objectives in an atmosphere of reduced spending, will the Minister consider how VAT is applied to things such as the retrofitting of buildings? Such activity achieves the Government’s energy objectives by suppressing demand while at the same time increasing employment. We have to be more imaginative in how we use fiscal measures to achieve our objectives and generate further employment.
Lord Haskins
My Lords, I did not intend to participate but could not resist doing so when the noble Lord, Lord Higgins, mentioned the Open University, which has always been very well represented in the House. I happen to chair the Council of the Open University and I was gratified to listen to his story. It is one that I have told many times to people, who listen with increasing disbelief that it could ever have happened. Not only did Mrs Thatcher do as the noble Lord, Lord Higgins, has suggested, she actually broke a manifesto commitment to shut the place. We are eternally grateful to her for that.
I am speaking today because I chair a local enterprise partnership, I sit on the Efficiency and Reform Board in the Cabinet Office, which is an experience in itself, and along with many other noble Lords I recently served on the Select Committee on Small and Medium Sized Enterprises. I was in Whitehall this afternoon talking about the situation with regard to LEPs, and it is clear that there is not very much money. I do not think that that should come as a great surprise to anyone, but some of my colleagues in the LEPs were getting a bit hot under the collar about it. However, anyone who thinks about it will realise that we are not in a situation where money is going to be dished out in a big way, and nor should we be, so we must concentrate on those things that do not relate to money but which can profoundly improve the economic situation.
As a representative of the Humber LEP, I talk to many would-be investors in renewable energy in the North Sea. It is hoped that some very big external investments will be coming in. Of course money comes into it, but there are some real issues that we have to deal with. The environment for people investing in this country is, broadly speaking, positive when compared to investing in, say, France or even in Germany. The broad impression is that this is a good place in which to do business and we must support that.
However, two or three points come up all the time. One that applies right across the country is the skills issue. I do not think it is so much about spending more money but about using the money that is presently available more effectively and efficiently. Last week I was talking to the head of a college in Leeds who pointed out that the college has to manage 39 different funding streams. That is just crazy. The college spends more time trying to understand where the money comes from than spending it. Successive Governments have looked at this but they have always baulked at tackling it. The reason they do not tackle it is twofold. First, Ministers come in with their own pet schemes that they put into the system and no one can cancel and, secondly, the Civil Service—the Whitehall engine—does not like to have its arrangements upset. These 39 schemes really should be whittled down to nine or 10.
The second issue is that of our major projects, which the Cabinet Office Efficiency and Reform Board has been looking at for the past few years. It is scary how badly these projects have been mishandled over the years—going back 20, 30 and even 40 years. We have to get a grip on that and make sure that we do not do it again. Once again it comes from the Whitehall silo mentality where one department finds it difficult to talk to another department. I contrast that with what I see when I go to Scotland to look at how they are doing things there. Whitehall could learn a lot from Scotland. In Scotland, Northern Ireland and Wales, the Ministers and officials know each other and communicate with each other.
I will give noble Lords an example. The noble Lord, Lord Heseltine, is taking a great interest in what we are doing in the Humber. We are looking at regulation. Regulation is another issue which constantly comes up, not because there is too much of it—that is not the issue—but because of the way in which existing regulation is mismanaged. I have a big investor at the moment who is having to go through one regulator and then start again with another, very often duplicating what the first one had done. We are setting up a pilot group to get all the state regulatory agencies together so that when a major project comes along, we all sit down around a table, agree what the issues are and apportion the regulatory problems. That does not sound very exciting, but it makes a huge difference to the attitude of investors.
Finally, looking at the local authorities, the test is whether you have the political leadership to carry all this out. It varies enormously across the country and we could do a lot more. Have we got the quality of officers in the local government offices? Finally, have we got the local business leadership we need to bring all that together, as in the 19th century with the Joe Chamberlains? I am afraid that a lot of the corporations have fled to London. You are not dealing with big companies with a lot of clout in the regions, but we will do our best.
Lord Davies of Oldham
My Lords, this has been a fascinating and somewhat lopsided debate. It is my task to at least try to achieve some balance in the arguments before the country at present. I have only just got my breath back from the Minister’s very first statement, in which he said that this economy has been well managed by the Chancellor from the beginning. So why is the Chancellor back with a second comprehensive spending review Statement? Why is he back with a second round of cuts? I accept that, as the noble Baroness, Lady Noakes, indicated, the economy may not be in a double-dip recession, but why is he here in circumstances where it is absolutely clear that there has been no growth in this economy for the past three years?
There is nothing in the Chancellor’s proposals, which the Minister has been defending with his usual elan today, that suggests growth for the future. The noble Lord of course has particular expertise on infrastructure. We all appreciate that and welcome his appointment to give the Government a boost in that respect. However, let us recognise that there has been no expenditure on infrastructure since 2010. In fact, all those issues which were planned at that time, which I think the Minister referred to as the 2010 pipeline, have been effectively blocked. There is virtually no progress on any of the 2010 schemes. Now, of course, infrastructure spending is being suggested—in the distant future. The things being boasted about are HS2 and north-south Crossrail. Both projects are 10 to 15 years away from significant expenditure; perhaps it is a little earlier with HS2, but certainly not prior to the next general election. If it is being suggested that there will be a boost to the economy through infrastructure spending over the next couple of years, everyone needs to be disabused of this idea. That is not going to happen.
I accept a number of points that were made in the debate. I appreciated the point of the noble Baroness, Lady Kramer, about the decline of manufacturing industry. On whose watch was that? Which Chancellor said that we were going to rely on the service-industry economy? That was the noble Lord, Lord Lawson, in the 1980s. Who turned their backs on the manufacturing industry in the 1980s, when we saw a massive collapse in manufacturing jobs? It was the party of Margaret Thatcher. I will give way to the noble Baroness, of course.
Baroness Noakes
Can the noble Lord remind the Committee what happened to manufacturing industry on Labour’s watch?
Lord Davies of Oldham
The very tragedy, in my view, of Labour’s watch was that it actually continued too many of the positions adopted by the Conservative Party in the 1980s. As regards manufacturing—the noble Lord, Lord Haskins, also made an important point on that—we should have put much greater emphasis upon the development of skills in our society. We have not equipped any of the next generation for the kind of economy that we seek to sustain.
I understand what the noble Lord, Lord Risby, indicated in terms of the enormous value of foreign investment. Of course we would all welcome that but does he think that foreign investors are enthusiastic about the great uncertainty over Britain’s relationship with Europe? That is the product of discord in the governing coalition. How welcome is that for potential investors? The noble Baroness, Lady Noakes, indicated the areas in which she welcomed what was happening but even she will recognise that the IMF has said that some £10 billion ought to be invested in infrastructure in “shovel-ready” industries, particularly construction. It ought to be put into housebuilding because that is the fastest way in which you could inculcate some element of demand into the economy. However, are the Government pursuing that strategy? If the noble Lord, Lord Deighton, were able to identify schemes that could fulfil that aim, I would be surprised. I give way to the noble Lord.
Lord Risby
I am most grateful but a little confused by what the noble Lord is saying. We have just had a record increase, the highest ever, in foreign direct investment in this country, way ahead of anywhere else and the highest in Europe. The point that I was making is that that trend is increasing, so I am afraid that his argument is not sustained by the reality.
Lord Davies of Oldham
My Lords, I was making a point that the noble Lord ought surely to take into account. Far from there being an environment in which foreign investors will necessarily find a place to invest in the future, as long as we are extremely uncertain about our relationship with the biggest market that we service, Europe, it is bound to cause anxieties among investors.
I also noted what the noble Lord, Lord Higgins, said—he is also my noble friend when we are on the golf course. He was very concerned to address some real points to the Minister with regard to the future of interest rates and the assumption made about future public expenditure. The Minister must address that point in his reply.
I appreciated the point that the noble Lord, Lord Shipley, made about local authority finance and being able to identify local resources. One product of the debate on Scottish independence and the referendum will be to identify those issues as far as Scotland is concerned. That is bound to give a stimulus to the broad argument that the noble Lord is putting forward about the resources available to the various localities of the United Kingdom and the needs that may be identified. I would have thought that that is bound to take a significant step forward as a result of the debate on next year’s Scottish referendum.
The noble Lord, Lord Flight, entertained us all with the Hayek versus Keynes debate. Although the noble Lord said that growth before the Second World War was considerable, he may have noticed that full employment in this country did not return until we went into wartime defence production. It is quite clear that under the Hayek principles you can certainly run an economy with a considerable level of unemployment. However, that word has not been manifest in this debate at all because the fact that we have significant levels of unemployment is a limited consideration for all those on the Conservative Benches concerned with how to manage the economy. We have people coming out of our colleges and universities who are highly qualified by any standards and who, in the past, would have expected to find a choice of jobs. They are facing a situation where the market is such that there are no jobs available. That is why I was grateful that the noble Lord, Lord Flight, identified the thinking behind the Conservative position and, to a more limited extent, the Liberal Democrat position with regard to what the Government are doing at present.
It took the right reverend Prelate to introduce morality into this debate. Why is it that the only person who is prepared to talk about those people who suffer the real costs of what is being carried out in the name of austerity is the right reverend Prelate? He identified the shock we all felt in the Chamber yesterday when it was suggested by a Conservative Minister that food banks are supply-driven and nothing to do with people’s needs. People’s needs have occasioned the development of food banks, which are necessary, but our great shame. Nor is there any understanding on the Conservative side about what it is to lose one’s job at present. It is quite okay to say, “We will cut public expenditure by making sure that there is a week in which one cannot claim jobseeker’s allowance”, but what do noble Lords think the morale of a family will be when someone loses his job against a background where the chances of getting a fresh job are very limited indeed? Why is it that, within that framework, it is thought that a really effective cut is to make sure that an application for support cannot be made until a week has elapsed?
Baroness Kramer
Can the noble Lord, Lord Davies, confirm that, during the years of the Labour Government, job centres were prohibited from referring any client to a food bank?
Lord Davies of Oldham
I am not well enough equipped to answer that question, nor am I quite sure of the point of the question.
Baroness Kramer
I shall try to be helpful. Like many people, I take the view that we live in a country where food banks should not be necessary, but unfortunately they have been necessary for a long time because the same issues of delays over benefits and various kinds of crises have affected those at the bottom. As I understand it, during the Labour years, job centres were not permitted to refer clients to food banks. As noble Lords know, you can go to a food bank only with a reference from an appropriate person: a job centre, a doctor or a limited number of other people. You cannot just turn up and make a claim. Today, job centres offer vouchers where they think there is need, but that need is not very different from the need that existed before. Food banks were just not announced.
Lord Davies of Oldham
Food banks are developing in almost every constituency in Britain because the so-called supply-driven factor has been occasioned by the demand of real necessity at present. It is a vastly different situation from that which obtained a decade or even five years ago.
I would ask the Minister to take on board the very important points that have been made by his noble friends today in supporting the coalition. Will he also, at some point in his remarks, address the question of morality? Why is it, for example, that his supporters are concerned to promote a bedroom tax that ensures that there is a desperate issue for impoverished people as to whether they will be forced to move but that when a mansion tax is proposed by the Liberal Party, there are all sorts of anxieties that people who are reasonably well off might be obliged to move and about what an affront to fairness that would represent? The mansion tax would be aimed at properties of very considerable value and at people who know they well might come under attack rather than the very large numbers of people who, under the bedroom tax, are being forced to move from their homes, the schools which their children attend and even the localities in which they have lived for very many years. I hope the Minister will address some of those points.
Lord Deighton
My Lords, first, I thank all noble Lords for their insights, ideas and challenge. It has been a most fascinating exchange and I congratulate the noble Lord, Lord Davies, on holding up the Opposition’s end there. I will address his question about morality straightaway. To me, this is a very simple issue: unless we are able to create a state that can actually afford to sustain itself, those who are most vulnerable will be the most exposed victims of the fall-out from that kind of financial crash. We have to get our ability to afford a welfare state in the right state so that we can sustain it. That is the way that we protect the vulnerable in the long run.
The Chancellor was back with another spending round because we had not defined the spending plans for 2015-16. We took the opportunity to lay out the investment programme through to 2021 because, as I explained in my earlier remarks, we think that it is the right way to provide an environment in which people can plan investment correctly. On the general question of whether anything is really being done about growth for the future, the point is precisely to begin to deliver a programme from which future Governments will benefit. They can quibble over who was responsible for the earlier decisions. These kinds of investments have very long lead times and our planning is trying to break the link between the political and economic cycles. There was some misunderstanding there, in that I do not think anybody was trying to claim more; we were just trying to claim that there is a long-term plan. Public sector gross investment in this decade, 2010 through to 2020, is slightly higher on average than in the previous decade, if you smooth out the peaks and the troughs and take the average.
In terms of delivery today, the noble Lord, Lord Davies, is correct that projects from 2021 and onwards, or in five years’ time, have an impact later. However, the projects we are undertaking now are having an impact. Crossrail is being delivered now—the money in the spending round is for the feasibility study for Crossrail 2. Crossrail will be open in 2018-19 and we are spending something like £15 billion on it. It is the biggest urban infrastructure project in Europe and is going on now, right under our feet. That a very good example of delivery. Similarly, we have upgraded 150 stations, completed more than 30 road projects, opened more than 80 new free schools, delivered more than 84,000 affordable homes and done an enormous amount in rolling out 4G mobile services. There is a significant amount of delivery going on now and we are trying to plan for future delivery. We are trying to accelerate it and make it better value all the way through. I accept the point of my noble friend Lady Noakes that it is not necessarily a good thing just because it is an infrastructure project. We have to evaluate them all, which is what we did in the plan through to 2020. We re-evaluated them all on a zero-budget basis and approved the ones that we thought were most powerful.
My noble friends Lady Kramer and Lord Northbrook both asked about the welfare cap. It will apply to welfare, of course, but does not apply to state pensions. As my noble friend Lady Kramer implied, it will work off the OBR forecast. If the spending is forecast to breach the cap, the Government will have to explain what action has been taken. We will put a buffer in place to ensure that any policy actions are not triggered by small changes. That is how that one works. For the information of the noble Lord, Lord Northbrook, the areas being capped are all in social security: housing benefit, disability benefits, pensioner benefits and tax credits.
The noble Baroness, Lady Kramer, also asked whether we would be focusing on the quick wins in infrastructure and leaving the longer-term strategic projects because they have a longer lead time. It is the portfolio that works; I addressed this earlier. Lots of delivery is going on at the moment and we are trying to put a consistent long-term plan in place. We will, of course, look at local funding of infrastructure projects, of which TIF is one example. Another example is the single local growth fund. The European funds we are allocated will be put into the single pot and be part of that as we devolve responsibility.
I was delighted that the discussion got around to our international competitiveness—I thank the noble Lord, Lord Risby, for giving us the detailed example of what is going on with Algeria. I have spent a lot of my own time dealing with inward investment. This country has a tremendous advantage. Overseas investors really want to invest here. They trust us. They believe in our rule of law. There are many things they like about the opportunities we create here. We are working very hard to exploit this to the country’s fullest advantage. On export promotion we are continuing to fund UKTI. It is in the process of transforming our approach to trade and its support to a very focused business approach.
We had a very powerful discussion about our fiscal position and whether we are moving quickly enough to address what I accept are still very high levels of borrowing. It is absolutely critical that people understand that the deficit each year is extra borrowing—it is adding to the stock of borrowing. I do not think that that is generally perceived or understood more widely. The implications of understanding that properly should focus attention on addressing the deficit as fast as possible.
In defence of the pace at which the Government are addressing the deficit, we are still focused on reaching a balance by 2017-18. We are on that path. There is a plan in place. I am very open to challenges about the paradigm shift, as my noble friend Lady Noakes suggested, that we could be more radical in some of the ways we deliver public services and in some of the ways we have structured the Civil Service. That is a challenge we should set for the next tranche of cost improvement. Without that it becomes very difficult to continue—again, in my noble friend’s words—to “salami-slice”.
My noble friend Lord Shipley asked about whole-place budgets. Community budget pilots have demonstrated that it is possible to do much more by joining up local authorities; I do not think there is any question about that. That is why we talked about the £3.8 billion social care budget that we have set aside. We have also set up a £200 million pot to accelerate joint working among local authorities. Whether we can release the borrowing cap on HRAs is another matter. If we were to do that it would add another £7 billion to public sector borrowing every year. Most of the schemes which creatively try to allow more borrowing at the local level are captured and increase public sector borrowing. That is always the constraint that we are trying to manage.
My noble friend Lord Northbrook asked for a response on public pension cuts. My noble friend Lord Newby and I will certainly get back to him on that.
The noble Lord, Lord Empey, asked why UK pension funds are not investing in UK infrastructure. He is correct to say that that industry is highly fragmented compared to its counterparts overseas. That is why we have worked with the industry to consolidate funds into a pension infrastructure platform of £1 billion. Ten funds have come together so that they can gain economies of scale, develop the expertise to assess those credits and provide us with the scale to begin to get them into that business in the same way that, for example, the Canadians have so effectively prosecuted over the past few years.
I could not agree more with the noble Lord, Lord Haskins, that we need to rationalise the number of funding streams going into skills training. That is why we have set up the single local growth fund so that we can begin to provide that kind of rationalisation.
The noble Lord, Lord Empey, asked about VAT and how it is applied to building. I will get back to him in writing on that.
I thank noble Lords for a very stimulating debate.
Lord Higgins
What is the assumption on interest rates in calculating debt interest payments?
Lord Deighton
I thank my noble friend Lord Higgins for reminding me of that question; I was intending to deal with it directly. There is a ready reckoner in the OBR. Our debt is fixed-rate, so the effect of interest rates going up increases over time as debt matures and as we borrow more. For example, if we had a 1% increase in gilts rates, by 2015-16 that would be costing us just over £4 billion more per annum in debt service costs. That gives a sense of the sensitivity. By 2017-18, it would more or less double to just over £8 billion.
Lord Deighton
That is the impact, but those are not the assumptions. We must consider the impacts, so the assumption is on a stable basis, but that is the sensitivity to change. That is how we measure it.
EU: Justice and Home Affairs
(11 years, 6 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Taylor of Holbeach
To move that the Grand Committee takes note of the report to Parliament on the application of Protocols 19 and 21 to the Treaty on European Union and the Treaty on the Functioning of the European Union in relation to EU justice and home affairs matters (Cm 8541).
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, the previous Administration made a commitment to table a report each year on the operation of the JHA opt-in protocol. The Government agreed to maintain that pledge and have ensured that such reports cover not only decisions taken under the JHA opt-in but also those taken under the Schengen opt-out protocol. The Government have since published three such reports. The most recent of these, which is the subject of this debate, was published on 25 April this year. It covers opt-in decisions taken between 1 December 2011 and 30 November 2012.
I apologise that the annual report was later than usual this year. We aim for publication in January, but opt-in decisions included in the annual report fall to a wide range of government departments. The late publication of this year’s report was due to a delay in finalising data from across Whitehall. We regret this delay and will aim to ensure that the next annual report is published promptly.
During the period of the latest annual report, the Government took 35 decisions on UK participation in EU justice and home affairs proposals. Under the JHA opt-in protocol we opted in to 24 proposals and did not opt in to eight. The Government took three decisions under the Schengen protocol, choosing to remain bound in each case.
As the Committee will be aware, the Government have stated that we will take opt-in decisions on a case-by-case basis. We consider factors such as the impact of the measure on our security, civil liberties, the integrity of our criminal justice and common law systems and on the control of immigration. At the heart of it is a commitment to focus on the national interest. As such, we will only opt in where we believe it is in the UK’s interests to do so. Examples of proposals where we judged UK participation was in the national interest were the EU-US passenger name records agreement and a directive on data protection. Both of these agreements promise to assist law enforcement authorities in combating serious crime, while including all the necessary data protection safeguards.
Conversely, the Government decided not to opt in to a proposed directive on the freezing and confiscation of proceeds of crime. While we were sympathetic with the aims of this proposal, we had concerns that the published text posed risks to the UK’s domestic non-conviction-based confiscation regime, and therefore felt that it was too risky to opt in prior to negotiations, given that we would then be bound by the final text, once adopted. The Government also decided not to participate in the internal security fund regulation due to concerns over value for money. Despite our decisions in these latter cases, I note that the Government have taken an active role in both of these negotiations and will consider participation post-adoption should our negotiating objectives be met.
The Government have been clear that we want Parliament to play an important role. For this reason, we have further strengthened the role of Parliament in scrutinising opt-in decisions. My noble friend Lord Howell of Guildford’s Written Ministerial Statement of 21 January 2011 pledged to give Parliament as much opportunity as possible to comment on and influence future opt-in decisions. Under these new arrangements, we have committed to the setting aside of government time for a debate on opt-in decisions where there is a particularly strong parliamentary interest. The Government must also now report each opt-in decision to Parliament by a Written or, where appropriate, an oral Ministerial Statement. This procedure is now well practised.
The commitments included in that Statement, to give Parliament more of a say in opt-in decisions, are something which the Government take very seriously. I emphasise to the Grand Committee that we are keenly aware of the essential need to make these new arrangements work on a practical level. To this end, noble Lords will be aware that following extensive consultation with interested parties, including our own European Union Committee, the Government have recently finalised an internal code of practice. Through the code we hope to reach and maintain a consistently high standard across government in respect of handling the parliamentary scrutiny aspects of future opt-in decisions.
I do not plan to dwell on more recent opt-in decisions today because they will be covered by the next annual report to be published early next year, and before then in our six-monthly update to the European Union Committee. However, I note that since 30 November 2012, the Government have taken a further 10 decisions under the JHA opt-in protocol, opting in on seven occasions. No decisions were taken under the Schengen protocol during the period.
I hope that this is a good introduction to the background of the report we have presented to Parliament. I commend it to the Grand Committee and I beg to move.
Baroness Corston
My Lords, it is a pleasure to follow the Minister. I welcome this third report on the application of the arrangements concerning the United Kingdom’s participation in European Union legislation in the field of justice and home affairs, the so-called opt-in arrangements. I am pleased that the report fulfils the present Government’s commitment in the interests of transparency and accountability introduced by the noble Baroness, Lady Ashton of Upholland, in the previous Government. As the Minister has acknowledged, it was something of a pity that it was published late, and I am sure that we all accept his apologies. I understand that there were difficulties this year in finalising the annexe, but that is likely to be a recurring problem for which the departments must plan ahead. My committee hopes very much that next year’s report will be published early in 2014.
As a member of and now the chair of the European Union’s Sub-committee on Justice, Institutions and Consumer Protection, I have followed closely the Government’s approach to European Union proposals. The sub-committee has scrutinised a range of proposals in the justice field since the UK’s opt-in arrangements have applied to the area of justice and home affairs, and I think that the Government’s case-by-case approach is the right one. In the civil justice area, like the Government, we have been cautious and particularly mindful of the principle of subsidiarity because of the potential effects of the proposed measures on UK legal systems, particularly on our law of property and the implications for the laws of inheritance in other jurisdictions. For example, we recommended that the UK should not opt in to a proposal which would lay down common rules on the choice of national court and law to apply where a deceased person had property in more than one member state.
We have also been unable to support, at any rate in its current form, the proposal for a common European sales law, despite its laudable objective of improving the operation of the single market. This would introduce an additional, albeit optional, law of contract for consumer transactions. Our concern is that its potential to introduce legal uncertainty and confusion among consumers would outweigh the expected benefits. We have suggested that the Commission would be wise to adopt generally, in the civil justice area, a cautious step-by-step approach.
In the field of criminal justice, the EU has taken that kind of approach, implementing two so-called road maps which set out specific measures agreed by the Council of Ministers. We have recommended that the Government should opt in to all these measures apart from one on the right of access to a lawyer in criminal proceedings. We agree that the right of a suspect or defendant to legal advice is a vital part of the legal process, but we consider that the original proposal did not strike the right balance between the rights of suspects and defendants on the one hand and the ability of law enforcement authorities to investigate and prosecute offences on the other. For the future, we have suggested that before the EU embarks on further measures in the criminal justice field, it first completes the road maps and then leaves time for a proper evaluation of the effects of the legislation. Any exceptions should require particularly strong justification.
Relatively few proposals subject to the opt-in fell within the remit of my sub-committee during the period covered by the report we are discussing. On the whole, the committee agreed with the Government’s approach to the proposals that have come before us. The single exception this year concerns the justice programme, where we differed on whether it offered good value for money.
Finally, I, too, welcome the code of practice for the guidance of government departments on handling proposals which are subject to the opt-in procedure, which should ensure that the scrutiny committees can undertake their work within the strict time limits imposed by the treaties because committees deserve and need the time properly to fulfil that obligation.
Lord Taverne
My Lords, my main concern so far is on the block opt-out. I could never see any real justification for this, and my feelings were strongly confirmed by the report of the House of Lords committee. Therefore, I thought I would look at the way in which the Government have approached the pre-2013 opt-outs and opt-ins and the ones now up for consideration. Like other speakers, I very much welcome the report as the proposals appear to be extremely pragmatic and the relevant cases are judged on their merits.
I wish to cite a few examples on which I have concerns. The proposal at page 14 of the report for a directive on criminal sanctions for insider dealing and market manipulation is welcome in principle. However, the Government very sensibly say that they want to see how it works out and will participate fully in the negotiations to enable the proposal to be better progressed. That seems to me a very sensible, practical proposal, and I am surprised that that attitude was not taken on the European arrest warrant, the merits of which appear to be extremely plain. The obvious way in which to influence these proceedings is to take part in the negotiations and see how they can be improved.
I have questions about the proposals on page 17 of the report regarding the internal security fund. The Government have not reached a final decision on this matter and state in the report:
“We need to be absolutely sure that the value benefits or cost savings we will secure from the Programme outweighs the cost of participation”.
It is obviously desirable that we should participate, so what are the costs involved? Are they really substantial or are they fairly unimportant in this context?
A further regulation,
“establishes a single Justice funding programme which combines three previous programmes”.
That is very sensible, but the Government raise the question of value for money. What sums are involved?
Finally, I have some questions as regards,
“the need to harmonise the offence of money laundering at EU level”,
mentioned on page 33 of the report. Again, it seems to me that it would be extremely sensible for the Government to look at this further.
It seems to me ludicrous not to support the proposal to combine Europol and CEPOL. It is obviously sensible to rationalise in this case, but it depends on our final decisions on Europol and the training college. It seems that the Government’s attitude has changed during the course of the negotiations between the coalition partners whereby a much more pragmatic mood has been created, but it would be absurd if we were not to remain members of Europol. We have the president of Europol and the college here in Britain, which brings in a considerable income. Obviously, the proposals depend on us remaining part of Europol.
I am pleasantly surprised by the pragmatic spirit in which these questions have been proposed. All the matters up for decision in 2013 seem, in principle, to be welcome, and I hope that we will continue to judge them entirely on their merits. I end by saying that I hope that this new mood of pragmatism, a mood that has always been there in particular areas, will prevail and that in the end we will find that we are full, participating partners in co-operation on criminal justice and crime in Europe.
Lord Boswell of Aynho
My Lords, I, too, thank the Minister for a useful report and, in my role as chairman of the European Union Select Committee as a whole, I extend those thanks to all those who are participating in this debate, which is exposing some interesting issues.
Be it far from me to suggest that the issues are easy to grasp at first instance and, to be frank, I would not recommend them to a novice member of my committee who had never been to one of these debates because it is not the easiest territory on which to start. However, we should remember as a committee that this subject reflects the real interests, welfare and, in certain cases, security of our citizens. It is important that we get it right. I am heartened by the way in which the Minister presented his case in terms of looking at the issues and making decisions on their merits. I say, with respect, that that is the way in which our sub-committees have tended to produce their reports, even on occasions when their conclusions have differed from those of the Government—or perhaps have not been confirmed by government until a later stage.
Inevitably because of those comments, my emphasis will be on aspects of the process. I have to offer some praise to the Government and some blame, too—alternatively, as it were. We certainly all welcome the fact that this report is being debated approximately two months after its publication. That is in line with the request made by the committee during the debate on the first annual report in 2011. I am delighted to see the noble Lord, Lord Roper, attending this debate, and he will remember that request. So far, so good but, as the Minister wisely confessed to the Committee, it is regrettable that this, the third annual report, was published nearly four months late, although its two predecessors were bang on time and both came out in January. The importance of timeliness should be emphasised by the Minister in rallying the outlying departments that have to be consulted on these matters. I hope that he can give an assurance that unless some great disaster intervenes, the fourth annual report will be published on time in January next year. There is a related issue to this and it would be helpful if the Minister could clarify how the report’s delayed publication will impact on the scheduled publication of the mid-year update to the report, which should be available by now, or very shortly in early July.
While on the subject of complaint, we also note that two of the opt-in decisions listed in Annexe 1, which is a very helpful annexe, cited incorrect legal bases. These have been subsequently corrected in correspondence with the European Scrutiny Committee in another place. Mistakes happen, of course, but we trust the Government will ensure that such errors are not repeated in the next annual report.
To turn to the positive, we, too, welcome the recent publication of the Government’s code of practice on scrutiny of opt-in and Schengen opt-out decisions. This is for the attention of all government departments to ensure that the views of Parliament are taken into account. I thank our officials in the Select Committee for their input to that process which has been mutually beneficial.
To come to what is, I suppose, the most important legal crux, but, again, not a particularly immediately obvious one, there is a consistent implication from the Government that the UK opt-in will apply to proposals which include justice and home affairs elements, despite not citing a Title 5 legal base, which is the normal legal basis for a justice and home affairs proposal. The Select Committee of this House and the European Union Scrutiny Committee in the other place have had little sympathy for this approach in the past. We suggest that it tends to fall on deaf ears in the Commission and Council. Perhaps the Minister will indicate to this Committee whether the legal base of a new European Union committee has ever been amended as a result of the Government’s approach in this regard and what the current Commission and Council position is on this matter.
Turning to slightly more substantial matters, the report notes that negotiations continue on a number of proposals where although the United Kingdom Government did not opt in during the initial three-month period, it remains their objective to seek to amend the text in a way that will allow the United Kingdom to exercise its right to opt in to the proposal after it has been adopted across the board. This situation applies to the directive on the freezing and confiscation of the proceeds of crime and the directive on the right of access to a lawyer. I think we all have some sympathy with doing this; the question is whether an acceptable outcome can be achieved. I would be grateful if the Minister could provide an update regarding what progress has been made in relation to both these proposals, including the likelihood of post-adoption opt-ins by the Government.
The Minister’s report refers to the proposed Europol regulation as a “forthcoming dossier”. Owing to the delay, the proposal was published very shortly afterwards. We acted fairly quickly in our Sub-Committee F report regarding the measure, which recommended that the United Kingdom should opt in. It was debated and endorsed by this House on 1 July. We note that the Government must reach a decision in response to that by 30 July, which will take the views of both Houses into account. We look forward to receiving notification of that decision, presumably before the other place goes into recess on 18 July. There is not much time for that, but it is important to know where we are.
Then there is what I might call the elephant in the room, which is the United Kingdom’s opt-out decision to be taken on the existing or pre-existing measures in 2014. The report correctly notes that this is a separate issue as it concerns the pre-Lisbon measures, but it is relevant in the context of this debate. All the post-Lisbon measures that the United Kingdom has chosen to participate in are listed in the report. It is worth recording that the average participation by the United Kingdom Government in these post-Lisbon measures varies, but is somewhere between 70% and 80%, so the significant majority are acceptable to the Government on consideration, although in certain cases, including the two I have referred to, it may take time, and it may take more than the three months to reach an acceptable decision. We would feel better late than never, if I may put it like that in shorthand.
Granted that all the post-Lisbon measures involve the jurisdiction of the Court of Justice of the European Union, we wonder about the Government citing concerns about this jurisdiction as one of the reasons for exercising their opt-out in relation to the pre-Lisbon measures that I have mentioned, which they suggest were not drafted with the court’s jurisdiction in mind. In the report that our joint sub-committees have issued on the opt-out report in relation to Protocol 36, this suggestion was considered and rejected. We therefore look forward to a further announcement on the opt-out, which we understand is now imminent.
It would be fair to say, in summary, that although we are not in any sense ideologically in favour of always acceding to justice and home affairs measures, and have aligned ourselves on a number of occasions with the Government in not doing so, we are broadly sympathetic to the approach where we can do so. We hope that the Government will wish to consider the Protocol 36 decisions sympathetically and provide a good portfolio of responses in due course.
Lord Rosser
My Lords, I, too, thank the Minister for introducing this debate and express my thanks to all who have participated with their considerable experience and knowledge—which I do not mind admitting is somewhat greater than mine—and not least my noble friend Lady Corston, who explained the work and views of her committee on certain key issues and referred to the code of practice. From current personal experience, I certainly share the view of the noble Lord, Lord Boswell of Aynho, on the difficulty of getting to grips with the detail of this report.
As the Minister said, this is the third annual report to Parliament on the application of Protocols 19 and 21 on the Schengen opt-out and justice and home affairs opt-in respectively. Once again, the reports arise from the previous Government’s commitment in 2008 to strengthen parliamentary scrutiny of the justice and home affairs opt-in, part of which was an undertaking to provide Parliament with and make available for debate an annual report that both looked ahead to the Government’s approach to EU justice and home affairs policy and forthcoming dossiers, including in relation to the opt-in, and provided a retrospective annual report on the UK’s application of the opt-in protocol. Annexe 1 of the report in front of us sets out all the JHA opt-in decisions and Schengen opt-out decisions taken from December 2011 until the end of November 2012. Annexe 2 outlines legislative proposals which are expected to be brought forward in the current year and will require a decision on UK participation under the justice and home affairs opt-in protocol.
One of the legislative proposals mentioned in Annexe 2 is the proposal for a regulation on the European Union Agency for Law Enforcement Co-operation and Training—Europol—about which, as has already been noted, we had a debate on Monday in the context of the European Union Committee’s report on the UK opt-in to the Europol regulation. At the end of the debate, the House agreed with the committee’s recommendation that the Government should exercise their right to take part in the adoption and application of the proposed regulation. Whether that will have any impact on the Government’s decision remains to be seen, since it is not unknown for internal party considerations to play a part in determining this Government’s approach to any matters European. The Minister told us on Monday that the decision on whether to opt in to the Europol regulation was “finely balanced”. Can he say which of our law enforcement agencies feel that we should not opt in to the regulation?
Annex 2 sets out a number of other proposed measures. Any specific update from the Minister on the situation in respect of some or all of those proposals would be helpful, in particular on whether any decisions have actually been taken. My noble friend Lady Smith of Basildon asked him, in the debate on the Europol regulation on Monday, how many measures were awaiting an opt-in decision by the Government and whether any have been delayed because of the decisions regarding the opt-out, to which reference has already been made.
There is one other issue I would like to raise from what was said on Monday. If memory serves me right, it was the noble Lord, Lord Hannay of Chiswick, who referred to a European surveillance order in which the Government do not have an opt-in or opt-out. They have simply failed to implement a piece of European legislation that they agreed to and which came into force throughout the European Union in December last year. What is the Government’s position on that order, which provides the possibility for someone who is subject to a European arrest warrant to be bailed in their own country?
The Government have sought to argue in this report that decisions taken in relation to the JHA opt-in and Schengen opt-out protocols are separate from the 2014 opt-out decision under Protocol 36 to the European Union treaties. However, that argument does not really hold water. As was pointed out in Monday’s debate, if the measure is a police and criminal justice measure that was adopted before the Lisbon treaty entered into force in 2009, deciding to opt in to that measure or a variation of it, or deciding not to opt in to a variation of it but to seek to influence it from the outside, would be completely nullified if we then decided to opt out of all those measures under Protocol 36. Perhaps the Minister will tell us which of the measures on which decisions were made to opt in between 1 December 2011 and 30 November 2012 as set out in Annexe 1 of the annual report would cease to apply to the UK if we made an opt-out decision under Protocol 36. Likewise, if we decided to opt in to all the proposals in Annex 2, or not opt in but seek to influence them from the outside, which of those measures would cease to apply to the UK if we made an opt-out decision under Protocol 36? If the Government decided to opt out under Protocol 36, no one knows which measures, including the European arrest warrant, we could subsequently get agreement to opt back in to or, if we could, on what basis or terms. All 130 measures were agreed by unanimity under a system where the UK had the veto, and not a single one of them was foisted on the UK against our will.
The noble Lord, Lord Boswell of Aynho, referred to the Europol regulation. I know it is only two days after the Minister was asked about it on Monday, but can he now clarify the Government’s position, including when the debate on the government Motion on the decision on the Europol regulation, postponed from today, will take place?
I shall conclude with a few specific questions on the report. On page 26, the Government have not opted out of parts of Schengen, such as the Schengen information system second generation. I understand that we will be connected in the fourth quarter of 2014. If we exercise the block opt-out, we will be leaving all pre-Lisbon parts of the Schengen acquis. What does that mean as far as the decision not to opt out of the Schengen information system second generation is concerned? On page 6, reference is made to the directive on the protection of the financial interests of the EU against fraud by means of criminal law. The report says that the Treasury will provide an update as soon as possible. If that has not already happened, when is it likely to happen?
Page 10 refers to the trade agreement between the EU and Colombia and Peru. I am genuinely not entirely sure what the current position is. Has that agreement been concluded? Was there an undertaking, as has been suggested to me, by the Government that there would be a vote in both Houses on the trade agreement between the EU and Colombia and Peru? Page 13 refers to passenger name record sharing with the USA to which the Minister referred in his opening comments. How is that operating and how effective is it proving to be? Page 16 refers to the asylum and migration fund. How would this be affected if we exercised the blanket opt-out? How much of an effect would an opt-out have on the UKBA’s resettlement activities?
Finally, page 23 refers to the confiscation of the proceeds of crime in the EU; once again, the Minister referred to this issue in his opening speech. Have any problems arisen subsequently as a result of not opting in? I appreciate that the Minister is unlikely to have all the information immediately to hand to respond to my detailed points; I mean that—I would be amazed if he did. However, I would nevertheless appreciate a response at not too late a stage.
Lord Taylor of Holbeach
My Lords, this has been a good debate. I would love to be able to amaze the noble Lord, Lord Rosser. I will do my best, but he is quite right in assuming that some of the questions are quite detailed. However, I am becoming more informed every minute, as the noble Lord can see, which is a very helpful support. I think that the noble Lord and I start off as relative novices in this esoteric part of the Home Office brief. We bow to the expertise to which we have had the opportunity of listening. However, I have found in the briefings which I have had that this is a fascinating and important area of government with real effects on how the Government operate and on the lives of the citizens of our country.
I am delighted that my noble friend Lord Taverne takes the view that our approach of being pragmatic and looking at issues on their merits is the right one. That is certainly true, and I have been impressed by the rigour with which this process has been pursued by the Government.
The Government are fully committed to engaging with Parliament on European Union issues and on the opt-in in particular. As such, the debate has been useful. Indeed, as noble Lords have mentioned, this is the second time this week we have considered the implications of this. This is a more general debate; we had a specific debate on Europol on the Floor of the House on Monday. This shows the seriousness with which the Government take these matters. During the period of this report, your Lordships have debated two other decisions on UK participation in EU measures: one on data protection and the other on the confiscation of criminal assets.
I will commence by going through points that noble Lords have made. I am grateful to the noble Baroness, Lady Corston, for her contribution. She started off with a modest reprimand which was reinforced by the noble Lord, Lord Boswell, that we were late. I acknowledge that, but we have plans and do not want this to happen again. We will be providing a report in January. We understand how important that is.
The noble Baroness also rightly asked that the committee be given enough time to consider our proposals. The committee exists to scrutinise, and we want to facilitate that. That is the intention of the code of practice. We are conscious of the time constraints on the committee and, indeed, sometimes on the process in which we are engaged. We will seek to keep the committee informed of what is in development, as well as providing Explanatory Memoranda promptly.
The noble Baroness regretted our decision not to opt in to the justice programme. My noble friend Lord Taverne also expressed concerns about this. We have said that we will consider seeking to opt in after it is agreed, if there is evidence to show that it is worth while. We take note of what the noble Baroness has said and would welcome any further evidence she or interested parties may wish to submit so that my right honourable friend the Justice Secretary can consider it at the appropriate time.
My noble friend Lord Taverne asked what the sums involved are. That issue remains under negotiation. The sums will depend on the nature and outcome of negotiations.
The noble Baroness mentioned the committee’s advice on civil and criminal measures. I completely agree with her about the measure concerning the estate of a deceased person and the directive on access to lawyers. Certainly, there needs to be a cautious approach in both cases because of civil and criminal law. On the question of a common European sales law, I agree it risks causing some legal uncertainly. However, the opt-in does not apply to the measure since it has been brought forward only as an internal market measure not as a justice measure.
My noble friend Lord Taverne wanted more detail on the reasons for the decision not to opt in to the internal security fund. The sums involved are still unclear as discussions on the EU budget remain under negotiation. However, we have committed to review the decision post-adoption and will consult Parliament then. He asked also why the merger of Europol and CEPOL is not a good thing. Noble Lords who were present at the debate on Monday evening will have heard me explain the Government’s position on this measure. We are concerned that by combining the two we are going to dilute the core functions of Europol. We do not believe that is in our interests.
The noble Lord, Lord Boswell, asked what was happening to our mid-year reports. Given this report was presented late, will our mid-year report be late? We plan to send it to the committee this month. We are catching up, and I hope we will continue to be on time in the future. The noble Lord—I keep thinking of him as my noble friend but given his now exalted position I have to reduce my friendship with him as we need to be at arm’s length and it is difficult to do—asked whether the Government’s position on the interpretation of the opt-in had changed. The Government believe that any measure including substantial JHA content triggers the opt-in protocol irrespective of whether it has been categorised as a JHA measure by the EU by, as he says, the citation of a JHA legal base. We often assert that the opt-in applies to measures that are predominantly non-JHA but which include a binding JHA content. That is what is determining policy. The Government have not changed their position in that regard, but it is very important to emphasise that it is the binding JHA content that triggers the opt-in procedure.
The noble Lord also asked about the inaccuracies that had crept into the annual report in the matter of legal bases. There was an administrative error in relation to the correct legal bases. The Secretary of State wrote to the chair to explain that the correct bases for the Turkey social security measure were Articles 289 and 48 TEU and on assurance mediation were Articles 53(1) and 62 TEU.
The noble Lord also asked whether we had ever successfully negotiated a change of legal base. We have done so in the case of a directive on road transport offences, which secured unanimity in the Council to change the transport legal base to a JHA legal base on police co-operation. We did not, in fact, opt into that measure.
As regards further information on the Government’s position on the 2014 opt-out, all noble Lords would like to receive it as quickly as possible. The Government’s position is that we will keep Parliament informed.
The noble Lord, Lord Rosser, asked about the question asked by his noble friend Lady Smith of Basildon in the Europol debate about opt-in decisions pending. I had hoped that the noble Lord would ask about that because I can place this on record and save myself a stamp. Among others, we have opt-in decisions pending on the directive on legal migration, a co-operation agreement with Indonesia, a mandate for an agreement with Cuba, an association agreement with Ukraine, a mandate for an EU-China investment agreement and the Europol decision, as the noble Lord will know. All are being managed within required deadlines.
Talking of the Europol debate, the noble Lord asked which law enforcement agencies say that we should not opt into Europol. The Government are yet to take a decision on the new Europol regulation and in the decision-making process we have been consulting a number of law enforcement colleagues, including the Met police and SOCA, on the options. Given that the decision-making process is ongoing, I cannot give any further detail on that matter.
The noble Lord also asked when the debate will take place. I gave a commitment that Parliament would be informed of the decision and I have little doubt that the debate in the other place will be tabled for consideration before the Recess. We are committed to a debate on the Europol regulation and are seeking to arrange for it to take place before the House rises.
The noble Lord asked about the European surveillance order, which I remember the noble Lord, Lord Hannay, talking about. I asked about that because I could not find any record of it. I think the reference was to the European supervision order, but the noble Lord, Lord Hannay, is normally so reliable, I can understand why the noble Lord, Lord Rosser, followed up on this matter. However, this measure was agreed under the pre-Lisbon arrangements and would fall within the Protocol 36 decision. The Government will determine their approach to implementation when the decision on that protocol has been made.
The final issue on which I have a note here was about the measures in Annexe 1 to our report. Would the Government be forced to leave if we took a block opt-out decision in 2014? I cannot give noble Lords a definitive answer until we have completed our discussions with the Commission on the measures that we would intend to rejoin. We regard the legal thresholds of practical operability and coherence to be a high bar. I hope that I have surprised the noble Lord, Lord Rosser, to some degree but not in absolute terms, and there are some points that I should like to cover in correspondence. I will not have saved a postage stamp, after all.
If we look to the future, it is not possible to say what proposals regarding an opt-in will be brought forward over the remainder of this year. In the report, we have given an indication of what we expect to happen based on work programmes, our knowledge of dossiers which are being considered, those which were carried over from last year and discussions we are having on an ongoing basis with our European partners. The Government have been very clear that we will take opt-in decisions on a case-by-case basis, so noble Lords will understand that it is not appropriate for me to comment on whether we will opt in to any new proposal that might come forward in coming months. I can give a commitment that whatever happens, we hope that the committee will work with us in scrutinising these matters and we will give Parliament as a whole the opportunity to be engaged in this important part of democratic scrutiny of European policy.
We expect a number of EU measures to emerge that will trigger a European opt-in decision. Most significant is the new Eurojust regulation which we expect to be published this month. At the same time, there is likely to be a proposal for a European public prosecutor. We expect that, as with the Europol proposal, the Eurojust opt-in decision will be subject to parliamentary debates in government time. Noble Lords will be aware that the Government have already indicated that we will not participate in the European public prosecutor. We also anticipate the publication of proposals on combating money laundering. After long negotiations, it is possible that an EU-Canada passenger names records agreement will be signed and concluded triggering opt-in decisions. I understand that the Ministry of Justice is anticipating proposals on special safeguards in criminal procedures for vulnerable suspected or accused persons and an initiative regarding legal aid in criminal proceedings. It is also possible that new initiatives on e-justice and the law applicable to contractual and non-contractual obligations will emerge.
Additionally, it is usually the case that we expect a number of further opt-in decisions will fall to other government departments during this period. I assure noble Lords that as the lead government departments on the opt-in the Home Office and the Ministry of Justice are committed to providing advice and assistance to other departments which are grappling with what can be quite a complex policy area.
I look forward to the participation of the European Union Committee and, in particular, the specialist committee headed by the noble Baroness, Lady Corston. Our next annual report covering the period 2012-13 will be laid before the House in January.
House of Lords
Georgia
(11 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Lord Bishop of Wakefield
To ask Her Majesty’s Government what steps they are taking to encourage greater economic and political co-operation between Georgia and the European Union.
Lord Wallace of Saltaire
My Lords, the UK fully supports greater economic and political co-operation between Georgia and the European Union, particularly through regular and intensive high-level contact. Three senior Georgian Ministers have visited London in recent months and three UK Ministers and several senior officials have visited Tbilisi. We are pleased that Euro-Atlantic integration has remained a priority for the new Georgian Government, and, through involvement in the Eastern Partnership, Georgia is finalising an association agreement and a deep and comprehensive free trade area with the EU.
The Lord Bishop of Wakefield
My Lords, I am grateful to the Minister for his response and for setting out the range of co-operation between Georgia and the EU. I remain concerned that, for most Georgians, this assistance remains invisible. Do the Government accept that to avoid similar mistakes to those made with the Ukraine, the EU should take steps to explain to the wider Georgian public the benefits of the association agreement and other such co-operation measures with the EU, rather than after they have been negotiated?
Lord Wallace of Saltaire
I was briefly in Tbilisi eight weeks ago and saw that the EU is quite visible there. The EU monitoring mission is the largest external monitoring mission in Georgia, monitoring the borders with the disputed territories of Abkhazia and South Ossetia. The EU heads of mission meet regularly, and comment regularly and openly, on developments in Georgian politics. The Council of Europe and the OSCE are also active in assisting with judicial training in Georgia and elsewhere. So we are quite visible and extremely active.
Lord Anderson of Swansea
My Lords, the Minister mentioned the EU monitoring mission but failed to mention that Russia and its allies still prevent that EU monitoring mission doing its work in Abkhazia and South Ossetia. What protests are we making to Russia about that, and are we content for yet another frozen conflict in Europe to remain for a longer time?
Lord Wallace of Saltaire
My Lords, we are not content, but as the noble Lord knows well, the Russians are not always the easiest negotiating partners. As he will also know, a fence is being erected along the boundary of the breakaway regions and, in some cases, several hundred metres into Georgian territory beyond the breakaway regions. We continue to talk to the Russians about this. The new Georgian Government have made a number of deliberate unilateral moves to demonstrate their willingness to talk to the Russians. There have been some limited talks but so far the Russians have not given very much in return.
Baroness Falkner of Margravine
My Lords, does my noble friend agree that the greatest challenge for the EU with regard to Georgia is managing the relationship between Russia and Georgia? Can he tell the House the position of Her Majesty’s Government on Georgia’s application to join NATO, which could present some newer challenges?
Lord Wallace of Saltaire
My Lords, at Bucharest some years ago NATO agreed to accept Georgia as a candidate member. The largest non-NATO, non-British force at Helmand at the moment is two Georgian battalions. We support Georgia’s aspiration to join NATO but it will necessarily, unavoidably be a long process. There are, indeed, British military trainers in Georgia.
The Earl of Sandwich
My Lords, the right reverend Prelate mentioned Ukraine as a possible parallel. However, is not Ukraine a good deal behind Georgia politically, and therefore could not Georgia qualify much earlier, given also that the Ukrainian opposition leader is still in prison?
Lord Wallace of Saltaire
My Lords, it is entirely fair to say that Ukraine is considerably behind Georgia in many ways. There was a free and fair election in Georgia last spring which resulted in a change of Government. The Georgian Government have just announced that on 31 October this year there will be a presidential election. Of course, that is not to say that it is a perfect democracy. There are a number of issues, including cases against members of the previous Administration, about which we are concerned. However, when I was in Tbilisi I had lunch at the British embassy with MPs both from the governing party and from the opposition. There are many countries in what was formerly the Soviet Union in which one could not do that.
Lord Kilclooney
My Lords, given that the European Union accepted Cyprus as a member even though its Government did not govern the entire island of Cyprus, why does the European Union welcome Croatia and not Georgia as a member?
Lord Wallace of Saltaire
I note some of the unspoken sentiments behind the noble Lord’s question. As he knows well, the process of admission to the European Union is long and arduous. Georgia is at a very early stage in that process. Georgia’s administrative capability and economic changes and the judicial, rule of law issues that it will have to go through mean that any approach to the European Union will be relatively long, but that is also true for some of the western Balkan countries.
Lord Bates
My Lords, given that the eyes of the world will be on Sochi next February for the Winter Olympic Games and that Sochi is less than 100 miles from the Georgian border, will my noble friend urge the UK mission to the UN to encourage Georgian and Russian reconciliation when the Olympic Truce is presented to the United Nations General Assembly in October? Given that the Russians invaded Georgia in violation of the Beijing Olympic Truce, this might be a timely point for reconciliation.
Lord Wallace of Saltaire
I congratulate the noble Lord on the faithfulness with which he wishes to ensure that we think about the Olympic Truce. We are very conscious that the Sochi Winter Olympics are taking place extremely close to the border with Abkhazia and that that may potentially raise some security issues. There is instability in the north Caucasus as well as in the south Caucasus and we have, of course, spoken to the Russians about that.
Homelessness
Baroness Quin
To ask Her Majesty’s Government whether they are proposing any measures to ensure that homelessness does not increase.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, we are currently investing £470 million over four years to prevent and tackle homelessness. In the recent spending round for 2015-16, it was announced that the Department of Health will bring forward a new £40 million hostels investment programme. We are also encouraging housing supply through expanding the private rented sector, with £10 billion in loan guarantees, the £1 billion Build to Rent fund and a new three-year affordable homes programme of £3.3 billion from 2015-16, including £400 million for new-product, affordable rent-to-buy.
Baroness Quin
My Lords, homelessness has risen sharply over the past two years, and recent government measures do not help. For example, on the BBC’s “Look North” last night, it was reported that rent arrears had shot up in Sunderland, Newcastle and north Tyneside as a result of the bedroom tax, raising fears of further evictions and homelessness. Will the Government recognise that misleading national figures about overcrowding and underoccupancy fail to appreciate the huge mismatch between these two things across the country, and that the Government should now, on an area-by-area basis, work urgently with local authorities and housing associations to stop the acute crisis in housing and homelessness getting even worse?
Baroness Hanham
My Lords, the Government are already working across the country with individual authorities, providing access to funding and policies that enable local authorities to make the decisions they need to make and which we have encouraged. We have changed the law to ensure that local authorities can use the private rented sector for people who are homeless or in danger of homelessness. Local authorities need to make decisions on the amount of housing and money they need to support homelessness and on their policies for dealing with homelessness. The Government are fully aware that there are discrepancies across the country and we are working with local authorities to try to help with that.
Baroness Gardner of Parkes
My Lords, does the Minister realise that many of these homeless people are dealt with by charities, rather than by local authorities? They are very difficult for anyone to manage. When I was a chairman of social services, we had homeless shelters where people used to smoke so often that you had a permanent fire hazard in the building. People who elect to sleep on the street often do not wish to be under any authority that would regulate them. What is the Government’s estimate of the proportion of homeless people dealt with by charities, as opposed to local authorities?
Baroness Hanham
My Lords, I cannot give the noble Baroness the exact proportion but, yes, a number of charities such as Centrepoint and St Mungo’s in London provide an extraordinarily important service. The Passage at Westminster Cathedral and similar organisations across the country play an enormous part in supporting and helping homeless people. The No Second Night Out initiative now takes place not only in London but across the country. It ensures that what my noble friend suggests happens does not happen. People are not on the streets for longer than one night. They are taken off and given advice, help and support to enable them to move back into proper accommodation.
Baroness Morgan of Drefelin
My Lords, official figures say that rough sleeping has increased by 31% in the past two years but experts working in the field say that the increase is double that. Do the Government have a projection for how homelessness, and rough sleeping in particular, is set to go in the future? Do the Government agree that it is essential that all rough sleepers should have access to emergency accommodation and that that needs to be planned for if we are to see this increase continuing in the future?
Baroness Hanham
My Lords, rough sleeping had gone down but I acknowledge that it is beginning to creep up again and, as I have said, that is completely undesirable. The No Second Night Out initiative ensures that people are not left on the streets for long spells of time and that they are given access and help. The £40 million I have just mentioned will come from the Department of Health. It is to build hostels and provide hostel accommodation for people who are sleeping rough and to get them off the streets. It will be very effective, particularly for the mentally ill, of whom there are more in that situation than we would wish.
Lord Berkeley
My Lords, alongside homelessness often goes hunger. The Minister told us yesterday that there was no government policy to encourage soup kitchens. Is starvation part of the Government’s policy, because that seems to be the only way out?
Baroness Hanham
My Lords, I will leave that to my noble friend the Minister who made the statement. Of course, starvation is not part of anyone’s policy or wish. One of the reasons for getting people off the street as quickly as possible is to ensure that they have access to food, medical help and help with accommodation.
Baroness Maddock
Has my noble friend seen the excellent report from St Mungo’s charity, which she mentioned earlier, entitled No More: Homelessness Through the Eyes of Recent Rough Sleepers? According to the report, St Mungo’s found that most of the rough sleepers it surveyed had been in touch with the police before they slept rough, rather than with any other service. What can the Government do to encourage and assist the police to do more work with other agencies to address the problems before they escalate into homelessness?
Baroness Hanham
My Lords, there is already good co-operation between all the agencies that are involved with people who are becoming homeless. The police are often involved in the initial stages, when people have perhaps committed minor crimes, and so they come across them that way. However, there is common accord across the health service, local authorities and the police to ensure that as much help as possible is given.
Baroness Farrington of Ribbleton
My Lords, the Minister has a long and distinguished career in local government. Will she join me in expressing concern that local authorities are repeatedly being told that they are given money for this and money for that, but that global budgets are being cut? The result is that individual groups and needs often start asking for the money to be ring-fenced, when in fact local authorities are being constrained far too much by central government. I remember occasions in her distinguished career when the Minister objected to central government doing that.
Baroness Hanham
My Lords, we could now have a debate for half an hour on the financial situation and why we are in a position where we have to reduce funding across both government and local authorities. As I said before and will reiterate, local authorities need to manage the budgets that they have, and need to make the necessary adjustments to how they administer themselves and allocate their funding. The noble Baroness is right that budgets are not ring-fenced, but local authorities are given specific allocations to help with particular areas, including homelessness. However, we are where we are and in the financial situation that we are, which did not start with this Government. Therefore, we all have to play our part in trying to ensure that that is improved.
Health: Diabetes
(11 years, 6 months ago)
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Lord Harrison
To ask Her Majesty’s Government what assessment they have made of the quality of healthcare available to diabetics with eye problems.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, we have set clear objectives for the NHS and Public Health England to improve the care and quality of life for people with diabetes. The public health outcomes framework includes an indicator on preventable sight loss, which will track three of the commonest causes of preventable sight loss, including diabetic retinopathy, to drive improvements in quality.
Lord Harrison
My Lords, given the decline in the regular and important annual check-up for diabetics, does the Minister acknowledge that the retinopathy screening for diabetics introduced by the previous Government is being undermined and underresourced? On cataract operations, will the Minister explain why, among our European Union colleagues, we are the most demanding regarding the threshold required to have such operations? Given the importance of cataract operations, especially for older people in retaining their vision, will the Minister meet me and other colleagues to discuss these matters and allied subjects?
Earl Howe
I would be happy to meet the noble Lord. I am aware that the whole area of the cataract threshold and, perhaps more importantly, the interpretation of that threshold, is one that NHS England is now actively looking at to ensure greater consistency around the country.
I do not agree with the noble Lord’s interpretation of the screening figures. The UK countries, I believe, lead the world in the area of diabetes eye screening. This is the first time that a population-based screening programme has been introduced on such a large scale. The latest figures show that up to March 2013, 99% of people with diabetes who were eligible for screening were offered it in the previous 12 months.
Baroness Finlay of Llandaff
My Lords, given the importance of prevention, have the Government been monitoring the progress of access to insulin pumps for children with diabetes, in order to prevent eye problems later in life, given that they have better control with insulin pumps?
Earl Howe
My Lords, that tends to be a matter for provider trusts, working in conjunction with clinical commissioning groups. I am aware that there is concern about the variability of access to insulin pumps. Of course, they are not a universal remedy for every diabetic patient, but where they are appropriate they should be commissioned. If I can give the noble Baroness the latest information on that, once I have consulted NHS England, I would be happy to do so.
Baroness Jolly
My Lords, the House has heard that eye screening is critical for those with diabetes. As the national screening programmes are now commissioned by NHS England on behalf of Public Health England, and while diagnostic and treatment services are commissioned by clinical commissioning groups, will my noble friend tell the House what challenges these arrangements pose to the patient when trying to assess quality?
Earl Howe
The key thing here is for NHS England, Public Health England and local commissioners to work closely together, which is indeed what they are doing, so that the patient experiences a seamless service. Essentially, the new commissioning arrangements for national screening programmes enable effective commissioning and oversight of the whole screening pathway, alongside integrating those with the diagnostic and treatment services. To ensure a quality service, local programmes are assured by NHS screening programmes’ quality assurance teams and services are measured against 19 standards.
Lord Low of Dalston
My Lords, I declare my interest as vice-president of RNIB. The Minister will be aware that NICE has recently approved the use of Lucentis as a treatment for those suffering from diabetic macular oedema. We are hearing reports from various parts of the country of queues building up of people requiring treatment for diabetic macular oedema. Will the Minister undertake to do his best to ensure that the necessary resources are put in place to relieve these backlogs and enable people to benefit from this new treatment that has now become available?
Earl Howe
My Lords, I am aware of the issue that the noble Lord raises. He will know that NHS commissioners are statutorily required to fund clinically appropriate drugs and treatments which have been recommended by NICE. The Centre for Workforce Intelligence has been commissioned to review the ophthalmology medical workforce after discussions were held between the royal college and Health Education England earlier this year. That review is due to report in the summer and the results of it should, I hope, point the way to a resolution of the issue that the noble Lord has raised.
Lord Collins of Highbury
My Lords, as a type 2 diabetic, I benefit from annual retinal check-ups at UCH; it is an excellent service. However, despite there being a national screening programme, there is a large variation in take-up, which in some areas is as low as 65%. What steps are the Government taking to ensure a higher and more consistent take-up?
Earl Howe
In the end, accepting the offer of screening is a matter for each individual. There are some people who, for personal reasons, will choose not to take up the offer. However, as part of the process of continuous improvement, we would expect the gap between the number of people offered and the number of people receiving screening to reduce, and for there to be greater consistency in numbers offered and received across local screening programmes.
Cyclists: Safety
(11 years, 6 months ago)
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Lord Greaves
To ask Her Majesty’s Government, in the light of the Department for Transport’s figures on road casualties in 2012, what steps they are considering to increase the safety of cyclists on the roads.
Earl Attlee
My Lords, as I said on Monday, we take cycle safety very seriously. Earlier this year, we announced £40 million, including local contributions, for 78 junction safety schemes. In addition, the majority of schemes in the £600 million local sustainable transport fund include cycling. We have made it easier for councils to introduce 20 mph speed limits and install Trixi mirrors. We are considering the recommendations of the All-Party Parliamentary Cycling Group inquiry and will respond shortly.
Lord Greaves
My Lords, over the past two years, the number of cyclists killed on the roads has gone up from 111 to 118 per annum and the number seriously injured, perhaps more worryingly, from 2,660 to 3,222. One of the main problems that cyclists have is their interaction with heavy vehicles. It is welcome that the Minister for Road Safety announced, I think last week, the setting up of the cycle-lorry safety working group, jointly between the Transport Department and Transport for London. Can the Minister say when this working group will start work; who will be involved and particularly whether cycling organisations will be able to give evidence to it; and which specific aspects of cycle lorry safety will it look at?
Earl Attlee
My Lords, my noble friend has asked me quite a lot of detailed questions and I think it would be better if I wrote to him. I agree that HGVs are a disproportionate problem. HGVs do not have any more accidents with cycles than do cars. However, when they do have an accident, the result is generally much more serious. It is quite right that we pay special attention to HGVs.
Lord Campbell-Savours
My Lords, the use of mobile phones by motorists is illegal, because it is unsafe. Surely the use of audio headgear by cyclists is equally unsafe and should be made illegal?
Earl Attlee
My Lords, I agree with the noble Lord that it is extremely unwise to cover one’s ears when riding a cycle, because you cannot hear traffic approaching or someone sounding their horn. I am not sure that it is necessary to make it illegal.
Baroness Sharples
Would my noble friend agree that cyclists should wear some form of identification? I was nearly knocked over outside Millbank. I shouted at the cyclist—I did not swipe him—but please could we have some identification on them?
Earl Attlee
My Lords, we want to do everything we can to increase the level of cycling because of the health benefits. To require someone to carry identification when riding a cycle would be an unnecessary burden. There can be incidents with pedestrians, for instance, when it would be good if they carried identity, but we do not require them to do so, so we do not see why a cyclist should carry identity either.
The Earl of Listowel
My Lords, what is being done to encourage children to wear helmets? Is the Minister aware of the particular fragility of the skulls of young children?
Earl Attlee
My Lords, we are acutely aware of this problem. We strongly encourage children to wear helmets. However, again because of the difficulty of enforcing the wearing of helmets for children, we do not want to make it compulsory—a legal requirement—but we strongly encourage children to wear helmets and we think it is a very good idea for adults to wear helmets as well.
Lord Winston
My Lords, does the Minister agree that the health benefits of cycling may not be as great as he imagines, given that in London the pollution from slow-moving traffic is about 10 times the legal limit in Europe?
Earl Attlee
My Lords, the noble Lord raises an interesting point. The noble Baroness, Lady King of Bow, has raised this matter with me and I have had a meeting with her about it. We are doing everything we can to improve the air quality in London, but it is difficult to get to where we want to be.
Lord Taverne
My Lords, the most radical and probably most effective measures proposed by the cycling organisations, such as the Go Dutch campaign, would be quite expensive. However, does the Minister not agree that the benefits would be very substantial? There would be less pollution, less congestion in cities and a better urban environment—and, of course, as the Minister has acknowledged, anyone who gets on a bike instead of sitting in a car will be much healthier, whatever their age.
Earl Attlee
My Lords, I entirely agree with my noble friend. I was a little bit worried when he started talking about expensive solutions, but I do agree with him.
Baroness Butler-Sloss
My Lords, I am concerned about the safety of pedestrians, as has already been mentioned. Cyclists ride with mobiles to their ear, with ear things otherwise filled with music, turning right across the traffic when the light is red against them. What are the Government going to do to tell cyclists to obey the red signs?
Earl Attlee
My Lords, I think that I agree with the whole House that it is important that cyclists adhere to all the rules in the Highway Code, in particular by not using a mobile phone while riding and not covering up their ears, in order to avoid unnecessary accidents.
Lord Davies of Oldham
My Lords, of course cyclists should obey the Highway Code, but the Question with which we started reflected on the fact that deaths and serious injuries for cyclists have increased during the past three years. Several months ago, the Times newspaper launched a campaign on cities fit for cycling and established eight points which have been largely endorsed by the cycling organisations. Are the Government supportive of those points and, if so, what action on them have they taken?
Earl Attlee
My Lords, we are generally supportive of the Times campaign; I have the list of all its suggestions here and we are measuring our performance against them. Not every single one can be adopted, but we are trying as hard as we can to reduce the casualties.
Lord Tebbit
My Lords, how many cyclists actually pay the fixed-penalty tickets which are issued to them for offences such as riding on the pavement to the danger of pedestrians? My noble friend may know that they habitually give false names and addresses; there is no way for the police officer issuing the penalty notice to know that. What are we going to do? Are we going to compel cyclists to have some form of identification so that, if issued with a penalty ticket, they are required to pay it instead of just scoffing at the law?
Earl Attlee
My Lords, it is up to the police to decide how they enforce road traffic law, and they have the necessary tools to do so. I gently say to my noble friend that the police look at where they can deploy their resources to reduce casualties. Although it is extremely annoying for noble Lords to see cyclists riding on the pavement, and although it does cause accidents, it does not cause fatal accidents.
Press Regulation
Lord Fowler
To ask Her Majesty’s Government how it will ensure that the relative merits of the two proposed royal charters on press regulation will be properly compared with one another given that it has been reported today that the relevant Privy Council meetings are likely to be months apart.
Lord Gardiner of Kimble
My Lords, the charter published on 18 March continues to have the support of the three main political parties. The Press Standards Board of Finance has petitioned with an alternative charter and this is being given proper, legally robust consideration in line with the Privy Council process. That will need to include consideration of the merits of the petition in the light of all relevant facts. The Secretary of State for Culture, Media and Sport will update the other House on these matters very shortly.
Lord Fowler
In thanking my noble friend for that response, perhaps I may ask him two questions. First, am I right in saying that the effective decision on the press’s proposal for its royal charter will be taken by a group of Ministers who happen to be privy counsellors? It is four months since the beginning of this royal charter process. Why has it taken so long? Given that the Government and Parliament have already rejected the press’s proposals, why do they need until October to give even further consideration to them? Secondly, is the Minister aware that press proprietors are now in the process of setting up their own body in any event and that one story is that they are to begin recruiting staff? Can the Minister therefore tell me just when we will get round to deciding the royal charter which was overwhelmingly approved by Parliament in March? Surely it is that charter, the charter approved by Parliament, which is pre-eminent and the one that we want to see considered and implemented?
Lord Gardiner of Kimble
A number of questions were asked, my Lords. We have to undertake due processes as regards the PressBoF charter application. One reason for the timing of that is that none of the detailed preliminary work with the relevant government departments and other interested parties that normally precedes a formal petition of the Privy Council has been undertaken. Indeed, that period of openness has resulted in 19,000 responses. Due processes have to be undertaken. That is the legal advice to which it is important to adhere. As for the Government’s charter, work is continuing on the outstanding points. I will perhaps go into them in further detail later, but work is being undertaken on the Government’s proposals. As for the press proprietors’ considerations, this is a matter for the Privy Council, not a matter for the press proprietors. The Privy Council will go through the due processes that are required. They may be lengthy or arcane to some, but they must be undertaken.
Lord Soley
Is it not glaringly obvious to everybody that the press is playing for time in order to avoid their responsibilities? Is it not time that we faced up to this? May I offer my assistance to the Minister, having had some experience of Bills of this nature from 20-odd years ago? I suggest that a group of Members, whether in the House of Commons or the House of Lords or jointly, see the Culture Secretary with proposals for a Bill promoting Leveson’s recommendations. It might take into account some of the other factors that have come to light, but we could have proper regulation fairly soon by putting a Bill through Parliament and ceasing to play for time with royal commissions.
Lord Gardiner of Kimble
My Lords, I understand your Lordships’ frustration about timing. Indeed, already two elements of Acts of Parliament with cross-party agreement deal with some of the Leveson recommendations. Obviously, I will pass on to the Secretary of State the noble Lord’s suggestion. However, I repeat—and I am sorry for doing so—that we have to go through the due process. The legal advice on these matters has been given to the leaders of all the political parties and I know that the Leader of the Opposition is in possession of that. That is why we are going through the necessary procedures.
Baroness Bonham-Carter of Yarnbury
How much support does the Minister think there is for the PressBoF charter other than from a certain powerful interest group? The fact is that its proposal would not create a self-regulator that is genuinely independent or impartial. On Monday, I quoted Sir Tom Stoppard and I want to quote him again.
“The resistance to a statutory monitor suggests that the dream of self-regulation persists in some quarters. Well, they had that, and . . . they blew it”.
Does not my noble friend agree with one of our greatest defenders of the freedom of the press?
Lord Gardiner of Kimble
We are in the position we are because wrongdoing took place, and we have had to decide how best to ensure that this does not happen again. That is why the cross-party royal charter commands the support of all the political parties. Indeed, it is why at PMQs today, my right honourable friend the Prime Minister made very clear his views on the PressBoF proposal and his continuing support for the cross-party royal charter.
Lord Stevenson of Balmacara
My Lords, when the noble Lord answered the question on Monday, he said,
“it is not appropriate for the Privy Council to consider more than one royal charter at a time on the same issue”.—[Official Report, 1/7/13; col. 976.]
Why is the Privy Council uniquely incapable of multitasking? I bet it is a man who is running it. Yes it is—it is the Deputy Prime Minister.
As I am sure noble Lords are aware, there are about 500 members of the full council. I bet there are more than enough in the Chamber this afternoon. Indeed, the noble Lord who asked the question is a member of the Privy Council, as are all the others sitting next to him. We could have a meeting now in the Moses Room. Could the Minister agree that this would be a desirable thing to do so that we can begin to do what the victims want and what Parliament has decided?
Lord Gardiner of Kimble
The noble Lord makes some very tempting suggestions but there is going to be an update by the Secretary of State very shortly—although I am not sure what “very shortly” means. I hope that it will be helpful to your Lordships. Clearly, we all want to make progress.
Lord Low of Dalston
My Lords, what proposals do the Government have for dealing with the situation which may arise when, having gone through due process, two charters have the approval of the Privy Council?
Lord Gardiner of Kimble
Oh dear. The truth is that there will be this due process in which the PressBoF charter is considered. Obviously, I cannot prejudge that because that is part of the due process that will need to be undertaken. Once that is considered, clearly, the cross-party charter would come up for consideration. As we speak, work is going on to ensure that the fine-tuning of that is complete, and that involves Scotland compliance following the vote of the Scottish Parliament on 30 April, and discussions with the Commissioner for Public Appointments.
Lord Tebbit
My Lords, for the sake of clarity, will my noble friend explain to the noble Lord opposite the difference between a meeting of Privy Counsellors and a meeting of the Privy Council? He does not seem to understand the difference.
Lord Gardiner of Kimble
I defer to the many Privy Counsellors in your Lordships’ Chamber. Not being one, I have not yet attended a meeting, so I am not in a position to comment fully, but I entirely understand the point that my noble friend is making.
Baroness Symons of Vernham Dean
The Minister said that wrongdoing took place, so can he explain the Government's retreat from the position that the victims of that wrongdoing had to be satisfied by the outcome of what is now before the Privy Council? Will he please explain to those victims that retreat and the delay in giving them the satisfaction that was promised?
Lord Gardiner of Kimble
The important thing is to make sure that this is done properly and correctly, and that is what is being done. I do not quite understand what the noble Baroness means in so far as we are going through the current process because of the need to ensure that this does not happen again.
Lord Gardiner of Kimble
I understood that. The victims are precisely why we are here. It is to ensure that this does not happen again. That is the final objective that we need to secure.
Baroness O'Neill of Bengarve
Is the Minister still committed to securing a royal charter that will underpin self-regulation but not self-interested regulation?
Lord Gardiner of Kimble
The intention with the cross-party charter is precisely to ensure that there is independent regulation of the press. As I said earlier, we need a free press but we need a responsible press. We need to secure a lasting settlement on both of those.
Reserve Forces
(11 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)
My Lords, with the leave of the House, I shall repeat a Statement made in the other place. The Statement is as follows:
“With permission, Mr Speaker, I wish to make a Statement on the future of our Reserve Forces. In November last year, I announced a formal consultation which lasted until January this year. I am grateful for the more than 3,000 responses we received. I have placed copies of the summary of consultation findings in the Library of the House.
More than 25,000 reservists from all three services have deployed on operations over the past 10 years. Sadly, 30 have paid the ultimate price, and I know that the whole House will want to join me in saluting their sacrifice.
In 2011, the Future Reserves 2020 Commission reported that our reserves were in serious decline. The Government responded by committing to revitalise our Reserve Forces as part of Future Force 2020, reversing the decline of the recent past, growing their trained strength to 35,000 by 2018 and investing an additional £1.8 billion in them over 10 years.
We recognise the extraordinary commitment reservists make and, in return, we commit to deliver the reservist a challenging and rewarding experience, combined with an enhanced remuneration and support package and an improved deal for employers, but to recruit the reserves we need and train and equip them to be fit for purpose in Future Force 2020 requires substantial change.
I am today publishing a White Paper setting out our vision for the Reserve Forces and the detail of how we will make reserve service more attractive. It also confirms our intention to change the name of the Territorial Army to Army Reserve—better to reflect the future role. Alongside the White Paper, I am publishing the first report of the independent External Scrutiny Group which I announced last year to oversee and report on our progress in delivering Future Reserves 2020.
The White Paper reiterates our commitment to improve access to modern equipment and provide better training as part of the £1.8 billion package. Two hundred million pounds will be invested in equipment for the Army Reserve and to kick start that programme I can announce today that we will bring forward to this year £40 million of investment in new dismounted close combat equipment—meaning upgraded weapons and sights, night vision systems, and GPS capabilities will start to be delivered to reserve units before the end of the year.
The integration of regulars and reserves is key to Future Force 2020. That integration prompts a closer alignment of the structure of remuneration across the Armed Forces. We have therefore decided to increase reservists’ total remuneration in two ways: through the provision, for the first time, of a paid annual leave entitlement in respect of training days and through the accrual of pension entitlements under the new future armed forces pension scheme 2015, for time spent on training as well as when mobilised. These two measures represent a substantial percentage increase in total reserve remuneration.
The White Paper sets out details of an improved package of occupational health support for reservists to underpin operational fitness. We will also ensure that effective welfare support is delivered to reservists and their families. Welfare officers are being recruited now for Army Reserve units. Additionally, we have already implemented measures to streamline and incentivise the process by which those leaving the Regular Forces can transfer to the volunteer reserve, with accelerated processing, passporting of medical and security clearances and retention of rank, as well as a signing-on bounty of £5,000 for ex-regulars and for direct entry officers joining the Army Reserve.
The support of employers is crucial to delivering the future Reserve Forces. We seek to strengthen Defence’s relationships with employers so that they are open and predictable. The White Paper sets out how we will make liability for call up more predictable; make it easier for them to claim the financial assistance that is already available; increase financial support for SMEs by introducing a £500 per month per reservist financial award to small and medium enterprises when their reservist employees are mobilised; and improve civilian-recognised training accreditation to help employers to benefit from reserve training and skills.
The White Paper signals a step change in Defence’s offer to employers. I urge them to take up this challenge. In turn, by building on the Armed Forces covenant with the introduction of the corporate covenant, we will ensure that reservist employers get the recognition they deserve. However, while Defence is fully committed to an open and collaborative relationship with employers, it is essential that the interests of reservists are protected. Dismissal of reservists on the grounds of their mobilised reserve service is already illegal. We will legislate in the forthcoming defence reform Bill to ensure access to employment tribunals in claims for unfair dismissal on grounds of reserve service without a qualifying employment period.
The job that we are asking our reservists to do is changing, and the way in which we organise and train them will also have to change. That will impact on both force structure, and basing laydown. The force structures and roles of the maritime and air reserves will remain broadly similar to now, although increased in size and capability. The Army, however, has had substantially to redesign its reserve component to ensure regular and reserve capabilities seamlessly complement each other in an integrated structure designed for the future role. That redesigned structure has been driven primarily by the changed function and roles of the Army Reserve and the need to reach critical mass for effective sub-unit training.
The details of the future Army Reserve structure are complex and beyond what could coherently be explained in an Oral Statement. I have therefore laid a Written Ministerial Statement, supported by detailed documents which have been placed in the Library of the House, showing the complete revised order of battle of the reserve component of Army 2020.
This restructuring will require changes to the current basing laydown of the Army Reserve. The TA currently operates from 334 individual sites around the United Kingdom, including a number of locations with small detachments of fewer than 30 personnel. Some of these sites are seriously under-recruited. To maximise the potential for future recruitment, the Army is determined that, as it translates its revised structure into a basing laydown, it should take the opportunity to rationalise its presence by merging small, poorly recruited sub-units into larger sites in the same conurbation or in neighbouring communities. As part of this exercise, the Army Reserve will open or reopen nine additional reserve sites.
However, the consolidation of all poorly recruited units would have led to a significant reduction in basing footprint and a significant loss of presence in some, particularly rural, areas. I have decided that that would not be appropriate as we embark on a major recruitment campaign. We will therefore retain a significant number of small and under-recruited sites that the Army considers could become viable through effective recruiting. The units on those sites will be challenged to recruit up to strength in the years ahead. Over the next couple of years, we will work with local communities, through the Army’s regional chain of command, to target recruitment into those units. I know that honourable and right honourable Members will want to lead their local communities in rising to this challenge.
The result of the decisions I am announcing today is that the overall number of Army Reserve bases will reduce from the current total of 334 to 308, a net reduction of 26 sites. With your permission, Mr Speaker, I am distributing a summary sheet which identifies the reserve locations being opened and those being vacated.
The White Paper and the WMS on structure and basing together set the conditions to grow and sustain our reserves as we invest an additional £1.8 billion over 10 years in our vision for the integrated reserves of Future Force 2020. That vision means an even bigger contribution from our reservists and from employers as we expand the Reserve Forces. I am confident that both will rise to the challenge.
For the first time in 20 years, the reserves are on an upward trajectory. Those of us who are neither reservists nor employers can none the less provide vital support and encouragement to our fellow citizens who make such a valuable contribution to delivering our national security, and I know that Members on all sides of the House will want to take the lead in urging our communities to get behind the reserves and the recruiting drive that will build their strength to the target level over the next five years. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Rosser
My Lords, I thank the Minister for repeating the Statement made earlier in the House of Commons by the Secretary of State. The Minister will be aware that the information on the hardly insignificant issue of the net reduction of 26 sites that will be lost was not available when the Secretary of State made his Statement. The Speaker in the Commons described that as “woefully inadequate” and reminded the Secretary of State that he was responsible for his department. The information on the sites is now available but will the Minister confirm that, in future, when the Secretary of State makes a Statement, he—the Secretary of State —will provide both it and the supporting documentation at the normally accepted time?
Before I go any further, I should say that we support an enhanced role for our Reserve Forces working alongside our regulars. We pay tribute to those who have served, particularly the 30 reservists who have died in the service of our country over the last 10 years and the much larger number who have been wounded. We welcome much of today’s announcement, not least those parts dealing with increased training alongside regulars, investment in equipment, the changed nature of Reserve Forces, improved occupational healthcare and welfare arrangements—including, presumably, for mental health problems—and the intentions to address the issues surrounding potential discrimination against members of our future Reserve Forces in their civilian employment.
We want the increase in the number of our reserves to be achieved, not least because the Government appear to be putting all their eggs in one basket on this issue; there appears to be no plan B. Today’s Statement and White Paper follow on from previous Statements and the consultation document Future Reserves 2020. In the foreword to that document, the Secretary of State said that it marked,
“a significant step forward in our plans to build the effective reserves our Armed Forces require to provide security for the Nation in future”.
The paper also said that our Reserve Forces,
“will be an integral and integrated element of our Armed Forces”,
will be,
“routinely involved in most military deployments”,
and that our Armed Forces will,
“increasingly rely on the Reserve Forces to achieve the full range of tasks set to Defence”.
On the basis of the Government’s own words, the reserves will not simply be complementing our Army; they will be plugging some of the gaps left by cuts to regular personnel. However, when I asked the Government two weeks ago for an assurance that the size of our Regular Army would not be reduced to the intended figure of 82,000 unless the strength of our Army Reserve had been increased to the intended trained strength of 30,000, the Minister said he could not give me such an undertaking.
The Strategic Defence and Security Review in 2010 addressed the issue of the commitments and planning assumptions that our future Armed Forces could be expected to carry out and the maximum level, extent and nature of operations they could be expected to undertake at any one time. Can those planning assumptions, set out in the SDSR in 2010 when there were 102,000 regulars in the Army, still be carried out with a Regular Army of 82,000 and an Army Reserve force of 30,000? Is the reduction in the size of our Regular Army to 82,000 dependent on our having increased the size of our trained Army Reserve to 30,000? If we need a Regular Army of 82,000 and an Army Reserve force of 30,000 to fulfil the maximum level, extent and nature of operations that we would expect our future Armed Forces to undertake at any one time, as set out in the 2010 SDSR, how can the Government allow the size of our Regular Army to fall to 82,000 unless there is, by then, a trained Army Reserve force of 30,000? If the reduction in the size of our Regular Army to 82,000 is not dependent on having first achieved an increase in the size of our trained Army Reserve to 30,000, that must surely mean that we will not have the manpower available that was assumed in the 2010 SDSR. Could the Minister confirm that this would mean less capability as a result and, if so, which capabilities would go or be reduced as a result?
The Statement has confirmed that the Government will be investing an additional £1.8 billion in the reserves over the next 10 years. How will that be divided between buildings, equipment, recruitment—including financial incentives—and pay? Will a trained Army reservist be regarded as having the same level of skills, expertise and experience as a comparable member of the Regular Army?
Some concerns have been expressed about the likelihood of increasing the number in our Reserve Forces to the required level. How is recruitment to our reserves currently going against targets? What was the situation in that regard last year? As for recruitment to the reserves, will new recruits be committed to staying in the reserves for a minimum or any other specific period of time? Will those receiving the taxable bonus of £5,000, to which I think reference was made in the Statement, be required to stay for a minimum period of time? What assumptions have been made about turnover in the reserves in future? How many people has it been assumed will need to be recruited into the reserves each year to sustain the greatly increased numbers in our Reserve Forces, including 30,000 in the Army Reserve?
How easy or otherwise it proves to increase the size of our reserve forces remains to be seen. A recent Federation of Small Businesses survey found that one in three employers believed that nothing would encourage them to employ a reservist, despite the fact that service experience provides people with organisational, team-building and leadership skills. It is of course possible that the financial incentives for SMEs announced in the Statement may change that position.
I reiterate our support for the enhanced role of our Reserve Forces. The move will also provide the opportunity to help to ensure that we can maximise niche civilian skills in a military setting, not least in the fields of cybersecurity and languages. It is also essential that those who want to volunteer to serve their country are protected in the workplace and do not suffer discrimination. That may not always be easy to achieve, since discrimination against someone who is not there the whole time can sometimes be very difficult to prove. I look to the Government to put particular emphasis on that point in the legislation and regulations that will follow.
We hope that the required increase in our Reserve Forces is achieved. The potential consequences for the defence and protection of our nation could be very serious if it is not.
Lord Astor of Hever
My Lords, I thank the noble Lord for his general support for what we are doing. I share his and the Opposition’s aspiration to strengthen the reserves in a very bipartisan way. The noble Lord asked me about the Commons Statement. The Secretary of State said that he would investigate and write to the right honourable shadow Secretary of State. When I have more information, I will pass it on to the noble Lord. I myself have ensured that all the necessary paperwork was distributed in the Peers’ Lobby and the Prince’s Chamber during the first Question, and I hope that noble Lords have got their hands on everything. If they have not and we have run out of copies, I have some spare copies.
There is one correction that I need to point out: in the information that I have handed out, I have been advised that there is an inconsistency over Kilmarnock. There is no change in the end result for the figure of 46 sites for Scotland, but Kilmarnock should have been scored as a new site rather than as an existing one. That is therefore good news regarding occupation.
The reserves are an essential component of our national security, our future forces and success on operations. In future, their contribution to our defence capability will increase and the reserves will become an integrated part of the whole force.
I turn to the noble Lord’s questions. First, he mentioned plan B. I am confident that we can deliver on that, and I will come to that in a short while when I address another of his questions. His second question concerned whether the reductions in the Regular Forces made them more dependent on the reserves and the commitment that I was not able to give the noble Lord the other day. I still cannot give that commitment. We are aware that there are risks in this, but we are confident. Recruiting is going well and the historical figures are on our side. When I was in the Army—a long time ago, admittedly—the reserves numbered 100,000, with a much smaller population, and we had half the strength of the present reserves in 1990. Other countries, such as the United States, Australia and Canada, have a much higher percentage of reserves. We are investing £1.8 billion over 10 years and, as the Statement said, we are investing £40 million this year. We are confident that the reinvigorated reserves will deliver the quality and number of reservists that we will require in future, both in training and on operations.
Employers play a key role in enabling the reserves to deliver their essential contribution to defending the nation’s security. This future relationship may need some incentives, which could include a cross-government commitment to support employers who encourage volunteering. The public sector will take the lead in setting the example.
The noble Lord asked how the £1.8 billion will be divided. We review our allocation on a continuous basis, to maximise value for money from the available resources to meet the needs of the Reserve Forces. He also asked if a trained reservist would have the same level of skills as a regular. When reservists deploy to operations, they will be equally as skilled in their specialist roles as a regular they serve alongside. The noble Lord asked how recruitment was going. All the indications that I have heard indicate that it is going very well and we believe that the announcement will have a positive effect on Army Reserve recruiting.
Our Reserve Forces have always attracted highly motivated individuals, and the assurance that the reserves will play a more routine and assured role within the whole force concept will act to broaden the appeal and encourage those looking for such an opportunity and their employers. The noble Lord asked about the commitment that a reservist must give and whether there is a minimum time. Every service person enlists for an agreed period of service. As we are a voluntary force, we recognise that individuals can exercise choice to remain or leave. Measures announced in the White Paper should further encourage retention.
As for turnover, I can confirm that retention of reservists, particularly in the Army, is on average much better than that of their regular counterparts. The noble Lord then asked me about employers. The Ministry of Defence is committed to working with employers to understand their views on its use of reservists and the impact of legislation, to understand better what an employer can realistically sustain in future. The Ministry of Defence understands the importance of engaging with employers and potential employers and, in addition of engaging with employer groups such as the CBI and FSB through the chain of command, the National Employer Advisory Board, SaBRE and the Reserve Forces’ and Cadets’ Association.
Finally, the noble Lord asked about the legal situation relating to employment tribunals. An individual cannot generally bring a claim for unfair dismissal at an employment tribunal until he or she has completed two years of continuous service with an employer. Periods of mobilisation do not count towards continuous service; therefore, it can take reservists longer than two years to gain this protection. I think that covers all the noble Lord’s questions, but if I have missed anything I will write to him.
Lord Palmer of Childs Hill
My Lords, I thank my noble friend for the Statement that he has repeated. From these Benches we associate ourselves with saluting the sacrifice made by our reservists. To meet the challenge of significantly increasing the numbers in our Reserve Forces we need to foster the belief that employers, employees and the nation all benefit from reserve service. Will the Minister say whether medically trained reservists will be able to bring skills to the military and develop additional skills to bring back to their UK employers? Will he also tell the House how employers and employees are to be convinced that there are benefits to the employer and the employee from improved skills and experience while serving, which might outweigh the temporary loss of civilian work time? Finally, will he say whether consultation with employers—which he mentioned previously—have uncovered signs of corporate social responsibility by allowing or even encouraging participation in the reserves?
Lord Astor of Hever
My Lords, in answer to the first part of the noble Lord’s question, medical reservists develop additional valuable specialist skills when they are deployed, which they then bring back to the National Health Service. The Defence Medical Services is uniquely placed to share the development of operationally specific medical science and clinical excellence with the NHS. The National Institute for Health Research centre has brought together military and civilian trauma surgeons and scientists to share innovation in medical research, to advance clinical practice on the battlefield and to benefit all trauma patients in the National Health Service at an early stage of injury.
On the benefits to an employer who recruits an employee who is a reservist, I would say that reserve service will benefit different employers in different ways. For some, the improved skills, experience and training of the individual reservist will be beneficial. For others, where the reservist’s military role is close to their civilian one, there will be more benefit from transferable skills. For some companies and sectors, reserve service suits and supports their business models. For many, reserve service may support corporate social responsibility objectives and may be part of their social action plans, alongside wider volunteering policies. We encourage employers to publicise their support for the Reserve Forces to customers, suppliers and their local communities. The second part of my answer was in response to my noble friend’s third question.
Lord Craig of Radley
My Lords, the Government say in the White Paper that they will introduce new legislation to enable mobilisation for the full range of tasks that our Armed Forces may be asked to undertake. Current mobilisation arrangements are something of a historical anachronism. Invariably they require ministerial authority. They date from a time when protection for employers was nothing like as good as it will be in future. Will there be arrangements to allow mobilisation of individuals for very small units to be carried out without having to seek ministerial authority?
Lord Astor of Hever
My Lords, I cannot from the Dispatch Box answer the noble and gallant Lord’s question. That point is not in my briefing, but I will write to him.
Lord Freeman
My Lords, as a former president for 10 years of the Reserve Forces Association, I warmly welcome this Statement. I would be grateful if the Minister would confirm two key principles. First, we should maintain the footprint of the Reserve Forces—and the Armed Forces—around the country. I am very pleased that there are no dramatic plans to reduce their number. Secondly, will the Minister confirm that the support of employers, and in particular of small employers, is crucial to maintaining support for the Reserve Forces?
Lord Astor of Hever
My Lords, I can confirm both points. We consider the footprint absolutely vital. Where we have had to close places it is because there has been a very small uptake in recruitment. We have managed to close fewer than we planned. I agree with my noble friend’s point about employers, and in particular small companies. In finishing, I pay tribute to my noble friend for the important work that he did.
Lord Davies of Stamford
The noble Lord was characteristically thorough and conscientious in informing the House and in answering my noble friend’s questions. However, I think that he left out one point. Will the £5,000 joining-up bonus be repayable if the officer does not do a minimum amount of service? I would be interested in the answer to that. I think that it will be quite a challenge to get to 35,000 but an ever greater challenge to get to a point where the reservists are on the same footing as the regulars and do not suffer a higher rate of casualties on active deployment. In that context, it is very important that we should put everything behind them in terms of equipment and training, and the noble Lord gave us some assurances on that point. Equally valuable is the promise by the Government to strengthen the defence of reservists against dismissal. However, would it not be a good idea for the Government to go further and to protect reservists not just against the danger of unfair dismissal but against discrimination in terms of remuneration or promotion? The American national guard has that kind of protection. Surely it is very important that reservists, or those who are planning to join the reserves, are confident that they will not suffer discrimination of that kind in the job market.
Lord Astor of Hever
My Lords, as regards the noble Lord’s first question about the £5,000, I do not change my answer. The reservists who join up are free to leave whenever they want. We are very confident that those regulars who become reservists will stay and will not leave the minute they get their money. We are also very confident that by 2018 we will get up to the figures that we need. I have spent a lot of time being briefed and our recruiting figures are going better than we expected. Noble Lords will see in the White Paper all the inducements that we are giving to the reservists and their families, and the encouragement that we are giving to employers. We realise that we have to work much more closely with employers than has happened in the past and we will endeavour to do that.
Lord Burnett
Will my noble friend confirm to the House that no closures of Royal Naval Reserve and Royal Marines Reserve units are planned? I should remind the House that Corporal Croucher, a Royal Marine reservist, was awarded the George Cross while serving in Afghanistan, and Corporal Seth Stephens, a Special Boat Service reservist who was killed in action in Afghanistan, was posthumously awarded the Conspicuous Gallantry Cross. These two outstanding and brave men had both served for many years as regular Royal Marines. What encouragement are the Government going to give retiring members of the Regular Forces to join the reserves? Regular members of the Armed Forces have so much to offer the reserves. They have a high level of training and expertise and are fully aware of the demands that will be made of them.
Lord Astor of Hever
My Lords, I can confirm my noble friend’s first point. No Royal Naval Reserve or Royal Marines Reserve units are closing as a result of FR20. As part of a wider betterment programme, three units will relocate to new accommodation, often in more populated areas. In some instances, the final decision on where the new locations will be is yet to be made, but the distance that current reserves will be expected to travel to attend their new location is likely to be less than 12 miles.
Regarding my noble friend’s question about regular redundees joining the reserves, the reserves have always benefited from the experience brought by ex-regulars, and some capabilities have relied heavily on their skills owing to the time that it takes to train on advanced equipment. Those who leave the Army through redundancy are being encouraged to consider a part-time military career in the reserves. For the Army, ex-regulars who enlist in the Army Reserve within three years of leaving regular service can enjoy a number of incentives and benefits, such as the reduced Army Reserve commitment and training requirement or, alternatively, a commitment bonus worth £5,000 paid over four years. That partly answers the noble Lord’s question. There is a comprehensive information campaign to ensure that all service leavers, and not just redundees, are aware of the opportunities and benefits of joining the reserves.
Lord Kilclooney
My Lords, can the Minister confirm that, pro rata, recruitment to the reserves in Northern Ireland in recent years has been greater than that in England, Scotland or Wales?
Lord Astor of Hever
My Lords, I can confirm that to the noble Lord. That point came up in the Statement in the other place and it is absolutely true.
Lord Clark of Windermere
My Lords, I thank the Minister for his Statement and wish him and his colleagues every success in achieving this plan for the Reserve Forces. As the Minister knows, in the past I have asked him a number of questions about the Defence Medical Services and I see from the White Paper that 38% of the DMS is currently reservists. What percentage of the DMS does he envisage will be reservists in the future and will there be some medical competences within the DMS which will be entirely dependent on reservists?
Lord Astor of Hever
My Lords, I thank the noble Lord for his support. He is absolutely right that the figure is 38%. I have seen the hugely valuable work that they do in Camp Bastion. Both the Armed Forces and the National Health Service benefit from the work that is going on and we will need these medical people in the future. I cannot give a specific percentage figure but I can assure the noble Lord how vital these people will be to us.
Lord Stirrup
My Lords, the Written Ministerial Statement rightly makes reference to the potential implications that the basing changes may have on cadet force units where these are collated with reservist units. I welcome the statement that alternative accommodation will be pursued in such cases but, of course, “pursue” is a slightly slippery word and does not quite imply the same as “achieve”. Will the Minister undertake to keep a very close eye on this to ensure that the changes being made with regard to the Reserve Forces cause no harm to what is widely acknowledged to be the finest youth institution in the land?
Lord Astor of Hever
My Lords, I can give the noble and gallant Lord that assurance. We take the cadets very seriously. In the few cases where a unit closes, mostly the cadets will remain in the building but on a very few occasions they will be moved very nearby. I have been a patron of sea cadets and I have first-hand knowledge of the important work that they do.
Lord Trefgarne
My Lords, can my noble friend say a little more about the integration of the newly enhanced Reserve Forces with the Regular Forces, which will be crucial to the effective transfer to which he referred?
Lord Astor of Hever
My Lords, my noble friend is absolutely right. Army Reserve units will be paired with regular units in peacetime for training and force generation, enabling combined training and helping to build links with the local community, including employers, to aid recruitment and resettlement of service leavers. Reserve units in all three services may be integrated with regular units for mission rehearsals and for operations. We will ensure that our use of reserves is as predictable as possible to help reservists, their families and particularly employers to plan ahead. Specific levels of attendance will become a compulsory part of the proposition and the majority of reservists can expect a maximum of 12-months mobilised service in a five-year period. Whether it is needed will obviously depend on operational requirement.
Lord Glenarthur
My Lords, I very much welcome the Statement. It is certainly extremely comprehensive. From what one can see from a first glance at the White Paper, it fulfils many of the aspirations which those of us who commented on the Green Paper felt were necessary. However, I should like to ask my noble friend about the national relationship management scheme. I suggest that, in any adaptation of the current relationships that exist, the process should be evolutionary rather than revolutionary. Having been involved in it for several years as chairman of the National Employer Advisory Board, the mechanisms that have existed for the past 12 to 15 years have proved to be extraordinarily effective. For example, the branding of SaBRE is such that it is understood throughout the country. I hope that my noble friend will ensure that this can be built on rather than something totally new created which is more likely to confuse than to help.
Lord Astor of Hever
My Lords, I thank my noble friend for his support. I also pay tribute to him for the important work that he has done for the reserves over many years. My noble friend made some very important points. I will take them on board and take them back to my department.
Lord Lee of Trafford
My Lords, in terms of the importance of enthusing and recognising employers, rather on the lines of the Queen’s Awards for Enterprise, and given the military service of Prince William and Prince Harry, would it be possible to consider something like the Princes’ Reserve Forces Award, which would combine employer participation, national interest and royal recognition?
Lord Astor of Hever
My Lords, we are looking at this area very closely. As I said, we take the relationship with the employers very seriously, and this is one of the ideas under consideration.
Lord Mayhew of Twysden
My Lords, will my noble friend come back to the question of retention? If the reserve units are to be fully integrated into the Regular Forces, does it not follow that if their members do not step up to the plate when called on to do so, the Regular Forces concerned will be deficient in their capability? Can he think a little further as to whether what he says he has great confidence in ought not to be toughened up with something more enforceable?
Lord Astor of Hever
My Lords, I repeat that I am confident. As I understand it, retention in the reserves, particularly the Army reserves, is very much higher than in the regulars. I do not have the figures in front of me, but I was told before I came into the Chamber that retention in the reserves is considerably higher than in the regulars. I can write to my noble and learned friend with the figures.
Viscount Slim
My Lords, the noble Lord is aware that the business community has culled and fined its companies in the matter of strength and management to get through this very difficult economic stage. As a number of noble Lords have mentioned, some sort of reward is essential for those companies which are taking part. I will say a little more bluntly that perhaps some tax benefit or some exemption from certain company taxes should be given to companies which fulfil the deal. Giving away one chap today in a company, particularly in a small to medium-sized company, is a considerable sacrifice, and I believe that Her Majesty’s Government have not fully thought through the rewards for the business community.
Lord Astor of Hever
My Lords, I can assure the noble Viscount that nothing is off the table. We are open to any suggestions. As for his proposal for a tax benefit, I will run it by the Treasury. It is certainly a very good suggestion. We seek an open relationship with employers tailored to meet the needs of different sizes and types of employers, based on mutual benefit. That will include working together to credit the skills and the training that reservists gain during service with recognised civilian qualifications, and the area that the noble Viscount mentioned.
Finance Bill
Care Bill [HL]
(11 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Pitkeathley
Baroness Pitkeathley
My Lords, in the unavoidable absence of my noble friend Lord Warner, I shall move Amendment 74 and speak also to Amendment 75.
These two amendments give an opportunity to put into the Bill further emphasis on the importance of integration. Amendment 74 requires reviews by CQC of regulated health providers to cover the integration of those services with other relevant services. Amendment 75 does the same for reviews of local authority adult social care services. They are a clear reminder in the Bill that when CQC carries out such reviews it will have to pay attention to the issue of integration of services for the benefit of patients and service users.
I shall not detain the Committee today with yet another speech of a kind that I have made many times before on the importance of integration of health and social care services from the point of view of patients, service users and their carers. We all know how important that is. The Committee is familiar with the arguments and, more importantly, so is the Minister. Indeed, the Chancellor of the Exchequer, no less, acknowledged this in his announcement in the comprehensive spending review in regard to joint budgets. The announcement has been widely welcomed, although caution has been expressed about how these budgets will operate in practice.
The amendments are a modest attempt to give some practical effect to the aspiration for integration which we all share. I hope the Minister will say that it is a good idea, “Let’s do it”, and get us off to a cracking start this afternoon. I beg to move.
Lord Hunt of Kings Heath
My Lords, I declare an interest as a chair of a NHS foundation trust and as a consultant and trainer with Cumberlege Connections. I am happy to support my noble friend Lady Pitkeathley’s Amendments 74 and 75, which rightfully push the CQC into the direction of integration of services. I also sympathise with the amendments of the noble Baroness, Lady Greengross, Amendments 76ZZA and 76ZAA, to which she will speak later.
My Amendments 74A, 76ZA and 76ZB and my opposition to Clause 80 stand part go to the core of the purpose of CQC and its approach to performance assessment in health and social care. Inevitably, recent events at that regulator in relation to Morecambe Bay and before that at Mid Staffordshire will readily come to mind. There can be no doubt that the current leadership of CQC faces a major challenge in changing the culture of the organisation and its approach to inspections. It has much to do to restore both public confidence and confidence within the NHS about the way in which it operates. That is why this clause is so important.
Clause 80 substitutes Section 46 of the 2008 Act and provides that the CQC’s duty to conduct periodic reviews, assess performance and publish reports of such assessments, which are henceforth to be known as “ratings”, is to apply in respect of any regulated activities and any registered service providers as may be prescribed in regulations. In addition, where regulations so provide, the CQC must also review and assess the performance of the provision and commissioning of adult social services by English local authorities. CQC is to be given responsibility for determining the quality indicators against which services and providers will be assessed. This may include measures of financial performance and governance if the CQC deems this appropriate. Different quality indicators, methods and frequency in periods may be used for different types of cases. The CQC may also review the indicators of quality and method statement from time to time as it sees fit.
Let me say at once that I support the broad intention of these clauses to make the CQC responsible for rating providers and local authorities. I say again that one should not underestimate the task. It is important that the CQC is not put under undue pressure to rush to change the way that it operates and to introduce new ratings without proper pilots being done and without having enough time to do it.
I refer the noble Earl to the Nuffield Trust’s work. As he knows, the Nuffield Trust was commissioned to carry out a review for the Secretary of State into the possibility of rating providers of health and social care. It argued that the new ratings must be given adequate time to work together with a range of stakeholders in developing a system which enables both patient choice and professional leadership to drive up standards of quality. That is vital. Yet I am concerned by the document issued by the CQC recently that indicates that it is to start inspecting and regulating NHS acute hospitals, in the ways that it set out in that document, from October 2013. Indeed, from December 2013, it will begin to rate NHS acute trusts and NHS foundation acute trusts, aiming to complete them before the end of 2015.
Have Ministers put pressure on the CQC around the timing of those ratings? Secondly, does the noble Earl not think that there is a risk that the CQC will be forced to rush into a new system without proper consideration? I remind him that the chairman of the CQC has recently made a number of statements. First, he has said that the approach to inspections by the previous leadership was wrong; it was wrong to go for generalist inspections. He also says that the culture of the organisation was wrong. Given that there are about 1,000 people employed by the CQC, although I am not absolutely certain, how on earth is the culture going to change in a short period of three or four months? I just do not think it is going to happen.
I have great admiration for the current leadership of CQC, but the risk is that it is going to be forced into a new system too quickly and it could fall over. As a result, its credibility will be very much damaged. Let us face it; it is almost starting from a negative position. I must confess that I am surprised that such an ambitious timetable has been set.
Who will be assessed? As I have already intimated, the clause provides for the Secretary of State to draw up regulations laying out exactly which services the CQC will rate. They are likely to be hospitals, GP practices, care homes, domiciliary care services across both the public and privates sectors and local authorities. Will the noble Earl confirm that? Will he say why this is not specified in the Bill? Does he not consider it important enough for Parliament to decide which bodies should be assessed, and to do so in primary legislation rather than through regulations?
I asked at Second Reading whether clinical commissioning groups are to be assessed. If not, why not? The Bill allows for local authorities to be assessed for their performance in the commissioning of adult social services, so I cannot really see why NHS commissioners—the CCGs—should not be similarly covered. The same logic then applies to NHS England which, after all, has been given a massive commissioning budget in relation to specialist services. If it is appropriate for local authorities to be assessed for their commissioning responsibility, surely all health commissioners should be similarly assessed. That must apply to NHS England because otherwise I do not see who will hold it to account for the mammoth amount of resources it will spend on commissioning specialist services.
I am particularly interested in local authority assessment, particularly in the way that services are commissioned. Can the noble Earl tell me whether this is intended to be a priority for the CQC? He will know that there is real concern about the practices of many private sector providers in social care in using zero-hour contracts and allocating only 15 minutes with each client. It is vital for the CQC to be able to investigate the way in which local authorities commission those services. We will come to this in Clause 5 but it would be very useful if the noble Earl could confirm that the commissioning responsibilities of local authorities will be a priority for the CQC.
Baroness Greengross
My Lords, I shall speak to Amendments 76ZZA and 76ZAA in my name. I thank the noble Lord, Lord Hunt, for the support he expressed earlier. On Amendment 76ZZA, we know that one of the major problems identified in the Francis report was the inadequate handling of complaints and concerns. This issue has not been addressed in the Care Bill. My amendment would enable the Care Quality Commission to introduce more rigorous complaint systems across all care settings. I hope the Minister will consider this because it is very important to get this right now. This is about the way in which a registered service provider or a local authority will handle complaints and concerns, and it is very important.
Amendment 76ZAA is about continence care. I declare an interest as chair of the all-party parliamentary group on this subject. It is hardly spoken about, but it is terribly important; people just do not recognise how many people have some problem with continence. The NHS services should have continence care as an essential indicator of service quality. It therefore needs to be established as an essential indicator of high-quality services across the NHS and care settings within the periodic assessments of care standards undertaken by the CQC.
A number of recent assessments have demonstrated that continence care is still a low priority across NHS settings, with poor treatment resulting in escalated and more costly care needs and poorer patient outcomes. This is in spite of the fact that good bladder and bowel control are fundamental to people’s dignity and independence and that NICE has published a wealth of best practice recommendations to effectively assess and treat the condition. The Francis report included an entire chapter outlining the scale of failures in continence care. Given the expected rise in prevalence of incontinence and the impact that poor care can have on patients and the NHS, continence care must be seen as a key indicator of high-quality provision across care settings. An explicit requirement within the Care Bill for the CQC to assess providers for the quality of their continence care would directly respond to the failings in this field which the Francis report identified—the stated purpose behind Part 2 of the Bill. That would encourage providers actively to address how they manage incontinence by assessing their local protocols and policies about the condition, taking steps to improve awareness among staff about incontinence and undertaking internal audits in order continuously to improve care standards.
Lord Sutherland of Houndwood
My Lords, I wish to register my support for the proposals in some of these amendments. The integration of services should always be highlighted. We have a long way to go and, since we are not providing an integrated budget, every encouragement short of that should be given, so I support the amendments that propose this.
The amendments and stand-part question in the name of the noble Lord, Lord Hunt, have to do with the standing of the CQC. CQC has been through a very rough patch, and to some extent, responsibility lies as much here as elsewhere. I remember the debates a number of years ago, when we changed the structure of the regulation that should be provided in this area three or four times within four or five years and always handed the ball on to a new organisation that we thought would solve all the problems. We failed consistently to answer the question: what are the signs that the new organisation will succeed in all the tasks being given to it? We now see that there have been difficulties. Moving with a degree of caution has a great deal to commend it, and I look forward to the Minister’s response to the questions raised by the noble Lord, Lord Hunt.
The rhetoric around the comments of politicians, those in health regulation and the press continually refers to Ofsted and Ofsted-style inspections. I declare an interest, in that I had something to do with founding Ofsted and the type of inspections that in due course developed. Ofsted is a rather a different beast, and these comparisons do not help. For example, the chief inspector is independent of the control of the department, which seems not to be the case in the plans for the future. That means that the relationships with the Minister and Secretary of State will have to be very carefully managed. I am not sure that sufficient thought has been given to that. That is part of the case for asking whether Clause 80 should stand part of the Bill.
The other pressures being put on CQC have to do with financial assessment. These are additional responsibilities for which CQC is hardly prepared. There is a need for specialist staff and specialist abilities to decide whether companies providing care at all levels have the ability to continue sustainably to do that—but that does not, as we have seen in other forms of financial regulation, come easily to regulatory bodies. This has to be looked at very carefully, along with the pace at which change is introduced into the practices of CQC, which is under, we hope and expect, good new management.
Lord Campbell-Savours
My Lords, the need for the specialist staff referred to by the noble Lord clearly lies behind the tabling of Amendment 76ZB. It is precisely why we need to pilot the proposed system.
My noble friend on the Front Bench referred to the system being created as a new system. We were told that we were going to get a new system in 2009. I sat on the third Bench behind my noble friend—the noble Earl was on the Front Bench on this side—and pointed consistently to the deficiencies in the system while it operated under CSCI and the inevitability of further problems arising under the new structure that was being created. Indeed that is precisely what has happened.
It seems to me that it can only get worse. The report of the Select Committee on Public Service and Demographic Change sets out the scale of the problem that confronts us in future. It prays in aid the Office for National Statistics updating its projections up to 2021 based on a recent release of data from the 2011 census on the ageing population. It says that, by 2021:
“There will be 24% more people aged 65 and over”,
and,
“39% more people aged 85 and over”.
It goes on to say that by 2030 there will be,
“will be 51% more people aged 65 and over”,
and that the population over 85 will have doubled. This means, to put it bluntly, that a lot more people will go into a lot more nursing homes throughout the country. Therefore, we have an absolute responsibility to make sure that the structure that we establish on this occasion is fit for purpose.
At the moment, I understand that there are 2,400 nursing homes catering for approximately 220,000 residents. That is going to increase, and I am still not convinced that the structure that this new so-called CQC is to set in place will be fit for purpose for taking on that task. Nor has the structure been defined in the legislation, as my noble friend has referred to. When I say fit for purpose I am reminded of the comments made by the noble Earl when we met on the last occasion to discuss this Bill, when he talked of a new broom at the CQC. As I understand it, it is not a new broom but an old broom with a new handle, because the person who is now running the operation is in fact the same person, I am told—and the information is available on the internet for anyone to read—who was responsible for the structure, which we are now debating, which has failed miserably over the past four years and is the subject of the complaint.
Mr David Behan, who runs the new operation, prior to his current appointment at the Care Quality Commission, was director-general of Social Care, Local Government and Care Partnerships at the Department of Health. As the director-general—and I read these words very carefully, because I do not want in any way to misrepresent the position—he had lead responsibility for the social care aspects of the Health and Social Care Act 2008, which created the CQC, the very organisation that we are having to review today because of its total failure and the scandals that have been drawn to our attention in the national media over recent years. I understand that he should have been aware of the Act’s requirements for the CQC to perform its functions for the general purpose of encouraging the improvement of health in social care services. This failure is implied in the Department of Health capability review, which in effect admits that the Department of Health was not sufficiently challenging and strategic in the way it supported the CQC.
David Behan is not new to social care regulation. Before taking up his appointment at the Department of Health, he was chief inspector of social services at the Commission for Social Care Inspection—CSCI—the organisation that we criticised in 2009 when the Act was going through on the basis of its failure in this particular area. I remember Ministers going to the Dispatch Box—Labour Ministers, yes—reading briefs produced by civil servants, in which they repeatedly assured us, as they did in personal correspondence to us, that the new structure that was going to be set up would work. It has not worked. It has been a complete and utter disaster area, which is why we are now faced with problems in this particular area that are reflected almost daily in the national press.
There is a very reputable organisation called the Relatives & Residents Association. Before anyone seeks to discredit its operations, it is worth pointing out that it is quoted in the most recent report by the House of Commons Health Select Committee. Its comments are prayed in aid in the committee’s criticism of the CQC. On 18 May 2009, in a letter to me following my criticism in the House, it affirmed its view. Four years ago, it said:
“we are concerned that … inspectors judge homes as delivering an adequate standard of care even when they are failing to meet national minimum standards for care homes”.
We were assured that that was going to be stopped. It has not been stopped under the structure that was established. The letter continued:
“the overall number of inspections of care homes has reduced. Homes that are failing to meet minimum standards are now inspected less often than used to be the case”.
We know that over the past 10 years, there has been a steady decline in the inspection of care homes nationally. We were told when the Act was passed in 2009 that it was going to be a risk-based system with a minimum of one inspection every three years. We know what a disaster that has been. We need an absolute minimum of unannounced inspections of care homes of at least twice per year, irrespective of the grading and irrespective of the ratings that have been applied to a particular home, because we all know that the management of a home can change over months, weeks or even overnight, and the home may drop in ratings dramatically as standards of care fall, depending on the financial considerations of the management of those homes.
The 2009 letter to me, four years before we stand here now, continued:
“requirements made by inspectors for action to improve care homes are often not met, there is little evidence of systematic follow-up by inspectors and requirements left unmet from one inspection to the next are common”.
That has happened over and over again over the past four years, and I am convinced that it will carry on happening until we set clear targets and a requirement of two unannounced inspections annually with a proper rating system, which is precisely why I support the amendment tabled by the noble Baroness, Lady Greengross, on the need for a pilot system for inspections.
I would now like to place on record the latest views expressed by the Relatives & Residents Association about what it believes the new structure should be. I do so because I understand that under the provisions of the Bill, the CQC will itself, following consultation with Ministers and others where necessary, be taking decisions on those very important areas. What does the Relatives & Residents Association say? I think that what it says should be implemented. It calls for the,
“reinstatement of regular twice-yearly inspections of all care homes to ensure compliance with regulations and standards. This case and others show that CQC needs to listen, record and act quickly on complaints which show older people are not receiving”,
the quality of care they should receive.
I add at that point that we are talking about complaints. I could never understand why we established the CQC without a proper complaints remit. According to the Relatives & Residents Association, people ring up to complain about the fact that the CQC is not dealing with complaints. The CQC says, “We do not deal with them, you have to go to the local authority”. The structure is wrong. The CQC should be the body that deals with those matters and should be given that responsibility. The association calls for investment and more and better training of all care home staff, with vastly improved training in leadership skills of care home managers and operators and up-to-date inspection reports which are easy to understand, with any action required by the provider clearly highlighted. It also wants to see:
“Care homes focusing on individual care rather than putting pressure on staff to complete daily tasks such as dressing and feeding.
Statutory registration of all care workers”—
a matter that we were dealing with on the last occasion we met as a Committee—
“by a professional body which can set standards for competence and hold individual care workers to account for their own practice.
The reinstatement of specific standards for care homes for older people”.
That might seem a particularly substantial agenda. However, if the Select Committee’s views on the ageing population are true and there is going to be a vast expansion of the care business in the future, more and more homes will have to open to deal with that increased population. We should be setting in place in this Bill a structure that is capable of dealing with that expansion in care. If we do not, we will be back here again in five years’ time arguing about a deficiency in the system. If I am still alive, I will be on my feet again complaining about the fact that the Bill we introduced in 2013 miserably failed. That is the route that the Government have set out to go down. Unless they make the resources available to address this, the CQC will inevitably fail again.
Baroness Howarth of Breckland
My Lords, I had not intended to speak in this debate and will do so briefly. We need to allow the CQC time to settle down under its new management. We should also remind ourselves of the rest of the history, because it is important to put it in context.
I was the deputy chair of the National Care Standards Commission, the first organisation that brought together the inspectorates for homes under the previous Government. It was also the previous Government who, after two years, made the decision concerning the organisation—which had been quite successful. It had established a baseline of inspection. It had integrated the inspectorates, which several other organisations which had tried to integrate the different teams had failed to do. Like other noble Lords, I would also cite CAFCASS in that regard. The commission did all of that. We should remind ourselves that it was only a year later that the previous Government announced through a newspaper, not directly to the staff, that the organisation would be merged with CSCI.
The merger took place and I think that it was extremely successful. David Behan was involved in ensuring that it went well. CSCI then took on the starring system which was put into place and was having some success. By that time, we had closed 400 poor establishments. The work was continuing in terms of co-operation when it was again decided that there should be a restructuring, this time to bring the inspectorate into health.
I think that we have two lessons to learn. The first is not to restructure yet again on a political basis. If there is good leadership and the lessons have been learnt, let the organisation settle down. The second lesson is clear. If you are going to inspect anything, you need to have the expertise within the teams to carry out the inspections. Again under the previous Government, it was a sort of theory that if you had somebody other than a nurse looking at nursing, a social worker looking at a social work establishment or a teacher looking at teaching—indeed, you usually did have teachers looking at teaching; that always seemed to be an exclusion—then you could get a better answer than if you had a professional do it.
I think that the present leadership at the CQC has learnt that lesson and understands that you need the professional expertise to know what you are looking for, although that should certainly be cross-checked by independents. I hope deeply that we will be able to keep that steadiness, because I understand absolutely what happens to organisations when they are in constant flux and change.
Perhaps I may make one other point while I am on my feet. I support anything that we can do about integration. We have singularly failed to reach some complex conclusions about how health and social care can truly be put together for the benefit of those who are the recipients of that care. We should ensure that we put into the Bill whatever we can about integration. I would support all of that.
Baroness Eaton
I endorse what the noble Baroness, Lady Howarth, has just said because I am firmly of the belief that it will take time to find all the appropriate people for the move which the CQC has clearly said it would make, from generic to specialist inspectors. I am sure that this will make a huge difference to the outcomes of inspections. I, too, think that we should give this organisation time. From what I have seen, it has the drive and the initiative to make sure that things improve enormously.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, this has been a very useful debate and in addressing this group of amendments, it might be helpful if I began by setting out why we believe this clause is necessary.
At the moment, there is no straightforward way for members of the public to get a clear view of performance in hospitals and care homes, nor is there a measure to help drive up performance, so we believe that a new system is needed to give patients and the public a fair, balanced and easy to understand assessment of the quality of care provided. Clear ratings on performance will help to incentivise providers to improve their services, as they will be able to see how well they are doing. One of the central principles behind this clause is that it will enable the CQC to develop the new performance assessment system—informed by the views of stakeholders, of course, but nevertheless independent of government. In its report into ratings, the Nuffield Trust said:
“While there is a legitimate role for … government … to influence priorities, the process should largely be sector-led including the public and users”.
I am rather pleased that we did not debate this group of amendments on the previous Committee day because the CQC has, in the mean time, published a consultation on changes to the way in which it regulates, inspects and monitors care. I draw that to the attention in particular of the noble Lord, Lord Campbell-Savours, whose points I will address in a moment. This consultation, A New Start, sets out the commission’s initial thinking on the timetable for implementing ratings. The consultation document also sets out some detailed thoughts on how the CQC will rate NHS acute hospitals. I take the point made by the noble Lord, Lord Sutherland: this rating process will have to have some fundamental differences from that followed by Ofsted. However, the ratings will be based primarily on inspection judgments. They will be informed by a series of indicators, using data already available and the findings of other bodies such as those from accreditation schemes, clinical peer review and the judgments of other regulators. The CQC will be consulting on this model more fully later this year.
Noble Lords have raised concerns about the ability of a rating system to reflect the complexity of NHS acute hospitals. I assure the Committee that both the CQC and the Government are fully alive to this risk. The CQC is committed to producing ratings at a level which recognises the complexity of NHS services and is useful to people who use them, as well as those who commission NHS care. It is therefore proposing to provide ratings for certain individual services, such as emergency and maternity services, as well as for each hospital.
A rating will also be provided against each of the CQC’s key questions. They are: is the service safe? Is it effective? Is it caring? Is it responsive to people’s needs, and is it well led? This will mean that where the evidence is available, a trust would have five ratings at three different levels—for the individual service level, for the hospital site and for the whole trust. I am sure that noble Lords will agree that this is an ambitious aim, and one that seeks to reflect the complexity of the organisations that provide care.
The Government will draw up regulations that will enable the CQC to develop the programme of performance assessment in the manner outlined in A New Start. The consultation is the first small, but important, step in the process of developing a robust system of performance assessment of providers of health and adult social care. The first ratings of acute hospitals will appear at the end of this year: I will come on to the timetable in a moment. This will be another significant step in developing a ratings system, but it will not be the end of the journey. The Government are clear that the development of ratings will be a process of continuous evolution.
Amendments, 74, 75, 76ZA, 76ZZA and 76ZAA set out areas that the CQC must or could consider as part of its performance assessment of providers. These amendments would mean that the CQC would be required to include or consider the specific issues raised as part of its methodology. The Government share the view of noble Lords on the importance of the issues they have raised through these amendments. I am sure we can all agree that they are useful ideas. However, I hope that they will equally accept the importance of the central principle that we believe should be adhered to: that the CQC should be given freedom to develop its own methodology for the new performance assessments. The clause is deliberately designed to be flexible in that sense. I therefore hope that noble Lords will be content to withdraw their amendments, in the knowledge that the CQC is ready and willing to listen to all good ideas as it puts its final plans together.
The noble Lord, Lord Hunt, has also tabled Amendment 76ZB, which would require the CQC to undertake a pilot of its new performance assessment system and require the evaluation report to be approved by Parliament. The Government agree that the CQC’s new performance assessment methodology should be subject to evaluation. This is why, in our response to the Francis inquiry, Patients First and Foremost, the Government made the commitment that:
“The Department of Health will commission an independent evaluation of the operation of the new ratings system, and this will inform future adaptations”.
The amendment would give Parliament a power of veto over the methodology which the CQC develops for performance assessment. This is not desirable as it would constrain the freedom of the CQC to act on the findings of its consultation with stakeholders. I therefore hope that noble Lords will be content not to move that amendment.
Amendment 74A would require the CQC to undertake performance assessments of commissioners of healthcare services, specifically clinical commissioning groups and NHS England. The wording of Clause 80 could enable the CQC to undertake reviews of local authority commissioning of adult social care services. The absence of a similar requirement for healthcare commissioning therefore requires an explanation. The requirement for the CQC to review healthcare commissioning was removed by the Health and Social Care Act 2012 on 1 April 2013 when primary care trusts were abolished. This is because the function of supporting the development of the commissioning system for healthcare in England has become the responsibility of NHS England. NHS England’s role is to determine how the performance of healthcare commissioners, including clinical commissioning groups, is assessed and managed. There is therefore no need for the CQC to carry out a virtually identical role. I trust that the noble Baroness will be content to withdraw her amendment, but I would like to address the particular points raised.
Lord Hunt of Kings Heath
I do not quite see the logic of that, because in a sense NHS England has a vested interest in ensuring that all is well with the CCGs. It is not an independent body in the way that the CQC would be.
The other question is about NHS England itself. It is a massive commissioner of specialist services. If a local authority is to be assessed, I still do not see why NHS England ought not to be subject to some kind of independent assessment. It could have a huge impact on where specialist services are going to be provided in future. We know that Ministers are no longer prepared to answer questions about lots of things that NHS England does, so there seems now to be a gap in the architecture.
Earl Howe
Ministers most certainly are willing and able to answer questions about what NHS England is doing, and will continue to do so. Parliament, of course, will be entitled to keep NHS England’s performance in the spotlight; that architecture was built into the 2012 Act very deliberately. I do not accept the noble Lord’s point about clinical commissioning groups, because it is for NHS England to assure itself that the commissioning system for healthcare in England is working properly. There will be a high degree of transparency in that regard. The performance management role of NHS England will be right there, and I think that the proof of that will emerge over the coming months.
Perhaps I could cover the individual points raised by noble Lords. The first point was raised by the noble Lord, Lord Hunt, and echoed by the noble Lord, Lord Campbell-Savours, about how we expect the CQC culture to change in a relatively short time. I say to both noble Lords that I firmly believe that the CQC is already very much a changed organisation. It has a new leadership team in which I have full confidence. It has a new board—which, incidentally, the noble Lord, Lord Hunt, may be interested to know will include Kay Sheldon—and I think it has a new attitude to openness and transparency, as its handling of the Grant Thornton report demonstrates.
On 16 July, the CQC’s chief inspector of hospitals, Professor Sir Mike Richards, will start in post, so that is very soon. By September the CQC will be publishing a list of hospitals that it has the greatest concerns about, and it will be using its new surveillance system to develop this list. The CQC is committed to learning from the past and pressing ahead rapidly to improve for the future. I agree with the noble Baroness, Lady Howarth, that the CQC needs stability.
Lord Campbell-Savours
On the question of the surveillance system that the Minister just referred to, what about the proposal that keeps coming up all the time of two unannounced visits per year for every care home within the United Kingdom? Why can that at least not be set down by the Government as a requirement, irrespective of all the other recommendations and decisions that the CQC comes to over its new so-called surveillance system?
Earl Howe
It is not for Ministers to do that. I say that with great respect to the noble Lord. In saying that, however, I also highlight the ability of the CQC to flex its inspection frequency in accordance with information received. The noble Lord will know that organisations such as local Healthwatch, and indeed local authorities themselves, are able to alert the necessary authorities through Healthwatch England, which, as noble Lords know, is an integral part of the CQC, to any problems that may be flagged up. The CQC will be consulting in future on its proposals for care home inspections, and I do not doubt that a difference of view will emerge about the frequency of those inspections. I am the first to say how important it is that the inspections take place, and I totally take the point that those assessments should not be allowed to drift in any way. However, for better or worse we have an independent body known as the CQC, which should be allowed to act accordingly. The noble Lord, Lord Campbell-Savours, took us back to the 2008 Act. I would say to him that, in agreeing with the noble Baroness, Lady Howarth, Robert Francis was clear in his report that the system should not be significantly reorganised.
Lord Sutherland of Houndwood
Perhaps I may ask for clarification on one further point relating to complaints. Amendment 76ZZA does not propose that the CQC should handle complaints, which was the gist of the Minister’s response. Rather, it proposes that there should be a clear and transparent method of handling complaints within each trust and relevant area. The role of the CQC is to open up that window, very much in line with the Francis report, so that we can know that complaints will be handled at the appropriate level and in the appropriate way.
Earl Howe
I completely understand the noble Lord’s point. He will remember that in the registration requirements for providers of health or social care, the existence of a complaints system is one factor on which the CQC will need to satisfy itself. On the quality of the complaints-handling system within that provider, my answer is that it is a powerful point and an important area, but in the end it is one on which we should let the CQC decide as it develops its methodology. I do not in any way dismiss the noble Lord’s suggestion, but it is one for the CQC to take forward.
Baroness Pitkeathley
My Lords, this has been a wide-ranging and well informed debate. It has focused on anxieties about the role and competence of the CQC. The anxieties seem to focus on questions about whether the job of the CQC is doable at all, doable in the very short timescale, or doable with current resources. Suggestions about how to address the anxieties and concerns have included piloting new structures, but there has been much support for the CQC being given time to improve its strategy and performance—although with strong reservations from my noble friend Lord Campbell-Savours. I am grateful for the support for my amendments on integration, and sorry that the Minister was unable to accept them. Given the concern and strength of feeling about the CQC, I am sure that we shall return to this matter on Report. For the present, I beg leave to withdraw the amendment.
“Funding
The provisions enshrining the new duties and responsibilities for local authorities in Part 1 shall not come into force unless and until a comprehensive and sustainable solution has been provided by the Secretary of State to address the funding of existing care and support commitments for local authorities and those arising from this legislation.”
Lord Best
My Lords, we now come to the beginning of the Bill and the very important Part 1, sensibly postponed until after the Chancellor’s Statement last week on the spending review.
I declare my interest as president of the Local Government Association. The LGA has drafted this amendment and, as with many other Bills, has provided invaluable analysis and briefing for parliamentarians, alongside its direct negotiations with central government on behalf of local councils. Indeed, I commend the LGA’s new publication, Rewiring Public Services, which was launched yesterday and sets out a radical agenda for local services, including social care services.
The provisions in Part 1 have been widely welcomed. They will update and reform the adult social care system. They will support greater integration of health and social care and, on the issue of paying for care, the Bill’s provisions will redefine the relationship between the state and the citizen. Some of these changes will lead to future savings in the cost to the public purse of providing adult social care.
However, achieving later savings means spending more today, and some elements of the Bill mean a shift in the cost of care from the individual to the state. Therefore, before your Lordships’ Committee embarks upon its consideration of the important changes contained in Part 1, it seems important to consider the financial position from which we are starting out.
There is compelling evidence that rising costs of care are leading inexorably towards a crisis in funding for the local authorities which are trying to meet the needs of an ageing population. Before we can assess the practicalities of extra activity and extra spending for social care, it is necessary to be clear how existing care commitments can be paid for, as well as how extra costs arising from the Bill will be funded. Decisions on funding need to be taken before, or at least at the same time as, the policy decisions. Therefore, Amendment 77B—and I am very grateful to the noble Lord, Lord Tope, who has added his name to it—seeks to postpone implementation of Part 1 until the Secretary of State has addressed the crucial issue of how the costs of social care and support will be met in the years ahead.
What we now know from the Chancellor’s Statement last week is that the spending review includes genuinely helpful steps to fund key measures contained in the Bill. Following productive dialogue between central government and the LGA, the plans set out in the spending review make it clear that significant extra funds will be available from the NHS to assist with the costs of local care services. As well as needing reassurance that all extra costs for local authorities resulting from the Bill really will be covered, there remains the greater underlying concern that the financial foundation on which the new position is to be built is not secure. Over the past three years, adult social care budgets have reduced by 20%. In a number of areas, to cope with the funding cuts it has already been necessary for councils to raise the bar before regarding older people as eligible for help from the council. Accordingly, despite growing numbers of older people, fewer people are now being helped because their needs are assessed as moderate, not substantial, even though earlier support can prevent the need for higher costs later.
The Association of Directors of Adult Social Services notes that the bulk of this reduction has been made up by efficiency gains. Many adult services directors believe that they can go a bit further; for example, through better procurement, shifting activity to cheaper settings, subcontracting provision to the private sector, and so on. But the scope for further efficiencies clearly now is much reduced. Demographic pressures, with a 3% growth every year in numbers of older people, mean that savings are predicted to be immediately cancelled out by the cost of meeting increasing demand. The cost of just standing still is estimated at another £400 million a year. Efficiency savings alone cannot keep pace with these budget pressures.
Lord Bichard
My Lords, I rise briefly to support this amendment as a mere vice-president of the Local Government Association. Very few Members of this House were here a week or so ago when the noble Lord, Lord Bates, sponsored a debate on the increasing complexity of legislation and, indeed, the increasing volume of legislation. It is a shame that more noble Lords were not there. In that debate, the noble Lord referred to a recent report from the Office of the Parliamentary Counsel, which pointed out that when the Queen came to the Throne in 1952, after 740 years of legislation we had 26 volumes of Halsbury’s Statutes; we now have 74 volumes. In 1952, the average Bill was 22 pages long; it is now 122 pages long. In 1952, there were 29 statutory instruments; last year there were 3,328. This is an astonishing increase even on 2008, when there were just 1,325. On that last statistic, I can bear witness as a member of the Secondary Legislation Scrutiny Committee. Indeed, my postman particularly asked me if I could do something about the volume of secondary legislation.
We have reached a point where we need to think seriously about the volume of legislation and its complexity, and whether we can carry on imposing new burdens and responsibilities, not least on local authorities. It would be fine if all this additional legislation was actually removing some of the red tape and bureaucracy that previous legislation had provided, but we know that it is not doing so and that it does not do so. We need to do one of two things. Either we genuinely reduce the volume of legislation and the additional responsibilities that it places on all sorts of bodies, or, as the noble Lord, Lord Best, suggests, we have realistic costing of what these new responsibilities entail and ensure that resources are available. If we do not, we remain in a cycle of despair and decline where we expect others to deliver new responsibilities, which they are just not able to do. We also raise the expectations of clients and users, who believe that things will change, when in all honesty they probably will not. That, I think, is a cycle of despair and decline, and it is the reason why I support this amendment.
Baroness Howarth of Breckland
My Lords, I rise briefly, as yet another mere vice-president of the Local Government Association, to bring a slightly different dimension to this debate. The noble Lord, Lord Best, pointed out that local authorities are finding a variety of different ways of delivering services. I have been looking at some of those and listening to messages about them. One issue is that they are delivering cheaper services, which often means commissioning them from providers which will then deliver them at a different level of quality. I declare an interest as a provider in the charity Livability, which delivers services to the disabled, the elderly and some children from residential care.
We need to know whether we are prepared to open the debate. Have the Government as a whole given thought to discussing with the community at large what we really can and cannot afford for the future? The noble Lord, Lord Campbell-Savours, raised the issue of the numbers of inspections. When I was involved in inspections, one issue was that you could deliver as many inspections as you had funding for. Now you can use that funding in a variety of different ways to get better options but, at the end of the day, resources count and, unless we know how far the resources will go, it is pointless to try to descend into the abyss, as the noble Lord, Lord Bichard, said.
If we are going to take this forward, we have to know what level of quality people are prepared to accept. Then, when there are failures in organisations, people are not blamed, because the failure is not necessarily one of individuals or even of groups but of the corporate whole simply not having enough resources to work across the whole piece. Until we start that debate, we will not be able to intervene in discussions about criticisms of local authorities giving only 15-minute slots to people when they have only enough resources for 15-minute slots. In residential care, we are taking away some of the extra services because there is no more money them. We are reducing staffing in various institutions because there are simply not enough resources.
I am not denying that because of the deficit we have to look at funding; I think we do. However, we have to open up the debate. Otherwise, we raise expectations in the country of what we are entitled to. I sat in this Chamber until 11 o’clock last night discussing the Children and Families Bill, and we were having exactly the same discussion. We all want these wonderful things. I want things in this Bill, but somehow we have to decide on some priorities between them all. Whatever we say, we cannot go on expecting to get the same out of the same.
Lord Rix
My Lords, I support this amendment in particular. I declare an interest as the president of Mencap. There is no doubt that the services that we are able to provide are being severely cut back because local authorities simply do not have the money to support those services. Where we used to get, say, £15 an hour, we now get £12 an hour. The implication is that we can lower the standard of our services, but we are not prepared to do that. Therefore, we will end up reducing our services and, as a result, people with learning disabilities, their families and their carers will suffer. This is exactly the situation at the moment. Local authorities will try to provide the services, but they are making it much more difficult for voluntary organisations such as Mencap.
Lord Campbell-Savours
My Lords, I shall refer to the report of the Public Service and Demographic Change Committee. Members of the House who have not read the report should do so because it is a fascinating document. It is probably one of the best documents to come out of the House of Lords for many years. On the question of Dilnot, to which I am opposed but I shall explain that later on in the Bill, paragraph 193 states:
“The major gainers will be the relatively better-off, who will be protected from depleting their housing assets”.
In other words, potentially we will be spending in the longer term money that could have been raised in taxation. We are losing that revenue at a time when the same report refers to the deteriorating ability of the state to help people who are in need of medical services. It refers to the fact that the number of people aged over 75 is expected grow from 5.4 million in 2015 to 8.8 million in 2035. It refers to the fact that the demand for hospital and community service spending by those aged 75 and over is, in general, more than three times the demand from those aged between 30 and 40. We have higher demands from the elderly, more people falling into the groups that are liable to want the services historically provided by local authorities and the state, and yet, at the same time, with these Dilnot proposals, over a period of time we will be handing back money to the taxpayer to which, in my view, the taxpayer has no right.
The report says that the number of people in England with three or more long-term conditions is predicted to grow from 1.9 million in 2008 to 2.9 million by 2018. It is forecast that the number of people in England and Wales aged 65 and over with dementia—we all know the care requirements of people with dementia—or moderate or severe cognitive impairment will increase by over 80% between 2010 and 2032 to 1.96 million. The report goes on to say that it is estimated that by 2022 the number of people in England aged 65 and over with some disability will increase by 40% to 3.3 million.
As I understand the amendment of the noble Lord, Lord Best, he is simply saying, “Hang on a minute, before we start spending money, we should take stock of what is available in the longer term. Can the state afford to pay all the bills that are to come? Has that work been done?”. I hope that the noble Earl will seek to give the Committee those assurances because if the work has not been done and the predictions of some have not been taken into account, it may well be that the amendment of the noble Lord, Lord Best, is relevant. Let us defer much of this expenditure until we have sorted out the budgeting.
Baroness Campbell of Surbiton
My Lords, I had thought that I would not respond to the amendment of the noble Lord, Lord Best. However, I feel I must because there seems to be a missing voice in this debate—the voice of the thousands of people who use social care, over 70,000 of whom receive some form of direct payment. Ten years ago, when direct payments were successfully introduced and allowed disabled people to live independently in this country, we were proud to be employers. We were able to employ RPAs at a good rate, with holiday pay, and we were able to advertise. We were equal to those who employed individuals in their own companies. Ten years on, many cannot even give holiday pay and cannot advertise. They fall back on costly social care services or enter hospital as a result of not being able to employ assistants.
We, too, want to know the costings before new services come into effect. Disabled people may have to accept these services and find that they lose choice and control over their lives. So please do not forget the voice of those who say, “We, too, wish to know that the money is settled. We, too, need a voice to remind people that, in order for us to employ or control our services, we must feel that we can do this with equality and dignity and do it absolutely properly”. Otherwise independent living will become just a memory.
Lord Sutherland of Houndwood
My Lords, the noble Lord, Lord Best, is right in his analysis. He is pointing towards a financial problem that we all know is there and will continue to be there, not least in the current situation, for a number of years to come. The noble Lord, Lord Rix, is right about the consequences of this within the community. I declare an interest as president of Alzheimer’s Scotland and I know that the same applies to its sister body in the rest of the UK. There is a shortage of cash, which means that services are being provided more cheaply or, of greater relevance, are not being provided and are being squeezed. That is the analysis.
I do not think I can vote for the amendment as it stands. What is driving this difficulty is not the profligacy of this Government, previous Governments or local authorities—we can all tighten our belts and are doing so—but the reality of changing demography. My favourite statistic is that since the start of this Committee stage our statistical life expectancy has increased by 27 minutes. We cannot cash that in individually, but that is the reality. That is the driver of the difficult position we are in.
Ministers are often between a rock and hard place, and none more so than now. However, in the light of these facts, the Government have not reviewed the priorities of public expenditure across the board—I hope the Minister will persuade them to do that—and how many things can we afford to do with the population that we have. That means looking at priorities across departments. I do not just mean health and social care. It is inevitable that we will have to do this. The sooner the Government—the previous Government were not good at this—are prepared to say that we must undertake a review of priorities in view of the changing nature of our society, the sooner we will begin to move forward. In the mean time, I am in favour of keeping pressure on the Government by introducing a Bill of this kind because there is no doubt that that will sharpen the appetite of the voters for how change should be devised in the future.
Lord Beecham
My Lords, I declare an interest as a vice-president of the Local Government Association and as a member of Newcastle City Council.
Forty years ago, as the newly-appointed chairman of the social services committee in Newcastle, I had to come to terms with the impact of Sir Keith Joseph’s reorganisation of the health service which came into force that year. Among much else, that involved the transfer of responsibility for public health from local government, where it had largely resided for over a century, to the NHS, taking with it paramedical services such as chiropody and bath attendants. The area health authority, as it turned out, was so limited in its resources that, for a period, we as a council felt it necessary to fund the continued provision of those services by the health authority. At the same time, we hugely increased social care provision, doubled the home help service and trebled the number of meals on wheels. I am sad to say that now those services are roughly back to where they were in 1973 as a result of the pressure on the authority’s budget. Now, in a step on which the Government are to be congratulated in principle, public health largely returns to its local government home and the concept of a holistic approach to social care, involving both local government and the NHS, is enshrined in the Bill.
It is unfortunate that the previous Secretary of State, in his shadow capacity, walked out of cross-party talks which the Labour Government had initiated to address the issue of care and its cost, and that it has taken three years to produce the proposals that we are debating. However, it is even more unfortunate that during that time not only has demand risen inexorably, but local authority funding has been severely and deliberately reduced by a greater extent than any other area of government expenditure. It is sad, but not untypical, that the Secretary of State for Communities and Local Government should not only have acquiesced in, but actively promoted, this perverse order of priorities with all it has implied for key services, including those that we are debating in this Committee.
As we have heard, the Local Government Association avers that adult social care budgets have been reduced by £2.6 billion, or 20%, over the past three years, with additional dire impacts on other services, such as leisure and housing, which should contribute to health and well-being and which are threatened with virtual extinction as local authority services by the end of the decade. The noble Lord, Lord Best, reminded us of the London Councils report and its estimate that the cost of the reforms—which, I repeat, we welcome in principle—will amount nationally to an average of £1.5 billion a year over the next four years. Apparently, the greater amounts will be spent in the first and last years of those four. London itself will be facing a bill of at least £877 million as a result of implementing the proposals.
Of course, this, in part, reflects the increasing demand from different client groups. We largely talk of the elderly, but there are other significant groups. The noble Lord, Lord Rix, has reminded us about people with learning disabilities, and there are also people with physical disabilities. These two groups are growing as medical advances have enabled them to live longer. The quality of their life, of course, is the subject of much concern and that imposes additional strains on the budget. It is another example of incremental demand that needs to be met. In addition to that, there are people suffering from mental health problems. The increasing demand so far has manifested itself as between something like 10% and 14% in these different categories. It is clear that inflation and demographic trends alone will push up the cost, as the noble Lord, Lord Best, has indicated, by some £421 million by the beginning of the next spending review period.
There is also a serious question about the amount and timing of the funding designed to assist transition to the new regime, given that this welcome increment was announced in the spending review for 2015-16, but work will have to begin before then if we are to make progress at that time. It would be helpful to know, given that part of the rationale for the changes is that a whole-systems approach is likely to be more cost effective, just what savings the Government anticipate will be made and over what timescale by each of the two principal partners—local government and the health service—and in the case of the latter, by which of its several components.
Given the huge problems currently experienced in A&E—in contrast with the position under the previous Government when 98% of patients were seen within four hours—and the emerging problems that we have read about in the past few days in general practice, how confident can we be that the basic funding projected for both partners is adequate, even before taking into account the scale of change envisaged? How do the Government respond to the comment on the spending review of the Foundation Trust Network, which warns of,
“a further major squeeze on NHS front line services as £4 billion is diverted from the NHS budget to social care”
in 2015-16? It points to fact that trusts,
“are, in many cases, struggling to meet the rapidly rising demand created by an ageing population”.
The concept of pooled budgets is welcome, but given the number of parties to the commissioning process, with local authorities joined by clinical commissioning groups commissioning hospital services and NHS England, currently the national Commissioning Board, commissioning general practice and mental health services, how will this pooling work in practice?
Baroness Wall of New Barnet
I know very little about local government other than that I work with it in the health sector, but I wonder whether, with the pressure that is on all of us with the cuts and the absolute need to reduce things, local authorities have looked at every opportunity. All I know is that since our income in an NHS trust has been looked at more carefully, we have had to have a look at the cost improvement programmes that we can deliver. We had never done that before, but we have delivered so many of those, improving costs by £17 million in the last year.
I am not making a criticism as I have no idea at all, and I know that we can all bemoan the fact that we have less money and all the rest of it, but until we know that we have done everything that we can, and got right down to questioning if we could do things differently, then we perhaps need to look at ourselves as well. Forgive me if you have already done that.
Perhaps I might respond to the question that the noble Lord is asking about what it means to integrate social care and local authority stuff. This is why I worry to death about this amendment. If this part of the legislation does not happen, the whole system will be in much worse straits than it is now. We have an issue about our local authority cutting back on some of the places in nursing homes, which means that we do not have the opportunity to put patients who no longer need to be in a hospital in the place where they ought to be to receive care.
At some stage or other, all of us have got to work together and say, “How do we do this?”. For lots of different reasons, not just the bed space, it is much cheaper for an individual to be in a care home bed than in a hospital bed. If we cannot resolve it between ourselves, and we cannot do it on our own as providers, local authorities cannot do it on their own, and neither can the care sector generally, then I wonder if we are ever going to get there. People perhaps need to start to look at how we might achieve this by being a bit tighter in other things.
Lord Beecham
My noble friend is right to draw attention, as many of your Lordships already have, to the need to integrate the provision and to avoid the sort of cost-shunting that can arise if organisations are kept separate. That is the point of the pooled budget: you look not just at the straightforward provision of care by one or other partner, or both partners, but at what will perhaps reduce the need for care in other ways. As I say, other local services such as leisure and adequate housing, in conjunction with the public health agenda, may very well reduce the demand for particularly expensive forms of care, as I am sure we all agree.
Of course, local government’s track record is not uniform, but it is right to say that local government has proved over the years to be the most efficient part of the public sector. There has been a huge improvement programme in local government, recognised by the shortly to be lamented Audit Commission, and others, over the years. The LGA in particular has sought, through a whole series of policies, including the very extensive and successful use of peer review, to engender new approaches and more cost-effective ways of dealing with a range of problems, including those in the social care arena.
I was about to conclude by drawing attention to another figure, which has just emerged today. It is a rather startling figure: £9.8 billion of uncollected VAT—10% of the total take—according to today’s Guardian. That dwarfs the amount that the Government are putting into the new arrangements. Just as local government needs, together with its partners, to engender the utmost efficiency in the mechanisms that it develops to provide services and make them cost-effective, as my noble friend suggests, so on the revenue-raising side central government has a massive obligation to ensure that it collects the taxes—instead of cutting the resources going into HMRC, which is responsible for collecting VAT, by a further 5% in the spending review.
We do not consider the cost of £3.8 billion and the welcome money that the Government are going to provide to be the last word in these matters. There will have to be a continuing process of establishing programmes that are effective and cost-effective. Looking at the totality, there is scope within the system to prioritise this area, providing that the Government take the right decisions—across the piece, not merely on the narrow front of health and social care but considering the implications for other services and functions of government—and collect the money that they are due anyway and which would relieve the huge pressure on these services and others.
I have a good deal of sympathy with the concerns expressed by the noble Lord, Lord Best, but I share the view of the noble Lord, Lord Sutherland, that it would not be right to hold things up. We must get on, but in doing so we must be realistic about the challenges that will be posed to those responsible for delivering these services. I look forward to hearing the Minister’s response to the various questions that have been raised in the debate.
Earl Howe
My Lords, I do agree with the spirit of this amendment. It is critical that care and support generally, and these reforms in particular, are fully funded. Without adequate funding, they will not deliver the benefits we all want to see. However, let me reassure noble Lords that we already have full procedures in place to ensure that there is proper funding for social care.
The first and very basic point is that the Government set spending plans for all areas of public expenditure at once during a spending review. This ensures that decisions can be taken about the future funding requirements of government as a whole, rather than assessing each part piecemeal. The noble Lord, Lord Sutherland, spoke about the review of priorities being a task of government. I agree, and that is exactly what spending rounds are designed to do.
Secondly, we have the new burdens doctrine in place, which requires that,
“all new burdens on local authorities must be properly assessed and fully funded”.
That ensures that all new funding pressures, including those that result from this Bill, are fully funded. I can tell the noble Lord, Lord Best, that our commitments are in line with the new burdens doctrine, the costs have been identified in the impact assessment, and the funding in the spending round will support local authorities to deliver on current and future commitments through to 2015-16. To answer the noble Lord, Lord Campbell-Savours, yes, the work has been done.
It is only right that the Government take spending decisions for all areas of public expenditure at once. This ensures that future spending plans are drawn up which are coherent and consistent across all public services. This is exactly the purpose of a spending round, the latest of which concluded last week, as noble Lords know, and set spending plans for 2015-16. Fundamentally, this settlement delivers the funding required to ensure that service levels in the care and support system can be protected and are able to deliver on all the commitments in this Bill.
However, with additional pressure on the system, we must ensure that the Government, the NHS, local government and care and support services are all working together to offer the best possible services for patients while also addressing the growing demand on the system that the noble Lord, Lord Best, rightly referred to. That is why we have announced in this year’s settlement a £3.8 billion pooled health and care budget to ensure that everyone gets a properly joined-up service, so that they get the care and support they need from whoever is best placed to deliver it, whether that is the NHS or the local authority.
In 2014-15, the NHS will transfer £1.1 billion to support social care with a health benefit. The pooled fund will include £2 billion more through the NHS in 2015-16. But this money will be given only on the basis that services are commissioned jointly and seamlessly between the local NHS and local councils. I hope that that helps to answer the question posed by the noble Lord, Lord Beecham.
Lord Campbell-Savours
Before the noble Earl moves on, perhaps he can answer this question. Is he saying that the statistics that were used in the report by the Committee on Public Service and Demographic Change were known to the department and were all taken into account, and that the calculations the department made were based on those statistics, which were well sourced, when the budget for these areas was decided upon by the Government?
Earl Howe
The statistics that the Government relied upon were official statistics and, I think, were exactly the same as the statistics used by the report to which the noble Lord referred. Of course, that report takes us forward 10 and 20 years. I am not pretending that the spending round has done that—it never does and I think it is safe to say that it never will. But we did look forward in a rigorous way to the pressures on the system in 2015-16 and based our assessment on the statistics that are officially issued.
As all plans will be jointly agreed by the NHS and local authorities in the pooling arrangements that I referred to, that in itself will provide a strong guarantee that the money is spent in a way that delivers on the priorities of health as well as of care and support. Not only will this fund help to deliver joined-up services, it provides the necessary funding for all the commitments and duties set out in this Bill, and the growth in demand from an ageing population and growing number of disabled people—I say in particular to the noble Lord, Lord Rix, and the noble Baroness, Lady Campbell. In particular, funding worth £335 million has been set aside for the introduction of the cap on care costs and the extension of deferred payment agreements.
Lord Beecham
My question was not about the purpose of the pooling, which I think we all share. My question was rather more detailed. If part of the funding is to be based on outcomes, how and when is that to be judged? If the outcomes are not achieved, how will the money be reclaimed? All this is something of a mystery as matters stand.
Earl Howe
The details of the payment-by-results system will be worked through. We are working with our partners in the sector including the LGA and NHS England to ensure that the system is designed with a view to incentivising integration. Further details of those arrangements are in course and we will announce them as soon as we can.
The kind of things that we will be looking for are, for example, the results that we have seen in places such as Cheshire West and Chester. The pilots, the whole place community budgets, showed that savings from integration could be substantial if implemented effectively. A business case needs to be presented. In that context, the pilot suggested that, once proposals are fully implemented, the net savings that could be achieved over five years are considerable.
Cheshire West and Chester has made savings of £26 million, with £3.8 million for Greater Manchester, £190 million for the Triborough authorities and £90 million for Essex. These savings are being identified. It gives us confidence to say that there is real potential to save money across the country, as shown by the pilots and other reviews, such as the Audit Commission review. Oxfordshire recently announced that it was nearly doubling the amount of money in its pooled budget for older people. That is a significant move.
I agreed with much of what the noble Baroness, Lady Wall, said. Savings are eminently possible without detracting from quality, by slowing and preventing the development of care needs or the onset of health conditions, or the loss of independence. We hope and believe that preventive care can increase the quality of life for individuals. A proactive stance by local authorities will deliver that. At the same time, preventive care will provide longer-term financial savings to the public purse. For the first time, Clause 2 creates a clear legal duty on local authorities to ensure the provision of preventive services.
I come to the point raised by the noble Lord, Lord Campbell-Savours, about the Dilnot package. I do not view the Dilnot package in the same way that he does. I do not see funding reform as being about protecting people’s inheritances. It is about providing hard-working people with peace of mind about how much they will pay for their care. Deferred payments will ensure that people will not have to sell their homes in their lifetime to pay for care. That will prevent distressing sales of houses and provide everyone with breathing space to make decisions and choices about what happens to their home. In the long term, the scheme is broadly cost-neutral to government, because the deferred payments will be repaid. Everyone will benefit from these reforms, but they will particularly help people with modest wealth who are most at risk in the current system of losing their entire home and savings.
Delivering on these transformational changes to health and care is the only way to secure the long-term sustainability of services, both for the NHS and local authorities. I would be firmly against delaying this —I think we would be heavily criticised if we did. The noble Lord, Lord Bichard, referred to the burgeoning weight of regulation during the past 60 years and one cannot argue with the statistics that he produced. This Bill serves to consolidate more than 60 years of legislation; it will repeal provisions from more than a dozen Acts of Parliament. Reducing the complexity of the statute and rationalising burdens on local authorities are our key aims in this context. I hope that, for the reasons that I have outlined, the noble Lord, Lord Best, will feel sufficiently reassured to be able to withdraw his amendment.
Lord Best
My Lords, I am deeply grateful to all noble Lords who have spoken: to the noble Lord, Lord Bichard, for pointing out that we cannot keep loading responsibilities on local authorities and others without willing the means to pay for those things; to the noble Baroness, Lady Howarth, who said that we cannot go on like this; and to the noble Lord, Lord Rix, who explained the position from the Mencap perspective—it could have been that of many other charities which are facing very tough times because local authorities cannot keep up the level of support that they used to have. The noble Lord, Lord Campbell-Savours, produced more impressive statistics, not least in relation to the people with long-term conditions and dementia who are living in the community and need to fund their care needs. The noble Baroness, Lady Campbell, brought us the users’ voice, pointing out that funding cuts have already meant people losing some of the control and choice which had been increasingly expected with use of direct payments and so on.
The noble Lord, Lord Sutherland, pointed out that the culprit is not local government or central government but demography, and that we need to make some choices as a result of those demographic pressures. However, in his view, one of those priorities is clear: it is that we should go ahead with this Bill. The noble Lord, Lord Beecham, also felt that it would be unwise for us to delay things, even though he accepted that cuts mean that social services in Newcastle have returned to the position that they faced in 1973 in terms of the resources available. He pointed that it is local government that has shown itself best able to be more efficient in these difficult times. We need to remember that. The noble Baroness, Lady Wall, pointed out that local authorities should try to make savings wherever they can, and the noble Lord, Lord Beecham, was right that statistics show that local government is doing just that.
I think that it is fair to say that the noble Lord, Lord Bentham, felt that it was necessary to find additional resources, but he thought that those could be found from the underspend in the NHS or the uncollected VAT or some other source. However, he did not want the amendment to delay the good things that the measures bring with them. The noble Earl, Lord Howe, agreed that we need fully to fund the measures—did I say Bentham?
Lord Beecham
My Lords, I hope to be of some utility, but I would not claim to be utilitarian.
Lord Best
I deeply apologise, and not for the first time, to the noble Lord, Lord Beecham, one of the most distinguished of the vice-chairs and past chair of the LGA.
The noble Earl, Lord Howe, agreed with everybody that we need fully to fund the new measures and to ensure that the funding for existing care services is there. He expressed to us the belief that the new measures will do just that and they herald a sustainable funding arrangement for the future. He noted that the settlement for local authorities is extremely challenging this time round, but that, in terms of social care, the settlement that we are now pointing towards, with jointly commissioned services, the pooling of the £3.8 billion and NHS and local authorities working together, will in his view prove enough to fund a sustainable care service. Only time will tell whether those calculations prove to be accurate rather than too optimistic. In the hope that the noble Earl’s predictions are correct, and recognising that government really are attempting to make serious change in this Bill to the funding system as well as in so many important ways to the care services, I beg leave to withdraw the amendment.
Lord Hunt of Kings Heath
“( ) The Secretary of State, in making regulations or issuing guidelines under this Part, must have regard to the general duty of local authorities in exercising a function under this Part in the case of an individual to promote that individual’s well-being.”
Lord Hunt of Kings Heath
My Lords, I shall speak also to my Amendments 78D and 88L. I am also supportive of Amendment 79, which very much follows the thinking behind my own Amendment 78. I also support Amendment 78ZA, in the names of the noble Lord, Lord Bichard, and the noble Baroness, Lady Tyler. I am sympathetic, too, to the amendments tabled by the noble Lord, Lord Black. I have also added my name to Amendments 78A and 78B in the name of the noble Baroness, Lady Barker. She will speak substantively to those amendments, which we have proposed in a number of Bills going back many years. They try to make sure that, when a regulator is dealing with a religious care home, regulations do not get in the way of the spiritual beliefs of the residents in that home.
Amendment 78 takes us to the very important well-being principle. In its consultation paper which led to the consolidation of the social care legislation that we see in this Bill, the Law Commission proposed that there should be tightly defined processes for determining the scope of adult social care. That follows on from the debate that we have just had. Replies to that consultation persuaded the Law Commission to define the purpose of adult social care as promoting or contributing to the well-being of the individual. That recommendation was accepted by the Government and is central to their new approach to adult social care.
Clause 1 provides for a set of legal principles which govern how local authorities are to carry out their care and support functions for adults under the Bill. Subsection (1) establishes the overarching principle that local authorities must promote the well-being of the adult when carrying out functions under the Bill in relation to that adult. This duty applies both in relation to adults who use services and to carers. The well-being principle applies to local authorities when they exercise a function in the case of an adult. My understanding is that it is not intended to be directly enforceable as an individual right, but to carry legal weight where a local authority’s failure to follow the principle may be challenged through judicial review.
This issue was considered very carefully by the Joint Select Committee, which commented specifically on the role of the Secretary of State in relation to the well-being principle. It took the view that many of the details that will shape the way in which local authorities discharge their functions under the Bill are subject to regulations and guidance issued by the Secretary of State. We will, of course, come on to one example—that is, the regulations in relation to eligibility, which we will debate not, I suspect, tonight but on another day.
The Joint Select Committee referred to Section 1B(1) of the National Health Service Act 2006, which provides:
“In exercising functions in relation to the health service, the Secretary of State must have regard to the NHS Constitution”.
The Select Committee suggested that the Secretary of State should be obliged to have regard to the requirements of Clause 1 on well-being when exercising the functions under the draft Bill. In giving evidence to the Joint Select Committee, the Minister replied:
“We absolutely want the wellbeing principle to apply comprehensively”.
The Joint Select Committee comments:
“We welcome the importance that Ministers attach to the well-being principle. We recommend that the draft Bill should include a provision requiring the Secretary of State, when making regulations or issuing guidance, to have regard to the general duty of local authorities under clause 1”.
We debated this at Second Reading. The noble Earl, Lord Howe, said that,
“Clause 1 is intended to apply at an individual level, when a local authority makes a decision. This individual focus on the specific well-being and outcomes for that person is at the heart of the way that the Bill has been drafted. It is not intended to apply in a more general way”.—[Official Report, 21/5/13; col. 829.]
He went on to say that it would therefore not be appropriate for the Secretary of State to be subject to the same duty, as the Secretary of State does not make decisions at the individual level.
I think there is an element of Ministers almost washing their hands of what actually goes on at ground level in health and social care. We have already seen that in the Health and Social Care Act 2012, and we are seeing some elements of that here. Of course, the Bill places a responsibility on local authorities to promote well-being in the way they implement the provisions of the Bill locally. However, if the Secretary of State were to issue regulations without having regard to the promotion of well-being, there is a risk that those regulations or guidance will conflict with the well-being principle. That would place local authorities in an impossible situation. For instance, if the eligibility criteria issued in regulations by the Secretary of State do not take full account of all aspects of well-being in Clause 1, local authorities may find that people who need support to promote well-being as defined in Clause 1 fall outside the eligibility criteria. I will come on to debating the eligibility criteria, but there are some aspects of the eligibility criteria which would suggest that they do not meet the well-being principles in Clause 1. I hope the noble Earl will think very carefully about this. There is a broad consensus in your Lordships’ House and within the Select Committee dealing with the draft Bill that the Secretary of State, when issuing regulations and giving guidance to local authorities, ought to be operating under the same principle of well-being as those local authorities are. It seems to go straight back to the debate instituted by the noble Lord, Lord Best, in relation to the Government legislating but not giving the wherewithal to local authorities to actually carry out that legislation effectively.
I turn to Amendments 78D and 88L, which are concerned with ensuring that health needs are taken fully into account in decisions taken by the local authority. I fully acknowledge that I have been inspired to do this by the noble Baroness, Lady Campbell. The starting point here is that it is essential to look at this through the prism of person-centred integration. As a starting point, we need to look at ways to put the individ