Grand Committee
(10 years, 10 months ago)
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Energy Bill
(10 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Verma
“Fuel poverty
(1) The Warm Homes and Energy Conservation Act 2000 is amended as follows.
(2) After section 1 insert—
“1A Objective for addressing fuel poverty: England
(1) The Secretary of State must make regulations setting out an objective for addressing the situation of persons in England who live in fuel poverty.
(2) The regulations must specify a target date for achieving the objective.
(3) Regulations under this section must be made by statutory instrument; and a statutory instrument containing such regulations may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
(4) The Secretary of State must lay a draft of the instrument before each House of Parliament within 6 months of the day on which section (Fuel Poverty) of the Energy Act 2013 comes into force.
“1B Strategy relating to fuel poverty: England
(1) The Secretary of State must prepare and publish a strategy setting out the Secretary of State’s policies for achieving the objective set out in regulations under section 1A by the target date specified in the regulations.
(2) The strategy must be published within 6 months of the day on which the first regulations under section 1A come into force.
(3) The strategy must—
(a) describe the households to which it applies,(b) specify a comprehensive package of measures for achieving the objective by the target date, and(c) specify interim objectives to be achieved and target dates for achieving them.(4) The Secretary of State must take such steps as are in the Secretary of State’s opinion necessary to implement the strategy.
(5) The Secretary of State must—
(a) from time to time assess the impact of steps taken under subsection (4) and the progress made in achieving the objectives and meeting the target dates,(b) make any revision of the strategy which the Secretary of State thinks appropriate in consequence of the assessment,(c) from time to time publish reports on such assessments.(6) If—
(a) further regulations under section 1A are made revising an objective or the target date for achieving it, and(b) the Secretary of State considers that changes to the strategy are necessary or desirable as a result of those regulations, the Secretary of State must revise the strategy within 6 months of the day on which those regulations come into force.(7) If the Secretary of State revises the strategy, the Secretary of State must publish the strategy as revised.
(8) In preparing the strategy or any revision of the strategy, the Secretary of State must consult—
(a) local authorities or associations of local authorities,(b) persons appearing to the Secretary of State to represent the interests of persons living in fuel poverty,(c) the Gas and Electricity Markets Authority, and(d) such other persons as the Secretary of State thinks fit.”(3) In section 2—
(a) in the title, after “” insert “”;poverty: Wales(b) in subsection (1), after “strategy” insert “as respects Wales”;(c) in subsection (2)(d), omit “England or”;(d) in subsection (8)—(i) in the definition of “the appropriate authority”, omit paragraph (a), and(ii) in the definition of “the relevant commencement”, omit paragraph (a).”
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, these government amendments propose a change to the Warm Homes and Energy Conservation Act in order to put in place a new, rigorous and flexible framework for measuring the Government’s progress in tackling fuel poverty in England. As we move forward with ensuring a safe, low-carbon future we must ensure that everybody is able to benefit from our policies.
Last year, Professor Hills completed his independent review of fuel poverty and concluded that we had been measuring the problem in the wrong way. Our concern about how we measure fuel poverty has been driven by wanting to address the problem more effectively.
High levels of fuel poverty a decade or so ago were masked by official figures that suggested the problem had been solved. The sensitivity to energy prices of the definition, creating an ever changing picture of the households who are fuel poor, makes designing and implementing effective policies extremely difficult. We want to learn the lessons of this.
We will therefore be adopting the new definition of fuel poverty proposed by Professor Hills. This finds a household to be fuel poor if it is below the official poverty line and if it has higher than typical energy costs. It is a more accurate measure of the problem. It brings the major advantage of telling us not only how many fuel-poor households there are but how badly affected each household is. This will help us target policies much more effectively, as our recently published Fuel Poverty: A Framework for Future Action attests. Although this new definition is rightly at the centre of our proposals, it is clear that a single indicator is not sufficient to give us an understanding of this complex problem. We therefore intend to monitor fuel poverty through a number of key indicators.
One of the important conclusions of the Hills review was that fuel poverty is a long-term structural problem, requiring an ongoing effort to mitigate it. The current framework does not reflect this, focused as it is on ensuring that no person lives in fuel poverty, as far as reasonably practicable. We want to address this problem with the current framework by adopting a new target focused on improving the energy efficiency of the homes of the fuel poor. In this way we can ensure that our efforts are directed towards a key cause of high energy bills and make a real difference to people who are struggling to keep warm.
Amendment 50J therefore sets a duty for the Secretary of State to have an objective to address fuel poverty and for the details of this new target to be specified in regulations, rather than in primary legislation as it is currently. The regulations must set out the form of that target, the level that will be achieved and the date by which this will be done. The secondary legislation must be brought forward within six months of the provisions entering into force. The amendment also maintains the duty on the Secretary of State to have in place a fuel poverty strategy but makes this duty consistent with the new objective.
Amendments 56A and 58 are minor provisions to be clear on the territorial extent of the amendments, where our proposals would apply to England only, and the commencement date for the provisions, which will be two months after the Act receives Royal Assent.
While we want to give the new target statutory backing, it would not be wise to set it in primary legislation. We need to be flexible in our approach to fuel poverty as we reform the electricity market, seek to drive the uptake of renewable heat in our homes, and bring about major improvements in energy efficiency standards through the Green Deal and ECO. We therefore think it appropriate for the details of the target to be set in secondary legislation, subject to parliamentary debate and the affirmative resolution of both Houses.
As part of this change, we need to be realistic about how quickly we can make progress. The current target is 2016. The interventions necessary to address the problem as we understand it cannot be undertaken within that timeframe. The needs of the fuel poor must continue to be championed after that date. A sensible approach for the future is to align our efforts on fuel poverty with the action we are taking more widely in tackling climate change. As my noble friend Lord Deben knows, the Committee on Climate Change already has a responsibility to monitor the Government’s approach to fuel poverty. The two issues go hand in hand.
Our amendments will allow us to bring forward proposals for a new target, including its precise form and level, and a date for its accomplishment. We will ensure that the determination and insights of those on the front line, working day in and day out to help alleviate fuel poverty, are reflected in our approach.
We want to make sure that the target bites. Our amendments therefore retain the key primary duty to have a fuel poverty strategy that sets out how we will meet our future target. Our amendments require us to set interim targets that will ensure that we stay on track along the way. Our recently published Fuel Poverty: a Framework for Future Action already sets out a direction of travel and underlines our commitment to tackling fuel poverty in a meaningful way.
I welcome the support that our announcements and proposed amendments received from the chair of the Fuel Poverty Advisory Group and the chief executive of National Energy Action, given their expertise on the issue. I understand that there may be some who are concerned by a significant change to the long-standing fuel poverty framework set out in the Warm Homes and Energy Conservation Act. By fixing a framework for the long term, the amendments ensure that, far from ceasing to be of concern in 2016, fuel poverty will remain high on the Government’s agenda throughout the delivery of our ambitious programme for energy efficiency and the energy sector in the UK.
Our amendments provide for an ongoing focus on helping low-income, vulnerable households keep warm, and will help them stay ahead in the energy efficiency market rather than fall behind. I trust that noble Lords will recognise the seriousness of our intentions to make real progress in tackling this long-term problem and will support the amendments. I beg to move.
Lord Jenkin of Roding
My Lords, I will make a few comments on what my noble friend said. The first is that we are extremely grateful to her and to the officials working with her for the briefing that some of us had fairly late last evening. All this was sprung on us at fairly short notice. The White Paper, Fuel Poverty: a Framework for Future Action, which is an immensely worthwhile document, contains a wealth of material. It is not always easy in a debate of this kind to do justice to it. It has been backed up by a paper produced in response to the consultation.
As the noble Lord, Lord Whitty, said in our debate on Tuesday when we discussed the problem of bills, not all of this is new. We have been aware of the Hills report, to which my noble friend referred, and the consultation paper. There were a good many responses to the consultation, which were referred to in the Government’s response. There is a wealth of material from which we can make an assessment of what the measures are likely to produce.
The first thing I will say on this is that the Government have been wise to recognise that the methodology of the previous fuel poverty target—how it was measured and what the appropriate responses were—has now really been shown to be wanting. That has inevitably meant that, in the light of Professor Hills’s report, that target and the methodology that accompanied it must be changed. I welcome very much what the Government now propose as the approach to this. It is not just a question of energy prices and relative incomes. There is far more to it than that. Without going into all the details, because I am sure noble Lords will have made their own studies of this, it is clear that there is much more to be done. Indeed, it is only if you measure the problem in an appropriate way that you can really devise and decide on the necessary measures to deal with it. That is an approach which I warmly welcome. If it continues to be measured in the wrong way, of course the authorities and the industry would be tempted to continue to use what have turned out to be often very ineffective policies to deal with this, and would give a false view of the size and severity of the problem.
This is a welcome new approach. I have read some of the documents which have been issued in the past day or two by the interest groups which represent the fuel poor. Although some of them wisely recognise the merits of the new approach, there has been an almost instinctive reaction of, “Well, you are abandoning the targets and not putting anything in their place”. My noble friend has indicated that her amendment will in fact lead to new targets. The other complaint is that it is not now going to be in statute, it will be in regulations. The fact is that you are going to advance this policy properly, it will have to be dealt with over time. That can only be done by regulations. My noble friend’s amendment would introduce the power to do so. I have never read an amendment which includes the phrase “The Secretary of State must” so many times. This will be a considerable reassurance to those who have been anxious that the Government are in some way weakening in their policy on this. They are not. It is a very real social policy leading to considerable hardship. Anyone who has represented constituents recently or in the past will be aware of the problem. Of course, it has got so much more difficult with rising prices.
Some of the methodology which stems from the Hills report is distinctly complicated. I found myself on Tuesday night trying to understand some of the charts in the White Paper. A particular chart on page 18 required having a fair number of towels around one’s head to try to understand it; I think that I fell asleep over it. The Minister’s officials were able to describe the meaning of some of this in our meeting yesterday. It illustrates the complexity of the problem that has been dealt with. There are all sorts of reasons why some households suffer from acute fuel poverty. They need to be examined in all their detail. This is what the department has tried to do with the help of Professor Hills’s report. We shall have to see how successful that is. I had not realised what a difference it makes whether you are connected to the gas grid or not. Yet the figures in the chart show clearly that that is a major factor. If you do not have access to mains gas, you are far more likely to be in serious fuel poverty.
Baroness Liddell of Coatdyke
My Lords, I will be brief. I welcome the proposed new clause. Unfortunately, I did not have the opportunity to attend the briefing yesterday evening but wish to make a couple of points. I have had a lifetime’s involvement in fuel poverty, having come from an area where the fuel poor are always with us. Sometimes one of the key things you need when dealing with fuel poverty is not fancy targets or models but a soupçon of common sense. This is one of the areas that troubles me about the Green Deal. If you are expecting the fuel poor to front-end facilitations to their house, for example, they are not going to be able to do it because they cannot afford to do so. It is great having a wonderful model that says, “If you up-front the amendments to your accommodation, you will benefit in the longer-term”. However, if you cannot afford to turn your heating on, you are hardly going to be able to afford cavity wall insulation.
I make a plea for some basic common sense when dealing with this matter. I heard the praise of the noble Lord, Lord Jenkin, for the fact that the amendment repeatedly says:
“The Secretary of State must”.
Frankly, the Secretary of State needs some enforcement powers to encourage the industry to get involved actively in the campaign to move people out of fuel poverty, unless he is going to go down to B&Q and get a hammer, nails and some insulating material. We need to have enforcement. With this Bill, as always, a lot of the detail will be in secondary legislation. Until we see the nuts and bolts of the secondary legislation, we will not see whether my common-sense points will be met. I welcome the proposed new clause and will read the secondary legislation with interest when it comes along. However, I repeat that common sense matters even more than targets in relation to this. I urge officials to bear that common sense in mind when they craft the secondary legislation.
Lord O'Neill of Clackmannan
I am very happy to follow my noble friend. The fight against fuel poverty in the past 10 to 15 years has been bedevilled by loose definitions and arbitrary targets. The amendment goes some way to mitigate concerns that have arisen about that. It sticks in my craw to say this but the Government must be praised for obtaining support for the measure from Derek Licorice, the chair of the Fuel Poverty Advisory Group, and Jenny Saunders of the NEA. The fact that people are giving understandably cautious support, but none the less a blessing, for the measure is an indication that Ministers have sought to build bridges on this issue. Known targets and definitions have been taken away and a rather more complex Hills approach has been adopted. That approach has its drawbacks but does take account of the complexity of the situation. Therefore, it is desirable to move forward not using the bludgeon of statutory change but rather a regulatory approach, as that will enable subsequent Ministers of whatever political complexion to adjust and calibrate the policies.
It is also fair to say that for us in Opposition to try putting forward amendments at this stage would be somewhat premature—although, from what one can gather of the parliamentary timetable ahead of us, we will have time, probably over the Recess, to look at some of these issues. Obviously, the statutory instrument and regulatory approach will be the subject of consultation and discussion. One would hope that that need not take an unduly long period. None the less, it will give us some opportunity to look at the fine print of this.
Some of us would be happier about this if we were to see the colour of the Government’s money, or indeed money at all from the Government. Their approach to fuel poverty has been to withdraw state funding from this and make it a tax on the consumer rather than on the country as a whole. That is a flawed policy. It would not be difficult for the Green Deal to become more successful than it is at present, but if it does not become substantially better we will have to look again at the Government providing funds for some of the major programmes that will be required to address areas of fuel poverty. We are not talking about individual households but street after street after street. If approached on that basis, we could deal with an awful lot of the most deep-seated areas which Hills recognises are the core of the problem.
As I said, I do not wish to be grudging in my support for this approach. There will obviously be difficulties and flaws but this is not the time to identify them. The opportunity for that will come on Report and beyond, when we have had time to digest some of the indigestible graphs to which the noble Lord, Lord Jenkin, referred. If we can do that, we can perhaps make something of this. At the end of the day, somebody has to pay for it. At the moment, that will fall in the main on the shoulders of the consumer of gas and electricity. That is not a satisfactory approach to social injustice on this scale. Even with the Hills modification, the scale is intolerable for a society such as ours to leave to some kind of slipshod market mechanism, the like of which we have seen in the Green Deal. The Green Deal might work. It is the only show in town but it will have to start working very quickly or some of us will not be confident that the great ideas and reasoned approach in this White Paper, these documents and expressed in this amendment will be enough, without proper financial support, to tackle the major social problem we have here.
Lord Deben
My Lords, I again declare my interest as chairman of the climate change committee, which has a specific responsibility to consider and concern itself with fuel poverty. It would be suitable for me to say a few words about this. I am very pleased that the Government have brought forward this amendment, not least because one of the difficulties of advising on fuel poverty has been the very peculiar mechanisms that we have used to measure it. To be able to measure it more effectively, to have a proper and accepted basis, will help us very much in giving advice. As noble Lords know, if you are a scientifically based committee, it is quite hard to move from making decisions on science, which is of course what we do, to making decisions on measurements that would not stand up to any kind of consideration from outside. This is a very good first step. All of us acknowledge the fact that there is widespread support for the principle but there is a lot to be worked through. I think most of us would agree with what the noble Lord who just spoke said.
It is worth realising, too, that it has much wider implications. As usual, we have been very much helped by the intervention of my noble friend Lord Jenkin. I am always amazed that he gets his head so easily around the most complex of issues and then lightly dismisses that by saying that he is not quite there yet. If when I get to the same stage of life, I am “there”—if I may put it so—as well as he is, I shall be very proud indeed. We owe him a huge debt of gratitude.
Baroness Maddock
My Lords, I thank the Minister for responding so quickly to our pleas last week about fuel poverty. I welcome what we have before us today. I think it is quite clear, as my noble friend Lord Jenkin said, that unless we understand the problem properly we cannot design effective solutions for it. I am particularly grateful to my right honourable friend the Secretary of State, Ed Davey, for pushing this within the coalition, and I am grateful that he has managed to move it forward. My noble friend Lord Deben talked about “may” and “must”: I think the answer is that my right honourable friend managed to persuade them on one issue, but not on the other.
Baroness Maddock
So we must help him to persuade others on the other issue, the decarbonisation target.
I will try not to be repetitive, because I agree with many of the things already said. I particularly welcome the fact that we are going to be monitoring things as they go along, that there will not just be an end target but targets in between, and we will see what is going on. The Warm Homes and Energy Conservation Act 2000, and the Home Energy Conservation Act before it, were both Private Members’ Bills. One of the problems with Private Members’ Bills is that they are not actually owned by the Government, and so they were not part of a big department getting together and putting legislation forward. Both those Bills suffered from that, because in many ways they were allowed to just drift along. That is a slight exaggeration, but the Warm Homes and Energy Conservation Act 2000, my own Act, drifted so much so that at the end the previous Government wanted to get rid of it completely. When the coalition Government came in—it was one in, one out—they thought it was ripe for the picking. We pointed out that you need that Bill if you are really into localism and are going to use local authorities—another thing I welcome in this regard. Maybe we will do a little better this time, because this has been an important piece of work done by a government department.
I commend to noble Lords the White Paper, Fuel Poverty: a Framework for Future Action. It will help people who have already contacted us because they were worried about one or two items that the noble Lord, Lord O’Neill, pointed out. It will answer some of their questions. This is not the final document and strategy. A more detailed strategy will come after the Bill has passed into law, so that we can co-ordinate it properly.
I will highlight one or two things. Everybody has talked about properties that are difficult to deal with for various technical reasons, but something that has always bothered me is that a large number of the fuel poor live in the private rented sector. Many things that we are trying to do are much harder to do in the private rented sector. I hope that, when the final strategy comes out, we can do something about that.
Some concerns that people have raised include the fact that we are changing the definition, and that it will be in secondary legislation. However, my experience of definitions being in primary legislation, in particular in the two Private Members’ Bills that became Acts that I talked about, was that it did not make any difference. Even though the target was in primary legislation, it seems that we are not going to hit it, so we have had to do something else. Therefore, history shows that that is not the total answer.
Many people who contacted us were worried about what the priorities and target dates will be. I hope that, as the noble Lord, Lord O’Neill, said, we will be able to look into that before Report. Clearly, a lot of detail will be in the final strategy, and we will be able to make our suggestions.
Another area that has been mentioned is how we will pay for this and how we can stop putting extra burdens on the fuel poor when we are trying to deal with climate change and decarbonisation. The document indicates that the Government are acutely aware of the issue, and that we need to look at how to deal with it. Perhaps my noble friend will be able to indicate some of the forward thinking on the issues that I have raised.
The other area that I particularly welcome is the commitment to much more cross-departmental working. That may be something we will touch on when we debate the next amendment about something else. We hear this phrase time and time again, but it does not always happen. Somewhere in the document it says that the Government will set up a body to work across departments. That has been tried in the past and has not been terribly successful.
I will touch on one issue mentioned by the noble Lord, Lord O’Neill, who talked about dealing with streets. One thing that has been discovered by those looking at who is fuel poor is that quite often they are peppered around streets. If you are trying to target your money at the fuel poor, sometimes you do not succeed if you take whole streets. This is not a worry with decarbonising, but trying to make money go around for the fuel poor is complicated. This is slightly disappointing, because it was talked about in the context of the Home Energy Conservation Act.
I will touch briefly on rural areas, to which my noble friend Lord Deben referred. As noble Lords know, I live in north Northumberland, which I think is even more rural than where my noble friend lives.
Baroness Maddock
Perhaps through e-mails.
Our problem is that a lot of properties are farm cottages. I go back to my worry about the private rented sector. My husband is an MP there and sees a lot of tenants. The farm cottages are often in the private rented sector because there are not as many farm workers. Trying to tailor all the programmes to do something to these properties, and in particular to get the landlords to do something, is very difficult. I have gone full circle and come round to the private rented sector, which I hope we will deal with.
I am pleased that the Committee has, within days, got something in response to our pleas last week. I thank the Minister for introducing the amendment.
Lord Whitty
I, too, thank the Minister for getting fuel poverty into the Bill. Throughout the Commons proceedings, and the earlier stages of the proceedings in this House, there was considerable criticism that one of the major areas of concern in energy policy—fuel poverty—was not reflected in the Bill. We now have a clear indication of the way the Government are going on this. I also join the noble Lord, Lord Jenkin, and others in thanking the Minister and her officials for trying to explain this somewhat complex position to us last night. The penny may have dropped but I am not sure the shillings have yet on all of it.
Indeed, some of it is not clear and cannot be clear until the Government, in six or eight months’ time, come up with a strategy and the secondary regulations. I understand that. On the other hand, there are some problems with the approach as so-far revealed. The Minister said she wants to display a rigorous and flexible strategy under these provisions. There is a slight danger of being too rigorous and complex on definition and target issues and too flexible and unclear on what the actual strategy will deliver. I will come back to some of those points.
I thank the Government for getting us here. However, we should not ignore the fact that this is, for those of us who have been engaged in fuel poverty and those who suffer from it, quite a sad point. Although most of us have recognised that this has been the situation for some considerable time, we have now explicitly recognised that the statutory ambitions set, with all-party support, in the legislation originated by the noble Baroness, Lady Maddock, and the follow-through of that, have failed. That has implications for other targets that we set in this area. There is a necessity to be rigorous in not only setting targets but also checking, enforcing, reporting and adapting to any failure to meet those targets, however difficult that might seem.
This is also the point where we have accepted that achieving those statutory targets is not easy. Previous statutory targets talked about the eradication of fuel poverty. We have now abandoned that ambition and substituted reduction, and a reduction that will be made in order of priority. I understand why that is the Government’s position, but in terms of the campaign on fuel poverty it is quite a serious retreat. It might be inevitable. From now, we need to treat it as inevitable and ensure that the new policy, strategy and less ambitious targets are achieved but we should not let this pass without recognising that it is a quite a profound change in our approach.
It is also more of a technologically significant change in the measurement. We debated this and others have commented on it. Some of us had the suspicion when the Treasury, when obliging DECC to look at this area, hoped that the redefinition would define the problem away. Whatever else one may say about Professor Hills, he has definitely reinforced and underlined that fuel poverty is an important and distinct area of policy, one that requires rigorous and effective measures to tackle it. Even with his measurement, which excluded a number of things, we have 2.5 million households in England alone suffering from it. We owe Professor Hills a debt for his report. We are now trying to turn that into some measure of reality.
The first complication it presents is that we now have an English target which measured differently from that in Scotland, Northern Ireland and, probably, Wales. That makes a UK approach to it difficult. Indeed, there was some advance on the basis of the old measurement, which was relatively easily understood, even though it was itself quite complex. It was relatively well established and we were about to adopt it on a pan-European basis. Europe will also have to think again about any co-ordinated approach on this.
Let us accept that the Hills definition will be one of the main measurements. I cannot remember the exact reference, but quite near the beginning of the report that I received yesterday, it says that from now on the Government will establish the figures only on the basis of one of the Hills measurements—namely, the low-income/high-cost measurement. At least for a few years, we need not only to take in the other Hills amendment, relating to the depth of fuel poverty—which in some ways is a useful and more understandable measurement—but to continue to measure it on the old scale. That is the normal approach in a lot of statistical series. Eventually, we may not need that, but for the next five years the credibility of this strategy requires us to look at what we previously defined as fuel poverty, and what our colleagues in devolved Administrations are probably going to go on using as the definition, in order to see how well we are doing. On a purely statistical basis, we ought to retain that.
It is of course also true that many points in Professor Hills’s strategy are not yet fully reflected in the Government’s actions. We will come back to that as we go on over the next few months. As expressed in the documentation now before us, there is clearly a triangle of effects on fuel poverty: household income, the energy efficiency of the home and the appliances within it, and the price of energy. All three are open to government intervention. The strategy shown by the Government so far focuses very much on intervention on the energy efficiency of homes. I am strongly in favour of such intervention but there is a danger of ignoring the other two sides of the triangle and the forces that define whether fuel poverty is going up or down.
It is important that we find a way of conveying the narrative on all three fronts to the population. Fuel poverty itself, the measurements involved and the nomenclature of the various intervention schemes are complicated enough, and we must find a clear narrative to explain what we are doing on all those fronts. At the moment, as the Commons Select Committee said only a few weeks ago, the Government are unable to convey what they are trying to do and why they are trying to do it when it comes to fuel poverty and energy efficiency interventions.
The new definition, as I say, has some advantages. It probably excludes a number of Members of the House of Lords who are on a reasonable income but live in rather draughty castles. I commend it from that point of view. However, although the Minister may contest this, it does not obviously take us hugely further forward in terms of operationally identifying precisely who those people are. It is pretty sound statistically but, operationally, we have no further clue as to whether such and such a house in such and such a town or village is actually suffering from fuel poverty or not. At one point, as mentioned last night at the briefing, the document refers to assessing the condition of housing at a local level. However, we do not actually have a register of the condition of every house—we only have a broad idea of what the SAP rating of certain kinds of housing is—nor do we have the identification of the household structure and the household income within it. I am not sure that we ever can have that. However, to make this provision work most cost-effectively, we need to see whether local authorities, or other local bodies taking the lead on this, can pin down the priority areas more precisely in terms of streets, houses or type of persons.
Baroness Maddock
I thank the noble Lord for giving way. When I introduced the Home Energy Conservation Act, that was one of the things we were trying to get local authorities to do. In the early days, they were quite innovative. For example, Sutton had infra red photographs in its local library which showed where the relevant houses were. I agree entirely with the noble Lord that we need to be able to do that but there are other things that we can do and there is legislation to enable people to do them.
Lord Whitty
Yes, but this has not been a priority for local authorities and in the present period of austerity is unlikely to become so unless the strategy that the Minister comes up with in a few months’ time places that obligation on them and provides resources to enable them to carry it out. At the other end, the income end, the data-sharing arrangements which were introduced in legislation—two Energy Bills ago, I think—have not fully worked in enabling suppliers to identify which of their customers are likely to be on benefits, which, itself, is only a very rough proxy of the fuel poor.
The document and the Minister have indicated that we need to be more targeted in our approach. Indeed, there is a significant element of prioritisation, so if we need to identify, first, those who are in deepest fuel poverty and take action with them initially, we need to have more detailed information, at least in broad terms. If we are to have an area approach, there is a bit of a conflict between that and a prioritisation on grounds of deepest fuel poverty or, indeed, the other priority identified in the document of serious health problems, which poses even more difficulties and is subject to data protection problems.
Given the Government’s emphasis on intervention in regard to energy efficiency, it is important to obtain clarity about the resources being put in by the Government or being diverted from consumers’ bills to deal with this. I asked the Minister whether the Government could indicate the total amount to be spent on fuel poverty determined energy efficiency interventions over, say, the next five years. The figures that NEA has come up with, comparing 2010-11 to this year, show a significant drop in intervention because not only did Warm Front, which was taxpayer-funded, end completely at the end of last year, although some schemes are still being completed, SERT and CESP were dropped and we all moved onto the ECO. We have another group of amendments dealing with the ECO and I do not want to go into those in detail now, but even assuming that the ECO works, in aggregate more than £200 million less is being diverted via taxpayers’ money or cross-subsidy from the consumer into fuel poverty and energy efficiency schemes. I will discuss later whether, even within that, the ECO is working most efficiently.
It is important to move forward on this issue and the government amendments are a significant step in that direction. Some of the documentation is still not adequate and we are unlikely to see any more before the Bill completes its passage. It could be another six to eight months before the secondary legislation appears, which takes us well into the second half of next year. By that time, according to most prognostications, energy prices will have risen, low-income households will not have seen an increase in their income and the tariffs that are likely to be offered under Ofgem’s new arrangements will not have been geared to attacking the problem of fuel poverty. That is the other area that is not covered in the Government’s policy statement, which I spoke of at probably excessive length in our previous Committee session—namely, that you can use the tariff structure as well as energy-efficiency interventions in order to improve.
Baroness Verma
My Lords, I thank all noble Lords for their warm welcome—even though from the Benches opposite it was perhaps slightly lukewarm. The noble Lord, Lord Whitty, and I genuinely share a concern about fuel poverty and I am extremely grateful that he recognises that the target that was put in by the previous Administration has not worked to alleviate fuel poverty. Something needed to be done and we have an approach that has been reviewed and put forward independently.
I will start by responding to the wide range of interventions. I thank my noble friend Lord Jenkin for his extremely warm welcome for the amendments, and all noble Lords who took the time to attend yesterday evening’s briefing. My noble friend is absolutely right, as are other noble Lords, that we really need to address issues around fuel poverty, and about how important it is that we retain a flexible approach and respond to the change in dynamics across England. I am extremely grateful to my noble friend Lord Jenkin for laying out eloquently and with great precision what the Government are trying to deliver. I, like him, when I first came across some of the statistics at which we have to look, was quite puzzled. I have been extremely grateful to my officials for explaining to me, perhaps for longer periods of time than to noble Lords, exactly how they work.
My noble friend also mentioned the gas grid, and the policy of gas grid extensions. Through the fuel-poor network extension scheme, which is part of the new price control arrangements known as RIIO, the gas distribution networks will be required to connect 80,000 fuel-poor households to the grid over the period of 2021. I can confirm that this is not adversely affected by the new definition. We can of course work with the sector on this, including the fuel poverty advisory group, to ensure that those who would benefit from being off-grid can access and benefit from our proposals.
Lord O'Neill of Clackmannan
My understanding of the concern of the noble Lord, Lord Jenkin, was that there was an implication that the figures to be connected to the gas grid were going to be far greater. Therefore, that would have a difficult impact upon the existing investment programme for the national grid. Are we being told that they are getting exactly the same number of households connected but possibly in different places?
Baroness Verma
The information I am being given is that there will be no change.
Lord Jenkin of Roding
Perhaps I can help the noble Lord, Lord O’Neill. The point that has been put to me on behalf of the national grid is that it does not yet see what the change in the target would mean for their investment programme. I endorse very much my noble friend Lord Deben’s point that there is now an element of uncertainty. It is that which needs now to be resolved as quickly as possible. I am sure that they will respond firmly to the invitation which has been issued for discussions to take place. Certainly, I do not know and have not been told whether this means investment in different places for different communities. They do not yet know enough about it to be able to make that sort of decision.
Baroness Verma
My Lords, to continue with my responses, the noble Baroness, Lady Liddell, asked about ECO and what was contained within it. Within ECO, energy suppliers will provide fully subsidised measures under the affordable warmth obligation to low-income, vulnerable households. We estimate that around 230,000 low-income households can be supported each year through ECO, so there will be no up-front cost through the affordable warmth obligation to low-income households.
Again, I am extremely grateful for the support of the noble Lord, Lord O’Neill, although I would say that, rather than sticking in his throat, it was a gentle hiccup. Through the Green Deal and ECO we are endeavouring to reach out and get to those households that would benefit the most. Again, I point the noble Lord to the £540 million that is being made available though the affordable warmth obligation and the carbon-saving communities obligation. We also have the warm home discount, with the overall effect that all consumer bills will be lower than they otherwise would have been had these measures not come into place.
The noble Lord also asked about the reduction in government funding for fuel poverty. Funding for fuel poverty has not been reduced over the spending review. Total spending on fuel poverty is being increased and by 2014-15 we expect to see spending on the warm home discount at £310 million and spending on ECO will be at least the £540 million that I said—up around 10% on 2009-10.
My noble friend Lord Deben rightly recognised fuel poverty in poor rural parts of the country. I completely agree with him that we need to make sure that the measurements we take help us to respond to those in rural households facing fuel poverty so that they are also able to benefit from our measures. The average fuel poverty gap in poor rural areas is £558 compared with £361 in other areas. In underpinning the new target, we need to reflect in other strategy how we will approach the fuel poor in rural areas. When it comes to consultation, I hope my noble friend will be able to assist us in that.
My noble friend Lady Maddock asked about the private rented sector and fuel poverty. Again, I recognise as she does the importance of ensuring that we work closely on regulations so that the private landlord sector is not omitted. From April 2018, landlords will not be able to rent out any property that does not meet the minimum efficiency ratings, subject to the provisions already present in the Energy Act 2011.
The noble Lord, Lord Whitty, said that while he sort of welcomed the measures instead of shillings pennies were being dropped. I will try to convince him that rather than shillings we need to talk about pounds being dropped. We recognise that we have to eradicate any kind of poverty but current methods—targets—are not working. Realistically, we need to see how we can reduce it to get to the point of seeing poverty eradicated. I need to make it clear that we are not abandoning fuel poverty targets. We are improving them and enhancing our delivery of meeting them. Our amendments increase certainty that successive Governments will keep this issue at the top of their agendas. This is a cross-party issue. I think all those sat in the Committee today recognise that successive Governments have failed. We need to make progress.
On publishing fuel poverty statistics, I am happy to reassure the noble Lord, Lord Whitty, that we intend to use the Hills fuel poverty gap and publish the relevant statistics. We will also use our annual fuel poverty statistics publication to record figures using the old 10% indicator.
The noble Lord also asked about the operational aspect of our definition. Targeting is always difficult but we hope that the new definition will open up new improvements. We currently use a number of proxies for fuel poverty, such as receipt of certain means-tested benefits. That will need to continue for some time but we know, on the ground, that local authorities and others are using a range of technologies and techniques to identify fuel-poor households. We are currently evaluating the outcome of the £31 million fuel poverty fund that we made available to English local authorities last year, with a view to seeing what works best in terms of targeting.
The noble Lord also asked about devolved Administrations. The measurement of fuel poverty is a devolved issue. The devolved Administrations are able to measure the problem in their own ways. We continue to work very closely with our colleagues in the devolved Administrations and have explained our proposals to them.
To finish on the noble Lord’s question on the total expenditure on fuel poverty, we have recently made available information on our spending on fuel poverty, which is going up. That was in an Answer to a Question in another place, which I will share with the Committee in writing as soon as possible. With that, I hope noble Lords will accept this amendment.
“Carbon monoxide detection
(1) The Secretary of State shall make regulations to provide that any person who undertakes work on a carbon burning appliance within a property shall ensure that—
(a) the premises is equipped with an appropriate carbon monoxide alarm, or(b) in the absence of such an alarm system, the occupier or a person acting on behalf of the occupier is advised of the requirement to install such a system.(2) The Secretary of State shall make regulations that any person replacing or installing energy efficiency measures which alter the air tightness of a building, where a fuel burning appliance is situated, shall ensure that—
(a) the premises is equipped with an appropriate carbon monoxide alarm, or(b) in the absence of such an alarm the occupier or a person acting on behalf of the occupier is advised of the requirement to install such a device.(3) The Secretary of State shall make regulations to provide that—
(a) no person shall replace or install a meter or a smart meter in any premises unless he is equipped with a personal alarm monitor for detecting carbon monoxide gas;(b) where a person replaces or installs a meter or a smart meter he shall ensure that—(i) the premises is equipped with an appropriate carbon monoxide alarm, or(ii) in the absence of such an alarm the occupier or a person acting on behalf of the occupier is advised of the requirement to install such a device.(4) The Secretary of State may by regulations amend the Gas Safety (Installation and Use) Regulations 1988, to ensure—
(a) the premises is fitted with an appropriate carbon monoxide alarm where any carbon burning appliance is in situ, (b) at intervals of not more than 12 months check that alarm system to ensure it is fully functional,(c) its power source is in good order for a further 12 months, and(d) proof of purchase of any alarm is retained for the period of that alarm’s lifetime, as specified in the manufacturer’s instructions.”
Baroness Finlay of Llandaff
My Lords, these amendments concern carbon monoxide detection. I want to explain why carbon monoxide needs to be detected, why the Energy Bill is the place that should have this amendment, and to explain the amendment briefly. I am grateful to the Minister for meeting me yesterday and giving me so much of her time.
Carbon monoxide is a colourless, odourless gas emitted when carbon, however produced—whichever fuel it is in—is incompletely burned. Domestic sources are usually faulty or improperly installed cooking and heating devices. At concentrations of 12,800 parts per million, death occurs in one to three minutes. At lower levels, ongoing damage may persist for years. The problem is that because you cannot see or smell it people often have no idea that they are being killed by it. Hospital episode statistics for England and Wales show that at least 40 people a year die from carbon monoxide poisoning, and about 4,000 people attend A&E departments with carbon monoxide toxicity. The inquiry that I chaired on behalf of the All-Party Parliamentary Group on Carbon Monoxide found that, based on the Government’s approximate figures, these incidents together are probably costing the nation well over £117 million a year.
However this is only the tip of the iceberg. The most authoritative estimates suggest that carbon monoxide poisoning is much more prevalent than previously thought. The majority of those who have discovered that they have been poisoned have never attended A&E and are thus excluded from official figures. Indeed the overwhelming majority of people poisoned by fossil fuel combustion are completely unaware that they are being or have been poisoned. They present with non-specific symptoms, which makes it difficult to diagnose; these include headache, chronic fatigue, mood disorders, poor memory, dizziness, poor or disturbed sleep, poor concentration, tummy ache, diarrhoea, pins and needles and recurrent infections. I should think every Member of your Lordships’ House has had some of those symptoms at one time or another. The effect on the brain is particularly marked: in chronic low level exposure the cognitive changes result in disordered chaotic thinking, which persists. The changes are irreversible and brain changes can be seen on MRI scans years later.
There have been studies into low level exposure. In 2011 Liverpool John Moores University, working with Mersey Fire and Rescue Department, visited 2,180 homes. Over 90% had a fire alarm but fewer than 10% had a carbon monoxide alarm. They left CO logging monitors in 109 homes for six months. These monitors scan to detect whether there is CO present every minute. The findings were horrifying: 24 homes—over 20% of the total—had CO levels at some time that were greater than 50 parts per million—the level at which symptoms develop. A further 53 homes—almost half—showed CO levels between 10 and 50 parts per million. So, half of the homes had chronic low level exposure, and the residents were completely unaware of it.
A study by University College London found that 2% of 597 homes visited had a “very high” risk of carbon monoxide exposure, and a further 4% were at “high” risk. Its study showed that the presence of an unsafe gas appliance was linked to neurological symptoms.
A joint study by Public Health England and Hackney Homes looked at all the homes managed by Hackney Homes which had a carbon monoxide alarm fitted, more than 22,000 homes. Between November 2011 and April last year, there were 106 alarm activations. In 0.4% of households the alarm had gone off: 29% were due to a defective cooker; 9.8% to a defective boiler; and 25% to a defective fire of some sort. In 10.6% of cases there was misuse of a cooker or cooking methods. Some families seemed to put tinfoil over the top of the heating area, which decreases the airflow and raises carbon monoxide levels. In 38.5% of cases the alarm had gone off because the battery was defective and needed to be replaced—so the battery detection was working.
Public Health England concluded that carbon monoxide exposure in local authority homes could be causing substantial ill health across the country and that the problem is seriously under-diagnosed. CO alarms are cheap. I will not ask for a show of hands of how many of your Lordships have got them in their homes, but an alarm with a seven-year battery life costs less than £20; in other words, protection for one year is cheaper than one cup of coffee on the high street. It is not expensive. Everyone in this House could afford several alarms in their home.
Why should we tackle carbon monoxide in the Energy Bill? We have already debated how people will struggle to pay their bills. Poverty puts energy safety at risk because servicing appliances is less likely to be a priority than paying the bill for running that appliance, whatever it is. Alternative fuels such as solid fuels and biomass are typically more dangerous in terms of carbon monoxide exposure than gas. It is classically thought that it is related to gas but actually the bigger problems now come from other fuel sources.
This amendment is concerned with detecting that carbon monoxide. Today in Derby there is a conference involving 113 organisations concerned about carbon monoxide detection and the effects of poisoning, and they all are supportive of this amendment. Industry and victims’ groups have been consulted and have had input into the wording of this amendment, specifically: the Energy Networks Association, Energy UK, HETAS, the Institution of Gas Engineers and Managers, OFTEC, the All-Party Parliamentary Carbon Monoxide Group, the Chartered Institute of Environmental Health, the Gas Industry Safety Group, the Gas Safe Charity, the Gas Safety Trust, the Heating and Hotwater Industry Council, the Council of Gas Detection and Environmental Monitoring, UKLPG, the Carbon Monoxide Survivors, Activists and Victims Group—which has been very active in this area, understandably—and Skanska. This amendment has not come out of the blue.
The first part of the amendment will require an engineer undertaking any work on a carbon-burning appliance to check on the suitability of the CO alarm in the property and make recommendations. It is not burdensome on businesses and can cover all appliances in all situations.
The second part relates to energy-efficiency measures and indoor air pollution. Energy-efficiency measures such as the Green Deal aim to make properties better insulated. But an unintended consequence of this is that hermetically sealed houses increase the risk of carbon monoxide poisoning by decreasing the “advantageous air” ventilation that is required to safely operate many appliances. Of all the noxious gases causing indoor air pollution, carbon monoxide is the most dangerous.
The co-chairs of the All-Party Parliamentary Carbon Monoxide Group, of which I am one, have been working closely with the right honourable Greg Barker, the Energy Minister, who fully recognises the concern and has worked to try to improve the Green Deal. But the Green Deal documents do not go far enough, focusing on existing rather than new alarms. This provision will clear up any confusion for installers of energy-efficiency measures and will meet the Minister’s commitment more comprehensively than the Green Deal.
The third part relates to smart metering. This will allow smart meter installers also to install a carbon monoxide alarm when they visit each property. It also protects the engineers themselves. Northern Gas Networks and Scotia Gas Networks have found unexpectedly high levels of carbon monoxide when their engineers have visited customers’ properties while wearing these personal alarms. Fortunately, most gas distribution networks have either provided or are piloting the provision of personal alarm and air monitors to protect their own staff on home visits. Industry has advised us that it would prefer that proposed new subsection (3)(b)(i) said,
“gas detection equipment capable of detecting carbon monoxide”.
I would suggest that the amendment as it is currently worded should not be accepted. The wording should change to allow for new detection devices as they are developed. Visits by smart meter installers to every home provides a specific window of opportunity to install a carbon monoxide alarm; that will be a fraction of the cost of the smart meter rollout and will save lives. Industry contacts have told us that they are keen to be involved in this because smart metering may provide an opportunity to save lives.
The fourth part focuses on landlords. We have heard already about landlords and how those renting property from private landlords are at higher risk—they have a fivefold higher risk of carbon monoxide incidents than members of the population in other dwellings. The Downstream Incident Data Report has provided data on this. Domestic carbon monoxide alarms are now required when a new or replacement appliance burning solid fuel is installed and, in Northern Ireland, this extends to all newly installed appliances, irrespective of the fossil fuel. This amendment gives specific protection to those people who are at risk because they rent where they live and are often in a poorer group of the population. It will require private landlords to have carbon monoxide detection in their properties. I hope that the Minister will accept these amendments, possibly with some modification of the wording, because they are extremely important. There is a typographical error, for which I apologise, in the proposed new subsection (4): it refers to the date of the regulations as 1988 but it should be 1998. I beg to move.
Baroness Maddock
My Lords, I support the noble Baroness in her efforts in this area. I had better indicate that—I cannot remember—I may be a co-chair of the All-Party Group as well. I cannot remember what the job was last time. The noble Baroness has introduced the amendment so well and with all the facts that I do not need to say very much at all. I first became aware of this problem when I was a Member of Parliament in Christchurch and a family in the constituency was affected by it. One of the family members died because of a flue wrongly installed by a builder. I have been aware of this matter ever since and have campaigned a bit but, I have to say, the noble Baroness has taken this much farther forward and with much more energy than I have ever done and I am grateful to her.
One of the problems that we have come across over the years—and I have proposed amendments to other Bills about this—is that the Government always say, “It’s not us”, and, “It’s not appropriate in this Bill”. I have a feeling that this may be what the Minister will say today. Interestingly, I notice that there are some people who know about it, because the civil servants behind her changed between the first and second amendments that we are discussing. Somebody in her department clearly knows something about this. It is time that we took this seriously—we have that opportunity now, as we have so many programmes where people go into other people’s houses and install equipment that might have faults in it of the kind we are discussing, when they could easily fit something else or easily detect where carbon monoxide is. Not only should we be doing this, but we should keep much better records; as the noble Baroness, Lady Finlay, said, one of the problems is trying to get records of how many people there are. The worst thing is that sometimes even doctors do not recognise the symptoms. There have been cases where someone has turned up at a surgery but the symptoms have not been diagnosed and they have gone home and died. We need to take this more seriously and to stop making excuses about why we cannot do some of the things that are—as the noble Baroness, Lady Liddell, said earlier—common sense.
If the Minister cannot accept the amendment, I hope that she will help us get something that we can put down on Report that will deal with this once and for all. We can have the cross-departmental working that we are going to have on fuel poverty on this as well.
Lord Hunt of Chesterton
My Lords, when we were discussing the previous energy Bill, I asked the Minister whether it included the word “ventilation”. Heating and energy involve insulation, heat and ventilation. The Minister asked the people behind him, who said that the Bill did not have that word in it. I was then assured that ventilation would be covered in secondary legislation or regulations. This matter is partly to do with ventilation. If it would be easier to accept the amendment by saying that it is an application of ventilation, which is part of energy, so be it.
Lord Deben
My Lords, we ought to help the Minister on this. I suspect that I know what advice she has been given, and it is important to warn her about it. I will express that warning very carefully.
In the 19th century there was a scandal when people bought wallpaper that had a colouring based on arsenic. Large numbers of people died. The Government consistently refused to outlaw arsenic in the manufacture of that wallpaper. In the end, it was the fact that people ceased to buy the wallpaper that stopped the damage. The Government did not change the law until 1974. Therefore, there is a history of Governments not doing what they ought to do at the time they ought to do it. I was fascinated to read some of the evidence that the Government gave about why they were not doing it. Noble Lords will not be surprised that the argument was, first, that there is no need for regulation in this area; secondly, that it will be expensive; thirdly, that there is no call for it; fourthly, that people ought to be able to make these decisions themselves; and, fifthly, that the science is not quite proven. Have we not heard those arguments before, and will we not hear them again?
I suggest to my noble friend that this is a genuinely serious issue that could be solved. Lives can be saved at a cost that is significantly lower than it used to be, because government is enabling people to go into these premises for all sorts of other reasons. If the Minister has been advised that it is inappropriate to have legislation in this area—of course, I do not know whether she has been—I would pick up on the comments of the noble Lord, Lord Hunt. Anyone who has a gas fire installed is always forced to install further ventilation, even if it is utterly unnecessary. We already have legislation of a very detailed kind. If you wanted to put a gas fire in this Room, even though it may be very draughty, you would have to put a ventilating spot at the top there because that is what the law says.
I am not suggesting that we should be in any way as prescriptive as that. We should not say what kind of alarm there should be, except to say that it should be effective, and we should certainly be willing to allow alterations to the text of the amendment, because I am not expert enough to know whether it would do the job. I hope my noble friend will understand that this is one of those issues in which everybody involved has to say to themselves, “Am I prepared to allow people to die when I could stop it?”. That must be of great importance. We have to ask ourselves, individually, as Members of the House of Lords, officers of the department and Ministers, “Am I prepared not to act when action will save lives?”. That is not acting in some extreme way, or some awful health and safety nonsense. The very simple fact is that modern equipment needs this. It ought to be part of the deal. No deal should be done without it. In other circumstances, it is precisely like stopping people working in unsafe conditions in factories. We do that as a matter of course.
Lastly, it would be quite wrong not to use the opportunity of the Bill to do this on the basis that there might be another opportunity, another Bill or another place. We can use this Bill—the provision falls within the Long Title. There is no reason why we should not do it here; it is an appropriate place to put it. I very much hope that my noble friend will accept what is a really valuable contribution and play her part—and ours—in ensuring that next year a whole lot of people who would have been dead are alive.
Lord Oxburgh
My Lords, I, too, support this amendment. After the eloquent contributions we have heard, there is little more to be added. I simply say to the Minister that if, in spite of the eloquence of noble Lords, she does not feel able to legislate for this here, when will the Government do so? Will she give a firm undertaking that legislation will be introduced? For the very reasons that the noble Lord, Lord Deben, gave, people are dying and we must do something about it.
Lord Grantchester
My Lords, we follow other noble Lords in also using our words in support of questioning the Minister on when such necessary legislation might come forward, if not included in the Bill currently before us. We agree that it mirrors to a large extent regulations that require the fitting of smoke detectors in all residential new builds, yet would go further than that in making it mandatory to install these alarms in all homes with any gas appliance.
We entirely agree that greater public awareness about the dangers of gas and of carbon monoxide poisoning is extremely important. After rising incident rates, it is encouraging that last year the number of such incidents fell. I understand that last year there were 46 incidents with casualties and one death. That still highlights that the problem persists. The noble Baroness, Lady Finlay, was correct to point out that there is severe underreporting going on and that incidents can affect health in many small, unnoticeable ways.
It is also striking that evidence suggests that those renting from private landlords are more at risk than those in other occupancy types. This deserves very careful consideration by the Government today. Like others, we understand that detectors cost only about £30, so this does not represent a huge cost to the household. The charge might also be absorbed by the plumber or fitter because it would seem to be him that would be liable under this clause. However, could the Minister clarify, as is it not entirely clear from the wording under subsections (2)(b) and (3)(b)(ii), if the occupier, although being made aware of the requirement, could refuse to pay the cost?
Baroness Verma
I am extremely grateful to the noble Baroness, Lady Finlay, for moving this amendment, and other noble Lords for participating in what has been a genuinely important debate on carbon monoxide poisoning. I am extremely grateful to the noble Baroness, whom I regard as a friend, for meeting me yesterday. Let me say from the outset that the Government take this issue extremely seriously.
For example, in my own department, following debate during the passage of the previous Energy Bill, prompted by the noble Baroness, we have procedures for checking and recommending carbon monoxide monitors in DECC programmes, including the Green Deal. In particular, the Green Deal adviser is trained to check for the presence of carbon monoxide detectors, and the Green Deal provider includes CO monitors in the specification of works. We are also looking into the Green Deal quality monitoring processes to determine whether we are checking the effectiveness of our policies with respect to carbon monoxide monitors.
We are sympathetic to the aims of this amendment. However, we do not believe that the proposed new clause would deliver these aims. Existing building regulations allied to the licence conditions for gas suppliers and the codes of practice established for boiler installers, meter installers and Green Deal installers ensure that occupiers are advised of the need for a carbon monoxide alarm in situations where the risk of poisoning is highest. Building regulations already require carbon monoxide alarms for solid-fuel boilers. They have also been updated to take account of the risks associated with the increased air tightness that can come with improvements in energy efficiency.
We are also taking steps to ensure that operatives are sufficiently competent to complete smart meter installations safely. Meter installers, where appropriate, will already inform the customer about the dangers of carbon monoxide and the need to have gas appliances serviced and checked. All meter installers will be required to be accredited by the National Skills Academy for Power as having completed their training, which includes gas safety elements.
Those working on dual-fuel or gas-only meters will also be required to be gas-safe accredited. In addition, condition 29 of the gas suppliers’ licence conditions considers gas safety; in particular, it states that the licensee must take all reasonable steps to provide free-of-charge information about the dangers of carbon monoxide poisoning and the benefits of fitting an audible carbon monoxide alarm.
We understand the scope of the gas safety regulations to be limited to gas safety, rather than any carbon burning device, as set out in the amendment. In the case of gas, as mentioned, the onus is already placed on the licensee to take all reasonable steps to provide free-of-charge information about the dangers of carbon monoxide and the benefits of an audible carbon monoxide alarm. It is not clear that a requirement on all landlords to install a carbon monoxide alarm is proportionate, but that is something I will take away and reflect on.
Across government, we are continually monitoring the effectiveness of our policies and processes regarding carbon monoxide. However, I have listened to the comments that have been made. This is an issue which my department in particular needs to understand better. I invite the All-Party Parliamentary Carbon Monoxide Group to come and meet me and my officials to discuss these issues further. I have also noted that my department is currently not a member of the cross-government group on gas safety and carbon monoxide awareness. I will ensure that officials from my department join the group and contribute to its meetings in future.
I know that my responses would perhaps not have satisfied noble Lords to the extent that they would have wished. Having said that, and reiterating my opening remarks that I take this issue incredibly seriously, I hope that the noble Baroness has found my explanation reassuring and will, on that basis, withdraw her amendment.
Baroness Finlay of Llandaff
My Lords, I thank everybody in the Committee for their unconditional support. I recognise that the Minister realises the importance of this. I will warmly welcome officials from her department to our All-Party Parliamentary Group, as will my co-chair, the noble Baroness, Lady Maddock.
This is the second Energy Bill that we have put this amendment down on. We have explained previously why this presents a unique opportunity. It would be a dereliction of our duty to the nation not to use this opportunity to widen the scope of protection from the pockets of protection that are there.
I do not know how any of us could accept not putting this in the Bill and then look the bereaved in the face. These are young people dying. I will tell the Committee about two boys: one went up to university; a year later his brother went to the same university so that his older brother would be there to look after him. They found a flat; the second night in that flat it was cold and they put the heating on. They did not wake up the next morning—two bright, much loved university students dead because their landlord had a faulty appliance there and there was no alarm. An audible alarm costing less than £20 would have saved both their lives. That is why this is so important.
I hope that the Minister will meet with us very soon. I would really welcome getting some wording, whatever it is, to signal that this is a major problem that needs to be addressed. The regulations can follow but we really should not let it drop. I accept that the wording here is not right. With that and with gratitude, I withdraw the amendment.
Lord Whitty
“Collective redress
Within twelve months of this Act coming into force, the Secretary of State shall bring forward regulations providing for forms of collective redress for consumers of gas and electricity.”
Lord Whitty
My Lords, Amendment 51ZA is a probing amendment, although it is one that the Government could give some commitments to taking forward, if not precisely in this form.
The Government are rightly giving Ofgem the power, in cases of breach of licence condition, to require licence holders—that is, supply companies—to pay compensation to the consumers who have suffered detriment, as well as raising a fine. I am not entirely clear whether that power also covers Ofgem requiring compensation for straightforward breach of general consumer law, rather than strict breach of licence, but it would make sense if it did.
The level of consumer complaints in the energy sector is one of the highest—in some years, the highest—of all sectors in our economy. The level of complaints dealt with by the consumer organisations, the ombudsman and, on occasion, by the courts, as well as by Ofgem, remains high despite significant improvements made or claimed by the supply companies.
It is clear that the complaints systems of several of the large energy companies are not really up to scratch. The ombudsman and Ofgem remark on this from time to time. Tens of thousands of consumers suffer from the effects of mis-selling, misleading information and misleading advice on choice of tariff and other conditions relating to tariffs; for example, on the cost determination. If you switch tariff, you have to pay a significant cost but that is rarely conveyed to you up front in an understandable form when you sign up for the tariff. It is a significant inhibition to many consumers switching and therefore to there being a proper consumer-led market in this sector.
One of the other areas of complaint is contested bills, particularly the estimated bills. As we were saying the other day, these are by definition wrong but are often insisted upon by the companies. On many occasions, eventually a settlement is reached, but it is on an individual basis. It may involve an ombudsman case but it reflects the general approach of the company to its consumers. In the impact assessment of the Bill, the provisions to improve Ofgem’s powers in this area are not given an accurate assessment. However, it is implied that the effect will be positive, and certainly I think that it will be. However, the size of detriment in the energy sector is potentially very large, and the inhibition on taking individual cases is also substantial. You have to go through a complaints process, and if you are not satisfied, you have to go to the ombudsman, take a case to court or get help from the various consumer and interest group organisations. That ends up costing a lot of time and often a lot of money, with not necessarily a coherent outcome to each case.
This situation is not confined to energy but, because of the high level of problems within energy, there are general aspects of provider behaviour from which a large number of consumers suffer. It is difficult to prove on an individual basis, but it is important that we recognise that there ought to be better systems for getting redress for consumers. By and large, consumer law in this country does not include collective provision, unlike in the United States, where there are significant class action provisions. Successive Governments have gone part of the way down the road towards greater collective provision, recognising that, for example, the PPI scandal in financial services would have been much better dealt with had there been a collective redress system rather than often quite aggressive complaints-handling companies taking up cases of varying degrees of authenticity, which led to differential outcomes case by case.
That was recognised by BIS in some of the discussion that surrounded the presentation of the draft consumer rights Bill that is now under pre-legislative scrutiny in another place. You have to get quite a long way into the Bill before you find it, but it is a significant breakthrough. It comes in paragraph 7 of Schedule 14 to the Bill and is the beginning of a provision for general collective redress in this area. It is on an opt-in basis, which is still somewhat narrower than the provision in the Financial Services and Markets Act of the previous Government, which unfortunately had to be dropped in its original form. It had a whole section on collective redress in the financial sector, which could have been taken out and generalised into other sectors and was particularly apposite for areas such as energy, where there is a regulator, regulated provisions and licence conditions, as well as general consumer law.
I attempted to get that written into the Enterprise and Regulatory Reform Bill, given that parliamentary counsel had already cleared it two years earlier. I have not bothered to provide the three pages for this Bill, because it covers esoteric matters relating to energy. I have set myself the slightly less ambitious target of requiring the Secretary of State to come forward 12 months after the Act is passed with some provision for collective redress in this area. I am encouraged by the fact that the Government have provided for at least one form of collective redress through the consumer rights Bill. Therefore, I hope that in 12 months’ time, the attitude of the House of Commons to that Bill and the Government’s reflection on it will give some guidance on how to do this with energy.
Therefore, it is an open-ended requirement on the Secretary of State in terms of the precise provisions. However, it is a signal that in this area of quite substantial consumer detriment and very substantial consumer distrust of the whole system we take this opportunity to make it clear that the Secretary of State must, at some future date, provide a means of collective redress within this sector.
There is a second amendment in this group to which I should refer. Amendment 51ZE seeks to delete the limit of the redress to detriment that occurred more than five years ago. The reality is that some of the mis-selling in energy, just like some of the mis-selling in the financial sector, started a long time ago, and the decision to apply a five-year limit is completely arbitrary. Indeed, that does not apply in the financial services sector. If a practice started seven years ago and was still happening within the last five years, there is no reason why the earlier detriment should not be taken into account. I am being quite modest in suggesting a 15-year limitation. I would be delighted if the Minister accepted my substitution of 15 for five; I would be even more delighted if he said that on reflection the Government would prefer to delete the limit altogether, because there are some long-standing wrongs in this area and the five-year limit does not seem sensible. I beg to move Amendment 51ZA.
Baroness Liddell of Coatdyke
My Lords, I support my noble friend in his amendment. The amendment seems particularly sensible and apposite, because at the time that this legislation was being crafted we were not aware of some of the mis-selling issues that were to emerge from the customers of energy suppliers. The last time I checked, there was something like 27 cases still pending with Ofgem, and that was before the announcement of the fines relating to mis-selling affecting Scottish and Southern Energy. Given the number and complexity of tariffs, many people will be checking whether they have been mis-sold.
It has been suggested that there is a danger that the mis-selling of electricity and energy in general could reach a stage where it matches the mis-selling of PPI and some of the financial services mis-selling. This would be useful for the Government to have in the armoury should that situation emerge. It is not radical; it is actually quite a simple measure. If we take into account that the most recent instances of mis-selling had been in the pipeline at Ofgem for around four years, my noble friend’s proposal to extend the time period from five to 15 years is measured and logical. I do not see this as greatly controversial but as a way of dealing with a problem that may be coming over the horizon and that would save recourse to additional legislation in the future. If the Minister cannot make a commitment today to support my noble friend’s amendment, perhaps this is something we might be able to return to on Report.
Lord O'Neill of Clackmannan
Following on from my two colleagues, it seems that mis-selling is endemic in certain areas of our public services—public with a small p rather than in the sense of Government-run.
A bank is as much a utility as the provider of electricity or gas. Mis-selling results in fines and punishments, which seem to be absorbed, and the public end up paying the fines through higher prices. We do not normally see a reduction in dividends as a consequence of this, but we might see a reduction in investment, which is one of the difficulties that we have if we clobber the utilities that want to invest. We require them to invest in order to sustain our supplies of power, gas and the like and, if we fine them very heavily, however understandable that is, we perhaps endanger some of that much needed investment. On the other hand, we are talking about the legitimate concern customers have in getting some kind of redress that they have not had in the past. That should also act as a deterrent to the companies so that they do not go about setting tariffs in the misleading and cavalier fashion that they have in the past.
We are talking about organisations that are persistent offenders when it comes to overcharging and misleading the public and, at the moment, we do not seem to be capable of deterring them. If we had simpler means for the public to get redress and for ensuring that these offenders are punished, we might begin to develop a deterrent culture, under which they would be a lot more reluctant to jump headlong into fiddling tariffs in the way that they have done recently—usually at the expense of not just the vulnerable but the whole spectrum of society. As we do not always know the full character or nature of the abuse, it is about time that we tried to introduce some more blanket form of deterrence. To my mind, a blanket form of deterrence in the form of easier access for the public to seek redress would be a major caution to these potential persistent offenders, which are in the dock at the moment as far as a large section of the community is concerned.
Lord Gardiner of Kimble
My Lords, first, I thank the noble Lord, Lord Whitty, for tabling these probing amendments, as he described them, and therefore providing this opportunity to continue the careful scrutiny of this part of the Bill. I have listened carefully to what noble Lords have said. I believe that we all want to secure the best for consumers but suspect that we may diverge on how that is best achieved.
Amendment 51ZA would require the Secretary of State to bring forward regulations to allow collective redress for energy consumers. We agree that consumers should be able to get the compensation that they are due when things go wrong. The consumer redress order powers we have put forward in the Bill will provide energy consumers with what we believe is the most appropriate and cost-effective way of obtaining this. In principle, collective redress can provide benefits in some sectors, but I am concerned about the potential impact such powers may have on the time and cost involved for energy consumers seeking redress through this route, and the impact of any additional costs on all consumers.
The most effective redress mechanism ensures that consumers receive timely and cost-effective compensation, and I was particularly interested in what the noble Lord, Lord O’Neill, said about balance in these matters. Under existing arrangements, energy consumers can already obtain redress through the courts, but the legal process does not typically offer a quick or cheap remedy for consumers who have suffered a detriment. In part, the concern that I have about the proposals from the noble Lord, Lord Whitty, on collective redress is that it would not speed up the process; indeed, it may, perversely, lengthen it, although I am sure that is not his intention. Consumers will also be required to identify themselves as potential claimants and join an action. Consumer redress order powers overcome these barriers by allowing Ofgem to take action on consumers’ behalf, without them needing to initiate action or incur costs.
Allowing collective redress via these amendments would benefit intermediaries involved in bringing such cases, who will seek awards that allow them to recover their costs—which would be borne by claimants or, where costs are awarded, by all consumers as energy companies seek to recover these sums. Collective redress could also encourage litigation on fine points of law, creating higher costs for energy companies, which would again risk increasing prices for consumers as a whole. In contrast, the consumer redress order powers contained in the Bill offer a speedier resolution to consumer detriment, which does not require consumers to come forward and take action, is proportionate to the sums at stake and minimises the potential costs for all energy consumers.
The noble Lord, Lord Whitty, asked whether the Bill’s provisions cover regular breaches of consumer law. The intention is that they will. If the breach is also a breach of licence conditions, such as mis-selling, that would be included.
The noble Lord’s Amendments 51ZE and 51ZF would increase the time limit for consumer redress order powers contained in Schedule 14 from, as the noble Lord has mentioned, five years to 15. I naturally have sympathy with amendments designed to ensure that consumers can obtain redress. The intention is certainly not for these time limits to be arbitrary. The time limit is consistent with the existing time limit for Ofgem imposing penalties on energy companies. In some cases, both penalty and redress may be appropriate, and so it is important that the enforcement regime that we establish allows Ofgem to balance both penalties and redress when looking to put things right.
This five-year time period for penalties was introduced as recently as the Energy Act 2010, following, as the noble Lord will know, two high-profile cases which showed the limitation of the then one-year limit for Ofgem to investigate and take action. There has been no case involving an energy company either before or since where it is alleged that this five-year time limit would not have provided ample opportunity for Ofgem to take action.
Lord Deben
On that point, I declare an interest as chairman of the Association of Professional Financial Advisers. I say to the noble Lord, Lord Whitty, that very long periods allowing for what is by then retrospective action can have a damaging effect on the confidence of an industry. We have to be very careful to get this balance right. The reference to the financial services industry made by the noble Lord, Lord Whitty, is a mistake because many people now recognise that that has done and will do significant harm, and is against any sense of human rights. There comes a point at which those who have been involved are now so far removed from those who are operating that it does not make sense. Five years was chosen, and it seems not a bad choice. I hope that the Minister will resist any temptation to go further. I say that as somebody who has no interest whatever in energy provision companies.
Lord Gardiner of Kimble
My noble friend provides an excellent prelude to further commentary on why the Government are concerned about the extension to 15 years. There are indeed jurisdictions with longer time limits than those afforded to energy consumers though these powers. Of course, there are others which are significantly less. These variations reflect various factors, including the length of time required to detect and act on wrongdoing, the scale of the sums at sake and the likelihood of sufficient evidence being able to investigate and determine a claim.
The powers are drafted to balance—a word that was used by my noble friend—these considerations without placing unnecessary additional costs on consumers. My noble friend has mentioned business. We are certainly seeking to provide an appropriate balance to all these matters. For those reasons—although I can assure the noble Lord, Lord Whitty, that his amendments have been given proper consideration—I hope that the explanation I have given is sufficiently compelling at this time that he might feel able to withdraw his amendment.
Lord Whitty
My Lords, I find the explanation on the five-year period extraordinary. I think it was my noble friend Lady Liddell who mentioned that the notorious recent Scottish and Southern case had gone on for four years. It would not have needed to go on for more than another six months for it to fall foul of this restriction. There may be something in the argument of the noble Lord, Lord Deben, that you need some restriction. Indeed, that is why I proposed a 15-year period rather than delete the provision entirely. I do not accept that there should be a shorter jurisdiction for energy than there is for financial services, nor do I accept the argument put forward by the noble Lord, Lord Deben, that it is a bad thing for people to be entitled to redress for the mis-selling of, for example, PPI and pensions in the financial services sector which happened a long time ago, albeit that continued until relatively recently. As for confidence, there is no consumer confidence in the energy sector. It is all very well saying there will be no business confidence if companies think they are going to be fined for something which happened 15 years ago, but at the moment there is almost nil consumer confidence. The energy sector has the worst record among the allegedly competitive markets in terms of consumer confidence. That is partly because over time consumers have had difficulty understanding whether or not they have been misled or mis-sold products and have faced grave hurdles in trying to remedy that. Sometimes they have—
Lord Deben
For the correction of the record, the problem is that the further you extend something, the less you can prove the case, the greater the chance that the people who are now involved had nothing to do with it and the less the chance that the circumstances in which it took place can reasonably be identified. You have to have a balance; that is all. There are many examples of cases where the conditions that obtained 15 and 20 years ago are unprovable and very different from the conditions obtaining now. In the end, you have an unfair circumstance. Therefore, some way or other, you have to have a decent balance—otherwise, you find that people’s confidence and willingness to invest in industry reduces. That is the experience and that is why so many fewer people now provide services to the public than used to be the case. We have destroyed confidence. You have to have confidence on both sides; that is all.
Lord Whitty
My Lords, if something is unprovable, redress will not be awarded.
Baroness Liddell of Coatdyke
I am very grateful to my noble friend for giving way but the noble Lord, Lord Deben, referred to the financial services industry. The whole issue around the mis-selling of personal pensions covered a period of between 15 to 20 years. One of the reasons why there had to be redress there was because the entire financial services industry had been damaged. Our energy suppliers are being damaged at the moment. I remind noble Lords of the statement by Warren Buffett that it takes 20 years to build a reputation but five minutes to lose it. We owe a debt to the industry to make sure that it operates with the highest possible standards. One way of doing that is to support the amendments that my noble friend has put forward.
Lord Whitty
My Lords, my noble friend has expressed the position far more precisely than me. I underline her comments. I will not pursue the point today but I ask the department to reflect on it and on how it will justify to the public that there should be a lower level of potential redress in the energy sector than there is in the financial services sector. I just ask that question.
In relation to collective redress, I believe that the Government, the Minister for Consumer Affairs and the noble Baroness, Lady Verma, who is replying for her department, have moved some way to recognise the need for consumer redress to be dealt with on a collective basis on occasion. It is particularly important that that is provided for in the regulated sectors. The amendment that I am proposing would allow the Minister to come forward with a whole range of potential forms of collective redress. Most of those would be less expensive than individuals taking cases themselves and would take less time. They could, indeed, be pursued by intermediaries, but the aggregate cost to consumers and the industry would be significantly less than if every single consumer, or even 10% of consumers, started to take individual cases through the courts, with each one taking time to reach a conclusion. I cannot see that collective redress is ever going to be more time-consuming and costly than having a range of thousands of individual redress cases, whether they are taken through the ombudsman, the economic regulator or the courts.
Lord Whitty
AEnergy company obligationEnergy company obligations
Subject to the review provided for in section (Energy company obligations review) the provisions related to the energy company obligation shall in principle be extended to 2019.”
Lord Whitty
My Lords, we have touched on this. The ECO is central to the Government’s strategy for delivering on their fuel poverty targets. We have had a lengthy debate on the context in which they will do so, and the targets and strategies that they will adopt. Clearly, their main attack on fuel poverty will be through the measures they bring to improve the energy efficiency of the homes of the fuel poor. The ECO is intended to be the main weapon for them to do this.
I have had some exchanges with the noble Baroness about how we are going on the ECO at the moment. I have received information from various sources that there are serious problems. This follows quite a good year—the last year of the old scheme, if I may put it that way—when a significant increase was recorded by the climate change committee in many types of interventions, including cavity wall insulation, solid wall treatments and loft insulation. All those schemes have now come to an end. They are all being replaced by the ECO, which in aggregate terms is less than the aggregate of the others—although the Minister pointed out that you also have to take into account the warm homes discount. That is on the other side of the equation—the income side—whereas in aggregate under the ECO, the number of schemes that will be delivered, and the aggregate cost and resources devoted to the schemes, will be less than under the pre-existing three schemes.
That would be a problem in itself, but it will be a greater problem if the way in which the ECO is being delivered is inefficient. Several sources appear to suggest that there is a serious problem with measures being brought forward under the ECO. On the climate change committee’s figures, the number of cavity wall insulation interventions declined by 60% in the first few months of the ECO regime. That is a serious teething problem. It may be a teething problem but it needs to be addressed seriously. The new structure under the various regulations introducing the ECO seems to create a problem for the cost of each individual measure as well.
I am probably not the only noble Lord who has received a letter from Scottish and Southern on this point. The supply companies have to buy from the market the interventions that they require to make up their ECO contribution. They have said, and this is quite startling, that the cost of some of those interventions under the ECO provisions is more than twice than under the old schemes. That reflects the volume but it also reflects the new system.
Scottish and Southern claims that the average cost at which it is buying cavity wall insulation, solid wall insulation and loft insulation has more than doubled under the new regime. That is also reflected in the views expressed by the insulation industry and the installers. They say that because the volume of work has gone down substantially, they can no longer send their workforce to an area where they can do four or five jobs in two or three days. They now have to go to an area where they can do only one job and then move on to the other side of the country, or the region, and carry out the other jobs. Therefore, the average cost to them is increasing. That is reflected in the prices they are offering through the brokerage system, which is therefore affecting the charge that Scottish and Southern and other electricity suppliers pay in the ECO context.
That is not a good situation. It is also having a knock-on effect in that those firms are also laying off workers. My own union, the GMB, which is the main organiser of insulation and installation workers, has seen significant layoffs already and sees more in the pipeline as the old schemes end. I have asked the Minister to give me some details about how the department sees the situation, but that is how it is seen from the point of view of the energy suppliers, the industry and the workers within the industry. If this goes on, the effectiveness of the ECO intervention is going to be substantially less than the equivalent level of resources that were provided under the pre-existing schemes.
Part of the problem, according to both the suppliers and the installation industry, is that the period over which the ECO is supposed to be operating is relatively short. Under present provisions, it runs to only 2015. That can be extended but at the moment there is certainty only over it existing until 2015. My amendments are an attempt to address this issue by, first, extending the period of the ECO in principle to 2019, giving time for this to be smoothed over; and secondly, providing for a review of how the ECO is operating. I am suggesting that we should put that in statute. If the Government are not prepared to put it in statute, they should make a commitment, in view of these assertions, that they need to look within the next six to 12 months at how the ECO is really working out.
The last stages of the old scheme are now going through their finishing stages. Everything that is starts from now on will, therefore, be under the ECO provision. Unless ECO rapidly builds to the same volume—and I hope at the same or better price—it will not deliver as great an impact on energy efficiency of homes, and thus on fuel poverty, as the previous system, even pound for pound and intervention by intervention. I want a review, which should be in the context of the ECO system lasting for a longer period because, theoretically, it is simpler than the multiple systems we had before. We need to know, however, what is really going on and whether the system and the market that has been established are operating properly. If they are, in the sense that real costs are being charged, what is wrong? Are the volume, incentives, or relations down the supply chain not right, or is there a basic flaw in the system itself? The sooner we have the answer, the sooner we can put the ECO system on a better basis, and one in which the industry, suppliers and consumers can have confidence. I beg to move.
Baroness Verma
My Lords, I am grateful to the noble Lord, Lord Whitty, for his amendments dealing with the future of the energy company obligations and the approach to replacement boilers adopted within the scheme. By way of background, ECO is worth £1.3 billion per year and is split into three obligations: affordable warmth; carbon savings communities; and carbon saving. ECO has been specifically designed to help us fight the battle against fuel poverty and to reduce carbon emissions by requiring obligated energy suppliers to invest in heating and energy-efficiency measures. Importantly, ECO is expected to be more cost effective than the Warm Front Scheme, with the delivery cost of 120,000 major measures estimated at around £350 million each year under the affordable warmth obligation. Under Warm Front, this amount of funding might have supported only 80,000 major measures, on which basis ECO is likely to be 50% more cost effective than the previous government-funded scheme. I recognise how important it is for vulnerable consumers to know how to access the support. That is why, in recognition of some of the reported difficulties, as the noble Lord, Lord Whitty, stated in his opening remarks, in identifying vulnerable customers who are eligible for help, we have provided a data-matching and referral service for ECO affordable warmth, operated by the government-funded energy saving advice service. Working in partnership with the Department for Work and Pensions, this service confirms whether a consumer meets the qualifying benefit criteria. Already, nearly 12,000 customers have been referred to an obligated energy supplier through this route. As we work on a new fuel poverty strategy to support the proposed new fuel poverty target, we will also be considering the scope for making more extensive use of data matching in future.
I turn to the amendments in more detail. Amendments 51ZB and 51ZC propose that ECO be extended to 2019, subject to a review. At the time that ECO was introduced, we indicated the intention that ECO would run until at least 2022 and the Government will, in due course, bring forward proposals for consultation on what the next phase of ECO, from 2015, should look like. In designing these proposals, it is important that we have flexibility to take account of experience under the current phase of ECO and new issues that may arise. It would therefore be wrong to restrict the future design of ECO to its current provisions. As part of our consultations on its future, we would, in any event, also consult all the organisations specified in the noble Lord’s amendment. Given the Government’s plans for the future of ECO, we believe that setting this requirement in law would be damagingly restrictive.
Lord Whitty
My Lords, it is precisely for the reason that this needs to be about the long term that I suggested that we extended the statutory period. I appreciate that we have talked to industry and said that we intend to run it to 2022, but all the industry sees is that it is going to run to 2015. I would certainly ask the Government at least to look at that. If the system is going to run to 2022, subject maybe to some tweaking, it would be useful for both the energy suppliers and the installation and insulation industry to know that that is indeed going to be the case. I can pass the noble Baroness the exact costs that Scottish and Southern claims it now has to pay, as against the figures in the DECC initial assessment of the cost of the ECO. Those costs are quite startling. For loft insulation, it goes from about £280 per installation to the brokerage outcome of £1,080. There is a similar escalation for cavity wall insulations. These are not consumer figures or even the insulation industry’s figures. They are ones that the insulation industry has charged to a supplier. Scottish and Southern draw the conclusion that we should put a cap on ECO. I do not go along with suggesting we should do that. Nor do I suggest that we should cut back on the ECO and change course. I suggest that the Government look at these figures and see how they have arisen. If it is a teething problem I accept that we need to give it a little time to settle down but I would like to be convinced that it will, otherwise the scheme will not be cost effective.
I did not speak very much about Amendment 51ZD, on boilers, in my opening remarks because I thought it was self-evident that probably the biggest contribution to household energy efficiency achieved in the last 10 years was when we required all replacement boilers to be A- or B-rated. That was a dramatic change and it has brought dividends to thousands of households. The amendment suggests that we try to extend that into the area of identified fuel poverty. Where the suppliers know that there is an old, inefficient boiler still operating, and that is matched with data identifying a household as within the definition of fuel poverty, there should be a possibility of using the ECO allowance to replace it. The amendment is not saying that it is mandatory to do so or that you use up the whole of your ECO figures in so doing. It simply says that that ought to be one measure recognised under the ECO portfolio. It matches one set of figures to another and tackles fuel poverty and energy efficiency at its very heart. If we could replace the F-, G- and worse-rated boilers that are still in a lot of poor homes, particularly in the private rented sector, with A- and B-rated boilers, it would make a huge difference to people’s bills and the energy efficiency of those buildings.
I am disappointed that the Minister is not prepared to take this up. She has to recognise that there is a perceived problem with the ECO at the moment that the Government and the department need to put right. I am not saying we should abandon the policy or even drastically change it but we need to get it right. If we do not get it right within a few months it will begin to fall into disrepute. At the moment there is that danger. I hope that in not accepting the amendments the Minister will at least accept that there is a bit of a problem. People need to be talked to as a matter or urgency and, if necessary, a formal review by the department needs to take place. With that, I beg leave to withdraw the amendment.
Lord Teverson
“Data from smart meters
(1) All data on energy use generated by a smart meter shall remain the property of that consumer.
(2) The energy supplier that receives data from a smart meter shall make that data readily available in an appropriate generic format, to be determined from time to time by the Secretary of State, to the consumer on demand.”
Lord Teverson
My Lords, one important but largely forgotten area of energy policy is the smart meter rollout which has been recently, rightly, postponed to make sure we get it right. To put it into context, nearly 50 million meters altogether will be rolled out to some 30 million homes and businesses at a cost, over about a decade, of £11 billion. That is a major national investment. Sometimes I feel that we do not give this enough attention—I am sure Government do but maybe Parliament does not—to make sure that that investment delivers what should be a real change to the way that the electricity market, distribution and usage, work in this country as the future foundation of a truly smart grid.
One important area is data. I apologise to the Minister for tabling this amendment very late; it is a probing amendment and she might tell me that I have nothing to worry about. If that is so, I will welcome it. I have felt a concern both on the consumer side and from within the industry that this area is not fully clear. If you look up smart meters on the DECC website, it says that both these areas are satisfactory. Clearly, there is no great detail there. The amendment would ensure that the considerable data that come out from smart meters and are transmitted to energy suppliers will remain the property of the consumer who used the meter, and that they will be able to use the information in whatever way they want, primarily to help use their energy more efficiently but also to get quotations from other energy companies. This will ensure that the data are used properly and to the benefit of consumers as well as to the electricity supply industry, which will have reduced collection charges.
Those two areas are fundamentally important. I would be very pleased to hear from the Minister that I have nothing to worry about and that this is already enshrined in a reasonable degree of law. If it is not, it is important that we make sure that it is enshrined in some legislative form. I beg to move.
Lord O'Neill of Clackmannan
I should perhaps start by declaring an interest. I am chairman of SmartGrid GB. In some respects we will have an information overload as a consequence of the rollout of smart meters. On the other hand, it would be desirable for the rights of the consumer to be taken properly into account. It is quite likely that there will be a lot of information, and it would be a reassurance to the consumer if they had access to what was out there. Some of the enthusiasts for the new technologies, which have yet to be fully realised, find their eyes glowing at the prospect of smart metering. We have to be a wee bit cautious. There could be civil liberties concerns, although not about the time when you put on a kettle or whether you run the washing machine in the middle of the night. These issues are trivial.
It is a bit like another problem that we have at the moment. If we use our passes on the Underground, we could be tracked over the course of a day or a week. While that might be of use to some authorities, and might be used for beneficial purposes, it could be a problem. It will be the same when we get these new meters in households. I see the noble Lord, Lord Deben, looking at me, but I am sure that, in his experience of constituency surgeries, he had, as I had from time to time, individuals who were convinced that in a television set there was a camera as well as the receiver, and that somebody, somewhere, was finding out what was going on in their living room.
Lord Deben
The noble Lord is absolutely right, but we should not allow people to think of this just as a joke. Some newspapers will certainly try to suggest that this sensible proposal is a means of doing untold damage. Therefore, we must get it right from the beginning or we will destroy the whole system.
Lord O'Neill of Clackmannan
I remember being a lorry driver’s mate in the 1960s when I was a student. As a consequence of a Labour Government’s legislation, the haulage companies were trying to introduce the “spy in the cab”. That is now regarded as a very important health and safety measure. At the time it was not very well presented. If we can get an understanding and an appreciation by government of the dangers of the overload of information that could emerge, the public could be educated on the beneficial uses of it and made aware of the dangers—of which the civil liberties lobby could take account—the anxiety that parts of the press might have about the rollout of smart meters would in large measure be mitigated.
Therefore, while I appreciate the probing character of this amendment, it would benefit the process if the Government gave us positive indications today that if this is defective, or if it is otherwise necessary, amendments could be presented at a later stage in the appropriate format. We would do well to keep this in mind even if we do not get completely uptight about it.
Lord Hunt of Chesterton
I would like to speak to Amendment 51AA, which I tabled with the noble Viscount, Lord Hanworth.
I was not at Second Reading but I have been listening to some of the Committee’s sittings. I went to a meeting last week at University College Energy Institute which discussed the difficulties people will have—up and down the country—with the new Energy Bill, which has many laudable objectives. I recalled at this meeting the case of one noble Earl finding that his electricity statement was five pages long. My son-in-law, who works in a green energy company, comments on the great difficulties people have when installing new green systems: heating, insulation, flood-prevention, and so on.
So how are people going to understand it? There seems to be a feeling we are not yet, and perhaps never will be, a society that gets it all on the internet or from a phone call. Perhaps we need to go back to what used to be quite a familiar sight on the high street: the energy showroom. Not only could you see a range of electrical apparatus, you could show your bill to someone. These showrooms were the front office for the energy company.
Our suggestion in this amendment is that the Secretary of State makes adequate provision for the universal availability of information, in order to enable domestic energy consumers to make effective decisions about their energy usage, including information relating to installation, running costs and monitoring equipment— that last point refers to smart meters. People studying smart meters realise they are going to be a source of great difficulty to many people.
My suggestion, therefore, is that we should have energy showrooms up and down the UK’s high streets, where empty shops give organisations such as councils, the Government and energy companies the opportunity to provide places offering this sort of information. As I have explained, it is important that in these places there are people who can provide information.
Like all good ideas this idea builds on the wide variety of existing initiatives run by councils and voluntary bodies. However, the Government should take it as a general responsibility to encourage, where possible, and to provide funding, where necessary, to ensure that these energy showrooms, or information centres, become available. The idea is that in such a place you could not only see technology but make a decision about spending more money on insulation or on heating.
It is true that, under the Green Deal, there are approved operatives who can come and visit you, but that is a second stage. You would really like to see a rather broad overview of all the possibilities as well as having somewhere where you could find out about the bills coming through to you. We have been talking about fuel poverty, which is a complex issue and will be dealt with in many different ways. Again, you need a real person to do it. I know people who work in the CAB, and I fear that the CAB will be overloaded with people trying to ask questions about their energy bills. The effect will be such a big ramp, it will be necessary to have additional or separate places for energy.
One of the other points is who would do this. Well, there are lots of people out there seeking jobs. This would be a rather interesting, useful and perhaps economical, way for people who have technical skills, abilities and inclinations to provide this kind of information. Anybody working in such an energy showroom would of course develop skills that they could quite quickly apply elsewhere, so it might be a practical way of upgrading the skills of many people with a direct objective.
Of course, the information services are available on the internet and via helplines but, speaking for myself, I always much prefer to go and buy something from a shop and talk to a person. Although I am a computer person and use a Japanese supercomputer, when it comes to my bill I like to go and talk to somebody down the street. I am not sure if the noble Viscount, Lord Ridley, is in his place, but people like him who go down to their electricity showroom might also like to get some government information about climate change from approved sources. When you go to a doctor’s surgery you learn about your health and how to change your lifestyle, and you learn about science and medicine. Maybe we should be hearing a variety of views, but it seems to me that these would be climate change centres as well as energy showrooms.
Lord Deben
I was just wondering how the noble Lord would make provision for the views of certain people who find that most of the information given at these centres will be somehow or other not to be trusted? Will he have a special little place on the side with a notice up that says “Contrarians”? If so, will he take some care to ensure that what they have said had at least some connection with the truth?
Lord Hunt of Chesterton
I was going to suggest that, in an objective way, you present the official view but you might say that there are some areas where there are questions, as there are in science. However, I am sure that if these centres were formed, the Committee on Climate Change would be able to give excellent advice on how these centres might be used. The other point, as we learnt this afternoon, is the question of safety, including the safety of carbon monoxide and so on. Again, you could have that information at these places.
Secondly, as I have commented before in the House of Lords, I visit the Netherlands quite often—I am a visiting professor there. They have an excellent European energy centre where you can see a tremendous array of all the different kinds of technologies and energy developments available. Of course, in the UK we have the Centre for Alternative Technology at Machynlleth in Wales. There was one in Swindon. Surely we should have many more of these centres where people can make these really quite complex choices between windmills—if you are a Prime Minister, you have one on your roof—solar collectors, heat pumps, biomass generation and new kinds of insulation. Two critical issues are insulation and flood damage. We really need centres up and down this country where people can go and see them, funded and managed by energy companies, non-profit bodies and councils.
These two suggestions are building on what exists already. They are in line with the Government’s big society—going to meet your fellow citizens dealing with energy is surely part of that scene. I believe that all political parties would support this kind of initiative in order to get the whole energy and climate change movement going faster and with less concern to people, and that people would make use of it. DECC should take action quite soon.
Lord O'Neill of Clackmannan
My Lords, I support my noble friend on this issue. As he was speaking, I was thinking that we have a model for what he is talking about. If you go along Oxford Street or the main street of pretty well any town there is at least one telecoms shop, where you can sign up to get a new phone. The last shops to close seem to be the mobile phone shops. Yet this is a far more pressing requirement than just a mobile phone.
One of the consequences of privatisation has been the demise of the old electricity and gas showrooms, in which various pieces of equipment, from washing machines to cookers to refrigerators, were on sale. Unfortunately, of course, they have now been superseded by the likes of Currys and tend to be in shopping areas outside the high street. With regard to the level of public concern about electricity and gas prices, and the confusion over the effectiveness of one piece of equipment against another, it is fair to say that if you go to some of the high street shops you will get very good, helpful assistance but that tends to be in the minority. Due to the churn of staff in the retail trade, people are there for relatively short periods and do not have the experience that was built up in the old showrooms.
The telephone companies and the makers of telecoms equipment seem to be able to provide a service for the public which the big six energy companies seem incapable of doing. They have retreated from the high street. The cost of property on the high street is not very high these days and one would imagine that it would not cost an awful lot to get people in there, but of course they would say that that was too much and that if people were better informed they would probably be looking for better tariffs than the ones that they get and we would be back talking about mis-selling and the like.
This is something that the Government ought to put their mind to and I wait with interest to hear what the Minister has to say. As my noble friend said, it is part of the big society, part of a well informed consumer society, and one would have thought that it might be an attractive proposition for some of the big companies to look at in terms of looking after their customers.
Baroness Worthington
My Lords, the amendment in the names of the noble Lord, Lord Hunt, and the noble Viscount, Lord Hanworth, raises a really interesting issue, and I commend them for tabling it. It brings this Bill into contact with people, consumers and citizens.
When I read about the amendment, I thought back to my childhood, where in a medium-sized town in south Wales, there was the South Wales Electricity Board showroom, right in the centre among all the shops. You could get advice about your bills and you could speak to people, but it also had a showroom for the sale of electrical goods. Of course, in those days—and I am sure this started a long time before—the energy companies had a great interest in making sure that every family had a washing machine, a fridge-freezer and an electric cooker because it would boost the sale of their product. They were ensuring that we were all making the most of all the labour-saving devices that were coming forward in order to boost the sale of the units of electricity that they generated. It probably made very good business sense. However, times have changed and over the years energy companies have receded into the background. Now they are engaged mainly in a massive database management exercise, in which they try to keep interaction with the consumer to a bare minimum. I have been told that, from a supply company’s point of view, every time someone rings up it is money off the bottom line and it does not like it. Companies invest in call centres, which have become a modern job-creation exercise here and overseas. We can talk to people only on the phone. There is very little interaction on the high street.
Baroness Maddock
My Lords, I do not know whether noble Lords are aware but some local councils have energy roadshows, which they take round to the town halls in small towns. They did it in Northumberland. Some of them have a trailer that they take round. I think that the energy centre in Milton Keynes used to have a roadshow, so there are some things that could be built on. However, I cannot see how a Government could afford to put something all across the country and I think we ought to build on what we have.
Baroness Verma
My Lords, I thank my noble friend Lord Teverson and the noble Lord, Lord Hunt, for their amendments concerning consumer access to information. I start by saying to my noble friend and to the noble Lord, Lord O’Neill, that I take the issues around data protection and data security very seriously. I hope that in responding to both noble Lords I will be able to reassure them of the measures we have in place. However, I will address that at the end.
Amendment 51ZDA relates to the ownership of, and access to, the energy consumption data that will be stored by smart meters. I am grateful to my noble friend for the opportunity to explain the important regulatory changes on smart metering data access and privacy that have came into effect since last month. The smart meter data access framework is based on the principle that consumers should have a choice about how their data are used and by whom. The first step is that energy consumption data will be stored by smart meters themselves, in people’s homes. The meters will be capable of storing at least 24 months-worth of historic data. The second step is that consumers will have control and choice over who can access the data held on those smart meters.
Consumers will be able to access their data directly from the meter in their home. Energy suppliers are required to ensure that consumers are able to do this. As part of their smart meter installation, all domestic consumers will be offered an in-home display. This will connect them directly to their smart meter and show them how much energy they are using, in real time and historically, and what it is costing them. We expect other innovative products to be developed that will connect directly to the smart meter, which consumers will be able to purchase on the high street.
Consumers can also choose to give their energy supplier, or anyone else offering them an attractive product or service, remote access to their data. This enables companies to offer services to consumers such as regular home energy reports. The only exception, where consumers do not have a choice, is that the meters will provide energy suppliers with the data required for billing or other regulated duties. One of the key benefits of smart metering for consumers is the end of estimated billing. This data access framework, embedding the principles of consumer choice and control, has been implemented through changes to energy suppliers’ licences and will be enforced by Ofgem.
Before I turn to the amendment of the noble Lord, Lord Hunt, I will respond to two points. Both noble Lords asked about data control and engagement. While I have given noble Lords a broad overview, we also have in place a central consumer delivery body that would be able to reach out and reassure consumers with an independent voice on how their data are being kept. We have come to create the mechanism through which the data are stored with advice from the National Technical Authority for Information Assurance, which is linked to the Government’s GCHQ; I hate acronyms. We therefore know that we have worked with a huge amount of expertise on national data security. The noble Lord, Lord O’Neill, will welcome the appointment of his colleague the noble Baroness, Lady McDonagh, as the chairman of the central delivery body.
The other mechanism, which I have just mentioned, is the data and communications company. This will effectively be the mechanism through which all information will go. It has security on the front and back ends. The information that will be utilised from consumers’ homes cannot be accessed unless it has been accredited to the suppliers who have signed up through their licence conditions to the utilisation of smart meters. There is a huge amount of information out there that I urge noble Lords to access. If noble Lords would like me to, I am more than happy to ensure that they receive the updated frameworks and codes of practice that we are putting out there to ensure that there is absolute privacy for and security on data for consumers. We have worked hard to ensure that we satisfy the sort of concerns and fears that noble Lords are raising.
I now turn to Amendment 51AA of the noble Lord, Lord Hunt. I, like the noble Baroness, Lady Worthington, support the sentiment behind the amendment concerning the provision of energy information to consumers. The first step to saving energy is to receive reliable, quality advice about energy efficiency. Generic advice from a high street shop will only get you to a certain stage of information availability. The best approach is to get personalised advice that is tailored to your own home. This is the only way to ensure that recommendations and savings estimates are truly meaningful for the consumer. The Green Deal assessment does exactly that.
The Green Deal assessment provides detailed advice about the range of options which might be suitable for a particular property, including insulation and other efficiency measures, renewable heating systems and options for generating low-carbon electricity, like solar panels. Householders also receive advice on how they use energy through an occupancy assessment. It is still early days, but awareness of the scheme has grown rapidly. I am pleased to say that nearly 40,000 Green Deal assessments had been completed by mid-June, with thousands happening every month. Physical demonstrations are always a highly effective way to raise consumer awareness of the measures available. That is why we are supporting the development of a national “open homes” network to make it easy for people to see how homes can be improved by energy-saving retrofits.
Baroness Worthington
We have seen the statistics on the Green Deal. If I am right, you have to pay for those assessments. That seems very different to somebody being able to walk in off the high street to receive advice. Would the noble Baroness care to comment on that?
If, in a year’s time, the numbers of actual, completed, signed-up Green Deal participants are still very low—and they have been quite low, in terms of completing the whole process—would the Government consider that perhaps a new approach is needed where a lower level of advice is available without any cost?
Baroness Verma
My Lords, first, we have to recognise that the Green Deal is still in its early stages. Given that, the numbers of assessments received and accepted are quite high. The noble Baroness does not get the point that the Green Deal assesses the individual’s needs and tailors advice to that individual’s home, whereas getting generic advice would be exactly that: generic. Everybody’s homes and requirements are different. The way the assessments are carried out is tailored to those individual needs and engages on a one-to-one basis—if the noble Baroness would allow me to finish—the needs of those consumers and their households. You cannot get that from going to a one-stop shop for that advice. This is tailored advice and it is too early to say whether the Green Deal measures are reaching out and people are engaging with them. Given the number of assessments that we have delivered, people are engaging with them. We must not be pessimistic about the numbers. I welcome the fact that there has been quite a surge in people wanting to access them.
Baroness Worthington
Unfortunately, the noble Baroness missed my point. Obviously, everybody’s body and lifestyle are different but we go to a doctor’s surgery without cost to receive advice from an expert. Does she not accept that if you place the barrier of an up-front payment fewer people will receive advice? Is there not a role for very low-level but expert advice that can be tailored? Of course, people can communicate their circumstances. They are not incapable of speech. That is exactly what you do when you visit a doctor.
Baroness Verma
It is up to suppliers whether they charge: they may or may not. Government cannot dictate that to suppliers. It is in the interest of suppliers to offer the best possible deal out there, knowing that they compete for that work. We need to leave it to the people offering the Green Deals as to whether they charge, do not charge or give the costs back if they have a Green Deal accepted.
The energy-saving advice service will ensure that both consumers and businesses have access to impartial advice on the range of measures and services available to them. The Government are also currently operating a cashback scheme to consumers as further encouragement to install energy efficiency measures. The steps we are taking in the area of energy efficiency form part of a whole coherent strategy. As noble Lords mentioned, alongside the Green Deal we are also rolling out smart meters. The introduction of smart meters will provide consumers with real-time information on their energy consumption to help them control their energy use. As part of the smart meter installation visit, suppliers must also provide energy efficiency advice.
I will also say a few words on energy labelling and product standards. Already, measures like the ECO design and the energy labelling directive have played a key role in enhancing energy efficiency, securing above-average savings from electrical appliances. The UK continues to work with partners in Europe and is currently pushing the European Commission to increase the level of ambition on this issue. We are not just doing it nationally here but trying to encourage our partners in Europe to do the same. I hope my noble friend Lord Teverson and the noble Lord, Lord Hunt, see that the Government are taking every step possible to reassure and inform consumers. On that basis, I hope my noble friend will withdraw his amendment.
Lord Teverson
My Lords, I thank the Minister for that. I am greatly reassured, particularly that, as the data are held for at least two years on the smart meter on the premises and are also being checked by GCHQ, if I lose the data I can be sure that the National Security Agency over in Washington has got it and I contact them to get them back. What could be better than that? I have every pleasure in withdrawing my amendment.
Lord Whitty
Lord Whitty
My Lords, Amendment 51ZE deals again with the redress powers. The issue here is that the Government have rightly given Ofgem the ability to require compensation as well as to fine for breach of licence conditions or consumer law, but it is not clear whether this could apply to the cases that are currently under investigation by Ofgem, to which my noble friend Lady Liddell, who is no longer in her place, referred earlier.
Those outstanding investigations include one that started in September 2010, looking at doorstep selling for Scottish and Southern, ScottishPower and npower; a separate one into doorstep selling for E.ON; one into customer complaint systems at EDF; and one into misleading tariffs from ScottishPower. In total, there are eight or nine ongoing investigations, some of which have been going on for three years.
Ofgem has therefore already started a number of such investigations and, as I understand it, will start some more in the months between now and Royal Assent. At present it does not appear that the powers to award compensation would be allowable under that welcome provision in this Bill. However, if Ofgem finds against the companies it seems likely that a significant number of consumers will have suffered detriment and that the consideration of potential damage to the companies has outweighed the Government’s determination to ensure justice for those consumers.
When a similar point was put in the Commons by my honourable friend Tom Greatrex, the Minister replied that this would be retrospective legislation. It is not retrospective legislation. Ofgem would have to find that there had been breach of consumer law or a licence that already existed. Previously, consumers would have to go to court to get compensation but the provisions in this Bill would allow Ofgem to award that compensation. This is not inventing a law in retrospect; it is ensuring that the compensation comes through an easier channel.
It is important that those consumers whose complaints are currently being investigated by Ofgem benefit in the same way as future consumers will from what is a sensible improvement to the situation by the Government. I hope that the Minister will not resort to the retrospective legislation argument, because it is not retrospective legislation; it is simply improving delivery of the penalty and the rightful compensation that is due to these consumers. I beg to move.
Lord Gardiner of Kimble
My Lords, I thank the noble Lord for his amendments. Amendments 51ZEA and 51ZFA are designed to amend Schedule 14 and permit retrospective application of these powers. I am aware that these amendments were debated both in Committee and on Report in the other place. The aim of these amendments is to allow Ofgem to require redress for events that happened prior to the enactment of this Bill.
In seeking to take powers through the Energy Bill, our objective has been to put consumers first and we will consider any amendments from that perspective. It may appear that it is in consumers’ best interests to seek to put right consumer harm irrespective of when it took place, but the effect of retrospectively applying powers in the energy market will have negative impacts on all consumers.
Noble Lords will be aware of the presumption that powers should not generally be applied retrospectively. This is an important principle, but we are also concerned by the effect this will have on consumers. It is likely that the introduction of the regulatory uncertainty that these amendments will create will lead to increases in the cost of capital for energy companies, pushing up bills for everyone. We want to avoid creating investor uncertainty, particularly when we are trying to encourage the private sector investment that is required to move to a low-carbon economy. Increasing costs will hit most heavily the small energy companies that we want to come into the sector. We want new entrants to the market and do not want to accept amendments that could hinder them.
In addition, smaller energy companies would be most likely to shoulder the burden of the increased costs of insurance premiums that could arise from these amendments, as companies seek to cover their liability for events prior to the enactment of the Bill. My noble friend Lord Deben touched on some of these concerns more generally when we debated an earlier group of amendments. The combination of these factors may push up costs for energy consumers, impacting the very people we seek to protect. The potential unintended consequences of these measures mean that, while I am entirely sympathetic to the intentions behind the amendments, it could be counterproductive to accept them. For those reasons, I hope that at this stage the noble Lord will feel able to withdraw his amendment.
Lord Whitty
My Lords, I am afraid that I do not accept those arguments at all. New entrants will not be affected. If they are not operating in the market at the moment, they will be operating under the very process that is prescribed in the Bill. There is therefore no uncertainty for them. Furthermore, the only retrospection will be in how compensation is delivered. Any breach will have been under a contract or licence that already existed at the time that the breach occurred. Any breach of consumer law would have been a breach of the law at the time, and therefore susceptible to a court case brought by one or more consumers at that point. This is not retrospective legislation. It is simply tying up the delivery of existing legislation and existing licensing conditions.
If the Government continue to resist this, they will need better arguments. There is no retrospection in the sense that the noble Lord, Lord Deben, talked about earlier. He perhaps had a point. This simply concerns consumers who are currently under investigation. We also have to bear in mind, when talking about the detriment to consumers, that some of them might have started a court case had it not been for the fact that they knew that Ofgem was beginning to investigate the situation and that they might be precluded from bringing such a case.
The idea that resisting the amendment is in the interests of consumers, or that it should be resisted because it implies a breach of the principle—which I fully support—of not legislating retrospectively, is wrong. I hope that the Government will look at this again before Report. At this point, I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, this is a straightforward question. The size of any compensation is limited to 10% of the company’s turnover, which is a fair amount. For some of these companies, it would be about £1 billion, which is a fair whack of compensation. Therefore, the possibility of awarding that compensation to an individual consumer would arise very rarely. However, it is of course possible that a serious breach of an industrial contract could lead to a loss to an operator of that order. My principal point here is that, in most sector regulations, a 10% limit applies to the fine that the regulator can impose. It is a reasonable limit on the enforcement and sanctioning powers of a public body. If Ofwat, Ofcom and Ofgem have the ability to impose fines of this order, the 10% limit is not unreasonable, but it is irrelevant to any potential compensation. The Minister may say this will never arise, and he may well be right, but in principle, if you have suffered detriment, should there be a limit on the degree to which you can seek redress for that detriment? That is the principle I am trying to establish. I beg to move.
Lord Gardiner of Kimble
My Lords, Amendments 51ZEB and 51ZEC, 51ZFB and 51ZFC are designed to amend Schedule 14 and permit unlimited liability for energy companies by seeking to ensure that the amount of compensation that can be required through a consumer redress order is not limited. I am aware that these amendments were debated both in Committee and on Report in the other place.
Our aim in drafting the powers in the Bill has been to ensure that the overall interests of the consumer are put first. With this in mind, we have sought to achieve a balance between the need for consumers to get speedy access to the redress they are due and an appeal process which is proportionate to the potential liability faced by energy companies and which does not present a barrier to entry for the small suppliers that we need to ensure a healthy competitive market.
In response to previous amendments, I mentioned that consumers can obtain redress through the courts under existing arrangements. However, the legal process is lengthy and does not offer a typically quick remedy for consumers who have lost out. This is largely because the legal process is necessarily equal to the potential sums at stake, where compensation is unlimited. Schedule 14 sets out powers which contain appeal mechanisms that are proportionate to the potential penalty. These are also limited to 10% of an energy company’s annual turnover and offer a relatively straightforward resolution of cases.
Accepting amendments to remove the cap could deny consumers timely compensation, as they would require us to make changes to the appeal mechanism, which could result in a more lengthy resolution of cases. Given how unlikely it is that consumers would lose out on a scale that went beyond the level of the 10% cap, we do not consider such a change is justifiable. As the noble Lord, Lord Whitty, has mentioned, for the very largest domestic energy suppliers to exceed a cap of 10% of annual turnover would mean penalties and compensation of over £1 billion. This contrasts with the largest penalty imposed by Ofgem to date of £15 million. We therefore believe that the proposed cap on redress is unlikely to hamper Ofgem’s ability to impose appropriate redress orders.
As I have mentioned in relation to previous amendments, removing the cap on liability could also have adverse impacts on smaller energy companies and, in turn, on consumer bills, due to the increased cost of capital and insurance premiums for energy companies. I assure your Lordships that the approach set out in the Bill does not let companies off the hook. The combined 10% cap on penalties and redress will apply to each separate regulatory breach, so that any company breaking the rules on a number of occasions will face correspondingly larger payouts. For the reasons I have set out, I hope the noble Lord feels able to withdraw his amendment.
Lord Whitty
My Lords, I thank the Minister particularly for that last point, because it indicates that it would not apply to a single breach—a single act of mis-selling or whatever—that applied to a large number of people. I am grateful for his explanation but I still think there is a difference between a limit on the ability of the regulator to impose a fine and a limit on compensation. However, although I am not in favour of a limit on compensation, he is right to say it is pretty unlikely to be applied and therefore it is not an issue to which I intend to return. I beg to withdraw.
Baroness Verma
“Feed-in tariffs: increase in maximum capacity of plant
In section 41 of the Energy Act 2008 (power to amend licence conditions etc: feed-in tariffs), in subsection (4), in the definition of “specified maximum capacity” for “5” substitute “10”.”
Baroness Verma
My Lords, in moving Amendment 51A I will also speak to Amendment 57; I hope that noble Lords will welcome them. The issue of increasing the scale of the feed-in tariff scheme was debated in Committee and on Report in the other place. It has also been raised by a number of noble Lords, both at Second Reading and outside the Chamber, including my noble friends Lady Maddock, Lord Teverson and Lord Stephen, as well as the noble Baroness, Lady Worthington, the noble Lords, Lord Whitty and Lord Cameron, and the right reverend Prelate the Bishop of London.
Having carefully considered the options, the Government agree that there would be a benefit to a limited extension of the feed-in tariff scheme. We intend to limit this support to community energy projects only. For developers of commercial projects larger than 5 megawatts, we continue to believe that larger projects are best supported through market-based incentives such as the renewables obligation and, shortly, contracts for difference as part of the electricity market reform process. This approach also offers the best value for money to the taxpayer.
Since the start of the FITs scheme three years ago, many communities have installed solar panels, wind turbines or hydro schemes. However, until now, they have been limited to a maximum capacity of 5 megawatts. We have listened to the compelling arguments of Co-operatives UK and others, and are convinced that the certainty of the feed-in tariffs scheme is a more appropriate way of helping community groups to deliver locally generated energy at scale and at the heart of their communities. We want to see communities up and down the country raising their ambition, and consider community-owned wind and solar schemes the most likely to benefit from this change. We hope that these amendments pave the way to support this greater ambition for community energy.
Amendment 57 is a procedural requirement which explains when this enabling power to amend the feed-in tariff scheme should come into effect. We will consult on how we intend to enable this change in secondary legalisation following Royal Assent. The current FITs scheme includes a definition of “community” which will form the basis of our consultation. We know that many will want to apply for this new support. However, we want to ensure that only genuine community energy schemes are permitted to benefit, so it is important that we create robust legislation which provides confidence to the public that subsidies are being delivered only to the intended recipients.
Taken together, these two amendments will drive a step change in the deployment of community energy. I hope your Lordships will support these amendments. I beg to move.
Lord Roper
My Lords, can I be the first to welcome the amendment? Those of us who have read the debates that took place in the other place in Committee and on Report are certainly very pleased that the move to assist communities to produce 10 rather than 5 megawatts has been agreed to. It will, however, be rather important that we watch carefully the secondary legislation which will define what is a “community activity”. Quite clearly, if it were to move into the commercial area, the increase to 10 megawatts would be resented by those who generate a little more than 10 megawatts. As it has been defined by the Minister today, however, it is an important step forward and will help a lot of micro-microgeneration in communities.
Lord Grantchester
My Lords, this is an important government amendment and we welcome the group, which replicates amendments tabled by Labour in Committee in the other place to increase the feed-in tariffs to at least 10 megawatts. This comes as a welcome acknowledgment of the gap that exists in the Bill on community energy. I also pay tribute to the personal enthusiasm of the Minister of State in the other place, Mr Greg Barker, both for these schemes and for the work that he has done since the debate in order to secure the amendment. We welcome the progress the Government have made in this respect.
On Report in the other place, we pushed the Government to introduce a minimum threshold for the fixed feed-in tariff of 10 megawatts. The Community Energy Coalition of NGOs, including the Centre for Sustainable Energy, the Forum for the Future, the National Trust, the Low Carbon Communities Network, Co-operatives UK and many more have called for the threshold to be raised even higher to 20 megawatts to allow community energy schemes a guaranteed income and enable them to participate effectively in the energy market in the future.
Already in the UK a number of community energy schemes exceed 5 megawatts, such as Westmill Wind Farm Co-operative in Oxfordshire of 6.5 megawatts, the Lochcarnan Community Wind Farm on South Uist of 7 megawatts and the Neilston Community Wind Farm near Glasgow of 10 megawatts. Community schemes are not necessarily small. The mid-size market can attract the participation of the wider population in renewable energy and the attainment of our 2020 targets. These schemes should also be given the signal that there is support to develop further.
The Energy and Climate Change Committee has argued that medium-sized projects of up to 50 megawatts are disadvantaged because they cannot access the feed-in tariff, yet often lack the financial capability to deal with the complexities of the renewables obligation and, in the future, contracts for difference. In the interim, until contracts for difference come into play, the gap remains. They may also struggle to obtain the reference price under the CFD regime, meaning that they would lose out financially. Why is the threshold fixed at 10 megawatts? What will the Government do to support mid-sized community energy schemes which are not eligible for the FITs but have difficulty accessing the contracts for difference? Community and co-operative energy schemes can be hugely beneficial in helping to meet our renewables targets that must be met by 2020.
Research reported by Co-operatives UK estimates that there is the potential for at least 3.5 gigawatts in UK community energy schemes by 2020—the equivalent of four conventional coal-fired power stations. Looking overseas, Germany, where 15% of renewables are community owned, is a good example of how community energy generation helps to diversify the market and increase its resilience. Locally owned and locally targeted strategies for energy generation and saving can be better tailored to local needs, such as helping to tackle fuel poverty, and can increase community awareness and engagement in a way that leads to lower bills and greater sustainability. We welcome the Government’s call for evidence on community energy launched last month. Indeed, the Secretary of State has said that he wants,
“nothing less than a community energy revolution”.
While it is disappointing that this proposed new clause is in many ways an afterthought to the Energy Bill, nevertheless it is welcome that it may become an integral part of the Government’s vision for the future electricity market.
FITs are a user friendly, bankable mechanism to encourage easy investment and engagement from people and organisations for whom energy is not their core business and who do not want the complexity of the renewables obligation. So far the mid-size market has failed due to excessively low FIT tariffs and unfair capacity constraints. However, the constraints on many applications of non-domestic solar are unfair. First, the FIT tariffs were set too low for many of the non-domestic FIT bands. Secondly, the degression mechanisms under budgetary constraint measures that come into play at relatively early stages are having the effect of leading to an imbalance between technologies.
The solar industry especially feels that it is subject to unnecessarily harsh measures. The consequences of these low capacity triggers is that any significant national deployment of solar power in schemes over 50 kilowatts in size—about the size of a school roof—will result in major cuts to the tariff that will make developing further schemes uneconomical. The solar industry contends that between 50 kilowatts and 5 megawatts it is cheaper than other renewables supported under the renewables obligation. I ask the Minister: why does it feel that it is subject to constraints beyond those that utility-scale renewables are subject to under the renewables obligation? Can the Minister clarify whether this Energy Bill could be used to correct the situation or could this be achieved through secondary legislation? Would there be any repercussions to correcting her department’s imbalance in the energy mix between technologies? Would there be an increase in the total budget before degression or would it result in reducing payments to some other technologies?
Baroness Verma
My Lords, I am extremely grateful for my noble friend Lord Roper’s warm welcome for these amendments and I think I sensed a warm welcome from the noble Lord, Lord Grantchester, as well. He said it was an afterthought. It was actually because we considered really hard what people had been saying and took that advice on board so I hope that the noble Lord has welcomed it with open arms. I agree with my noble friend Lord Roper that we must ensure that we have in place robust legislation, which will provide confidence that these subsidies will be delivered only to the intended recipients.
As always, the noble Lord, Lord Grantchester, raised a number of searching questions. Although I tried very hard to keep up with him, I suspect that I will end up having to write to him in response to one or two. The noble Lord asked why we should stop at 10 megawatts. Supporting generation through the FIT scheme is more expensive than market-based mechanisms such as the renewables obligation. We value community energy and are willing to extend the FIT scheme to support the ambition of the sector. Community developments larger than 10 megawatts will still get support but at that scale they will need to apply for the renewables obligation.
The noble Lord also mentioned that we had a call for evidence around the benefits of and barriers to community energy access. The community energy strategy will be published in the autumn and will identify the potential of community energy projects in the UK to bring benefits to communities while, very importantly, still helping tackle climate change and maintain energy security. The strategy will go further than renewable electricity generation projects. It will also include community energy-efficiency schemes, community renewable heat projects, smart grids and collective energy-purchasing and switching schemes.
On degression, the non-domestic solar PV sector is supported by the renewables obligation and the FIT scheme, so some schemes are receiving both. But degression is a necessary tool. As we discussed yesterday, we do not want to put an unfair balance in favour of one technology over another while technologies are developing. The mechanism of degression assists us in ensuring that some technologies do not get an overexposure to subsidies while other technologies try to reach up and compete on an equal basis. On that note, I commend these amendments.
Lord Hunt of Chesterton
“Energy information
(1) The Secretary of State shall make adequate provision for the universal availability of information to enable domestic energy consumers to make effective decisions about their energy usage, including information relating to—
(a) installation;(b) running costs;(c) monitoring equipment.(2) Measures under subsection (1) should include physical demonstration and comparison in collaboration with industry providers.”
Lord Hunt of Chesterton
I was astonished by the Minister’s remarks. She does not sound as if she goes shopping before she buys something. The whole point of this is that you want to see things—you cannot get a custom service. I do not know what the Minister’s life is like but it is not like most people’s lives.
The Deputy Chairman of Committees (Lord Faulkner of Worcester)
The noble Lord can move his amendment if he wishes and then he will get a response. However, he must move the amendment in order to get the response. The noble Lord is entitled to degroup if he wishes to.
Lord Hunt of Chesterton
I wanted to move my amendment and thought that we had done that before. I just wanted to make my point.
Baroness Worthington
My Lords, I have proposed that this clause should not stand part, partly because this is a very odd part of the Bill. I read it and then read it again. Then I thought that I would go to the Explanatory Notes as they would help explain what it is all about. However, the Explanatory Notes simply repeated what was written in the clauses in the same language but with the numbers taken out. So that was absolutely hopeless. I then turned to the debate in the Commons when this clause was introduced. I was seeking some sense of why this was needed, how it was going to operate and what it was for. My colleagues in the other place pressed the Minister quite hard but, I am sad to say, I am still a little confused as to why this power is being taken.
It did not appear in the draft Bill, so it was not subject to any pre-legislative scrutiny. There is very little background information on it and there seems to have been no consultation. It introduces quite extraordinarily wide-ranging powers with almost no definitions at all. It allows the Treasury and the Government to raise money, but the amounts that are allowed to be raised do not even need to pass before Parliament; they can simply be determined by the direction of the Secretary of State. It is quite a profound, if small, piece of legislation. I was curious to know what it was for and I still am. Perhaps the noble Lord can provide us with his account. Is the noble Lord, Lord Jenkin, going to tell me that there is lots of background information that I have not read?
Baroness Worthington
In the other place, the Minister did try to give some explanation as to what these fees for energy resilience might be. My colleagues in the other place did press him quite hard, because one reading could see it as a way to discourage strike action in those sectors that deliver fuel or are connected with the energy sector. We were pleased to receive quite emphatic reassurances that these fees would not be applied to unions that sought to take strike action.
What seemed to emerge was that the fees are going to be levied on business in response to extreme events that it was almost impossible to predict. That could be anything but some examples were given. The Government might need to step in and provide personnel to companies in the event of an outbreak of a flu pandemic and would want to recover the cost in fees. Then there was the potential for equipment or vehicles that the Government own to be deployed in the event of extreme weather or of a clean-up. Then there are the unspecified assets that might need to be provided in the short term to business. Really, this is the Treasury seeking a power to regain costs for that. What have we come to? Is the government budget so tight that we are introducing powers to claw back money for disaster situations? In reality, if a disaster strikes you want the Government to be able to respond. You do not want there to be any quibbling about costs being passed on or who will pay for what. Why do we—and companies—pay taxes? The Government are there to provide a service in the event of national security issues.
Maybe I am wrong and there are plenty of precedents for the Treasury introducing specific powers to recover money for specific unintended events. If there are, I stand corrected. However, my reading of this is that it is an extraordinarily broad power with almost no definition and very little accountability. For that reason, it does not have a place in this Bill. Obviously, as we go forward we know that there will be an increase in natural disasters that could potentially interrupt energy supply. In fact, we have quite a resilient system for dealing with that. The power companies and National Grid are on the front line. Their licence requirements mean that they have to reconnect customers as soon as they can. When the large storms hit the Isle of Arran, SSE men in vans were out there fixing that problem. The Government were not involved. I suspect that the Government do not have the skills to address these issues.
It strikes me that this must be about military personnel. It can only be about military deployment because the department certainly does not have skilled engineers who can go and fix transmission lines. That is all done in the private sector. If it is about concerns about the military and the budget, this is quite a strange precedent to set, that there will somehow be fees applied to businesses. Are those fees voluntary or mandatory? How will they work? Does a company have to pay? As I said, when will all this be negotiated? If there is a natural disaster I would hope that we got on with fixing the problem and that the Government would be sufficiently robust and well resourced to do that, not that we would be quibbling about collecting these fees.
As I said, we are going into a world where there are likely to be more natural disasters. We should not shy away from that, but the Treasury would better spend its time getting to grips with climate change rather than preventing us from tackling it and introducing apparently innocuous but quite powerful bits of legislation that enable it to collect costs. It should be thinking about how it can act to stop the excessive increase of natural disasters and it should start taking climate change seriously.
Lord Jenkin of Roding
I apologise for appearing to interrupt the noble Baroness in mid-flow. I just have one question. I had the same problem as the noble Baroness did. I thought, “Why has this clause stand part question been put down and what does the clause say?”. I turned up the Ofgem consultation letter published on the same day as its recent capacity assessment report, which has of course shown that the margins will, by the middle of this decade, become very much smaller. It goes on making hopeful remarks that perhaps there will not be interruptions but an increasing number of people think that there might be. The letter consults on additional balancing measures for the grid. It proposes two of them. I will not go into this in great detail at this hour of the night—we are due to rise in two minutes—but does that have anything to do with this clause? There is nothing in the letter about fees so there may be no connection, but it proposes new methods to achieve resilience to avoid power cuts. It seemed that there might be a connection. The noble Baroness, Lady Worthington, seems not to think so. We will listen to my noble friend replying in due course.
Lord Roper
My Lords, I want to raise a slightly narrower point, but one related to that raised by the noble Baroness, Lady Worthington. The report of the Delegated Powers Committee raised very clearly a point about subsection (3)(b), where money can be specified or determined by the Secretary of State without any reference to Parliament. Your Lordships’ Delegated Powers Committee is very clear, and concludes:
“We accordingly do not find persuasive the explanations in the memorandum that the power conferred by clause 134(3)(b) is appropriate; and we recommend that, unless the House can be satisfied to that effect by further explanations from the Minister, paragraph (b) should be removed from clause 134(3)”.
I would be most grateful if the Minister could give us such a reply.
Perhaps, as I am dealing with the Delegated Powers Committee, I could raise a slightly wider question. We have, of course, had a new report from the Delegated Powers Committee this morning, based on a further memorandum submitted by the department to that committee. It is impossible to find a copy of that memorandum on either the department’s or the committee’s website. I would be grateful if it could in due course be made available to Members who have attended this Committee.
Lord Gardiner of Kimble
My Lords, I am particularly grateful to the noble Baroness for this opportunity to consider this clause, which will enable the Secretary of State to charge fees for providing energy resilience services in the event of a disruption or threatened disruption to energy supplies. It will allow the Government to recoup some or all of the costs of the services provided to businesses, and to set appropriate fees for these services.
The clause does not set the rate of any fees or charges. It will enable the Secretary of State to set fees either through secondary legislation or through administrative means and, as such, to recoup some or all of the costs of providing the service. It cannot and will not be used as a revenue-raising measure; that is not the purpose of this provision. The services will be provided on a discretionary basis, because businesses can choose to take advantage of them or not, based on balancing the effect on revenues and meeting contractual obligations against cost of the service.
The services which the Government may provide, to help improve the resilience of the energy sector, are those such as making available personnel, supplies, equipment or other assets, to businesses. Examples of where the Government could provide a service for which it might be appropriate to charge businesses include: provision of personnel in event of widespread impacts on workers due to flu or industrial action; equipment or vehicles which have greater flexibility in extreme weather conditions, allowing companies to carry out repairs or clean up more effectively; and provision of assets to enable a critical component of the supply chain to remain viable in the short term and until alternative options are identified.
The need for this power became apparent last year when there was a threat of industrial action by drivers, which would have caused widespread disruption to fuel supplies across the UK. As a result of that, the Government have set up a military fuel school to train military personnel to drive commercial fuel tankers. Drivers could be deployed to haulage companies in the event of a future dispute of this nature, and this power would enable us to charge those companies for some or all of the costs incurred by Her Majesty’s Government—which is to say, the taxpayer.
My noble friend Lord Roper raised the Delegated Powers and Regulatory Reform Committee, and the recommendation for the removal of subsection (3)(b) which enables the Secretary of State to set the levels of the fees by means of a direction to be laid before Parliament, as well as by means of regulation. The Government are considering all the committee’s recommendations very carefully and will respond in due course. However, I take this opportunity to clarify why we feel that this provision is important.
The requirement for the services proposed is likely to arise in the event of a significant unexpected disruption. This may be necessary to plan and provide services in a situation of emergency and urgency. There may well be situations where it would be appropriate and feasible to set out the level of fees to be charged for a particular service in secondary legislation, and the Government would aim to do so in those circumstances. However, it is likely that there may also be circumstances where it is not feasible to work within the timetable required for secondary legislation, and the flexibility afforded by ministerial direction would be required for those sorts of situations. Lack of this flexibility may make the services difficult to deliver within the optimum timescale. At worst, it could render timely delivery completely unfeasible, with the consequential loss of benefit to businesses, the economy and consumers.
My noble friend Lord Roper mentioned other matters in relation to the publishing of the department’s reply. We will be happy to make it available. It will be published on the department’s website as promptly as is possible. That is in hand.
My noble friend Lord Jenkin made some points. I will say that these powers are not connected with, and would not apply to, provisions elsewhere in the Bill on the security of electricity supplies and capacity market provisions.
For the reasons I have set out, and given the importance of the provision for improving national resilience, the clause should stand part of the Bill.
Lord O'Neill of Clackmannan
Will the Minister clarify one point? If there is an official strike, for which due notice has been given, and military personnel are used as strike-breakers, companies will have to pay the Government for the use of the strike-breakers. In that event, what would the companies have to do to recoup the money that they had been forced to lay out to pay for the strike-breaking? Would they have recourse to the courts? Would they be able to sue the unions for the money involved in the strike-breaking activity?
Lord Gardiner of Kimble
My Lords, this provision is not designed to interfere with the normal relationships between employers and employees. Wherever possible, the Government’s preference is for the supply of fuel to be maintained by the normal, civilian supply chain. Military personnel would be deployed only where this is not possible. Ministers will take a decision to deploy military personnel only where there is a threat of significant disruption to fuel supplies. Industrial action in this sector can have a very serious impact on the UK economy, as well as endangering the health and safety of our citizens.
Lord O'Neill of Clackmannan
The Minister did not answer the question. If the Government impose a charge on companies in the event of an industrial dispute where military personnel have to be responsible for driving tankers, what redress will the companies have to recoup the money that they will have to pay to the Government to fund the strike-breaking exercise?
Lord Gardiner of Kimble
We do not anticipate that the companies could recoup in those circumstances.
Baroness Worthington
It seems to me that we have got to the bottom of this. It is a very narrow thing that is needed, yet the Government have created an incredibly enabling piece of legislation with no scrutiny. It is poor legislative drafting to have taken such a wide-ranging power. The Minister says that it will not apply to electricity, or will be used only in certain circumstances—which boils down to the Army learning how to drive fuel tankers. That is very narrow, but this is not a narrow provision. It almost sounds as if one could interpret this as the Government going into the energy supply business. It is that broad. I am glad and encouraged that we are not. I am also reassured to hear that this is discretionary, although how that would play out I am not sure. Either you deploy or you do not deploy.
Is the Minister saying that we would not deploy unless the company agreed to pay? That would be a reduction in the security of the country. The company might say, “No, we’re not paying for that”. Who in their right mind would say yes? If you are an oil company, you will not have factored into your bottom line unexpected payments to the Government for people to drive your tankers. The money has to be recouped from somewhere, and a company would be perfectly within its rights to refuse to pay. In that case, the Government will have to deploy their personnel anyway, or risk an interruption in our fuel supply. This needs to be narrowed in its application. It needs more definition in law.
I absolutely agree with the noble Lord, Lord Roper, who pointed to the delegated powers recommendation that subsection (3)(b) does not deserve to be here. It is far too wide-ranging. The whole thing is ill conceived. As I pointed out, in a disaster situation the last thing you want to be doing is negotiating around who is paying who. We have a Government. We pay taxes for a reason. That is what we expect of government. This is penny-pinching from the Treasury and it does not deserve to be in the Bill.
House of Lords
Press Regulation
(10 years, 10 months ago)
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Lord Dykes
To ask Her Majesty’s Government when they expect to achieve final all-party agreement on their proposals for a royal charter on the supervision of ethical standards in the United Kingdom press.
Lord Gardiner of Kimble
My Lords, a cross-party royal charter has been agreed and published. On 4 July the Culture Secretary updated the other place by way of a Written Statement, as I did in your Lordships’ House, on developments since the cross-party agreement on 18 March. On 30 April the Press Standards Board of Finance petitioned the Privy Council with an alternative charter. The PressBoF charter will be considered by a committee of the Privy Council and a recommendation made before any recommendation is made regarding the cross-party royal charter.
Lord Dykes
I thank my noble friend for those details. Will he confirm that the priority now is to look after the past, present and future victims of press harassment and bullying and definitely not to appease international proprietors who do not pay UK personal taxes and insist on treating Parliament and people with continuing contempt?
Lord Gardiner of Kimble
My Lords, I understand fully, as I have in many of the exchanges we have had on this matter, that the priority is to ensure that there is a resolution in place so that the victims can be reassured that it can never happen again. It is clearly in everyone’s interests that the committee acts swiftly to consider the charter in a manner consistent with delivering a robust and justifiable decision.
Lord Prescott
My Lords, the agenda, the rules of decisions, the timing and attendance are determined by Cabinet Members. They have decided to give the press charter greater priority. Is the Minister aware that there is division on the press charter as a number of the papers do not support it? It is not consistent with Leveson’s request for independence—free of government, free of Parliament and free of the press. In giving priority to this they have chosen to make a controversial political decision inside the Privy Council. That may inevitably mean a division of opinion between Parliament and the monarchy.
Lord Gardiner of Kimble
I do not agree, although I can understand the noble Lord’s point about priority. There are due processes and legal opinion, so we have had to consider the PressBoF charter first.
Lord Gardiner of Kimble
There was an application to the Privy Council. The cross-party royal charter could not be referred because a number of outstanding points needed to be dealt with, including making it Scottish compliant because on 30 April the Scottish Parliament asked to be included in the matter. That is the position. There is no sense of priority; it is about dealing with the matter through the procedures that are required.
Lord Fowler
In relation to the newspapers’ own scheme, was it not Lord Justice Leveson who warned that over the past half century there have been fine words and promises from the press following similar inquiries and commissions, and frankly we ended up with phone hacking and scandal? Surely what we want this time is for the reality to match the rhetoric and for the Government to ensure that that is the case.
Lord Gardiner of Kimble
I agree with my noble friend. That is precisely why we are going through the procedures that we are, which we must do for legal reasons. The PressBoF charter will be considered swiftly, as I said. But Parliament has already, as we know, passed two Acts of Parliament—the Crime and Courts Act and the Enterprise and Regulatory Reform Act. All the recommendations made by Lord Justice Leveson will provide strong and effective incentives for relevant publishers to join a recognised independent self regulator.
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)
My Lords, we should hear from the Cross Benches.
Baroness Hollins
Under the currently planned schedule of Privy Council meetings, final approval for the Leveson-compliant royal charter, which we and the other place approved in March this year, may not come until October. What steps are the Government taking to ensure that there is no further delay in securing Privy Council approval of the March royal charter? As Hacked Off, the campaigning organisation, rightly says, the public, the victims of press abuses and the democratic will of Parliament deserve better than this.
Lord Gardiner of Kimble
That is precisely why I said the committee was set up yesterday and the membership of it will be announced very shortly. It is determined to act as swiftly as it possibly can to ensure that the PressBoF charter is given due consideration. Once that has taken place and depending on what is said, there is obviously the cross-party charter, which is being finalised. That can then be put before the Privy Council.
Lord Richard
My Lords, can the noble Lord tell us who will be on this committee? Can he confirm that they will all be members of the Cabinet? Can he also confirm that the decisions that will be taken by the committee will not be reported to the whole of the Privy Council or indeed reported to Parliament but will be governmental decisions? We will then be faced with a situation in which a committee of the Privy Council, consisting of members of the Cabinet, will have taken a decision that will be backed by the Government and we will be presented with a fait accompli. Does he not think that that is an absolute disgrace?
Lord Gardiner of Kimble
As I have just replied to the noble Baroness, the membership and indeed the chairman of that committee will be announced very shortly. It will be for that committee to ensure that its work is rigorously applied given the legal opinion that has been given.
Lord Mackay of Clashfern
My Lords, is there any particular reason why the membership of a committee of the Privy Council should contain only members of the Cabinet?
Lord Gardiner of Kimble
With regard to the membership of this committee, I had hoped to be helpful to your Lordships and to have been able to give the information this morning, but it will be announced very shortly.
Lord Hughes of Woodside
My Lords, what would the position be if this special committee of the Privy Council recommended in favour of the press’s own charter?
Lord Gardiner of Kimble
My Lords, I obviously cannot pre-empt what the committee is going to say, but it is fair to say that in the other place last week the Prime Minister said that there were serious shortcomings in the PressBoF charter.
Baroness Williams of Crosby
Does the Minister agree, however, that an agreement between all the parties in Parliament is an extremely important step towards asserting the powers and influence of Parliament? Is it not important that the public know what has just been raised by the noble and learned Lord, Lord Mackay, the former Lord Chancellor, that members of the Privy Council will not be all the members or even a selection of members of the Privy Council? I have written to the secretary of the Privy Council as a privy counsellor to ask whether he would consider widening the terms of those taking part. This will be a government decision rather than a Privy Council one.
Lord Gardiner of Kimble
I am most grateful to my noble friend for that. I can only say—I am seeking to be helpful to the House—that all the announcements on the membership will be made very shortly. I am sure that they will be mindful of what my noble friend has said.
Health: Anorexia and Bulimia Nervosa
(10 years, 10 months ago)
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Baroness Howells of St Davids
To ask Her Majesty’s Government whether they are taking steps to ensure that those suffering from mental health disorders such as anorexia and bulimia nervosa are receiving the most appropriate care; and what provisions exist for urgent cases, particularly those of 17 to 18 year-olds.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, early intervention is essential for those with eating disorders. We have been clear that GPs are expected to use guidance produced by the National Institute for Health and Care Excellence—NICE—when choosing the most appropriate treatments, from physical and psychological treatments to medicines. The NICE guidance is due for review in January 2014.
Baroness Howells of St Davids
I thank the Minister for his Answer. Does he recognise that talking therapies are more effective for treating eating disorders, yet to date there is no legal right to receive talking therapies, as there is for drugs? Recent figures outline that more people than previously are waiting longer than the targeted access time of 28 days to receive those therapies, especially those under 18. In fact, the figures show that those under 18 are sometimes referred to mental hospitals rather than being given such therapy at the time. I respect the fact that the Government have committed to make measurable progress by March 2015 to parity of esteem, and that they cannot make any commitments before that. However, I am concerned that there appears to be no monitoring of this situation. The fact that this is urgent does not seem to be taken on board and many young people under 18 are suffering.
Earl Howe
My Lords, the mental health of children and young people is a major priority for the Government. Half of those with lifetime mental illness first experience symptoms by the age of 14 and three-quarters before their mid-20s. That is precisely why we are investing a large sum of money—£54 million—over the four-year period 2011-15 in the Children and Young People’s Improving Access to Psychological Therapies programme. We know, as the noble Baroness rightly emphasises, that those talking therapies can make the most difference, particularly if early intervention is achieved.
Baroness Gardner of Parkes
My Lords, is it not so that very often parents do not realise what is happening to their child? As for cancer or any other condition, early diagnosis is the secret. What can be done to speed that up? When I was chairman of a hospital, we had a whole ward full of people with this problem, but their condition had been recognised too late and therefore treatment was extremely difficult.
Earl Howe
My noble friend is absolutely right. However, it is encouraging to see that in recent years a range of information and support has become available. The Royal College of Psychiatrists has published a fact sheet on eating disorders, which is aimed not just at the profession but particularly at parents, teachers and young people themselves. It is called Mental Health and Growing Up. The fact sheet discusses the causes of eating disorders, how to recognise them and gives advice on how to cope with a child who has an eating disorder.
The Countess of Mar
My Lords, I am sure that the noble Earl accepts that some young girls have an eating disorder that is not anorexia or bulimia—they may have CFS/ME or reactions to HPV vaccines. Very often, they are incarcerated in mental hospitals when they should receive a different form of treatment. I have spoken to the noble Earl about this but perhaps he could say what progress is being made in ensuring that such young people are not mistreated?
Earl Howe
My Lords, I am sure that this is an area that NICE will need to look at when it refreshes its guidance to the clinical community. The noble Countess is absolutely right to raise the issue. CFS/ME can often be misdiagnosed; it can be mistaken for other conditions without proper differential diagnosis having taken place. We know that there is more work to be done in this area. However, the range of programmes now available to GPs, some of which I have referred to, can be helpful in this area.
Lord Hunt of Kings Heath
My Lords, I refer noble Lords to my health interests in the register. Perhaps I can take the noble Earl back to my noble friend’s question. She mentioned “parity of esteem”, which of course the House legislated for in the 2012 health and social care legislation. Could he tell the House how the Government intend to ensure parity of esteem, particularly ensuring that mental health services are given their fair share of resources in the health service? How do the Government intend to take that forward?
Earl Howe
My Lords, I do not wish to duck the fact that this is a very difficult area to define. We all know that we want to achieve parity of esteem. It depends on ensuring not only that mental health services are given their fair share of the budget but that the right treatments are delivered to the right people, and that everyone in the country has access to appropriate treatments. We are currently firming up with NHS England what the right metrics are in order to judge whether they have met that aim. I will write to the noble Lord with the latest news on that front.
Baroness Tyler of Enfield
My Lords, I am sure that the Minister is aware of the growing trend for eating disorder clinics and hospitals to treat much younger children and, indeed, boys with eating disorders. Given this, what additional steps does the Minister think need to be taken to ensure that everyone involved—children’s services, primary schools and others—are spotting these signs, particularly in boys, where stigma is often attached to acknowledging these things, to ensure that effective treatment is quickly available?
Earl Howe
My noble friend is absolutely right. The figures that I have before me show that by far the largest number of cases occurs in the age group 10 to 17. We are working on raising awareness of mental health problems, including eating disorders, and on providing support in schools. Particularly, we have provided £3 million of funding over two years to the BOND Consortium, which is led by YoungMinds. The aim of that is to build capacity in the voluntary sector to support the access that schools have to local services. We are also producing an e-portal tool for children’s and young people’s mental health, which we hope will be delivered next year.
Health: Prescription Drugs
(10 years, 10 months ago)
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The Earl of Sandwich
To ask Her Majesty’s Government what changes have been made in the training of junior doctors and nurses in the long-term effects of prescription drugs and in the availability of services to those suffering from addiction to and withdrawal from such drugs.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, recent changes to key documents governing the training of doctors have strengthened the requirements for their training in the long-term effects of prescribed drugs. The training of student nurses, due to the introduction of new educational standards, has been strengthened. Services to treat dependants, including for addiction to medicines, are commissioned locally. Information on changes to the availability of services locally to those suffering from addiction to and withdrawal from prescribed medicines is not collected centrally.
The Earl of Sandwich
My Lords, prescribed medicines can be every bit as dangerous as hard drugs, and the length of withdrawal can be much longer—up to three or four years, as I know from personal experience. Their victims lead a half-life and are out of the range of the NHS, with only the voluntary services to help them. Despite what the Minister has just said, which is encouraging, does he agree that the training being given to the younger generation of doctors and psychiatrists, and even the older ones, is still inappropriate and inadequate? What can the Government do to strengthen this training and to reinforce what the voluntary sector is already doing?
Earl Howe
My Lords, I am sure that the noble Earl will be encouraged to know that a lot of work is going on in this area. The Centre for Pharmacy Postgraduate Education, the Royal College of General Practitioners, Public Health England and others are developing information and educational materials and training on addiction to medicines for GPs and other healthcare professionals. In fact, the Royal College of General Practitioners published a consensus statement in January in which a wide range of professional organisations signed up to tackling this serious issue. I know that the Board of Science of the British Medical Association has also discussed it. I hope that the noble Earl will be encouraged that there is genuine activity in this area.
Lord Walton of Detchant
My Lords, many years ago when I was chairman of the General Medical Council’s education committee before I became its president, I received in the course of two months 32 letters each demanding that the special interest groups that wrote to me should have their conditions and concerns included in the undergraduate medical curriculum. Does the Minister accept that the range of medical knowledge is now so vast that basic medical education over five or six years does no more than simply enable graduates in medicine to benefit from postgraduate or vocational training having acquired skills and knowledge in principle which will help them to do that? Can he assure us that this extremely important matter raised by my noble friend now figures in postgraduate training of doctors, and not least in the mandatory vocational training programme of three years which must be undertaken by all intending general practitioners?
Earl Howe
I do, of course, agree with the noble Lord. I am sure that we have to be realistic about the extent to which every GP can be fully informed about this area. I can only say that it has risen in prominence in recent years, not least thanks to the efforts of the noble Earl. There is growing concern that this particular cohort of patients has been poorly served in the past and that is why the extent to which these drugs are being prescribed has diminished significantly over recent years.
Baroness Corston
My Lords, will the Minister confirm that the Committee on Safety of Medicines and the Royal College of Psychiatrists said many years ago that benzodiazepines are unsuitable for long-term use and should be prescribed for periods of two to four weeks only? And will he revisit a Written Answer he gave me recently saying that there was no connection between benzodiazepine addiction and suicide, when there is 30 years of eminent research to show that that is indeed the case? I declare an interest as the patron of Battle Against Tranquillisers, the foremost charity campaigning in this area, whose mission statement is:
“To lessen the harm caused by benzodiazepine and z drug tranquilizers and sleeping pills”.
Earl Howe
My Lords, of course I will revisit that Answer, and I will come back to the noble Baroness if I find cause to correct what I have said. However, I agree with her that the risks associated with long-term use of tranquillisers have been well recognised for many years. There are several authoritative sources for guidance for prescribers on this issue. I believe that that guidance is having an effect because, as I said, the prescribing rate has considerably diminished of late. There is no shortage of guidance out there. There is the national formulary, which already describes the importance of gradual withdrawal from benzodiazepines, and there is a wide variety of other impartial and trustworthy information resources to support prescribing.
Baroness Jolly
My Lords, GP training is important but for a user the crucial thing is the availability of the services. Will my noble friend tell the House whether services for those addicted to prescription drugs are readily available within each CCG area and where one might find details of such services?
Earl Howe
My noble friend will be encouraged to know that Public Health England has published a commissioning guide for the NHS and local authorities which sets out its expectation that support should be available in every area for people with a dependency on prescription or over-the-counter medicines. Local authorities are now, as she is aware, responsible for commissioning services to support people to recover from dependence in line with local need. Most of the support available for people who are addicted to prescription drugs is with their GP and not in services treating those addicted to illegal drugs, but there is a range of services available.
Baroness Finlay of Llandaff
To better understand the size of the problem, will the Government consider adding a box to the yellow card, which has been successful in reporting adverse drug reactions, to state that the doctor suspects that this person may have dependence on the drug? That would provide ongoing epidemiological monitoring.
Lord Hunt of Kings Heath
My Lords, the noble Earl will be aware that in the past few years nurses have been given much more authority, once they have been properly trained and authorised, to prescribe medicines. Can he confirm that the measures he has talked about will apply to nurse prescribers as well as to doctors?
Banking: Regulation
(10 years, 10 months ago)
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Lord Harrison
To ask Her Majesty’s Government to what extent their response to the Parliamentary Commission on Banking Standards is aligned with proposed European Union legislation on bank regulation.
Lord Newby
My Lords, none of the measures in the Government’s response to the Parliamentary Commission on Banking Standards are prevented by proposed European Union legislation on bank regulations. As the detail of these measures is developed, HM Treasury will ensure that they are appropriately aligned with any relevant European Union legislation.
Lord Harrison
My Lords, given the slender reference to the European dimension both in the Tyrie report and the Government’s response, could the Minister illustrate what obligation there is at present, under CRD IV and Basel III, for us to report the British banks that have a high-risk assessment to the European Banking Authority? Given the flat-footed nature of the Government in responding to the financial transaction tax and the European banking union, may we have an assurance that preparatory work is being done in anticipation of the Liikanen proposals coming to fruition this autumn, and indeed the recovery and resolution directive that will cover all 28 member states?
Lord Newby
My Lords, I think that I can give that assurance as far as the Liikanen proposals are concerned. As the noble Lord probably knows, the Government believe that there is no incompatibility between what he is proposing and what the Government are doing in respect of banking and the banking reform Bill. I am confident that the Government are acting with all due speed on these measures, and indeed in some areas we have moved more quickly than the EU as a whole has been able to do.
Lord Lawson of Blaby
My Lords, as a member of the Parliamentary Commission on Banking Standards, I remind my noble friend the Minister that in our unanimous report we were in fact highly critical of the emerging European Union banking regulation, and indeed not greatly enamoured of the approach of Basel III either. We made it clear that, given that London is the only world-class financial centre within the European time zones, it is incumbent upon this country to put in place whatever system of bank regulation we feel is necessary to address the problems that have emerged.
Lord Newby
Yes, my Lords, and of course that is exactly what we are doing with the banking reform Bill.
Lord Barnett
My Lords, the draft banking Bill came from the House of Commons yesterday. I have only just had a chance to glance at it, but it clearly is not quite in line with what was recommended on the important issue of regulation regarding ring-fencing. Why not?
Lord Newby
My Lords, as my colleague the Financial Secretary has made clear in another place, there are some aspects of the commission’s views on the speed and timing of ring-fencing that the Government are going to look at further and revisit when the issue comes back to your Lordships’ House. We have Second Reading of the Bill on 24 July, and my noble friend Lord Deighton will look forward to telling the House more about the provisions of the Bill at that point.
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)
Forgive me. If we could hear from the noble Lord, Lord Pearson, then we will hear from my noble friend Lady Kramer.
Lord Pearson of Rannoch
My Lords, is the Minister aware that his answer to the noble Lord, Lord Lawson, does not quite stack up in view of Written Answers from the previous Government on 21 July 2009, at col. 365 of the Official Report, which confirmed that they had passed overall supervision of our banks and financial institutions to Brussels? Given that the EU has not had its own accounts signed off for 17 years, and given that it deeply dislikes the City of London, was this wise and how do we get out of it?
Lord Newby
My Lords, the basic assertion that the noble Lord makes, that the Government are unable to put in place a satisfactory regulatory framework for banks in the UK, is, frankly, simply not true. We have taken a wide range of measures to strengthen the regulatory structure and the provisions with regard to remuneration and capital, and in all those areas what we have done is compatible with what has been happening at EU level.
Baroness Kramer
My Lords, while many of us in this House will be working to strengthen banking regulation based on the commission’s report, and I was privileged to be part of that commission, is it not also true that what is remarkable from the evidence we received from the European Union is the common ground shared by the regulators, both in their definition of the issues and the areas in which they are seeking solutions? Is it not true that the key issue of dispute between the two is in fact whether or not there should be a cap on bankers’ bonuses—on which, ironically, the British public are with the EU?
Lord Newby
My noble friend is clearly right in that respect. The previous Government started a process with regard to remuneration for senior bankers, which has been strengthened in several respects. One of the more encouraging developments in recent years is that as a result of that—and as a result of public pressure—the level of bonuses at RBS has fallen by 70% between 2010 and 1012, and at Barclays by 40%.
Lord Tunnicliffe
My Lords, the report of the Parliamentary Commission on Banking Standards says at paragraph 896:
“Remuneration requirements should, ideally, be mandated internationally in order to reduce arbitrage. The Commission expects the UK authorities to strive to secure international agreement on changes”,
and it goes on to describe the changes. The Government’s response on this paragraph is unclear. Will the Government be taking a lead internationally to secure the commission’s recommendations on this issue?
Lord Newby
The Government have taken a lead on remuneration levels—in particular, in seeing how remuneration levels can be more closely matched to risk. We are, for example, sympathetic to one of the commission’s proposals about linking remuneration levels not only to the immediate risk, but by making some degree of the remuneration relevant to what happens even up to 10 years after its level is set. So we are already taking the lead and will continue to do so.
Business of the House
(10 years, 10 months ago)
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Lord Hill of Oareford
That Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with on Monday 15 July to allow the Finance Bill and the Supply and Appropriation (Main Estimates) Bill to be taken through all their remaining stages.
Business of the House
(10 years, 10 months ago)
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Lord Hill of Oareford
That the debates on the Motions in the names of Lord Patel and Baroness Deech set down for today shall each be limited to 2½ hours.
Inquiries Act 2005 Committee
The Chairman of Committees
That Lord Soley be appointed a member of the Select Committee in place of Lord Clinton-Davis, resigned.
Privileges and Conduct Committee
The Chairman of Committees
That Lord Brown of Eaton-under-Heywood be appointed a member of the Select Committee in place of Baroness Manningham-Buller, resigned.
Health and Social Care in England
(10 years, 10 months ago)
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Lord Patel
That this House takes note of future models of funding of health and social care in England.
Lord Patel
My Lords, it is a pleasure to open this debate on the future funding of health and social care. I would like to thank all noble Lords taking part in the debate today. Looking at the list of speakers, no doubt we will hear radical views and provocative ideas in an altogether interesting debate. I thank in particular the Minister and the noble Lord, Lord Hunt, on the Opposition Front Bench for taking part today. Perhaps neither of them will be willing to put forward what the views of their own parties would be if they were in Government post-2015, but who knows? They might be persuaded to do so. The procedures of the House mean that the Minister has to wind up the debate. However, any questions put to him about future Government plans for funding health and social care beyond 2016 would be, in my view, inappropriate, and I, for one, would not do so. I hope that we have an open debate which can form the basis of a wider public debate. In my view, that is necessary before the next general election, and only this Chamber could facilitate such a debate. I also thank the Library staff and the many organisations outside, chiefly the Nuffield Trust, for providing detailed briefings to facilitate this debate.
Last Friday, 5 July, was the 65th anniversary of the establishment of the NHS through a bold and courageous piece of legislation that established free healthcare for all, irrespective of the ability to pay. Despite its many faults and occasional disasters, even to the point of causing harm and death to patients, and the daily reports of its shortcomings, it remains the most cherished public service—to the extent that, much to the bewilderment of foreign visitors, we celebrated it at the Olympic opening ceremony. Some say that it is our only national religion.
The NHS is the most successful and envied health system in the world. I have had the privilege of working in it for 39 years and 62 days, and I was trained in it for five years before that. Today, over 1 million people are at work in the NHS, over 70% of them female, and many thousands more provide a voluntary free service. Over 1.5 million patients and their families will be in contact with the NHS. Each month, 23 million people visit their doctor or a nurse. Every minute, five 999 calls will be answered by the ambulance service. The NHS has delivered many innovations: drug developments, new devices, CT and MRI scans, ultrasound and innovative surgical procedures. In September, a Member of your Lordships’ House will celebrate 25 years of his heart transplant, which is quite an achievement. It has also delivered assisted conception, complex treatments and much more. In fact, in some ways we have failed to harness the potential of the National Health Service to deliver innovations, including healthcare delivery. The majority of people who come into contact with the health service are satisfied with their care. Of course, it fails some people and that is unacceptable, but all this suggests that the NHS is a good ship, and any future plans need to bear that in mind.
Is the NHS the product of brilliant design or of politics and circumstance? Are the continuous changing of structures and reorganisations beneficial or merely ideological? In an odd way, the strength of the system is that it is resilient enough to absorb change to meet changing needs and yet continue to provide care. I do not believe that any other health system in the world is able to do that, certainly not under the insurance model of funding. However, in prolonged austerity, can a service that is free at the point of use survive and continue to do so? If the answer is “yes”, how will it have to change? If the answer is that it cannot survive as a free service at the point of use, who is best placed to make the argument to the public for the alternative? Is it the clinicians, the politicians or the managers?
There does not seem to be much of an appetite to change the model drastically. A poll of public views suggests that there is a willingness to contribute financially for minor, non-clinical services, but the majority want a free service at the point of use and are willing to pay higher taxes if the efficient use of money can be demonstrated. In a recent report from the Nuffield Trust on the NHS as viewed by 65 politicians, many of them previous Secretaries of State, managers, clinicians and others, the majority feel that the founding principles of the NHS are deeply enshrined. Some, however, do not feel that that is so and say that we are sleepwalking towards destroying the NHS. Some, like the noble Lord, Lord Warner, who unfortunately could not take part today—I think he is sorting out the US health service—feel that we should start exploring the basis on which we fund the NHS, which is with a complex mix of hypothecated taxes, user charges, and so on. Other notable voices such as those of Stephen Dorrell, Alan Milburn, the noble Baroness, Lady Williams, and Kenneth Clarke, say that despite the financial challenge, the NHS should remain free at the point of use.
Expenditure on the NHS has risen constantly since its establishment in 1948. In its first year of operation, the Government spent £11.4 billion. In 2010-11, the figure was 10 times greater, at £121 billion. At a growth rate of around 4% per year, in GDP terms that was 3.7% of GDP at the inception of the NHS to nearly 8.9% now. A reduction in funding and cost savings over the next decade will, based on historical cost growth, produce a funding gap of £54 billion by 2021-22. Sir David Nicholson made a speech yesterday suggesting that it might be less, but that is the figure worked out by PricewaterhouseCoopers.
Historically, the drivers of increased NHS spending are population growth, growth in national wealth, cost increases and developments in medical technology. An ageing population with an increasing number of older people is thought to be much less important as an increase in life expectancy merely delays the healthcare costs associated with death. If we follow the trajectory of spending over the past 50 years to the next 50 years, we will spend one-fifth of the nation’s entire wealth on the provision of health and social care. Of course there will be the benefits of better health, quality of life and a positive impact on productivity and economic activity. However, spending at that rate will also produce diminishing returns and therefore costs will always need to be controlled.
To remain free at the point of use, the NHS will have to change. We will need to find a better way of spending £120 billion. Some, such as the noble Lord, Lord Fowler, and Sally Davies, argue for a plan to reduce demand: a strategy of disease prevention. Demographic and behavioural trends will put increased demands on the service. By 2023, the population of England is projected to be 58 million, with those aged over 75 accounting for 10% of the population. There will be an increase in the number of people with long-term conditions such as diabetes, vascular disease and dementia, and there will be more cancer survivors. People with such conditions account for 64% of out-patient appointments and make up 70% of in-patients. For every £10 spent, £7 goes towards the health and social care of these patients.
In 2011, nearly 25% of the population were obese. Behavioural factors such as smoking, drinking, obesity and a lack of exercise will have a significant effect on the health budget. The public and private sectors, particularly the food and drink industries, will have to contribute to preventative strategies, voluntarily or through legislation and taxation. One-third of healthcare costs are consumed by three categories of patients: mental health, vascular disease and cancer. The last two will double in incidence in 10 years and 40% of that incidence is based on the behaviour and attitudes of the public.
Inevitable technological progress will push up healthcare costs as new technology is expensive and will increase life expectancy, particularly of those with the highest healthcare costs. Likely developments in the medium term include better cancer care, better drugs for cancers, focused radiotherapy and ultrasound, the molecular targeting of cancers with drugs, nano-medicine, embedded chip monitoring of disease progression, genomics, better stratification of patients for treatment, proteomics, population genomics for risk identification, personalised care and, in regenerative medicines, cell therapy such as the treatment of age-related macular degeneration, autologous stem cell therapy, gene therapy, tissue engineering, robotic surgery, drugs that will slow the progression of diseases causing dementia, and many others. Other cost pressures will be rising wages, which can be controlled temporarily but not in the long term, and will affect productivity. These costs have stagnated since 2010, probably because of a reduction in labour. Productivity growth of 4% a year, year-on-year, cannot be sustained; neither can cost savings without providing care differently, which will mean managing public and political attitudes. It will also mean the better use of data and technology, which have the potential to transform treatment and the management of care.
What possible options are there for finding funds from other sources? The public view, as we can see following the Ipsos MORI and King’s Fund event, is interesting. The public want free care at the point of need, but may accept charges for inappropriate use or clinically unnecessary procedures. Some would accept increased taxation, particularly hypothecated tax. Many have accepted that the NHS is under pressure, but do not accept that it is justified to change the fundamental principle on which the NHS is based.
I am sure that there will be proponents of other ideas for raising funds or reducing costs. Arguments for co-payment will come to the fore; the experience of New Zealand and France may be of interest in understanding that. There have been novel ideas such as taxing the providers of risk foods and alcohol, as we did those responsible for fixing LIBOR interest rates, to pay the costs of the Armed Forces covenant; charging for GP appointments; and part-insurance, either for the young or the older population, on the California model. The evidence suggests that the public have no appetite for any of the above. Charging those not entitled to the service would be more acceptable if it was incremental. The majority of the public see the NHS as a morally special property and therefore expect it to be adequately funded, even to the detriment of some other public services, if that is the choice.
Any changes to NHS funding would require the public to be convinced that the current system is working as efficiently as possible before considering radical changes. The public want to be involved more and more with the NHS, including on decisions related to funding; changes need to be explained to the public, with a public debate before any legislation. The public have a strong attachment to the founding principles of the NHS and will not accept a radical change to the current model of funding. The only likelihood of success is through an incremental approach. I beg to move.
Lord McColl of Dulwich
My Lords, I am grateful to the noble Lord, Lord Patel, for securing this debate. There are two subjects on which I would like to comment. First is the underlying cause of the ever increasing demands on the NHS; they are due, of course, to the ever increasing number of patients with diabetes, eye disease, high blood pressure, strokes, heart attacks, cirrhosis of the liver, cancer, worn-out knees and hips, and so on, as the noble Lord, Lord Patel, has already said. But it has to be pointed out that most of these conditions have a single cause, and that single cause is obesity. The obesity epidemic is the worst epidemic to afflict this country for 90 years; it is killing millions and costing billions and the cure is free: simply eat and drink fewer calories. A great deal of obesity is due to that poison called alcohol, a cause not only of obesity but of many diseases.
This enormous problem has been bedevilled by the Department of Health, Health Ministers and opposition spokesmen, and that quango NICE, all misleading Parliament by stating that all the calories we eat is spent on exercise. This is totally untrue. Exercise is good for the heart, helps keep the cholesterol at a safe level and improves the feeling of well-being, but it is not effective at reducing weight. One has to run 10 miles to take off a pound of fat. Really obese people cannot exercise, and they do not need to in order to lose weight; all that they have to do is to eat and drink fewer calories. NICE has informed me that it is going to correct its misleading advice, but it will not be published until January next year.
Secondly, this enormous obesity epidemic is obviously bankrupting the NHS. It is often said that it is old people who are costing the NHS so much, but in fact it is people who are dying who are so expensive. It so happens that most people who are dying are old, but young people who are dying are just as expensive.
Where is the extra funding to pay for the ever increasing demands going to come from? Perhaps we should try listening to other people and learning from their experiences. Perhaps we could listen to Prime Minister Attlee, who was a very perceptive and brilliant man. Within a year of the inception of the NHS he realised that there was a major problem. In October 1949 he announced, in another place, “We propose to bring in prescription charges in order to discourage people from using the NHS excessively and unnecessarily”. I suspect he really wanted to put the charge on going to see the GP but he realised that that would be political suicide.
We might learn a lesson from the radical changes in the dental services which occurred under the previous Government. A large number of dental treatments had to be paid for by the patient. All credit to the Labour Government for grasping this particular nettle. As the noble Lord, Lord Patel, has already said, we could learn from the French, who pay the doctor up front and, if they cannot afford it, are reimbursed. There is an attraction in the patient paying up front because he is not asking for charity, he is employing the doctor. It changes the relationship. The system in France has worked well.
As Labour Governments have pioneered these kind of changes, they might care to join a cross-party movement to work out a new funding arrangement. One suggestion was to charge patients £5 or £10 to visit the GP and then reimburse those who cannot afford it or who have chronic or recurrent illnesses. All hospital treatments would be free. Another suggestion, which has been discussed for many years, is to have a compulsory health insurance scheme for those who can afford it. It would seem sensible at this time of financial crisis for a cross-party group to be set up to try to work out a solution, free of petty party politics and the shibboleths which have so bedevilled the National Health Service for so long.
Lord Filkin
My Lords, my short speech will build on the work done by the House of Lords report, Ready for Ageing?, which we look forward to debating when we receive the Government’s response, which I expect will be next week. I will say a few things, building on what the noble Lord, Lord Patel, set out so clearly.
It is unarguable that the NHS and social care will face a massive increase in demand and cost. It is axiomatic, even though not done, that we have to have a major service redesign, as Sir David Nicholson said today. However—and this is different—it would be naive to think that the process of massive service redesign, given the time and complexity of doing it, will by itself fund the significant gap consequent on the increase in demand. We will, therefore, have to have a debate, not only about service redesign but also about how we fund the NHS going forward.
For my part, I hope we abide by the principles of the fundamental services being free at the point of use. That requires us to have a wider debate about the welfare settlement of our society, given the very considerable increase in demand and costs consequent on our ageing society. That, in short, is what I will say, so your Lordships can nod off if you do not want to hear the rest.
Those who have glimpsed the report will know it, but I will try to encapsulate the situation on ageing now. In the current decade there is going to be a 40% increase in the number of people aged 85-plus: it is not a future change. The numbers who are 85-plus will increase by 100% in the two decades 2010 to 2030. Largely consequent on that, we will see a quite remarkable increase in the number of long-term conditions experienced by those older people.
We were staggered to find that there is no public forecast data on demand of that sort published by the Department of Health or the NHS. We therefore had to ask eminent academic epidemiologists to do forecasts for us, by applying current and forecast incidence rates to the future certainty of the age cohorts that we know. The illustrations showed increases of between 45% and 90% in the five main chronic conditions in the long term. The number of those with multiple conditions will increase from 1.2 million in 2008 to 1.9 million in 2018, and those needing social care and daily assistance will increase by 90% between 2010 and 2030. It is therefore clear that there will be a massive increase in demand and it would be of great help if NHS England, if not the Department of Health, would put out some clear evidence on why demand increases are likely. It will help an honest public debate across society.
I will not go on but it is obvious that because the number of long-term conditions will increase massively—they drive roughly 70% of health and social care costs—there will also be a massive increase in those costs. I agree with the noble Lord, Lord Patel, that David Nicholson is clear in what he said today but is underestimating the scale of the challenge. Nuffield and others state that £40 billion-plus is more likely to be the sort of funding gap that we will face by 2021-22, if you consider health and social care together.
We should therefore beware of the myths being portrayed, whereby if we do what we have to do—integrate health and social care, increase prevention, shift from an acute focus to a community and primary-focused model, and get more older people out of hospital—that in itself will crack the funding problem. It will not do so because all those changes will take a considerable time, even if there is stronger political leadership on these changes than we have seen from any political party so far. These are big systemic changes that will take 10 years and require investment. The benefits will not always be cashable and there will be double running costs while the changes are being made. Thinking that they will produce short-term savings is naive, although I do not for a second belittle the importance of going for those big changes.
If one looks at the context of continuing public deficits in 2015-16 and high levels of public sector debt, a difficult challenge is facing whichever Government address these issues. They have to be looked at in the wider context, and I agree with the noble Lord, Lord McColl, that the more that we can get at least some attempt at cross-party discussions about the reality of this situation, the better for our society.
Baroness Jolly
My Lords, I thank the noble Lord, Lord Patel, for securing this debate on such an important issue. I declare an interest that I suspect is shared by many other noble Lords: this debate is about my care down the line. I would like to examine the challenges facing us on future health and care funding, the public expectation of the future delivery of these services and how the public can be seen as part of the solution, not the problem.
Our population is ageing and the gap between pension age and life expectancy is increasing. Thus, the ratio of taxpayers to pensioners is decreasing. According to the ONS, the population of over-65s will increase by an average of 1.8% a year between 2014 and 2021. Coupled with other factors such as the rising population, this will create an increase in demand for NHS services of 4% a year. I appreciate that there are other figures but those were the results of my research. Pension entitlement has caused pensioners as a proportion of spending to increase from 17% in 2010 to 21% in 2015. This proportion is likely to increase with fewer working-age people to fund it. However, we must remember that older people generate some £40 billion for the UK economy, and this will increase to £70 billion by 2030.
It is important to contrast the views on welfare entitlement as a whole between generations. Recently, the Economist highlighted that more than two-thirds of people born before 1939 consider the welfare state one of Britain’s proudest achievements, whereas less than one-third of those born after 1979 say the same. Polling by YouGov shows that those aged 18 to 24 are more likely than older people to consider social problems the responsibility of individuals rather than of the Government. They will become the taxpayers who fund our health and social care system in the future and will make the political decisions, yet their views on the state’s responsibilities to individuals are markedly different from those of baby boomers entering retirement now, so things will have to change.
Clearly, there must be a debate on where the public’s priorities lie. By 2061, non-health departments will have had to reduce their proportion of net government spending from 80% to 50%. This 50% would apply to education, pensions, benefits and defence. So how do we fund future health and social care? What behaviour and attitudes need to change? I think we all agree that we cannot continue as we are. If it is funded purely out of taxation, excluding all efficiency savings, for every 1% increase in healthcare spending as a percentage of GDP—that is around £15 billion—it would add to the tax bill of every household in the UK another £570 a year. To put this in context, a 1p increase in income tax would yield only an extra £5.32 billion per annum for the Treasury, so it would require a 3p rise for each extra percentage point. The sums are now beginning to sound really scary.
Obviously, there are efficiency savings to be found, such as extra investment in preventive care and the use of technology, which, as a recent Deloitte report for Scope has shown, achieves average returns of 30%, which would reduce the number of people entering the system at crisis level. Do we cut big-ticket spending items, such as Trident, which is projected to cost £20 billion, or High Speed 2, estimated at £32.7 billion? Do we means-test access to primary care? Do we cut pensions in return for better social care? Do we encourage planning for old age to include care and pensions? Here I must make clear that I am repeating questions that others have asked, not making personal or party recommendations.
We also need to ask what we can do for ourselves. One thing we will not be short of is human resource—and fairly fit human resource. The Olympics last year in London made volunteering acceptable and even cool. Volunteers were given the inspiring descriptive title of Games makers. They were given a role description, managed brilliantly and changed the face of the Games. They were the envy of the world. The voluntary sector is already active. It knows that older people can be the solution and not the problem. What better legacy of the Games could there be than using that sort of model to support the health and care sectors?
The issues are complex and the stakes could not be higher. We need to have a long conversation involving the public, all political parties and policymakers, the voluntary sector and care professionals, and we need to start it sooner rather than later.
Baroness Boothroyd
My Lords, official warnings of the mounting crisis in the National Health Service are coming thick and fast. Last week, the Government said that the NHS could break down if we continue to run an international service open to all comers from other parts of the world. At one o’clock this morning, the body responsible for the NHS in England published its report, A Call to Action, saying that it is about to run out of cash and may need a minimum of another £30 billion a year by 2020. The royal medical colleges believe that 20 hospitals may have to close to prevent financial ruin. In short, the NHS is fighting for its life. Painful though it is, I welcome this outburst of reality. I only regret that it has taken so long.
There is a culture of denial and indifference in this country that allows serious problems like this to reach a crisis point before we face up to them. Too often, those in authority react by creating new organisations that do not work, prattling about lessons being learnt when it is clear that they are not being learnt, and hunting for culprits who pass the buck to others, who say they did not know anyway.
Last week’s report by the Department of Health breaks new ground. It points to the chaos in our hospitals and GP surgeries caused by overseas visitors who are not entitled to use the NHS, yet do so and avoid payment for their treatment. We do not know how much this racket costs. Ten years ago, a document produced by CCI legal services estimated that between £50 million and £200 million is lost every year through under or non-recovery of charges applicable to overseas visitors. We have never known the true cost because successive Governments did not want to know, and said so. Serious though this issue is, I believe that we have almost advertised our willingness to be taken for an international trolley ride.
I take no pleasure in saying that this is not hindsight on my part. In this House on 9 December 2003, I asked how the Government intended to strengthen the regulations to prevent overseas visitors unlawfully obtaining free national health treatment. My question fell on stony ground. I was told that we must not get this out of proportion, that it was best left to local authorities to decide who should or should not be charged and that no data were collected centrally. I was astonished to learn that this important information, costing the country millions of pounds, was not among the information that hospital trusts must yield to central authority.
Six months later, on 20 July 2004, I tried again and said that GPs have neither the time nor the resources to decide which foreign nationals were entitled to free treatment. I suggested a system of compulsory health insurance. After a lost decade, that is one of the options in last week’s consultation paper. The noble Earl, Lord Howe, may remember the exchanges that we had with the Minister responsible at the time, who said that the NHS was “a humanitarian service” and talked about a Cabinet Office review into the problem of seriously sick migrants. Today, 32 diseases qualify for free diagnosis and treatment, regardless of a person’s nationality or conditions of stay here. That does not count sexually transmitted diseases and HIV treatment, which also qualify.
Some say that we can easily afford to run the world’s most generous health service and dispute that it is exploited or defrauded on a significant scale. They are living in a land of make-believe. Professor Meirion Thomas, a cancer specialist, has first-hand evidence. He tells a different story, as do those of us in this House with friends in the medical profession who have experience of tourists who exploit the system.
Doctors rightly have the last say on whether patients need emergency care, but the parameters have surely become too wide. One hospital I know routinely gives free dialysis to foreign nationals on the grounds that their condition would worsen without it. Dialysis can cost more than £30,000 per patient a year. How long can this go on? Under the NHS tariff, private outpatients are charged £250 a visit, in-patients pay £500 a day and a normal pregnancy costs £3,000—with complications, this can rise to £9,000.
Insiders know what goes on. The Health Secretary says that fewer than half of overseas visitors who should pay are charged and that fewer than half of those who are charged pay up. Fraud specialists report a trail of false addresses, false identities and untraceable patients.
The current guidance to GPs and hospitals shows why the system never worked. This document runs to 89 pages. Last year alone, there were seven revisions of it. What are doctors supposed to do if they suspect a bogus patient and read on page 9 that they should consult a lawyer if they are unsure of their obligations, or that, before refusing a patient, they must sign a statement that reminds them of the Human Rights Act 1998?
The NHS is bleeding and needs emergency treatment. The dream of free universal care from the cradle to the grave lasted from 1948 to 1951, but the NHS survived and it is time to face reality. The fraudsters who exploit it have had more than their fair share of our resources, our doctors and our hospitals. We can no longer deny what we know to be true. It is time to say: enough.
The Lord Bishop of Derby
My Lords, I, too, congratulate the noble Lord, Lord Patel, on securing the debate. As we have heard from all speakers so far, there is a strong narrative about how precious the NHS is, how high public expectation remains and the problem of rising costs—it’s own health check has just been referred to.
I want to talk a little about care systems and the models that we might need to develop. Experience on the ground tells us that care systems are very fragmented. As systems such as family stability collapse, many people are isolated and struggle to access care and health services. The current system is very skewed towards the delivery of episodic interventions around particular crises. We need to look below that. We need to step back and see how we can create a culture of engagement, support and well-being for people that puts those episodic interventions in a different context and perhaps provides a context in which they would be less necessary and less frequent. I shall raise some questions about models and capacity, not least in relation to the elderly.
I work in the county of Derbyshire. Last year, in the city of Derby, I organised a commission, the Redfern commission, which looked at models of care in our community and how we could contribute alongside the statutory provision. We had a public hearing looking at models of care for the elderly. One of the experts who came as a witness to that public hearing raised three issues. She started by talking about people’s feet and the fact that proper foot care is very important to allow people to continue to have mobility—to be able to shop, do their cleaning and have social intercourse. Very simple things that require microengagement make a huge difference to people’s well-being and health. She also talked about the reluctance of doctors to diagnose depression in elderly patients who suffer a lot of loss. She said that something like 2 million elderly people are diagnosed with clinical depression, but there are probably far more, and it is hard for them to get treatment or even support on the ground. She also raised the lack of provision of advice for elderly people about sexual health.
Many of these things can be dealt with not through episodic major interventions but through a culture on the ground of support, care and contact. It is voluntary groups—churches especially—that in most communities provide lunch clubs, outreach and all the things that allow people who are otherwise isolated and struggling with medical and social care conditions to be supported. However, 87% of local authorities are setting their eligibility criteria at substantial or higher. I think we need models that look below the surface where people need care and can be sustained more realistically. In a parish in a rural group of parishes, the parish, the diocese and the Simeon Trust have brought together resources to appoint a chaplain. In that rural area, that lady visits 140 people regularly to monitor them, to put them in touch with each other, to help to assess them face to face and to know when support from the medical and care system might kick in, so that people do not get to an acute moment. There is a community system of monitoring, care and contact.
That kind of model needs to be developed. The Dilnot report said that there has to be a new relationship between individuals and the care system. Beneath the radar of the formal care system, there are enormous resources in the voluntary community that can allow that to happen. Will the Minister consider how the Government, local government and the framework of formal systems can enable a small amount of investment to encourage voluntary and church groups doing this face-to-face work on the ground that provides the context for care and well-being to flourish and grow so that the demand for the major interventions that are so costly might be more controlled and probably reduced because of a better sense of well-being at grass roots level? I would be interested if the Minister could comment on that model and how it might be encouraged and developed to create greater capacity in our systems of social care and health provision.
Lord Kakkar
My Lords, I, too, thank the noble Lord, Lord Patel, for having secured this important debate. I declare my interests as professor of surgery at University College London and as a consultant surgeon for University College London Hospitals NHS Foundation Trust.
We have heard that the National Health Service is a vital part of society’s infrastructure in our nation. It provides a unique reassurance by ensuring free and universal access to healthcare. In addition, it provides a most remarkable structure for the provision of public health and preventive strategies, which are vital in ensuring the nation’s long-term health and in containing costs. It also provides a unique environment for biomedical research. Indeed, the research infrastructure that we have heard about has resulted in much innovation and a change in clinical practice for the benefit not only of our own citizens but of people throughout the world. Furthermore, it provides the basis for a vibrant and important life sciences industry which makes a huge economic contribution to the welfare of our country. Beyond that, it is the social solidarity, or glue, that the National Health Service has provided to bind our society together that forms a vital part of the debate about its future.
During this debate we have heard from many noble Lords about the increased financial demands of the National Health Service. Some 50 years ago, it consumed 3.2% of our gross domestic product; last year, some 8.2%; and in 50 years’ time it will be some 20% of GDP if the rate of growth—the 4% per year that we have seen over the past 50 years—is sustained over the next 50 years.
Figures relating to the increasing financial requirements of the NHS produced by the Office for Budget Responsibility show that in 2032 the OBR expects £132 billion to be spent on NHS provision, whereas if the 4% growth that we have traditionally seen in the past 50 years is sustained, the figure will be closer to £170 billion. However, what is striking is the number of people employed in the NHS—currently one in 18 of the working population. If we continue at the same rate of growth with 20% of GDP consumption by 2062, one in eight of the working population will be employed by the NHS. What modelling is done in the Department of Health and the Treasury around this increasing consumption of healthcare resources? Does the noble Earl recognise these figures, and does he, as well as others in government, consider this a sustainable trajectory?
In terms of a solution, one that has been suggested during this debate is to increase taxation. There is a great fondness among our fellow citizens for the National Health Service but even providing one extra percentage point in GDP to be diverted towards health spending would require an increase in taxation of £570 per household per year, and that is a huge increase in taxation. Of course, we know that the demand is going to be much greater. We could settle on giving a greater proportion of public expenditure to health, but 20% of departmental spending is currently already devoted to the National Health Service. Is it sustainable to take more and more from other public services and divert it to health if we do not increase the income available?
A third potential option is to improve the effectiveness and efficiency of the services that we provide, and in this regard Her Majesty’s Government have to be congratulated. The report entitled Innovation, Health and Wealth, published last year, clearly focuses on ensuring that the National Health Service can improve the outcomes that it achieves for fellow citizens in a way that adds to economic growth rather than continuously draining economic resources, although I think that many would agree that it is not a drain of resources to ensure that our nation is healthy.
In establishing the outputs of Innovation, Health and Wealth and, in particular, in establishing the academic health science networks—I declare a further interest as chair for clinical quality at the recently designated academic health science network at UCL Partners—what metrics will be applied to determine whether the networks are successful in terms of the economic rather than just the health question? We know that, as part of the designation process, each of these networks across England has been asked to define high-impact innovations that will be applied across the population and to adopt NICE guidance to improve clinical outcomes, but both those sets of interventions should also have an impact on resource utilisation. Are metrics defined that we will be able to assess over time to determine whether a focus on improving efficiency and effectiveness in the NHS can also result in better utilisation of resource?
Viscount Ridley
My Lords, I also congratulate the noble Lord, Lord Patel, on the timely nature of this debate, and it is an honour to follow the noble Lord, Lord Kakkar. They are a reminder of the great expertise that this House has on this subject.
I have learnt a lot already this morning, and expect to continue to learn more. I am particularly struck by the consensus among the noble Baronesses, Lady Jolly and Lady Boothroyd, who said that things cannot continue as they are. However, I want to come at this from the bottom up, as it were—from how technology and patient expectation will drive changes both to the structure and, by necessity, to the funding of healthcare services, and in particular, how digital and genomic innovation will have an effect on the National Health Service. It is a subject that has been much discussed at the International Centre for Life in Newcastle, of which I have the honour to be honorary president, and I declare my interest therein.
It is not all bad news. We are likely to see huge reductions in the cost of certain procedures as a result of innovation. IT, 3D printing in surgery and new materials are all helping to drive down various costs. I believe that the cost of a cataract operation has come down dramatically because of an increase in the speed of doing it and a decrease in the cost of the materials. This is, of course, bringing operations within the reach of the poor in other countries as well as in this country.
Genomic sequencing has come down from costing billions to thousands in the past decade alone. As we know, however, if we make things cheaper, people will want more of them. I suspect that, through new technology, we will soon be putting enormous demands on healthcare services. We will use our smart phones to find out precisely what kind of lurgy we have, rather than just accepting that we have one; what kind of allergy we have; which drugs work best for our particular condition; and indeed, checking our blood for early precursors of cancer. At the very least doctors will have to get used to dealing with us online. I have a friend who over lunch checked his electrocardiogram with a device on his iPhone and sent it to his cardiologist.
We would be sticking our heads in the sand if we hoped to prevent this end-user innovation, as it is called, turning medicine upside down, as it has done to so many other industries, and if we continued to think of medicine as a top-down business in which the doctor knows best. In the past, treatments have too often been designed to treat the population rather than the individual. For the patient, the change will be great in many ways, and there will no doubt be some savings. For example, we can have many more virtual appointments. As Eric Topol, who has written a book about this, says:
“I expect some 50% to 70% of office visits to become redundant, replaced by remote monitoring, digital health records and virtual house calls”.
This will keep down hospital-acquired infections as well. Overall, however, it will vastly increase costs because personalised medicine means not only more demand but more expensive sorts of demand. That is bound to push up costs well beyond what any pooled system can bear in terms of cross-subsidy, whether from the rich to the poor or through insurance. It will undoubtedly raise ethical issues. If precise genomic diagnosis or drug toxicity information is available to some individuals and not others, it will put enormous strain on the budget of the NHS and the principle of common access to it. There will then effectively be a form of rationing. Added to that, of course, is the growing burden of us all living much longer, as the noble Lord, Lord Filkin, said, and of having up to five conditions when we are old, which I believe is the average, not to mention the obesity epidemic which my noble friend Lord McColl mentioned.
It is obvious that we face rising healthcare costs as a proportion of household budgets. That is why it is vital to turn the NHS as far as possible into an organisation that tries to drive down its costs in a ruthless fashion. The Government have made a good start on this. The NHS is on track to make £20 billion of efficiency savings by 2015 and, we hope, more beyond that. However, as many noble Lords have said today, this will prove to be a drop in the ocean. Not even the NHS’s most ardent champions would at the moment call it a ruthless pursuer of cost-efficiency. It has none of the usual levers such as competition or fear of losing business to other providers that drive up efficiency and quality in the commercial world. No amount of top-down diktat will substitute for those trends. To meet the bottom-up challenge coming from patients and from technology, health funding needs to experience a form of bottom-up reform. Sixty years on from the founding of the NHS, as the noble Lord, Lord Patel, said, we need to be open-minded about all the models available for discussing the future of health reform.
Lord Bhattacharyya
My Lords, it is a privilege to speak in a debate led by the noble Lord, Lord Patel. The noble Lord spoke with his customary wisdom. I have learnt a lot discussing medical problems with him.
There are many healthcare experts speaking today. I am a little more of an outsider. From my perspective, it seems that we constantly read of reports, inquiries and investigations into the problems of our health and care services. Whether it is care assistants, inspections, waiting times or long-term care, every day seems to bring a new story about how our health service is struggling.
Of course, when you consider the great changes of the past 60 years, it is remarkable how the NHS has met the health needs of the nation, and done so in a very cost-effective way. However, that does not mean that this will continue in future. Just this week, we saw how health and social care funding faces three major pressures. Just 24 councils now offer adult care for those with moderate needs, and national eligibility standards will restrict this further. The cost of long-term care will expand significantly, with Ministers this week telling the insurance industry that it must fill the gap left by their proposed cap. Finally, as we heard this morning, NHS England faces a £30 billion shortfall by 2020, with the NHS director for patients saying:
“We are about to run out of cash in a very serious fashion”.
If I did that in my industry, I would be bankrupt.
Each of these tensions is a major challenge to the aim of a comprehensive, universal health and care system. So what can be done? The truth is that if we want good, comprehensive, universal care, we will have to find a way to pay for it. The obvious route is taxation, whether direct or in the form of a levy or giving tax benefits to private health insurance. Yet such new taxes will be hard to sell to the public. Why? Because while the NHS generally delivers good care for a reasonable cost, many patients feel that social care is of a low quality. Others have witnessed inefficiency and poor treatment in their local hospitals. They will not be content to see taxes go up simply to pay for more of the same. Of course, for more management consultants, not hospital consultants, that would be fantastic. So we must demonstrate how we will improve our care system, not just fund it.
To do so, we must develop new skills and structures for workers throughout the National Health Service. I have a personal interest, as my wife has been a midwife and a tutor. She knows first-hand how better and up-to-date training and career development for those on the front line can transform patient care. However, many of our health career structures and much of our training still seem stuck in the 19th century. From care assistants to consultants, from matrons to health technologists, we need to rethink career development in the health service totally. Even our definition of what a doctor is will have to change in the future.
One reason we need to change how we develop our people is that technology is radically shifting how patient needs are identified and treated, as the noble Lord just mentioned, in everything from social care to heart transplants. To take just one example, the Scripps Research Institute is developing embedded sensors in the bloodstream to alert users if they are at increased risk of heart attacks. Such advances create new treatment routes for those seeking better health, which means that new ways of offering care will be needed, such as advising people at risk on how to improve their health, and monitoring their progress. Is that a role for a doctor or a nurse, or a new role entirely?
Technological changes also mean that individuals will seek greater control over their care. Therefore, despite the promises of consolidation of services, there will be more demands, so although the service improves, the savings will not automatically follow. Yes, we should expand personal budgets so that people in continuing care can choose their care packages. But we should go further, removing the divide between health commissioning and social care to create whole person care. This will raise some fundamental issues about what is included in universal healthcare. Does it make sense that we offer little support to people who wish to maintain good health, but expect no contribution from people who visit their GPs 10 or 20 times? The answers to these questions will be controversial, but they must be found if we are to find an equitable, affordable way of meeting expanding expectations and increasing routes to access healthcare.
To address these challenges we need major innovation in people, technology and funding. That will be difficult and controversial. However, if we tackle them head-on, we will be as bold as a Butler in Education, a Beveridge in welfare or a Bevan on the NHS. That is an ambition well worth fighting for.
Lord Rix
My Lords, as president of Mencap, I wish to focus on social care and the importance of a well funded system for disabled people. Indeed, one in three social care recipients is a working age disabled adult. Social care is of critical importance for around 143,000 people with a working disability who receive one or more of the social care services in England.
Spending on social care services for people with a learning disability represents 25% of gross expenditure on social care services by local authorities. Let me put this in perspective by talking about Laura, who is 25, and has a learning disability and autism. Social care plays a vital role in her life as an active and valued member of the community. This would not be possible without her personal budget. She uses some of the money to pay for transport to get to her places of work and she uses the rest to take part in activities that build her skills and confidence. Laura is a committee member of Worcestershire self-advocacy group, SpeakEasy NOW. She attends a care farm three days a week, where she helps by looking after the animals and tending the kitchen garden. She studies art for a qualification and has passed London School of Music exams. She also works as an ambassador to a multisensory centre for people with more complex learning disabilities and volunteers as a steward at the Swan Theatre in Worcester. With the right care and support, Laura is making a significant contribution to her local community. She, too, benefits personally, as do many others around her. The support of a loving family has been crucial to Laura, but none of her achievements would have been possible without good social care.
In May, the charities Mencap, the National Autistic Society, Scope, Sense and Leonard Cheshire launched the report, Ending the Other Care Crisis: Making the Case for Investment in Preventative Care and Support for Disabled Adults. It showed that currently 40% of disabled people are failing to have their basic care needs met and the system is underfunded to the tune of £1.2 billion.
The underfunding of social care has catastrophic consequences for individuals, especially people with learning disabilities who are often isolated and in many cases live on the very periphery of society. Well funded social care would lead to a more inclusive society and it would also save on the public purse. The charity’s report shows that every £1 spent on services generates benefits for people and carers, as well as local and central government, worth an average of £1.30. These economic benefits come from preventing people’s needs escalating and having to rely on more costly public services.
It should of course be recognised that the Government have committed further funding for social care through the recent spending review and that is to be welcomed. However, there is significant concern in the sector that the new national eligibility threshold to be set in the Care Bill will simply be too high to bring benefits for many disabled people. The Care Bill and accompanying regulations, as well as present-day actions by many local authorities, suggest that this national threshold will be set at a level equivalent to substantial, as in the current system. That would spell disaster for thousands of disabled people who will be denied the care that they need to maintain their well-being and their independence.
A year ago, Mencap published Stuck at Home, which found that one in four people with a learning disability spent less than one hour outside their home per day. Without adequate funding to enable people to get out and be valued members of their community, I fear this shocking figure will rise.
Lord Cormack
My Lords, it gives me great pleasure to follow the noble Lord, Lord Rix, whose work for Mencap is widely admired throughout this country and beyond. I congratulate the noble Lord, Lord Patel, not only on securing this debate at such a propitious time—the 60th anniversary of the National Health Service and the date on which we have been given this extraordinary wake-up call about the £30 billion or more—but on the way in which he introduced the debate in his very wide-ranging and wise speech.
For many years, I have never talked to any person in the health service—clinician, administrator or anyone in a position of seniority—who has not agreed with my contention that we need a plurality of funding in the National Health Service. In the same period, I have never met a single Secretary of State or Minister who has been prepared—I am talking about both parties—to face up to the reality of the challenge. The National Health Service has been regarded for far too long by far too many as a sacred cow whose basic principle of free care at the point of need is never open to challenge, yet a number of speeches in this remarkable debate have shown that it should be challenged. No one did that with more feisty determination than my friend—I deliberately call her my friend—the noble Baroness, Lady Boothroyd, in a quite remarkable and splendid speech. I would take it a little further than my noble friend Lady Boothroyd did: I believe that the time has come to recognise that, with enormous advances in medical science and with increased longevity, we cannot work to a formula that was devised more than 65 years ago. It is just unsustainable.
When I was first elected to another place, no one had had a heart transplant. This morning, we heard of a Member of your Lordships’ House who had a heart transplant 25 years ago. In 1970, I had no constituents who had artificial hips or knees. When I stepped down from the other place, I sometimes thought that every Conservative gathering that I attended was bionic because they all had them. One has to recognise that and in so doing one has to recognise that the money has to come from somewhere but not just from taxation. We have to look at things that we have not been prepared to look at before: proper charges for people who are in full-time work when they see the doctor, which could do something for absentee rates as well; and bed charges for hospitals, which might increase the dignity of a hospital stay.
A couple of years ago, my wife and I went to a hospital to visit a dying friend, a clergyman. He lay in his bed in rather a dingy ward, although it was not a bad hospital. There was a flimsy curtain around the bed and in ill written capitals above his head was his Christian name. I will not name the hospital or the man, of course, but to me that was indicative and symbolic of what we have to put up with sometimes. Do not forget that I represented a constituency in Staffordshire but I will not dilate on that.
We need a truly world-class service. In many respects we have that but countries such as France and Finland have a plurality of funding, which we do not have but which we must recognise that we need. I would like to support very strongly the plea made by my noble friend Lord McColl—I say to him that I am dieting—for some form of cross-party commission, committee or group. This House is uniquely placed to provide such a group as we have some of the most eminent medical people in the world here; we have people with long experience of administration and politics. If it cannot be an official committee of the House—although I should like it to be one—it could be a cross-party group that would look, without any fear, at the various possibilities for answering the problem that was so graphically underlined on the news this morning.
Lord Turnberg
My Lords, this debate is extremely timely and I congratulate the noble Lord on introducing it so well and on stealing some of my best lines. It is hard to get away from the fact that we are in for a rather prolonged period of constraint on public spending that will inevitably impact on funding for health and social care. It cannot be denied that we are falling behind as inflation in medical care runs ahead of general inflation.
There is a commonly held assumption that the NHS is a bottomless pit but that is just too simplistic. During the years of relative plenty, when the Labour Government dramatically increased funding, we saw a remarkable improvement in care: waiting lists virtually disappeared; GPs could be seen on the same day in most places; waits in A&E departments came down; patient satisfaction levels rose; and productivity, despite views to the contrary, rose too. The number of operations and other procedures rose by 50% during the decade starting in 2000 and hospital lengths of stay fell by 27% from an average of 10.5 days to 7.7 days. So money did talk but now, as we deal with the Nicholson challenge, we are failing to keep up. We are seeing a rise in waiting lists and a fall in staff numbers. The pips are squeaking and we are beginning to see a fall in standards.
So how do we fill this funding gap? The Wanless report of a few years ago suggested that we would need to find 10.6% of our GDP by 2021, while John Appleby, in his report for the Nuffield Trust, suggested that in 50 years’ time we would need to put 20% of our GDP into the NHS. Fifty-year predictions are just a little fraught but he said it would be affordable—that is an important point—if our total GDP increased threefold, illustrating the point that the better off a country is, the bigger proportion of its GDP it can afford to put into healthcare. We have not been short of ideas about how we might fill the looming gap but few are free of problems. Doing nothing is clearly not an option as we will just see a steady deterioration in standards and quality with a public backlash, voter disillusionment and a change of government, whoever is in office.
That leaves us with three options: become more efficient, find more money or ration what we provide for patients. First, there are always efficiencies in a system as huge as the NHS but there are limits and we are pretty close to them now. So-called reconfiguration of hospitals is a popular idea at the moment. Close a few and the community services will pick up the bill for caring for the patients. I am all for focusing specialised services in a few places, as it certainly saves lives, but, unfortunately, it does not save money. I am all for closing small, inefficient hospitals and moving money into community services, but simply redistributing funds does not give us any gain.
I agree here with my noble friend Lord Filkin but, in the face of the enormous pressures building up, I really cannot see that even more efficiency savings are sustainable for very long. As regards finding more government money, I cannot see much prospect of that either, at least in the short to medium term. It would mean taking a bigger slice of the cake and leaving less for everything else, which would not be very popular. Only when we manage to increase our GDP and reduce our debt would we be able to consider taking a bigger slice of the cake. Then we could look at limiting what we provide in the NHS; that is, we could define a basic package of care but stop funding some types of treatments. Again, that is not likely to be very popular and defining which treatments should not be available in the NHS will always raise hackles. As a way of controlling costs it was found to be pretty ineffective in Oregon a few years ago.
Then there is the possibility of co-payments by patients—we have heard about that. We have already broached that principle in the UK, but experience elsewhere is not encouraging. When they tried it in Germany, they saw a rise in the number of patients who avoided visiting their doctors when they were ill or who failed to fill their prescription. The impact of charges for care will have to be examined very carefully if we are not to see a fall in the number of patients who need care but who avoid getting it for financial reasons.
At the end of the day, we will have to choose between a number of unappealing and potentially unpopular options, but one thing is absolutely clear: doing nothing is not one of those options. It is essential that we have a more open debate with the public about these possibilities. A cross-party discussion is desperately needed, as many noble Lords have said. We certainly cannot keep our heads down for much longer.
Baroness Lane-Fox of Soho
My Lords, perhaps like many here, I come at this subject from a very personal and a professional angle. I thank the noble Lord, Lord Patel, for introducing this debate.
I shall speak, first, about the personal: my life was saved by the orthopaedic department in the John Radcliffe Hospital in Oxford, so I owe my life to a well funded NHS. I am also someone who fervently believes in the power of technology to improve public services. It is only through their more effective deployment that we will continue to have a world-class healthcare system at a reasonable cost.
I am talking not about expensive NHS IT projects, top down and heavy, but about open standards, agile development, data and a more digitally minded healthcare sector. I would like to give some examples.
This era is often called the era of big data. We are able to aggregate information from a mass of different sources. The analysis of these data is changing the way in which we work and live. The Government have already encouraged the use of their own datasets, which are from many different sources.
However, we are only at the very beginning of this journey. A wonderful project which has come out of the Open Data Institute here in London illustrates why data are such an important part of this debate. In 2011-12, the NHS in England shelled out more than £400 million on statin drugs, from a total drug budget of £12.2 billion. However, in collaboration with Mastodon C, Open Health Care UK—a small start-up developed by a programmer and a doctor—managed to look at every prescription written for statins from every GP in England by using a dataset provided by the Open Data Institute. They looked at the regional patterns and discovered that, if doctors had prescribed the white label version, they would have saved more than £200 million. The variation is remarkable. Imagine the potential savings if this was applied across many other classes of drug.
As the Economist wrote recently:
“A study in the British Medical Journal … reckoned that the NHS could save more than £1 billion by switching from branded drugs to generic equivalents”.
Smart use of datasets will become essential in improving our healthcare, as long as the interoperability of systems is put at the heart of those improvements.
As 80% of the NHS costs come from the 20% of the population with chronic conditions, it will be essential to focus resources on how to help them manage their lives more independently. There is a growing evidence base that shows that online tools can help in this. Mindfulnet, Big White Wall and buddyapp.co.uk are just some examples of websites that provide help to people with mental health issues, giving them confidential help and techniques that allow them to manage their own lives. NHS HealthUnlocked is a London-based start-up that works with patient groups and gives 1 million people monthly information to support long-term illnesses such as diabetes and obesity.
More than 70% of us look at our smartphones before we go to the doctor. Every day, millions of people are using health apps on their mobile phones, logging into websites or chatting in online forums. New technologies such as UP by Jawbone, or even Nike+ FuelBand, allow people to gather their own data and make better lifestyle choices. This is where I respectfully disagree with the noble Viscount, Lord Ridley. I believe that such technologies will help prevent health issues and drive down costs.
It is vital that the NHS is able to deliver services of the same quality as citizens find on the web, or we will be in danger of undermining one of our most valued public services. This will require a cultural change in the sector so that all the people working with patients are able to provide high-quality, relevant and modern care and to connect with the innovative solutions being provided outside the NHS.
While I spent two years in hospital, I met some of the most remarkable people— from surgeons to doctors and nurses to healthcare assistants—but, even then, there was a huge gap between what they were able to do and what was happening in the commercial sector. We must ensure that all staff are digitally literate and that the internet is at the very heart of the design of services, surgeries and hospitals. On this the 65th anniversary of the NHS—surely one of the greatest innovations of our country—it is essential that we incorporate another of our greatest innovations, the world wide web, otherwise we will have no hope of meeting future funding challenges.
Baroness Hollis of Heigham
My Lords, as we know, social care, health and social security expenditure is being driven by the growing number of the elderly. It accounts for two-thirds—£110 billion—of our welfare budget. As local authorities face 50% cuts, we are none the less going to need 65% more hours of care from the same number of working-age people in the next 15 years.
People talk airily about the extra life expectancy since Beveridge’s time—it was then five years after retirement; it is more than 20 years now. They argue that there should be a fixed proportion of adult life for retirement—let us say 30%—and that the pension age should rise accordingly, saving some £15 billion a year. However, the health and social care statistics should give us pause for thought. Those extra years are not enjoyed as years of good health but are years of chronic disability. At 65, we may enjoy a decade of good health, followed by a decade of growing but chronic disability, such as arthritis and diabetes, impairing our ability to walk, to reach, to see and to hear. Finally, there are perhaps two to five years—this has not changed much—of conditions involving heavy dependency, including Alzheimer’s, with substantial personal care needs.
The years of extra life, therefore, are largely extra years of chronic disability, but it is heavily class-specific. The better-off will live longer in good health—and they include those commentators who seek to encourage the raising of the state pension age—but for everyone else, those extra years of life will be added to the years of chronic disability. In my city, in two wards that are one mile apart, there is 11 years’ difference in life expectancy and 15 years’ difference in healthy-life expectancy. The gap is widening. It is deeply unfair to raise the state pension age and reduce the good years of retirement for most of the population.
I doubt that we can significantly extend the decade of healthy-life retirement for most people, but we can make the next decade, of disability, qualitatively better. What must we do? Measures include adapted housing and equity release—only £0.5 billion of the £2 trillion locked away in property of the over-55s is being released each year. Decent state pensions under the new Pensions Bill will provide funding for heating, food and mobility. We also need to fund social care adequately and intervene early.
Can we afford it? We spend £62 billion a year on the state pension and more than £40 billion on pensions tax relief—a shadow welfare state for the well-to-do. It is outrageous really. We have three ages of man—work, early good-health retirement and later disabled retirement. We need to smooth income not just from work to retirement, as we do, but between early retirement and later retirement as well, which we do not do.
Standard tax rate relief on pensions and/or treating pensions like ISAs would release £7 billion or £8 billion a year. If that money was then ring-fenced for later-life social care, redistributing it not only from work to retirement but from younger, healthier, wealthier pensioners to the older and frailer among us, I think that it would command support. Raising the cap on employees’ national insurance, now frozen at the higher rate, would raise a further £11 billion.
There is money; it is about our political choices and our priorities. With a sufficient state pension which is coming, with the redistribution of money from pensions into social care, with the adaption of our homes for safer living, partly funded from equity release, and with a more courageous attitude to integrating hospital, primary and social care, we can cope. Half of the growth of the older old is indeed due to increased longevity, but half is due to the post-war baby boom. In a decade or so we shall be through that baby boom and in a better worker-pensioner support ratio than almost all other European countries—until the next baby boom, that is, which has just begun, but that is a problem for the 2070s and our great-grandchildren.
Lord Crisp
My Lords, I, too, congratulate my noble friend on securing this debate and on his excellent speech. In fact, there have been many excellent speeches and, as a result, I have completely rewritten what I was going to say. I declare an interest as a former chief executive of the NHS and I have many non-commercial health interests, mainly abroad.
The core issue here is that we have an NHS designed and created in the previous century that is trying to deal with the problems of this century. We have an NHS that is focused on illness not prevention, that separates GPs and primary care, that is designed to treat episodic illnesses—heart attacks, infections and cancers that are not chronic diseases—and we need a different sort of health service. We need a massive change in the way that it is delivered, using technology, using staff differently and changing the infrastructure. I agree with the noble Lord, Lord Filkin, that that is a major change, and that it is the fundamental change that needs to be done, but we can make a start on it. It is important that we have a clear vision of what we want our health and social care system to look like in the future. This debate is not just about funding. Using the wrong model to deal with today’s problems is a recipe for inefficiency. We are not alone. Every developed country has the same issue. If we look across the Channel at, for example, France and Germany—which, incidentally, spend 20% and 25% more than we do—according to the United States Commonwealth Fund, they are less efficient in how they do it than we are. So this is a common problem. It is a big problem but we can make a start on it.
There are no simple solutions but let me mention two possible ones. First, the most interesting study on waste in health systems comes from the United States. It is estimated that 30% to 40% of expenditure in the health system in the United States is waste. The biggest reason for that is not overtreatment and the sort of things you would expect in America; it is a failure to co-ordinate care. It is somebody with multiple problems having to go to one doctor for this problem and to another doctor for that one. It is a failure to co-ordinate that and having repeated inputs into the system. It is also not getting the treatment right first time. Those are the biggest impacts on waste. I suggest to the Department of Health that it might wish to use the same methodology to look at waste within the United Kingdom because I think we will see a lot of similarities.
Paradoxically, we need to focus on quality in order to manage costs. As people working in industry will know, this is the way to do it. The Japanese guru, Kano, talks about three levels of quality. The first level of quality is doing it right first time—actually doing what is needed to deal with the problem, making sure that if you are in hospital that the X-ray or whatever is needed is done in time so that you do not have to spend the rest of the following week there as well. The second level of quality is doing the same thing but with cheaper inputs. The obvious question in the NHS is: to what extent can things that are done today by doctors and people working expensively be done by other people within the system? And the third level of quality is adding something. It is only that third level of quality that adds cost; the first two save cost. We see it across industry and in the best examples in the UK. Many people in the NHS know this and there are many isolated examples. This could be the really big push that I believe is needed to tackle many of these issues.
The second area, which I have touched on, is staffing. Reducing the drug budget by 10% saves 1% of the NHS budget; reducing staffing by 10% saves 6% or 7% of the NHS budget. We need to be much bolder and braver in thinking about who does what within the NHS, particularly when we are aware that new technology allows things to be done. We know how we can do that well. There is plenty of evidence of task-shifting or substitution, using people who are less trained and skilled but properly supervised to do things, not least from the All-Party Group on Global Health which I chair and which published a report looking at this worldwide and demonstrating how this could be done.
So those are two areas where I believe there is a great deal more that we should be doing. Before we get too radical about trying to change the financing system, we should be focusing on changing the NHS. In conclusion, this debate needs to be about the NHS and the social care system we need. There are no simple answers but there are many promising leads. Political, NHS and social care leaders need to do much more to lead and to win the arguments about the future with a sceptical public. There is at the moment, I believe, no clearly articulated vision from either Front Bench. We need one if the NHS and social care are going to continue to serve the UK population effectively in the 21st century.
Lord Desai
My Lords, I, too, thank my noble friend Lord Patel for initiating this debate. We have heard many innovative speeches already. I think I am the only professional economist speaking in this debate so I had better stick to economics.
First, all projections for 10 years’ time should be ignored. If you predicted backwards, you would find that you were spending negative sums of money 30 years ago. NHS growth has been very uneven. The NHS grew from 3.5% of GDP to 4.5% over 30 years and then from 4.5% to 9% in 20 years, the fastest growth being since 1997. We have been accelerating growth and we did that because of the determination of the Labour Government to increase the proportion of GDP spent on health. There was a target and that target was achieved. GDP growth was good at that time. GDP growth will not resume at anything like the level we had up to 2007. We will have much slower GDP growth with much more attention paid to reducing the size of the state’s share in total spending. We spend up to 48% now and we are going to reduce that to 44% by 2017, but once upon a time we spent only 36%. We will have to reduce it to something like that, and within that smaller share we will have to find money for the NHS. Productivity will have to grow. I must disagree with my noble friend Lord Turnberg. Productivity did not grow between 1997 and 2010. As the King’s Fund report shows, it fell by minus 0.2% per year. Between 2011 and 2015, it will grow by 5%. That is not my number; it is the King’s Fund’s number.
What is to be done? The first thing has to do with universality, which is one characteristic. The noble Baroness, Lady Boothroyd, was quite right. How do we ration this to only people who are entitled? When I arrived in 1965 I was given a card by the NHS with my number on it and I was told I had to show it. Nobody has ever asked me for the card. Why can we not have that very simple thing? The Labour Party abandoned the idea of an identity card. It would be very simple to have our NHS number, which exists somewhere in the ether, and to be asked to show it whenever we go to the doctor. That would sort out the tourists from the citizens. That is one thing.
Secondly, we have to make people aware of what they are getting. My biggest worry about the NHS is that people are not aware of how much they are costing the organisation. If we are spending, say, £2,000 per capita, give everyone something like an airline loyalty card containing 2,000 points and say, “These are your points for this year”. Every time you used the NHS, you would be shown how many points had been deducted. If you missed a GP appointment, it would cost you twice as much as going to that appointment. No one would need to pay anything, but this would make people aware that there are costs for what they do. As people in middle age typically will not need treatment, they would accumulate points over a lifetime so that they could finally spend those points when they needed them. You could have a lifetime budget of shadow points. This would be very good for people. Since I do not have much more time to speak, I think I can sit down.
Lord Owen
My Lords, following on from what the noble Lord, Lord Desai, said, one of the strengths of what was initially introduced as an internal market was that it would be able to show people the costs of healthcare in a far more systematic way than hitherto. In my view, it is a tragedy that the internal market has been changed into an external market, and we have lost the growing acceptance of people in explaining—particularly doctors and those who make financial decisions in the health service—what it costs.
I come to the main subject of the debate, the future funding of health, and the very objective and fair explanation by the noble Lord, Lord Patel, of the various options. I have no doubt where I come out: I agree with the Wanless committee, which looked at this in some detail. It is still worth reminding ourselves of some of his report’s words:
“Out-of-pocket payments for higher levels of non-clinical services may provide one means of meeting demands for greater choice and responsiveness … The key conclusion to this Review, however, is that the current method by which healthcare is financed through general taxation is both a fair and efficient one from a macroeconomic point of view”.
I stress another fact: very unusually, we have had a social experiment in paying for the National Health Service. When the previous Labour Government substantially increased health expenditure, which was a very good decision, they paid for it by increasing the national insurance contribution. Far from being unpopular, that was an extremely popular decision.
With that experience, we have to take the next step, which is to break down the Treasury’s reluctance to earmark taxation and have on everyone’s tax form what is spent on the National Health Service out of their taxation contribution. They can break it down further into what comes straight from tax and what comes from national insurance. Most people in this country have felt for many decades that their national insurance contribution pays for the National Health Service. Many people are arguing for a greater contributory element in our social financing. The NHS provides a wonderful vehicle for that; it is popular and people are prepared to contribute more. If we had earmarked taxes on our tax forms and if we then raised national insurance contributions, all that would be seen for what it was on the tax form. In my view, that would gradually shift the national insurance contribution and it would be seen to be the mechanism of funding, but you would still need a taxation top-up.
That is my practical suggestion, and it could be done initially to simply explain the overall cost of the National Health Service that you yourself are contributing. If that was open and earmarked, and people felt that that money was going to the National Health Service, there would be much greater acceptance. The big macroeconomic factor in this climate is not ageing, which I will come on to in a moment, but the fact that we are very likely to have a sustained period of much lower growth than we have had over the past 20 or 30 years.
On the question of ageing, the speech by the noble Lord, Lord Filkin, was very strong. My warning, particularly to those working on the Lords Committee reports on ageing, is that this is a much more complex issue. All the evidence so far that an ageing society has this great cost claim on the NHS was rejected in 1999 by the Royal Commission on Long-Term Care of the Elderly, the Sutherland commission, and three years later the Wanless report concluded that:
“Across all scenarios, the contribution of demographic change to future costs is relatively modest”.
Similar findings have been reported in the USA, Canada and Australia. There is also the supreme irony of regarding increased longevity as a problem when it is one of the great prizes of economic growth.
We should be careful in this whole area and have a little more history. My generation of doctors in the 1960s was faced with men of 50 dying a long, racking death because they had smoked, or in some cases because they had industrial diseases like pneumoconiosis or asbestosis. That is now very rarely seen because of the massive public health contribution of people giving up smoking.
That longevity has brought about a different type of death, too, and we should face that. The warning on that came from obesity. I have no more time to go on to that issue, but every word of the statement by the noble Lord, Lord McColl, is vital in order to realise that this is a new public health scandal. Alcoholism and binge drinking among young people are also a problem. In 20 or 30 years we will pay a very heavy price for this, and we have to start doing something and spending money to stop it now.
Lord Graham of Edmonton
My Lords, it is a joy and a pleasure to be able to take part in this debate. I am a consumer, more so than those who have made speeches today who have impressed me with their foresight, warnings and good sense, and I am deeply grateful.
I rise today to refer to an incident. An 88 year-old man who was partially disabled and partly immobile fell in his kitchen, and rang 999. That was at 5.30, but an hour later there was no sign so he rang again. At 7.30 he rang yet again and received no assistance. This old man then rang a care line that he subscribed to locally, and within the hour two ambulance men came along and looked after him.
That old man was me. I lay on the floor of my kitchen for three hours until assistance came. Although I was not badly injured, I just could not get up from the floor and I needed assistance. When the ambulance men came, they looked after me. They were superb and kind, so I thought to myself, “Well now, this is what it’s all about”.
My family have had great access to the National Health Service all their lives. I pay tribute through the Minister to what that service is and does. Of course the problems that have to be solved have been laid before him. Not many of them will be new, but he will be well aware, first, that the House holds him in high regard and, secondly, that he does what he can. What he did when I wrote to him was to tell me that he was not the person responsible for the ambulance service and that there was a different arrangement, which I did not know about, for which I apologise. He told me that I needed to write to the East of England Ambulance Service in the NHS, which I did. The Minister may or may not be aware of this—I am not trying to tie him down—but when he asked me to write to this organisation, I did. I was told that their procedure allowed 25 working days for a response. They guaranteed that I would get some response. I have counted 49 days since the date of the letter. I have had no action from them.
It is little things like that which spoil the image of the National Health Service. During the war, I lay on a hillside with gunshot wounds and my life was saved. Ever since, especially as my health has deteriorated of late, I have been grateful for the service that I have got. Does the Minister recognise that all I ever wanted was an explanation for why I had to lie on the floor for three hours? The answer is simple: resources. That is in the title of the debate today.
I express deep gratitude for all that I and my family have received, but I was particularly taken by the comments of the noble Lord, Lord Cormack, that now is the time to reassess what the health service is and how we proceed. That was also referred to by the noble Lord, Lord Owen, whom I have known for a very long time. I can also see, sitting in her place, the noble Baroness, Lady Boothroyd, who stood on a platform with me 61 years ago—
Lord Graham of Edmonton
Sixty-one years ago. I may have just given away the age of the noble Baroness. Well, the noble Baroness is just younger than me and I am now 88 years old, so I have not given it away too much.
Lord Newby
My Lords, before the noble Lord embarrasses the noble Baroness, Lady Boothroyd, further—
Lord Newby
I remind the noble Lord that there is a time limit of five minutes on the speeches.
Lord Graham of Edmonton
I have watched a number of five minutes’ being put up for the past hour, but no one has said anything to me. Thank you very much.
Baroness Tyler of Enfield
My Lords, it is a privilege to follow such a powerful and moving personal testimony from the noble Lord, Lord Graham. I, too, add my congratulations to the noble Lord, Lord Patel, on securing this very timely debate. Why do I say timely? As so many other noble Lords have said today, it is an opportunity to look at some of the underlying causes of the escalating costs of healthcare and what can be done about it. The National Audit Office recently released figures showing that 30% of all non-emergency hospital admissions are avoidable. With resource inefficiency such as that alongside the pressures from our ageing population, technological advances in healthcare and increasing public expectations of the system—we have heard so much about these today—it is clear to me that standing still and having more of the same is not an option, particularly in a prolonged era of less public money.
I speak today particularly as a member of the Select Committee on Public Service and Demographic Change, so ably chaired by the noble Lord, Lord Filkin, who has already spoken very eloquently. The Committee’s report, Ready for Ageing?, put considerable emphasis on the need for major redesign of the way the health and social care system is funded and delivered. I say respectfully to the noble Lord, Lord Owen, that that committee made much of the very important contribution that older people make both to society and to the economy.
We have already heard some alarming figures in today’s debate. I will not repeat them but I refer to the Nuffield Trust’s prediction of the budget shortfall by 2021 if nothing happens, and the fact that 70% of current spending goes on people with long-term conditions. I want to focus my remarks on the ways in which the existing £120 billion budget could be better spent, fully recognising that this is only part of a much wider debate. The Select Committee received overwhelming evidence that a radically new system was needed with a funding model designed to ensure that health and social care funding is aligned so that it incentivises preventative care, early diagnosis and intervention, and active management of long-term conditions, thereby avoiding worsening health and the unnecessary use of acute hospital stays—with the home, in essence, becoming the hub of care.
The committee concluded that a remarkable shift in NHS services was needed, particularly to have older people with long-term conditions receiving good joined-up primary care, community care, social care and effective out-of-hours services; that is, a health and social care system that works well 24 hours a day and 7 days a week. I think we would all agree that we do not see that at the moment. This would be designed to shift funding from acute and emergency services, which currently consume more than half of the NHS’s budget, and allow for more investment in community and social care.
Welcome moves are already being made by the Government to ensure more integrated and co-ordinated care as part of the NHS mandate refresh. These are clearly steps in the right direction. Much more radical thinking, however, will be required. I urge the Government, and indeed politicians across all parties, to consider more fundamental changes in the run-up to the next election. One such change I would put forward—as the Select Committee did—was that there should be serious long-term strategic planning which can look 10 years ahead, with the Government introducing a 10-year spending envelope for NHS and publicly-funded social care.
I do not for one moment envisage that this will be an easy sell to the British people, who understandably fear changes to the local hospital arrangements on which they rely. However, it is a conversation in which we, as parliamentarians, need to engage with the public openly and honestly, as many noble Lords have said today. I, too, was very interested in the recent findings of the King’s Fund and Ipsos MORI deliberative event, which the noble Lord, Lord Patel, referred to at the beginning. It is very interesting to see how little appetite there was for the charging of clinically necessary care. When the former Health Minister, my honourable friend Paul Burstow, was looking at ways in which we could use more widely the resources that we and the wider community have, he put it very succinctly. He wrote that:
“Our current systems are predicated on perverse incentives: people have to prove dependence and refuse informal help to qualify for services. We need to work with the strengths of people and communities to foster resilience, reciprocity and support self-care”.
He also wrote that:
“The future of our care system lies in preventing or postponing people from needing care in the first place”.
Pooling health and social care budgets is one way to achieve this sort of prevention, along with person-centred commissioning and a single point of care for all commissioning.
There are other areas we could focus on—as the King’s Fund has recently indicated—where there is real potential to transform health and social care. I shall mention just one, as time is running out, but they include that of embracing more joined-up procurement so that the vast collective purchasing power of the NHS can be used far more effectively to keep costs down.
Baroness Emerton
My Lords, I thank my noble friend Lord Patel for the way in which he introduced this debate and other noble Lords for their very valuable contributions. Like my noble friend Lord Crisp, I have had to change what I was going to say in terms of the range of things. I declare an interest in that I am a nurse by background, a long-retired nurse who had 60 years’ experience, in one way or another, connected with the NHS. It is true to say that there is evidence of brilliant care being given within the NHS and social care. However, there are also many deficits.
We have talked about a seamless service. Is there a seamless service today? A model needs to be developed from the previous Government’s introduction of the patient pathways. I hope that we will not forget that patient pathways are the most cost-effective and care-effective way of treating people in the future. However, we need to think about prevention being better than cure, as was said by the noble Baroness, Lady Tyler. Public health is defined as the science and art of preventing disease, prolonging life and promoting health through the organised efforts and informed choices of society, public and private organisations, communities and individuals. This requires a change in the culture of the population served to a health and well-being approach to life and a personal commitment to living a healthy lifestyle from birth to the grave. This picks up some of the points made by the noble Lord, Lord McColl.
Changing the culture of the NHS is an even more important issue. The prime focus must be on the principle that all aspects of public health are centred on the personal pathways of the population and the provision of health and social care given through those pathways to a healthy population. Changes must be made to the culture of the delivery of health and social care towards those who live independently, supported where necessary by expert professional teams that are educated in the delivery of holistic care to meet mental, physical and emotional needs within the community. Hospitals should be required only for the diagnostics, treatment and research that cannot be delivered in the community. To make all these changes, outstanding leadership skills are required. This can be achieved only by an open and honest approach to the population which helps them to understand that to live longer, healthier lives, changes have to be applied through a much more active and aggressive approach to the prevention of disease and the promotion of health. These changes must be assisted and supported by expert clinicians from all health and social care professions who utilise the good of what is in place while identifying the large gaps that exist. They must make those good not only by correcting the education and training of the workforce but by engaging the assistance of families and communities.
The education and training needs of the NHS social care workforce need to be radically examined to ensure that the overarching focus of care delivery in this country is public health-supported by the treatment of disease. This strategy requires a refocusing of the distribution of funding towards these aims. Florence Nightingale once said that hospital beds should be reduced in London. Perhaps we should look at the way in which our hospital beds are used and ensure that hospital services are cost-effective and care-effective within the framework of the patient pathways determined by the health and social care teams. This should be done to support patient pathways in a seamless way from diagnosis through to treatment. In turn, we must utilise the support of families and communities towards the future health and well-being of the individual on discharge to the community, where high-class care is delivered by professional health and social care teams, families and communities.
I hope that the Minister will be able to look at the point raised about the need for a cross-party multiprofessional group. However, I stress that it needs to be multiprofessional.
Lord Hunt of Kings Heath
My Lords, I declare an interest as president-elect of GS1 UK, as chair of an NHS foundation trust and as a consultant and trainer with Cumberlege Connections.
I, too, thank the noble Lord, Lord Patel, for his opening remarks, but also for allowing us to debate one of the key social issues that we will face over the next few years. I warm to the noble Lord’s optimism, although there is no doubt that the NHS is in the midst of an unprecedented financial challenge. The supply of funding is not keeping pace with the growing rate of demand for healthcare. More people need care and they want it to be better than it has been before, but we know that growing pressures on finance could impact on the quality and experience of patient care. As Sir David Nicholson said today, hospitals are staring down the barrel of having to cut doctors and nurses from their employment, actions that could lead to another Mid-Staffordshire scandal unless the NHS radically reforms. I know that my noble friend Lord Desai warns us, I suspect with good cause, to be wary of long-term financial projections. However, there seems to be a general consensus around the work of the Nuffield Trust, which says that cost pressures on the NHS are likely to grow by around 4% a year up to 2021-22 due to the growing demand for healthcare to meet the needs of a population that is ageing, growing in size and experiencing more chronic disease.
We also need to factor in the impact of social care. There is no doubt, looking at public sector finances, that local authorities have borne the heavy brunt of the reductions. As adult social care is the largest part of discretionary spend within local government, it has inevitably been affected. A&E services were under the cosh this last winter. There can be no doubt that one of the main reasons for this was a reduction in social care provision and in the additional burden that our carers have had to face because of the reduction in support services available to them. Sir David Nicholson’s response was to call for a dramatic reconfiguration of services, including the centralisation of specialist services. I should like to put that point to the noble Earl, Lord Howe. Will Ministers support radical reconfiguration of services? So far, we have seen little sign of that occurring. Will the Minister also ensure that clinical commissioning groups get on with approving radical changes instead of, as seems to be the case at the moment, resisting big change and being protective towards local services?
On that reconfiguration of services, I want to ask the Minister about today’s decision of the Competition Commission to reject the proposed merger of two hospital trusts in Dorset. That must be the most ridiculous decision that has ever been taken in relation to the necessary reconfiguration of services. His right honourable friend the Secretary of State has spent his time in office going around attacking the NHS. It would be nice to think that the Secretary of State might issue a mite of criticism of the Competition Commission for what it has done. The signal this will give to the health service is that reconfiguration of services will not be allowed because of the Competition Commission’s ludicrous intervention. I hope that the noble Earl will be able to say something positive about what Ministers will do to stop the Competition Commission doing this in the future. It will be impossible for services to be reconfigured if in Dorset, a small county, two small district general hospitals are prevented from merging. This is very serious indeed.
Is it all doom and gloom? Will the NHS descend into mediocrity and inevitably become a second-rate service for poorer people? Will charges be introduced, with all the costs and perverse incentives to which my noble friend Lord Turnberg referred? I hope not. Like the noble Lord, Lord Patel, I am more optimistic than some noble Lords. My noble friend Lord Graham, in his marvellous speech, will also recall, as I do, the beloved and late Lord Donald Bruce, who was Nye Bevan’s PPS. He sat just behind the noble Earl when Nye Bevan introduced the NHS Act 1946, when the Commons was using the Lords as its Chamber. Nye Bevan always said that the NHS will always be with us as long as people want it so. It is my contention that whatever the pressures and challenges we face, the British public want it to continue with us.
Of course, it is clear that muddling through is unlikely to be feasible, and spending more will always have to be an option. My noble friend Lady Hollis made a very powerful case for redistributing priorities. The noble Lord, Lord Owen, argued for earmarked taxation. Some noble Lords have argued that higher spending on health and social care should not be seen solely as a debt or a burden but as an improvement and an investment in the economy and the economic and health well-being of people’s lives. I have no doubt that the public will continue to expect the NHS to be a tax-funded system free at the point of need. However, public finances will remain tight.
The noble Viscount, Lord Ridley, doubted the efficiency achievement of the NHS in the absence of a market. All international evidence suggests that the more marketised a health system is, the more wasteful it is. My grounds for optimism are based on international comparisons. The Commonwealth Fund in the US, which is a very authoritative comparator of healthcare systems, ranks the NHS number two. It ranks it number one for effective care and for efficiency. We should not throw that away. Despite all the challenges, the NHS has a lot going for it.
The noble Lord, Lord Cormack, could have made his speech in every decade going back to the 1950s—perhaps he did make that speech in the 1950s. The Guillebaud Committee was set up in the early 1950s when debates took place about whether we could afford the NHS. Professor Bryan Thwaites in the 1980s came out with speeches that the NHS was unaffordable. Here we are, 30 years on from that, still debating this issue.
If the NHS is to survive of course it has to be more efficient and there are three areas where I suggest efficiencies. First, the Government at a stroke could stop the marketisation of the NHS. The amount of money that is going to have to be wasted in compulsory tendering of services is extraordinary—£3 billion has already been spent on the stupidest reorganisation the health service has ever gone through and much more money will be wasted in the future. Secondly, in central government there is heavily centralised procurement. I welcome that. The Government are not allowing individual government departments to procure separately. We should do the same for the health service. We cannot afford to have 500 different organisations procuring. Thirdly, I agree with the noble Baroness, Lady Tyler, about avoidable admissions, caused either by the public not turning up when they should do or turning up when other facilities should be on offer.
There is much to be gained. The shift to prevention offers much. The need to integrate health and social care is becoming broadly accepted everywhere. People need to shift from being passive consumers of care to active partners in their own health. The system needs to become much more open and transparent. Above all, I put my money on innovation. In this country we have fantastic scientists who are inventing new medical treatment and equipment day after day but we are very slow to use that in everyday practice. The academic health science networks, NHS England’s specialist commissioning facility and the assurance that NICE guidance is aggressively adopted would give us a foundation for an efficient health service where innovation is adopted quickly and the benefits are seen not just in the quality of patient care but also because the global pharmaceutical industry will see that the NHS continues to be a strong place in which to invest in the future. We must want to get to where health and wealth run closely together. If we can do that, the future of the NHS is a good one.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, first I thank the noble Lord, Lord Patel, for securing this debate. I am particularly grateful to him for presenting the House with the scale of the financial challenges that face our health and care services. Those challenges should not be underestimated and I very much welcome the opportunity to debate them.
Healthcare systems across the world are facing huge and very similar challenges. The noble Lord, Lord Filkin, quoted a number of sobering and inescapable statistics. Our population is ageing. The number of people aged over 65 in England is set to increase by 50% by 2030 and the number of over-85s is set to double. New treatments and technologies, while very welcome, often increase costs. Of particular importance, more people are living longer with long-term conditions. There are now 15 million people in England living with a long-term condition and that number is rising fast. By 2018, an estimated 2.9 million people will have more than two long-term conditions, up from 1.9 million in 2008.
More people need to be supported to manage their conditions well and this means, as my noble friend Lady Tyler and many noble Lords have identified, that the NHS and social care need to find ways of working more closely together. This includes, as the noble Baroness, Lady Emerton, reminded us, managing older people’s care proactively to help keep them out of hospital, as well as ensuring that the care and support people need is ready and waiting for them when they are ready to leave hospital, along the seamless pathways she talked about. It also means making sure that the NHS is there for us all in an emergency, as it should have been for the noble Lord, Lord Graham of Edmonton.
I want to outline the Government’s approach to the financial challenge set out in the recent spending round and then go into more detail on our proposals to bring about the radical change in the integration of health and care services. The spending round set out that the Government are continuing to protect health spending in 2015-16. We are setting up a £3.8 billion pooled health and social care budget to transform service delivery—to which I will return in a moment. We are providing better and more proactive care for the vulnerable elderly. We are introducing a new national minimum eligibility threshold to protect access to social care services—again a topic to which I will return—and we are beginning work on introducing the cap on the cost of care so that no one should have to sell their home to fund care later in life.
In addition to taking these radical steps to integrate health and care, we are making enormous strides towards an ever more efficient and comprehensive health service. We are pressing ahead with investing in technology to reduce clinical mistakes and to guarantee quality of care; investing in cancer services through two new proton beam therapy centres and investing in better mental health care. We are also working closely with partner departments across central government to fund capital projects worth almost £700 million.
Last month in the spending round the Government committed to protect spending on health through to 2015–16. In addition to already committing £12.7 billion of funding to 2014–15, we will be adding an extra £2.1 billion in 2015–16. All this investment will go towards delivering improving services and boosting integration. Although funding continues to rise, meeting rising demand represents a huge challenge. The noble Lord, Lord Kakkar, was absolutely right. Greater efficiency is vital here and I am pleased to say the NHS is already delivering significant efficiencies. Thanks to the dedicated and hard-working NHS staff, the service delivered £5.8 billion of savings during 2011–12 and approximately £5.1 billion for 2012–13. This means that the NHS is on track to deliver up to £20 billion of efficiency savings by 2014–15.
The noble Lord, Lord Rix, and the noble Baroness, Lady Hollis, spoke about the importance of funding social care. We are clear that they are right. In the 2010 spending review, we allocated an extra £7.2 billion from 2011 to 2015 to support social care services and we have committed another £0.5 billion since. We calculated that this would be enough to maintain services if councils achieved 3% efficiency which was an assumption in line with the projections of The King’s Fund, the Local Government Association and the Association of Directors of Adult Social Services. This included money transferred by the NHS to support social care services that benefit health.
One very important way in which to deliver efficiency is to create a genuinely joined-up service, correcting the failure to co-ordinate care that the noble Lord, Lord Crisp, spoke about so well. With some of the biggest users of the NHS being those who also use social care services, we need to make fundamental reforms to the system to ensure better integration between services. In delivering these efficiencies to date, the NHS and social care have clearly made huge strides in working more closely together and getting more value from the public money that they receive. Too often, people still fall through the cracks. The changes announced in last month’s spending round represent a significant opportunity to do more; rather than continue simple transfers from the NHS to social care, the spending round announced a £3.8 billion pooled health and social care budget. This is a radical step forward in reducing the silos of separate local budgets and will be a powerful driver of local integration. The aim is that the pooled fund will be directed at activities that have a clear benefit across both the health and care systems, and it will be given only on the basis that services are commissioned jointly and seamlessly between the local NHS and local councils.
Health and well-being boards, as well as being the local hub for planning service provision, will play a significant role in spending pooled budgets. To access this funding, local partners will need to agree a collective plan for how it should be used, including distribution within the health and care system. Plans will cover how areas will protect social care services; achieve seven-day working in social care and health to support patients being discharged and prevent people being unnecessarily admitted at weekends, which is an abiding problem; ensure better data sharing between councils and the NHS, with a requirement for the NHS number to be used as a unique identifier; and ensure a joint approach to assessments and care and support planning. Some £1 billion of the money will be linked to outcomes achieved, with half being paid at the beginning of the year and the remainder in the second half of the financial year. There will be a strong element of local determination in setting these outcomes. Many local authorities and NHS partners are achieving much greater integration between health and care services, thereby improving care for people and optimising the use of resources. The new pooled budget will help to make this a reality across the country.
A number of noble Lords have drawn attention to the wider picture and have referred in particular to the predictions by NHS England of a significant funding shortfall by 2020-21. I am not sure that it would be wise of me to ignore those predictions, as the noble Lord, Lord Desai, sought to advocate. Clearly, we are experiencing the biggest financial challenge that the NHS has faced. Work to set the NHS on a sustainable footing in the long term has already started. I have mentioned that it is on track to deliver £20 billion of efficiency savings by April 2015, and that is a start—but more must follow. We are pleased that NHS England is undertaking this work to better understand and respond to the long-term challenge for the NHS, and has committed to the development of a 10-year strategy. I welcome the realistic tone of the document that it has just published. NHS England will lead that work to build on the gains and efficiency in the NHS in 2015-16 and beyond; its publication today is an important first step, and it is looking for genuine engagement and the kind of open debate called for by the noble Lord, Lord Turnberg.
The noble Baroness, Lady Boothroyd, spoke about the acute difficulty with funding that faces us. We know that demographic change and more people living with long-term conditions, as well as the rising cost of drugs, will continue to put pressure on the NHS. So those demands are accepted by all, and we agree with NHS England that the NHS needs to transform the way in which it does things to become more efficient. It must be able to make the decisions that it thinks are in the best interests of patients, which is why we set up NHS England to work with local doctors, nurses, patients and the public about how their NHS works for them. The consultation on migrant and visitor access should elicit some important messages from the clinical community as well as the general public. I shall refer in a moment to what the noble Baroness said on that subject.
The noble Lord, Lord Filkin, suggested that integration and prevention alone will not solve the funding problem. I agree with him that it is not the whole solution but it is an extremely important part of the solution, which is why we have taken the opportunity of creating the pooled fund that I have mentioned. But we are not relying on that alone; we are maintaining our commitment to protect the NHS budget, despite precarious public finances, and the QIPP programme is on track to deliver up to £20 billion of annual efficiency savings by 2014-15—and we will continue to drive efficiency beyond that.
The noble Lord, Lord Turnberg, expressed doubt about moving services into the community and whether this would actually save money. I believe that it will and should save money; moving care into the community is not about doing the same things in another location—it is about managing conditions well to avoid the need for acute care. There are some good examples of where that has happened. Evidence from the four whole-place community budgets suggests that savings from integration could be very substantial. In their business cases, the pilots that we have run suggest that the net savings that could be achieved over five years are: Cheshire West and Chester; £26 million; Greater Manchester, £3.8 million; Triborough, £190 million; and Essex, £90 million. Those are significant figures by any standards.
The noble Lord, Lord Kakkar, asked me whether the department or the NHS models future trends on demography and disease. We most certainly do. My department, the NHS and other health bodies model all those trends. We agree with NHS England that the NHS must continue to change if it is to get ahead of these trends and, indeed, influence them. As my noble friend Lord Ridley recognised, this can be done. We have made a good start in delivering efficiency savings, but it is important to take on board the fact that savings in the first two years have been reliant on reducing bureaucracy and having pay restraint, as well as making local improvements in operational efficiency. The NHS now needs to focus on the transformational change of services away from hospitals and into the community.
I shall come on to the issue now raised by the noble Lord, Lord Hunt of Kings Heath, around reconfiguration. Certainly, the Government support reconfiguration. The NHS has always had to respond to patients’ changing needs and expectations. As lifestyles, society, technology and medicine continue to change, the NHS needs to change as well. Both the Government and NHS England are clear that this will not mean cutting, charging for or privatising services. Local empowerment is the key here. It is not fruitful or wise to go for topdown redesign. Local empowerment is the key to allowing services to respond to the needs of local people. Decisions about the future design of services need to be made as part of an ongoing conversation between commissioners, providers, local authorities, and the communities they serve. Clinical quality and local need should be at the heart of those decisions. As the noble Lord knows, we have made it clear that we expect proposals for significant change to meet four tests. There should be strong public and patient engagement; the proposals should support choice for patients; there should be a clear clinical evidence base; and there should be support for proposals from clinical commissioners. We have encouraged necessary reconfiguration through the NHS mandate.
I, too, noted the decision by the Competition Commission today around the mergers in Dorset. All mergers of NHS organisations must be in the interests of patients. The Competition Commission has a specific role to play in this, and that is the legal position. We note the commission’s provisional findings, which will be discussed with the two foundation trusts and other interested parties before a final view is reached.
The noble Lord, Lord Kakkar, spoke powerfully about the life sciences industry and how vital it is to the NHS—and, indeed, innovation more generally. We are absolutely committed to innovation and healthcare, both to deliver the best possible care to patients and as an important driver of economic growth. Innovation can also help to drive down costs. The healthcare and life sciences section of the Government’s plan for growth 2011 highlights that health research and innovation have a key role in the national economy as well as in improving health and care.
NHS England has an important leadership role, such as continuing to support the strategy for UK Life Sciences, and in spreading innovation throughout the NHS in line with their commitments in the innovation, health and wealth strategy.
In our current consultation on revisions to NHS England’s mandate, we propose updating its objectives on growth. The aim would be to help drive forward the Prime Minister’s initiative, announced in December last year, to sequence 100,000 whole genomes over the next three to five years by supporting its implementation and delivery and by preparing the NHS for the adoption of genomic technologies.
The noble Lord asked me what metrics would be applied to determine whether AHSNs are successful. I agree that there need to be robust and transparent outcome measures, and that is why there is a three-year academic evaluation commissioned jointly by the Department of Health and NHS England, which is currently out to tender. In addition, we are designing the five-year licence and building into it robust and vigorous outcome metrics, national baselines and locally appropriate lead indicators. That is due for completion by 1 September. However, all this will evolve over the five-year licence period.
My noble friend Lord Ridley said something unarguable: that the NHS needs to remove more inefficiencies. I completely agree with him and will draw attention to two specific examples: procurement, to which the noble Lord, Lord Hunt, referred and technology, which was spoken to so well by the noble Lord, Lord Bhattacharyya, the noble Baroness, Lady Lane-Fox, and the noble Lord, Lord Crisp.
On procurement, the NHS undoubtedly needs to look at every pound it spends to see whether it is giving value for money. Procurement spend accounts for around £14 billion of the NHS budget and we need to make sure that this money is being effectively spent. We will publish plans this summer to save up to £1 billion by 2015-16 through more efficient procurement.
On technology, I listened with care to the expert views of the noble Baroness, Lady Lane-Fox. We are committed to a paperless NHS by 2018 to improve services and make real efficiency and productivity savings. Better use of technology will save time for doctors and nurses, improve patient safety and has the potential to save billions. External studies have estimated that cost savings of £4 billion can be achieved, but these figures are illustrative at the moment and are subject to further work and examination.
My noble friend Lord Cormack suggested that we had reached a time when we needed a plurality of funding for the NHS. I understand the arguments that he put forward but I should make it clear that the Government have no plans to introduce any additional charges for NHS services. The NHS constitution states clearly that NHS services should be free at the point of use, except where charges are expressly provided for in legislation. Any decision to introduce new charges would need to be sanctioned by Parliament.
The noble Lords, Lord Rix and Lord Bhattacharyya, spoke about social care eligibility and the national threshold. In line with the recommendations of the Dilnot commission, the Government are committed to introducing a national minimum eligibility threshold. This will ensure that everyone has a minimum entitlement to social care, wherever they live, but councils will be free to provide services beyond the minimum level and there is no sense in which we are asking councils to be less generous.
The noble Baroness, Lady Hollis, spoke about local authorities facing 50% cuts. I recognise that local government has faced tough constraints on budgets but I do not recognise the 50% figure. Over the past four years of the current spending review, local government spending was forecast to fall by 14% in real terms and DCLG has calculated that this will fall in 2015-16 by a further 2.3%. It was that context that led us to take the decision to make significant additional resources available from the health budget to social care.
I am afraid that time is now against me. I have much more to say, particularly to my noble friend Lord McColl, who raised the extremely important subject of obesity, to the right reverend Prelate the Bishop of Derby on harnessing the voluntary sector to deliver more care, and to the noble Baroness, Lady Boothroyd, on NHS charges for migrant and visitor access. However, I fear that I will have to address those points in a letter.
I hope that this debate has brought it home to all of us, as it has to me, that the challenges facing us in ensuring that we have a sustainable, high-quality NHS for tomorrow and the long term, will occupy us for some time. They are issues that the Government in no way seek to avoid in our stewardship—which we are privileged to have—of this precious and valued national asset, the health service.
Lord Patel
My Lords, first and foremost, I thank all noble Lords who have taken part in this stimulating and brilliant debate. I am not biased, but it has been one of the best debates this Chamber has ever had. Some really serious thought has been given to how we might avert the crisis that may be happening in the NHS. Kenneth Clarke said, surprisingly, that:
“Every Secretary of State for Health will find they are trying to walk up a downward-going escalator”.
Despite that, he continued to say that it would be sad,
“if we gave in to the siren voices saying that an NHS largely free at the point of use can’t last”.
The NHS will last and we just have to find the means of making sure that it does. There is an issue about the demand and supply side. We need to address the demand side, a point made by many noble Lords, as well as on other issues. I see that the lawyers are gathering, and if I do not give in to them, I fear my fate.
Legal Aid
(10 years, 10 months ago)
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Baroness Deech
That this House takes note of the effect of cuts in legal aid funding on the justice system in England and Wales.
Baroness Deech
My Lords, I declare an interest as a regulator of the Bar, but not its representative. My remarks today are informed much more by my decades as an academic lawyer in the home of lost causes and a law reformer rather than by any concerns about barristers’ income.
What we are debating today is the health of one of the great pillars of our democracy and liberty; namely, our legal system and the way citizens may benefit from or challenge laws which, as this House knows well, are painstakingly established for the good of the community. Access to justice is every bit as vital to our societal health as access to health services. In an ideal and affluent world, the need to fund legal services would be seen to be as compelling as the NHS and as deserving of ring-fencing, albeit with controls to prevent malicious or frivolous use. Our courts are like the NHS but with a far older pedigree. Our justice system has been the admiration of the world and a model for emerging democracies elsewhere. This is the country that litigants come to, if they can afford it, to seek justice that they feel is denied to them at home. This is the country that sends judges and barristers overseas to help new countries establish a decent legal system. I need hardly point out, in this week of Middle East chaos, how crucial and yet how fragile the rule of law can be.
The regulatory objectives for the legal profession, such as consumer protection, the rule of law and a strong, diverse and independent legal profession, are a fundamental pillar of the Legal Services Act 2007 and the basis upon which successful regulation of the legal profession is measured. My overarching concern with the proposals set out in the Ministry of Justice consultation, Transforming Legal Aid, is that they will undermine these objectives to such an extent that regulators and lawyers will not be able to mitigate the risks that arise as a result. Moreover, since the LSA is primary legislation, I consider that the Ministry of Justice should not pursue a policy which either is, or risks being, inconsistent with it without full parliamentary debate. I ask the Minister to provide that opportunity by giving the House the chance to debate primary or other legislation before such profound changes are made.
It is commendable that the Lord Chancellor has listened to the representations made to him so far and has recognised that choice has to remain in the allocation of a lawyer to a person accused of a crime. So far, so good, but in the complex area covered by the paper, much remains to be challenged.
Our system of judicial review, which it is proposed will be cut back, enables every citizen to challenge officialdom. Even when the chances of a successful JR are low, the shadow of it creates a climate in which officials know that they must stay within the legal boundaries and observe human rights; otherwise, they will be brought to book. Any diminution of this, no matter how severe our national financial situation, must be treated with the utmost seriousness. That is because everything we do, especially in this House, is built on our centuries-old acceptance of a functioning rule of law that is there to defend and protect all of us. JR is like knowing that the policeman is on the beat somewhere—if only.
The recent peddling in the media of the notion of greedy lawyers and litigants drunk on public money obscures a fundamental principle of our system. I have heard the Minister characterise the professionals I regulate as “fat cats”. The reality is the perception that government can use cuts in legal aid to reinforce the application of unpopular policies by choking off challenge and redress. How are people going to be able to challenge medical negligence, housing problems and treatment in prison? The silence that will fall as the proposals are implemented will allow future Governments to say that problematic policies have in fact succeeded because they were not challenged—it will have become impossible to challenge them.
Of course the Government need to save money. Here we are talking about £220 million a year, although some say that the sum does not take account of recent falls in the outlay on legal aid. This sum pales when one thinks of, say, expenditure of taxpayers’ money on council credit cards and failed NHS IT systems, or Apple and Vodafone not paying tax. Shave a little off HS2, and we would have it, although the profession has in fact come up with other ways of saving money that would render unnecessary the Ministry of Justice proposals. It is not helpful to compare our legal aid expenditure with that of other countries because they have inquisitorial systems whereby the work equivalent to that carried out by our barristers is done by officials before the court hearing. Those costs have to be on the state balance sheet somewhere. They could be cut by putting more of the legwork of an offence trial on to other organs of the state. They could be cut by reducing the outflow of new criminal offences from the legislature. They could be cut by removing some children’s cases from the criminal system and shifting them elsewhere. The organisation Justice has calculated that releasing around 6,500 prisoners from custody every year would make up the necessary savings in the justice system. We need to take a holistic view of expenditure. We need to know whether the ministry has calculated the additional costs that would be incurred if its proposals were to be implemented, quite apart from the broader balance of social benefit and detriment. I am not convinced that the deep calculations, allowing for the slowing down of the legal system and more failed cases and appeals, have been carried out or revealed. The knock-on effects may well wipe out the savings.
Others will speak about children and mental health, but I hope that the Minister will bring forward a proper impact assessment of what the cuts will really save and what they will not save. There is a clear risk to the most vulnerable and even the middle class in society. A threshold of £37,000 per household is unsubtle and will lead to defendants not having equality of arms when representing themselves against the police and a barrister acting for the Crown on the other side. Nor is there provision in the proposals for vulnerable defendants who simply cannot cope on their own. What of the impact of cross-examination on his alleged victims by an accused acting in person, about which we read so much in the media? Prisoners are to lose legal aid in relation to what happens in prison. The consultation is possibly over-optimistic in stating that the prisons complaints system can replace legally aided advice for prisoners. I have heard estimates that the complaints system is as expensive, if not more so, as using a solicitor.
Women have been especially hard hit by the Legal Aid, Sentencing and Punishment of Offenders Act, known in the trade as LASPO, which commenced the restrictions in legal aid. This is the second bite of the cherry. The impact of that first Act has not yet been observed, although we know that there has been a 27% increase in disputed cases concerning children. Social welfare law and family law have become largely ineligible for aid. Some 57% of those affected are women, who bring 73% of the education cases and, a few years ago, formed 62% of the applicants for family legal aid. It pains me to say it, but women may be less able to represent themselves than men and lawyers in general. In sum, the interests of the public could be damaged in that there may not be competent representation, and the criminal justice system may fail to convict the guilty and acquit the innocent.
The big money saver, according to the consultation, will be the introduction of price-competitive tendering. Giving out contracts based on cost alone removes any incentive on the providers to exceed the minimum standards of service. Going for the cheapest ignores the reality that defence lawyers have to work with the individuals they represent; they have to work at weekends and be ready to deal, by definition, with the weakest members of society and cope with their wider problems—rather like the NHS, which we have just debated. Tendering for this legal work cannot be an accurate or exact measure because the length and complexity of cases are unknown. Currently, lawyers in the local community have experience and reputations that are known to the local police and courts. Mergers of small firms may destroy that, along with the availability of specialist skills, for example, in human trafficking or war crimes which are not to be found in the large new corporate pile-them-high and sell-them-cheap providers. The supermarkets and haulage companies who will hold themselves out to do this are unlikely to send the appropriate cases to barristers, thereby reducing the calibre of advocacy and future judicial material. Once they have secured the work and closed down the local firms, they will of course put up their prices.
I am particularly concerned about the tapered fee. We are all innocent until proven guilty and have the right to plead innocence and face trial. That is not inefficient; it is the rule of law. There must be no influences brought on a decision to plead guilty, such as a higher fee for the adviser or the inability of a solicitor to conduct a trial if the client were to plead innocent. The client, even now, should be inquiring of his or her representative as to whether that representative has any interest in an early guilty plea.
It is irrational to propose, as the MoJ has done, to reduce fees on a daily basis if the trial is a long one. The number of witnesses may be necessary, the jury may take time, and the legal arguments and cross-examination may be complex. Let us imagine a health system in which the longer the operation takes, the less the surgeon will be paid. We should either have fee cuts of 17%, as proposed, or PCT interference in the market. We do not need both. If there is to be a 17% cut in fees, firms should be left to work out how they will manage. If there is PCT, the price should be allowed to be settled that way.
What about the barristers whom I regulate? Criminal lawyers earn a great deal less than MPs and have to bear their own expenses. The Bar has worked hard to improve diversity but there are now only 400 pupillages a year, of which about 19% go to black and ethnic-minority pupils. I fear that the profession will become exclusively the domain of white, middle-class, self-financing advocates because young people will have no assurance of even a modest legally-aided income as they set out at the Bar. I do not see how they can survive with the education debts they are chalking up these days, not to mention the cost of qualifying as a lawyer. No wonder social mobility is less than it used to be. I do not wish to read any more exhortations from diversity tsars to increase the number of young people from underprivileged backgrounds in the legal profession. The Government want universities to lower the entrance requirements to this end, but they may be making it impossible to attract poor young people to the legal profession.
I was sorry to read that the Lord Chancellor commented to the Justice Select Committee that the Bar has not engaged with the Government in contemplating the changes that need to be made. On the contrary, the Bar is putting forward its own suggestions. It will be ready, I am sure, to help in delivering efficiencies through what are known as alternative business structures. It would be ready by now, but is being held back from getting them off the ground by the excessive red tape and overregulation that is built into the Legal Services Act 2007.
I hope the House will agree that there ought to be primary legislation for an issue of such constitutional magnitude to ensure that whatever changes are proposed after consultation will receive the scrutiny typical of this House. The proposed changes are of the order of those achieved in the LASPO statute and deserve as much attention. Even the judiciary, which is normally reticent in such political situations, has criticised the proposals. I am convinced that the protection of the profession and of the public that is enshrined in Section 1 of the Legal Services Act will be undermined by the proposals of the Ministry of Justice as they stand. I beg to move.
Lord Faulks
My Lords, I begin by congratulating the noble Baroness, Lady Deech, on securing this debate on these recent and very controversial proposals. I declare an interest as a barrister regulated by the board she chairs. Although barristers are not naturally enthusiastic about regulation, the Bar Standards Board has won increasing respect from practitioners. I wish that I could say the same about the LSB, the super-regulator.
On 3 December 2012, I spoke in another debate initiated by the noble Baroness about what can be described only as the overregulation of the legal profession. I am glad to say that the Government have now announced that they have embarked on a wholesale review of legal service regulations following concerns over their complexity and the unnecessary burdens that they place on the sector. That debate clearly had some effect, and I hope that what is said today in your Lordships’ House will similarly cause the Government to think carefully.
I also declare an interest as a barrister who, while not often paid by legal aid, has experience of the way that the system works, has acted with legal aid and has sat as a recorder in the Crown Court. When proposals are born out of a need to save money, there is a significant risk that cuts will be made in rather a crude way and that the legal system as a whole will suffer long-term damage. These proposals have met with extraordinarily widespread criticism, much of it admittedly from interested parties. However, it seems to me—and I may be alone here in believing this, or almost alone—that there is some good sense at the heart of what the Government suggest in the introduction of PCT. Indeed, in March 2010, the previous Government produced a Green Paper that said, in relation to the restructuring and the delivery of the criminal defence services, among other things:
“Currently the criminal defence service is highly fragmented, with a large number of small suppliers and relatively few large suppliers … We believe that these market trends are not sustainable. Therefore we believe a future tendering process would ensure a more consolidated market, with a smaller number of more efficient suppliers, required to undertake the full range of the services we need”.
I therefore expect that the party opposite will applaud at least the concept that these proposals contain for the restructuring of legal services.
It is of course important that any restructuring does not result in a degradation of the quality of justice or its availability. I, like the noble Baroness, welcome the Secretary of State’s announcement that he will carry out a further consultation before finalising his plans. He has also said that he is looking again at the important question of choice of lawyer. I look forward to seeing precisely how he reflects this question of choice in any amended plans. I admit that I find it rather an elusive concept. Of course, it is desirable that anyone charged with an offence should be represented by lawyers in whom they have confidence. However, choice is unlikely to be an absolute matter. Indeed, I reject the suggestion that those charged with criminal offences are incapable of making informed choices. Some of them are quite experienced consumers. I can remember, on a couple of occasions when I was a young barrister, being introduced to a defendant by my instructing solicitor, to be met with the comment, “I do not want him”. That, I think, was an expression of freedom of choice in terms of representation.
Some of the personal attacks on the Lord Chancellor are highly regrettable. I also find the suggestion that lawyers in this area are overpaid and are, in effect, milking the system unfair and unsubstantiated. It is the habit of all Governments to publish rather misleading figures about earnings at the top end by practitioners in legal aid. These figures never tell the whole truth. The average earnings of a criminal practitioner are extremely modest. It is vital that we preserve the possibility of lawyers doing this important work. What is at stake is not just the standard of living of lawyers, which may be regarded by some as of secondary importance. It is much more important that we maintain the quality of justice for which this country rightly has an extremely high reputation.
Time does not permit me to examine the other proposals in detail. I can say, however, that the alarming increase in expenditure on legal aid by prisoners deserves careful examination. Some of this is explicable by the fallout from IPP sentences, abolished by this Government; I have considerable personal experience of the litigation arising from this. However, I understand that these cases, concerned with actual detention, will still receive legal aid. When it is for trivial disputes, I have some sympathy with the Government that they can properly be resolved by the alternative remedies. Similarly, judicial review, vital though the availability of this remedy is for constitutional reasons, does not mean that the availability of legal aid is not subject to some careful scrutiny. I found the evidence of the Lord Chancellor to the Justice Committee on this point persuasive.
I invite the Minister and others in the Ministry of Justice to look at the suggestions made by the Society of Conservative Lawyers for further savings in costs, which are not currently included in the proposals, in a recently published article on its website. I also ask the Government in due course to look at the inquiry that is to take place by the Joint Committee on Human Rights, of which I am a member, which is looking at the human rights elements in these proposed changes. I do not think that these changes warrant the wholesale condemnation that they have attracted. I ask the Secretary of State to proceed with very considerable caution. He needs to have preferably the profession and certainly the public with him on these changes if they are to be successful and preserve our system of justice.
Lord Irvine of Lairg
My Lords, I, too, congratulate the noble Baroness, Lady Deech, on having secured this timely debate. I will confine myself to the impact of the Lord Chancellor’s legal aid proposals on judicial review.
The Constitutional Reform Act 2005 provides in Part 1 that the Act will not adversely affect,
“the existing constitutional principle of the rule of law, or … the Lord Chancellor's existing constitutional role in relation to that principle”.
The civil legal aid scheme supports the rule of law by making access to justice and the courts real. The Lord Chancellor himself has acknowledged that legal aid is,
“the hallmark of a fair, open justice system”.
I invite your Lordships to contrast that sound statement with the damaging effects, in practice, of his legal aid proposals on judicial review.
One is to refuse legal aid to those who do not meet a residence test—that is, those who have not been lawfully resident in the UK for 12 months—so no immigration detainee will be eligible for legal aid as, by definition, anyone in immigration detention is not lawfully resident in the UK. A second is to remove legal aid from a wide range of prison law cases. A third is to remove funding for cases assessed as having a borderline prospect of success—that is, most cases in public law.
Those changes will set the Government above the law in many areas. First, legal aid will no longer be available for those in immigration detention. The Home Secretary already has the power to deprive those individuals of their liberty by executive fiat, not court order. In 2012, more than 28,000 people were detained under immigration powers in immigration removal centres; many more were detained in prisons. Secondly, legal aid will no longer be available to destitute families with no immigration status who are waiting for a decision from the Home Office; nor, thirdly, to prisoners, who are wholly under the control of the state; nor, fourthly, to cases where foreign nationals have been murdered, tortured, or detained abroad by British soldiers.
I draw your Lordships’ attention to some recent decisions of our highest court in claims that could not in practice have been brought without legal aid but would not be eligible for legal aid under the proposals. First, there is the Lumba case in 2011, the leading case on the Home Secretary’s ability to detain individuals using immigration powers. The Supreme Court held that the Secretary of State was applying an unlawful policy when detaining foreign national prisoners, in that the real policy entailed a presumption in favour of detention without exceptions, whereas the published policy had a presumption in favour of release.
Secondly, there is the decision of the House of Lords in Simms in 2000, which held that Prison Service policy and instructions preventing prisoners from having oral interviews with journalists, even on questions of whether they had been wrongly convicted, were unlawful. That claimant would no longer be eligible for legal aid, as he will be excluded under the prison law reforms. Thirdly, in Al-Skeini in 2007, the claim arose from the deaths of six Iraqi civilians and the brutal maltreatment of one of them, causing his death. Each of the deceased was killed, and the maltreatment was inflicted by members of the British Armed Forces. That claim, which succeeded in the Supreme Court, could not be brought under the proposals, because the claimants would fail the residence test.
In his evidence to the Justice Committee in the other place on 3 July 2013, the Lord Chancellor admitted that the changes are, at least in part, ideological in nature. He asserted that matters relating to conditions in prison should be dealt with through a complaints system and a prisoners’ ombudsman. However, judicial review is a remedy of last resort: only those cases that have arguably not been satisfactorily resolved through the complaints system and the ombudsman ever get to court.
The effect of the reforms is to make judicial review in practice unavailable to many of those most in need of its protection. No doubt, the Lord Chancellor and some of his colleagues in government find judicial review an irritant, but the critical issue is whether the proposals will in practice take a wrecking ball to our constitution and the rule of law. I am sure that many of your Lordships share my deep concerns.
Lord Marks of Henley-on-Thames
My Lords, I add my congratulations to those of noble Lords who have already spoken to the noble Baroness, Lady Deech, on securing the debate and the way in which she opened it. I also declare an interest as a practising barrister. My noble friend Lord Phillips of Sudbury, who is unfortunately unable to be here, asked me to say that, as one who has fought for legal aid all his professional life, he wishes that he had been able to contribute to this debate.
In the debate on the gracious Speech, I suggested that there was a need for a fresh settlement between the Government and the professions over legal aid. I am bound to say that the past few weeks have more than ever convinced me of that. The Government and the professions appear at times to be in a hostile stand-off. It is bad for both the Government and the professions, but it is also bad for justice and bad for the public’s confidence in our system of justice.
The starting points are that we recognise the need to save money in this area and that the professions must recognise that the Government do not owe them a living. However, the Government must accept that the professions are not simply special pleading but have genuine and justified concerns about access to justice for the many who need, but who cannot afford to pay, lawyers. Of course, they include the most vulnerable in our society, but we should not forget that they also include millions of ordinary people who can meet their day-to-day expenses but cannot afford the sudden demands of expensive legal costs for them or their families.
A new settlement can be achieved only by dialogue, and it is therefore welcome that the Government have already been responsive to the consultation, particularly over the issue of choice of lawyer. For myself, I regard the right of a defendant to choose his lawyer as fundamental for three reasons. First, it is wrong for the state which prosecutes a case to choose the lawyer on the other side. Secondly, it is essential for a defendant to have confidence in his lawyer. That brings practical benefits in sensible and early guilty pleas where appropriate. Thirdly, choice in this area is a simple matter of liberty.
I confine myself in this short speech to making a handful of points about the Government’s proposals. Much of the controversy has of course centred on PCT. I suggest that there is much force in the argument that competition based on price rather than quality risks lowering standards. If we set only a minimum standard, we will get advocacy of a minimum standard—the so-called race to the bottom. Tendering should be based on quality as much as on price, and that should be made explicit in the application process. A precedent for that is to be found in the Health and Social Care Act, where, on persuasion, substituting competition on quality against a tariff for the original proposal for competition on price significantly improved the Government’s proposals.
The Government have invited the Bar Council to help to design a system of tendering based on quality. It is a matter of regret that the Bar Council has not accepted that invitation. Exactly that kind of dialogue is what I consider to be important. When the noble Baroness, Lady Deech, next sees the Bar Council she might consider taking that back to suggest a change of view in that area.
A further area of concern is the number of providers and their distribution. I believe that a reduction from 1,600 to only 400 providers is far too great. It will badly affect smaller firms and reduce the possibility of both choice and competition.
Attention has been drawn to the problems in multi-handed cases, where a number of defendants may need separate representation. However, I suggest that those problems could be addressed in part if we reconsidered how far the existing professional rules on conflicts of interest are working in accordance with the public interest. Should it not be possible for solicitors in the same firm to act for defendants in legally aided criminal cases where there are conflicts between the defendants’ accounts but no financial conflicts of interest for the firms concerned? Of course, there would have to be safeguards in such a system to ensure that confidentiality was maintained, but barristers in the same chambers have always appeared against each other and the distinction between self-employed barristers and partners in the firm is not, in my view, an overwhelming obstacle.
However, the present proposals risk creating advice and representation deserts where no appropriate legal advice or representation is available. This the Government have recognised, but the proposals also risk creating specialism deserts. The danger of advice deserts could be addressed by increasing the number of providers in more sparsely populated areas. The specialism issue is more difficult. I fear it may become impossible to find solicitors specialising in particular areas of crime—for example, fraud or sex offences—throughout large areas of the country. Correspondingly, specialist lawyers may find that work in their fields is not financially supportable, so specific measures are needed to allow specialists to practise.
I turn briefly to civil legal aid. The proposals on judicial review are claimed by the Government to assist in ensuring that applicants’ lawyers will be paid only for cases in which they get permission, which will filter out weak cases. However, in practice many of the strongest cases are settled at the pre-permission stage where the body, often a local authority, admits fault and settles. Why should we not fund cases such as those, especially since the Government are rightly committed to encouraging early and economical settlement of litigation? The proposal to deny an oral permission hearing in all cases deemed to be totally without merit, while it may be acceptable in cases where there is legal representation, is entirely unacceptable in cases where a judge is needed to tease out the applicant’s case on an oral hearing.
Finally, in the time available, I shall say a word or two about the residency test. I suppose it is possible to conceive of arguments about why the residency test may be at least a relevant consideration in some cases, but given the examples set out by the noble and learned Lord, Lord Irvine, it is very difficult to see that it can be imposed justly in a blanket way. If the Government are not prepared to reverse this proposal, I urge them at least to preserve a discretion. There are other areas for consideration, but I look forward to hearing the Government’s response.
Lord Ahmad of Wimbledon
My Lords, before the next speaker, I remind noble Lords that this is a time-limited debate, and the limit for speeches from the Back Benches is six minutes.
Baroness Coussins
My Lords, I, too, am grateful to my noble friend Lady Deech for securing this debate. I want to raise the issue of civil legal aid in relation to debt, welfare and repossession. I declare an interest not as a lawyer but as president of the Money Advice Trust, a national charity which advises individuals and small businesses via National Debtline and Business Debtline with the aim of helping people across the UK to tackle their debts and manage their money wisely.
Problem debt is a severe issue for an increasing number of people and is currently affecting one in five households, according to research recently updated by Dr Gathergood at Nottingham University. If reports in this morning’s news are accurate, it is set to rise even further with what has been described as,
“a major surge in families with dangerous debt levels—especially among worse-off households”.
Yet only 1.7 million people currently seek advice, while problem debt casts a shadow of wider problems affecting individuals, families and society, including mental health, the exacerbation of poverty and the repossession of homes.
Apart from the continued availability of legal aid for people at the point of repossession, civil legal aid was cut under LASPO for debt advice. The advice and justice systems will inevitably feel the impact of this cutback. First, the free advice and pro bono legal advice sectors will not be able to cope with the rise in demand. I know that the Money Advice Trust is very concerned that services which do not provide legal advice, such as the National Debtline, will see this upsurge but no longer have anybody to whom they can successfully refer clients at the point at which the advice needed is legal advice and beyond the expertise of general debt advisers. What assessment have the Government made of the likely increase in demand for debt advice leading to legal advice, and what do they consider will be the impact on individuals in debt, often through no fault of their own?
Secondly, it is thought that there will be a significant increase in the number of people forced to represent themselves in court. This carries the substantial risk of creating delays in proceedings and greater inefficiency. There is also a high risk that many litigants in person will find themselves left with exorbitant court costs, as they are not only unable to represent their cases effectively due to their lack of legal expertise— regardless of the merits or otherwise of their case—but are unable to afford the services of costs draftsmen who would be able to negotiate costs on their behalf. This in turn is likely to lead to the perverse outcome of further debt. Indeed, court fines have already risen significantly as a category of debt problem on which the National Debtline is called to advise. It is now in the 10 most common types of problem debt and is more common even than mortgages.
I am also concerned about the implications of the additional cuts currently being consulted on, which aim to reduce the legal aid budget by at least another £220 million a year. Will the Minister give a categorical assurance that the protection for legal aid for those at the point of repossession is safe and will not be slipped into the range of new cuts?
Finally, will the Minister comment in as much detail as he is able on the proposal to recover legal aid from universal credit? This proposal is of very serious concern to the free debt advice sector, and it is likely to exacerbate problem debt among vulnerable groups. As far as I know, no details have yet been given on how this mechanism will work, and I would be grateful for any light the Minister is able to shed on this aspect of the latest round of prospective cuts.
Baroness Scotland of Asthal
My Lords, I, too, very warmly thank the noble Baroness, Lady Deech, for bringing forward this very important debate. I declare my interest as a practising member of the Bar, a recorder, a deputy High Court judge and chair of the All-Party Group on Domestic Violence.
It is with a very heavy heart indeed that I rise to speak in this debate. During the passage of the LASPO Bill, a number of us in this House on all Benches raised serious concerns about the likely impact of the then proposed changes to legal aid, Lord Newton of Braintree being not least among them. I think of him every time we debate these issues. Our experience over the past 30-odd years had shown clearly the importance of having legal aid available to those who need assistance to resolve often emotional and sensitive issues that flowed from the breakdown of their relationships and marriages, particularly where those relationships had produced children and the breakdown affected them adversely. The fear was that those who had been in receipt of help, advice and support would not be able to obtain the assistance they needed, which would be deleterious to their well-being, to the well-being of the children and to justice as a whole. I remember well the Minister assuring us from the Dispatch Box that our fears in this regard were unfounded and that the quality of help and support that would still be available would be capable of meeting the needs. However, your Lordships will also remember that no impact assessment was produced to substantiate those assurances. Indeed, the indications that we had available pointed in the opposite direction. During this very short intervention, I will not reiterate the concerns I raised during the passage of the LASPO Bill. However, we were also assured that the Minister would keep a careful eye on the impact of these provisions so that we could readdress them if necessary, and that assurance gave us some comfort.
However, I have to tell the Minister that the concerns that we had then have all, tragically, proven to be true. Since the passing of the Bill into an Act, the consequences that we feared seem to have come to the fore. In preparing for this debate, I have had the benefit of reading innumerable submissions from practitioners, individuals and organisations who, with heart-breaking clarity, have set out the real consequences for the people for whom they care of what now, regrettably, appear to be quite pernicious changes in the legal aid provision rules. The speed of the downturn has, however, shocked most of us. Many solicitors have indicated that there has been a downturn in new clients of at least 50%. It has had an immediate impact on legal service provision and it is affecting the staffing levels in many firms so that they are simply no longer able to give the service that is needed.
Perhaps I may quickly give a couple of examples. Williamsons, which has offices in Hull, Driffield and Bridlington, has indicated that there has been a dramatic reduction in the number of its private clients, and even those clients are struggling to find the £50 or £100 that is needed for legal referrals. The number of referrals for mediation is down, and the reduction is commensurate with the volume of clients. The downturn in work has been in the region of 50%. The Legal Help scheme is so draconian that the clients are simply unable to show eligibility on the merits test, and the firm is unable to meet its legal help quota for any of its offices. That story is echoed across the piece.
There are instances of baby-snatching cases. In one, a grandmother had care of her grandchildren under a care order but the children were removed. Despite the fact that she had a low income, capital would be taken into account and, as such, she would have to sell her house to fight the case. There are all manner of private law children’s disputes involving contact and residence, and hundreds of such cases are being turned away en masse. The same applies even to domestic violence cases. When litigants come forward and are told about the threshold, as well as the need to get medical advice and the need to pay for the certificate, they do not come back. Where do they go and where do they get their justice?
The stories are heart-breaking. One solicitor talks of secretaries who have worked for his firm for a long time being in tears over the fact that they are unable to assist some clients in difficult situations. They have spoken to clients whose children have been kept by the other party and they have had to deliver the bad news to those clients. They are having to turn away grandparents, concerned mothers and fathers on low pay, domestic violence victims and others. It is truly shocking. The impact on the courts has been dire as well—they have been flooded with cases.
I end by reminding the Minister that costs flow from many different sources and the costs on the courts are dire indeed. It was really concerning to read what was said by the Court of Appeal in a recent case where none of the parties had been represented. The consequences of delay were clear. The judge in the case said this:
“The consequences by way of delay of other appeals which need to be heard are unquantifiable. The appeal would certainly never have occurred if the litigants had been represented. With more and more self-represented litigants, this problem is not going to go away. We may have to accept that we live in austere times, but as I come to the end of 18 years’ service in this court, I shall not refrain from expressing my conviction that justice will be ill served indeed by this emasculation of legal aid”.
That was said by Lord Justice Ward and I agree with him.
The Earl of Sandwich
My Lords, I congratulate my noble friend on winning the ballot for the Cross-Bench debate and on drawing our attention to this issue. It is a situation that concerns lawyers, of course, but only in relation to a much wider constituency of clients. As a non-lawyer, I have rarely received so much material for a debate, and most of this comes from individuals whom I trust to give a fair picture of what is happening. As the noble and learned Baroness, Lady Scotland, has already said, it has been quite moving to receive briefings and advice from a range of organisations which have a genuine concern for people in need. It is as simple as that. I have the highest regard for the CAB, for example. My sister worked for it voluntarily and I know that its specialists are like personal counsellors. They are often the very last resort for people in great personal distress.
The Minister will know from his previous incarnations that organisations such as BID and ILPA not only have a good track record in their field but they are the only ones that will stand by the most vulnerable groups in society, such as refugees and the homeless. I would go further than that. In the absence of government, they are effectively the government in their particular field in that they may be the only service-providers available. Of course, one of these services is legal aid.
As the Minister is bound to point out, none of these non-governmental organisations has the responsibility that government has in a recession. We all have to recognise financial necessity on a national level but they have to deal with the finance of individuals. They know better than anyone in government what the real costs of recession are to ordinary people on the brink of survival.
All these organisations are linked by a common purpose and they are all clear about what needs to be done in forthcoming legislation. They want the Government to understand that judicial review is the key way in which people can challenge decisions by public bodies. They want the Justice Minister to reconsider his refusal to fund the initial stages of judicial review, including the critical preparation of the evidence. They want the residency test modified to extend eligibility to currently excluded groups, such as babies under 12 months of age and asylum seekers. Asylum seekers will be allowed to access legal aid while their application is pending but, once they are granted asylum, they must wait a further 12 months, even if they have already been here for more than 12 months, before they can receive civil legal aid on any new matter. This can be discriminatory because refugees fleeing persecution abroad may be denied equal access to justice for longer than those whose residency arises from other causes. These organisations also want a fairer tendering process. They want contracts to be worded to ensure that appropriate adjustments are made to meet specific cultural, geographical and financial needs. They would also like the Government to undertake a review of quality assurance schemes to help consumers of legal services to identify reputable providers.
Here, the comments of the noble and learned Lord, Lord Neuberger, on 18 June about the quality and amount of legal aid must have given the Government food for thought. Essentially his warning was about cut-price litigation leading to unrepresented litigants and worse lawyers.
All the people giving evidence to the Justice Select Committee agreed with the Law Society that a 17.5% cut in fees on top of PCT in the case of criminal legal aid was unsustainable, even for large firms. The Secretary of State seemed to accept some of the Law Society’s ideas when he welcomed the model on client choice of solicitor. However, apart from the effect on the legal firms, as the noble Lord, Lord Faulks, pointed out, there is a real risk of diminution of advice at a local level. On that, the Bar Council says:
“We are concerned that access to legal aid via the nationwide network of high street law firms will be undermined as 1,200 out of 1,600 firms will be forced to close or pull out of legal aid. The advice ‘deserts’ we already see in some rural areas will spread more widely, making it harder for millions to get the right advice and support”.
On asylum-seekers in immigration detention, mentioned by the noble and learned Lord, Lord Irvine, there are many concerns that I have no time to mention. ILPA lists challenges to detention, applications for bail, judicial reviews of unlawful detention, habeas corpus applications and applications for damages for unlawful detention. I am tempted to quote from the Bail Observation Project’s latest report expressing views on the lack of justice in immigration hearings but I suspect that the Minister will already be familiar with that report.
Finally, I was shocked to hear from the Islington Law Centre only this afternoon of some of the effects of the proposed legislation on the more vulnerable prisoners that it works with. It says:
“We note with dismay that there are no exceptions for children, and those prisoners who are accepted to have mental health problems, a disability or other vulnerability, including those who may not have legal capacity. For example, a detained child who will be unable to identify legal issues, will not have the financial resources to pay for lawyers ... Such a child or person of any age with a mental health problem or other relevant disadvantage ... will have no means by which to fully frame their complaint to the prison authority”.
That speaks for itself. I am not convinced that the Government have sufficiently taken account of the most helpless people in our communities, and I look forward to the Minister’s positive response to these concerns.
Baroness Kennedy of The Shaws
My Lords, I, too, express my gratitude to the noble Baroness, Lady Deech, for securing this timely debate. I also declare that I am a practising barrister. I am the chair of Justice, the pre-eminent policy organisation working on the rule of law here in the United Kingdom and the British arm of the International Commission of Jurists. I am also the co-chair of the International Bar Association’s Institute of Human Rights.
My practice at the Bar, and my work with these organisations at a high level, have absolutely convinced me of a number of things. One of those is that I do not need to persuade people of the vital role of just law here in Britain and in societies around the world. It is also a constant reminder to me of the place of the United Kingdom as a source of influence and admiration the world over. Our judges are universally admired and drawn upon for their skills. Our professionals are deemed to be of the highest calibre and international courts comment regularly on the quality of the lawyering from this country. Our legal institutions are, in my view, the finest in the world—and that is not an idle boast. It is not an accident that we have such a fine system. It is great partly because it has taken us a long time to get here; we have built our success out of the hard stones of experience over many generations. Quality, we have learnt, does not come cheap.
This issue, I emphasise, is not just some hysterical pay negotiation as it has been caricatured. Governments wanting to cut legal aid always reach for a base argument, which is to crack the cynical joke about fat cat lawyers acting like a cartel to fix their fees. I hope we will not hear comments about the large number of lawyers speaking in this debate. The reason lawyers speak about these matters is because it is lawyers who see at first hand the impact on ordinary people of savage cuts. They also see the inevitable impact on the quality of work across the board, and they foresee the desperate effect this will have on the system as a whole, not just the risk of injustice but inhibitions on the development of law. Politicians often see cost cutting as a form of surgery, taking off some excess fat, but like the demand by Shylock for his pound of flesh, the removal does not come without real bloodletting and a very serious risk to the health of the body legal.
This debate is actually about an important constitutional issue, as others have said. It is a constitutional issue because legal aid has an important constitutional function. It is about access to justice, but it is also about the integrity of our criminal and civil justice system as a whole. Further, it is a constitutional issue because it is about holding government and public bodies to account. It is not just legal aid lawyers who are complaining, it is judges, commercial lawyers, academic lawyers who study the effects of law on people’s lives, and indeed most lawyers who see that the system is of a piece and that taking the shears to parts of it has implications for the whole. Justice is a central component of any civilised society and we have to maintain trust in it.
The lack of rigour by the Government on this topic is not new. The Joint Committee on Human Rights, on which I serve, regretted the failure of the Government to grapple with the human rights implications of the proposals in LASPO. I am afraid that we are seeing it again. It was only after long and contentious arguments in both Houses that the Government recognised that they would almost certainly face successful human rights challenges if legal aid was not available to the victims of domestic violence, human trafficking or other egregious wrongs. That was when carefully crafted exemptions were created. Yet the proposals in these reforms will substantially undermine those exemptions. It is quite wrong that such important changes should come into being through secondary legislation. As the noble Baroness, Lady Deech, said, they should be subject to the proper scrutiny of Parliament, as was LASPO, and there should be primary legislation. I urge the Government to slow down and think carefully about this.
I enjoyed the account of the noble Lord, Lord Faulks, of being rejected as a barrister by knowing clients. The only time it happened to me was when a woman in Broadmoor on trial for arson looked at me and said, “She’s too small”. It was because she had seen the prosecutor, Tim Barnes, a man of six feet six inches, and obviously thought that the trial process involved some sort of wrestling or armed combat.
The message that in practice we send to the Government is that justice cannot be produced on an assembly line or by bulk buying. What the Government had in mind with their competitive tendering proposals was to give a contract to the cheapest tender. Those ideas about going for the cheapest are still afloat. The cost-cutting is about one lawyer doing a great number of cases and not looking for the specialist. I want to emphasise that some cases require specific expertise, an issue that has been raised. Some clients have a relationship with a particular law firm and it saves time and money to have that firm act for them. Sometimes the case may concern mental health, and lawyers come to have rich knowledge about particular subjects, especially in the interface of law and psychiatry. Sometimes the expertise is in the field of domestic violence, child welfare or counterterrorism, the area in which I have spent a lot of my life. Some specialise in cases that involve abuse of the most terrible kind. A massive reduction in legal aid will interfere with this considerably.
I am still concerned about the flat fee, where people will receive the same fee whether there is a guilty or a not guilty plea. It means that solicitors, human as they are, will have more incentive to get their clients to plead guilty since a not guilty plea entails considerably more work. At the moment, 73% of people plead guilty, but they do so because of the trust they have in the advice of their lawyers. Once they think that a lawyer might be pushing them in a certain direction for financial reasons, trust will be destroyed, and trust is at the heart of good institutions. If the Government want to see the kind of chaos that price-competitive tendering brings to justice, they need only look at the issue of interpreters. Barristers wait for days in court for Serco, which now deals with the interpreter system, to deliver an interpreter. I have heard of young barristers storing multilingual phrases in their phones so that they can explain to their clients that the interpreter has not turned up. Also, the defendant is often not produced by Serco. The waste in the criminal justice system is often about large companies bidding for and securing a contract at prices on which they cannot deliver. We then end up with no cost savings at all.
Lord Ahmad of Wimbledon
I remind the noble Baroness that the debate is time limited, which means that when the clock shows six minutes she should be looking to sit down at that point. That is a reminder to all noble Lords.
Baroness Kennedy of The Shaws
This is about preserving the quality of our system. Wonderful legal aid lawyers do that, and this is a way in which they are being undermined. They deserve better.
Lord Ahmad of Wimbledon
My Lords, before the next noble Lord speaks, I must insist that this is a time-limited debate. I have had to intervene for a second time. It eats into the time of the Front Bench, the Minister’s time, and that of the Opposition Front Bench. I request all noble Lords participating that when the clock shows six minutes, it means that they should sit down.
Lord Carlile of Berriew
My Lords, I join in congratulating the noble Baroness, Lady Deech, on securing this debate on this very important subject. I also declare my interest. It is set out in the register, but for relevant purposes, I have practised criminal law for 42 years, of which I have spent 28 in one or other of these Houses of Parliament observing the rather tense relationship between politics and law.
This debate is about something fundamental: the quality of the society in which we live. It is about the clarity of the political conscience, which must be sure that our legal institutions are properly implemented and are to be trusted. One of my great mentors was the much-lamented Emlyn Hooson, a colleague of ours on these Benches and one of my predecessors as Member of Parliament for Montgomeryshire. Emlyn Hooson represented Ian Brady on legal aid at his celebrated trial—the Moors murders trial. One of the reasons why we have been able to be confident that what has happened to Ian Brady has been just is because he had the advantage of a proper legal aid defence of the highest quality. We should let go of that at our peril.
The avoidance and the remedying of injustice are dependent on a quality criminal legal aid system, which needs in appropriate cases the best advocates and the best solicitors. Without that, our consciences will be failed. We have heard some criticism of the Bar Council today. I do not hear the same criticism when the doctors in your Lordships’ House stand up and rely on the representation of the British Medical Council or, at least until recent days, when a trade union such as Unite stands up and speaks for workers in this country who find it difficult to negotiate on their own behalf. I applaud the Bar Council, the Criminal Bar Association and the Law Society because they have had the courage to say firmly what needs to be said strongly to protect our legal system in this country.
The reality is that young barristers and young advocates who are solicitors are working for smaller amounts of money than they would earn in almost any other profession. Even without these suggested legal aid reforms, Queen’s Counsel—silks—are being priced out of the market by restrictions on their appearance and by the diminishing amount of work. There is now developing a divided legal profession in which some are still earning large amounts of money—why should they not because they are in the private market? Those of us who choose to remain in the public market are in an almost entirely different profession. That is not good for the health of our society or for the law.
May I specifically say a word about very high-cost cases? These are the small number of extremely complex fraud cases that come before the criminal courts. VHCC could equally stand for very highly challenging cases. They involve huge sums and massive complexity; they are every bit as complicated as any commercial arbitration. Yet it is the legal aid system that is targeted by an entirely arbitrary cut of 30% which, outrageously, is intended to be applied to cases that have already started. People who are involved—I am involved in one such case—will have to take, if they do not return their briefs in outrage, a 30% cut as they continue that case if these proposals come into force. Yet the Ministry of Justice has failed to engage with other issues about such cases. VHCCs are overadministered and, outrageously, restrained assets—the assets, until they are restrained, of defendants—cannot be used to pay for their defences. That seems to be wholly anomalous and unacceptable. The VHCC proposals are quite simply outrageous.
Let us not forget that the Serious Fraud Office sometimes gets things wrong. It took the noble and learned Lord, Lord Goldsmith, who incidentally was not being briefed at legal aid rates as far as I know, to sort out the misbehaviour of the Serious Fraud Office under its previous leadership to ensure that two brothers, Robert and Vincent Tchenguiz did not face wrongful prosecution for alleged crimes that they had not committed. It sometimes takes the best to sort out bad decisions by public authorities.
Finally, I just want to say a word about prison law because I used to be the president of the Howard League for Penal Reform. I have now been succeeded by the noble Lord, Lord Myners. The changes in prison law will not save money and will increase costs. They will undermine the principle of rehabilitation. More prisoners will become stuck in jail. They will result particularly in specialist lawyers being replaced by less experienced lawyers for the same price. There is not time to develop this, but I urge the Minister to attend closely to the submissions made by the Howard League and particularly by Laura Janes, the acting legal director, who is the great expert in these matters.
Lord Brown of Eaton-under-Heywood
My Lords, if the Lord Chancellor’s welcome concession last week on choice of representation is anything to go by, it appears that these proposals are not to be regarded as set in stone and are well worth debating. I join with those who thank the noble Baroness, Lady Deech, for enabling this to happen. It is much to be hoped that other of these proposals too will similarly come to be recognised as ill-judged and will be abandoned. It is on just one of these that I propose to focus—one relating to judicial review not among those identified by my noble and learned friend Lord Irvine of Lairg. It is the proposal that lawyers should not be paid for their work in making application for judicial review unless eventually permission comes to be granted. It is crystallised as question 5 on the consultation paper.
First, I want to digress just briefly to express a few heartfelt words of regret at the radically changed role of the Lord Chancellor in public life, following the Constitutional Reform Act 2005. How unfortunate it is that we no longer have as Lord Chancellor someone in the tradition of the great holders of that office who, quite recently, included the noble and learned Lords, Lord Mackay of Clashfern and Lord Irvine of Lairg. It is a great privilege to have heard the noble and learned Lord, Lord Irvine, in this debate. He chooses very fastidiously the occasions when he invites the attention of this House. What huge benefits to the office they brought: not merely were they highly experienced and distinguished lawyers in their own right but, no less importantly, their voices were authoritative and statesmanlike at the very heart of government. They were voices that recognised the central importance in our democracy of the rule of law, the independence of the judiciary and rights of access to justice. Such Lord Chancellors had already, of course, achieved the summit of political life; they were not career politicians with personal ambitions still to be realised.
Let me make it quite plain that I have nothing whatever against the present Lord Chancellor. He became such after I retired and I do not know him. Nor do I have anything against career politicians. No doubt they are essential to any healthy democracy. However, I cannot pretend to have the same confidence in proposals of this sort that emanate from a career politician with no background whatever in the law as I would have felt, and indeed used to feel, towards proposals from Lord Chancellors past. Grateful though one is for the recent concession as to choice of legal representation, it does not fill one with confidence that these proposals as a whole have been properly thought through by someone with real knowledge of our legal processes, properly sensitive to the imperative demands of access to justice.
I turn, necessarily briefly, to the proposal that concerns me most, the proposal that, unless permission comes to be granted for a full judicial review, no costs at all—only non-legal disbursements—will be paid for work carried out. It is opposed, perhaps unsurprisingly, by all parts of the profession, including notably the Administrative Law Bar Association, of which I am proud to say I was president for many years. It is also strongly opposed by the Judicial Executive Board—that is, the higher judiciary—the Civil Justice Council and Her Majesty’s Circuit Judges.
These responses are cogently and convincingly argued, ALBA’s perhaps above all. It is very difficult to suppose that anyone could fairly reject their conclusions. Manifestly, the proposal will result in fewer challenges to administrative decision-making and there are those—I am not among them—who would suggest that this is their central and cynical purpose: an attempt to insulate the Government, as far as possible, from legal challenge. However, I regard the proposal not as mischievous but merely as fundamentally misguided. It is misguided because it stems from a basic misapprehension of the place of permission in the process of judicial review and it would result in consequences far removed from those intended and very damaging to this critical part of the courts’ jurisdiction—the ability to supervise the proper exercise of public power.
Bear in mind that, as of just last week, 1 July, following the earlier changes to legal aid, when the High Court refuses permission to proceed on the documents, the judge now can certify an application as being “totally without merit”. In itself, that prevents the applicant requesting an oral hearing of the application; all he can do is to make one further application on the documents. If more than that is required, let the lawyers be deprived of costs in that very limited category of cases on the certification of a judge but not in the altogether larger category envisaged by this present proposal.
The problems with this proposal are so many and so various that, alas, I have no time to spell them out. All one can say is that it may discourage solicitors taking even perhaps the strongest cases. The strongest cases are those where the defendants are most likely to respond early by making the concessions that make judicial review ultimately unnecessary and thus inappropriate, but there are so many more objections. Read ALBA’s full letter of response and you will not persist in this ill-judged proposal. I suggest that it would damage the process profoundly; it is a rotten idea and it really ought to be abandoned.
Lord Touhig
My Lords, I congratulate the noble Baroness, Lady Deech, on securing this debate. I shall confine my remarks to the impact that proposals outlined in Transforming Legal Aid will have on victims of trafficking and domestic violence.
Under the proposals, civil legal aid will be available only to individuals who are lawfully resident in the United Kingdom at the time of their application and have been lawfully resident here for 12 months. At first sight this may seem perfectly reasonable but then look more closely and there are some pretty bad consequences. I am extremely concerned that no exemptions to this residence test are planned for either victims of human trafficking or for women who have entered the United Kingdom as the partner of someone settled here, and then experienced domestic violence at their husband’s hands. This is the more surprising considering that, in an Answer in the other place on 3 July, the Prime Minister described human trafficking as “modern-day slavery”. He added:
“We are looking at legislative options, and I will be chairing a committee across Government to look at what more can be done”.—[Official Report, Commons, 3/7/13; col. 920.]
I hope that Mr Cameron will look at this and perhaps read Hansard for today’s debate.
Legal aid for both of the groups that I have mentioned is explicitly protected under legislation passed only last year but would be removed in a large number of cases under the proposed system. This is despite a series of statements and publications by the Government giving reassurance to those of us who are concerned. Indeed, I find it hard to discern exactly what the Government’s position is, because they keep contradicting themselves.
The noble and learned Lord, Lord Wallace of Tankerness, speaking in this House on 27 March last year at Third Reading of the LASPO Bill rightly acknowledged that, given their “particular vulnerabilities”, support for trafficking victims to resolve immigration matters should be available to them during,
“a period relevant to the experience of being trafficked”.—[Official Report, 27/3/12; col. 1291.]
The same noble and learned Lord said on March 7 2012:
“The ability to bring damages claims against former so-called employers is an important tool to secure reparations for victims and to punish their exploiters”,
and that successful claims,
“discourage those who seek to exploit people for financial gain”.—[Official Report, 7/3/12; col. 1889.]
He said that there was a risk of leaving some trafficking victims without necessary support if cases relied on exceptional funding. He admitted that the scheme was not sufficient to protect victims of trafficking.
However, just two weeks ago, the Justice Secretary, Mr Grayling, said in a letter to Helen O’Brien, the chief executive of Caritas Social Action Network:
“Individuals who do not meet the residence test would be entitled to apply for exceptional funding under the power set out in the Legal Aid, Sentencing and Punishment of Offenders Act”.
I invite noble Lords to contrast that statement from Mr Grayling with the conclusions reached by the noble and learned Lord, Lord Wallace, on 7 March. He said:
“We had always anticipated that legal aid would have been available under the exceptional funding scheme for these damages claims, as was indicated by my noble friend Lady Hamwee, where such cases met the test for exceptional funding under Clause 9 of the Bill”.
However, he added:
“On reflection, we recognise the risk that in some cases this will not be sufficient”.—[Official Report, 7/3/12; col. 1889.]
Perhaps like me, noble Lords are at a loss to know quite what the Government really want to do.
After all, let us not forget that the LASPO Act includes equivalent provision for legal aid funding in immigration cases concerning anyone granted indefinite leave to remain as the partner of an individual settled in the United Kingdom whose relationship then permanently breaks down because they are the victim of domestic violence.
During the passage of the Act, the then Minister, Mr Jonathan Djanogly, emphasised the importance of this provision stating:
“There is a real risk that, without legal aid, people will stay trapped in abusive relationships out of fear of jeopardising their immigration status”.—[Official Report, Commons, Legal Aid, Sentencing and Punishment of Offenders Bill Committee, 19/7/11; col. 245.]
Since 2002, over 2,000 women have been granted indefinite leave to remain in the United Kingdom following the breakdown of a relationship with a violent partner. While this accounts for a comparatively small fraction of legal aid expenditure, it reflects the significant human cost that would be incurred were such recourse not available.
To be fair, the Government have demonstrated a strong commitment to tackling the horrors of human trafficking. They have also shown a clear determination to prevent and reduce domestic violence. On 24 April this year, Helen Grant, the Minister for Women, Equalities and Victims, told the Salvation Army trafficking conference that trafficking is.
“something that no civilised country should tolerate. It creates victims who are often some of the most vulnerable members of society”.
In the human trafficking strategy published by Theresa May the Home Secretary in 2011, the Government outlined the UK’s positive record in tackling trafficking and committed to a series of measures building upon this, including better care for victims.
The Home Office website setting out the Government’s policy on ending violence against women and girls states:
“We all must do much more to prevent violence against women and girls happening at all”.
It specifically highlights that,
“fewer than one in four people who suffer abuse at the hands of their partner—and only around one in 10 women who experience serious sexual assault—report it to the police”.
Those of us who are concerned about the victims of trafficking and the women victims of domestic violence in the circumstances that I have described have heard warm words from Ministers and read many encouraging statements, but I conclude by saying to the Minister that depriving victims of legal aid for immigration cases risks undermining steps to address domestic violence against vulnerable women and significantly exacerbating the problem of underreporting of these cases. I hope that he and the Government will think again about these proposals.
Lord Low of Dalston
My Lords, I join other noble Lords in thanking the noble Baroness, Lady Deech, and congratulating her on securing this important debate, which could not be more timely. I declare an interest up front. As noble Lords may know, I have for the past nine months or so been chairing a commission established by the Legal Action Group with funding from the Baring Foundation, the Barrow Cadbury Trust, LankellyChase Foundation and the Trust for London on the future of advice and legal support on social welfare law in England and Wales. We are on course to have a draft report for consultation in September and produce our final report by the end of the year. I have been keeping a fairly low profile so as not to compromise the independence of our report, but I have been prevailed upon to break cover for just six minutes today.
Let me say straight away that I understand the Minister’s problem. On my first day at university, we received a lecture from Lord Denning who said that the difference between a judge and an academic was that whereas judges had to find a solution for every difficulty, academics took pleasure in finding a difficulty for every solution. In this, I see Ministers as more akin to judges than academics. We shall certainly be trying to come up with solutions rather than difficulties. We do not think it is possible or even desirable simply to put things back as they were and I hope we will be able to come up with some suggestions for creating a more orderly landscape of advice services which will be helpful to Ministers in getting the most out of reduced resources.
The recent proposals are mostly about criminal legal aid, of course, and that is not our concern. But there are also some proposals affecting civil legal aid which have been less remarked on, although they have not been ignored today, perhaps because they save a comparatively small amount of money—£6 million, I think. They may nevertheless have some untoward consequences and I want to say a word about two of them in a personal capacity, in the hope that the Government might be willing to reconsider them, particularly when they make such a trifling saving. They also concern me because of their potential to impact on children with special educational needs trying to secure the special educational provision they require.
Often the only thing that makes a local authority do what they know they ought to do is the threat of judicial review. According to MoJ figures, about half the cases in which legal aid is currently granted to bring judicial review do not lead to a JR. My information is that the actual figure may actually be considerably higher than that. That is not because the claims are unmeritorious but because in many of them a local authority caves in when they know a JR is coming. If, as under the new proposals, lawyers do not get paid for the work they do before the permission stage, many fewer JR claims would be brought, as has been said, and local authorities would be let off the hook. Either that or, if lawyers get paid only for cases which are issued and permission is granted, and not for cases that settle, there will be a perverse incentive to commence cases which would currently settle and more, not fewer, JRs will be brought and the projected saving will soon disappear.
Secondly, stopping the funding of borderline cases will have a dramatic effect for tiny savings on disability and SEN cases. Many such cases are currently classified as borderline in terms of their legal aid merits, either because they are factually complicated or are test cases, raising new issues of law. Some very important test cases of strategic significance are borderline and will not now be able to be brought. Indeed, test cases are almost by their very nature borderline.
In passing, the residence test will impact very harshly on children challenging special educational provision who happen to be the children of persons who have not been resident for 12 months. In effect, they will be being punished for their parents’ immigration status.
Also in passing, I am advised that recent reforms to the costs regime in civil litigation have had a deleterious impact on disabled litigants trying to bring cases under the Equality Act. No longer having the benefit of cost-shifting rules or the ability to recover insurance premiums, it is much more difficult for them to bring proceedings under a conditional fee agreement. They are thus unintended casualties of the Jackson reforms. I wonder if the Minister would be prepared to meet me to see if we can find a way through this.
Finally, young legal aid lawyers have written to me to express concern about the impact of these latest proposals on junior lawyers. Some, such as the cuts to civil advocacy fees, will have a direct impact. Others, like price-competitive tendering, will have an indirect impact as firms cut corners in order to stay afloat. This will impact on the future of the profession. If junior lawyers are not paid, supervised and trained to an adequate level, we will lose our next generation of legal aid lawyers.
As the judiciary said in response to the consultation, there is a,
“real risk that the firms obtaining contracts will employ those who will take the lowest salary in order to maximise the firm’s profits”.
This can lead only to a race to the bottom. It will also impact on social mobility and diversity in the profession, which will become increasingly closed off to those from less affluent backgrounds. These are not fat cats talking but young lawyers with a real sense of public service, which I find runs strongly within the profession, who want to be able to provide a quality service to vulnerable clients.
Lord Clinton-Davis
My Lords, I apologise at the outset for my late arrival, but I will not go further into that.
When I was a young solicitor, many moons ago, legal aid was viable from the point of view of both lawyers and clients. It represented an important part of our social services, and that situation endured for many years. Today all branches of legal aid have been drastically reduced and more is threatened, but will there be a substantial reduction in expenditure, as the Government predict?
With regard to criminal legal aid, while a large amount is spent on exceptional, long and complex cases, it is idle to assume that the remainder of people on trial—the largest proportion by far—will not suffer increasingly. So will all this result in savings? Is it not possible that, in consequence, trials will take even longer? Will unrepresented defendants not take much longer to make their points, or fail to distinguish between the good, the partially good and the virtually unarguable?
One of the most odious ideas concerning legal aid, coming from a department where senior Ministers are “lawyer-free”, is that a criminal defendant will have to be represented by a lawyer selected by the Government. In my view, this offends a basic tenet of the criminal law. However well qualified the lawyer—and that may be open to doubt—a defendant may believe that they have been foisted upon him or her, for somewhat dubious reasons. This proposal may never come to fruition, of course, and indeed I hope not, but it remains a possibility and a threat.
The Government certainly face some difficult problems in the sphere of criminal legal aid but the wrong solutions should not be sought, and not everything can be solved by assailing lawyers’ fees. Legal aid in both the civil and criminal sectors still represents a vital part of our social services, yet the Government resist that concept. It is puerile to conceive that little or no damage will follow the severe and often ill thought-out cuts that the Government have set their heart on.
The Government should say to the legal profession, “We want to work closely with you but it’s not a one-way street. We both want to make our legal aid system work more efficiently and cheaply, and we are prepared to listen to your views as well”. Are the Government prepared to take that course? Are they ready to abandon political and unworkable nostrums in return for sensible debate? I fear not. However, I still say to the Government: think again, and think wisely.
Lord Hope of Craighead
My Lords, I thank the noble Baroness, Lady Deech, for initiating this very important debate. It is with some regret that, so recently having returned to the House after the lifting of the disqualification that attached to me as a Justice of the Supreme Court, I find myself speaking for the first time on such an occasion as this. It is a sad occasion because one cannot help feeling that the need for this debate ought not to have arisen at all. I find it hard to believe that a Government who truly understood and respected the rule of law, who had taken the trouble to appreciate what that phrase really means and assess the consequences of what they had in mind, would have even contemplated introducing some of the proposals that have attracted so much criticism this afternoon.
Let me emphasise at the outset that I have no personal interest of any kind in the outcome of these proposals. I left legal practice long ago and have now reached the age when I am no longer allowed to sit as a judge. I can claim, however, to be an informed observer. My experience as an appellate judge during the past 24 years has been very wide. Judicial review has been a significant part of my work, as has dealing with cases supported by legal aid. I am also well aware of the pressure on public funds and of the need to make savings, and to continue to make savings year after year wherever possible. I had to face up to that problem time and time again when I was the Senior Presiding Judge in Edinburgh and, more recently, as the Minister will know, as the Deputy President of the Supreme Court. I have done my best to promote efficiency and the saving of costs wherever possible. I have supported the Government and will continue to support them in their search for further savings, including in the administration of legal aid. Of course there is no bottomless pit.
The Government are right to seek to target their limited resources on those cases which really do justify legal aid and on those people who need it, but that requires the exercise of judgment based on sound research and open-minded consultation. There is one cardinal principle which until now has always been respected. It is set out in Section 1 of the Constitutional Reform Act 2005, to which the noble and learned Lord, Lord Irvine of Lairg, referred: the constitutional principle of the rule of law and the Lord Chancellor’s role in relation to that principle. It is worth recalling that the clause was not in the Bill as originally drafted. It did not appear until Third Reading in this House following a recommendation by the Select Committee on the Bill. Perhaps it was thought to be so obvious that it was not necessary to state it at all, but that was not the view of the Select Committee, which thought that it should be there and could not be dismissed as unimportant. It is indeed fundamental to the continued existence of our democracy, but the important point I would emphasise is that the rule of law exists for the benefit of everyone and it is for everyone to respect it. There can be no exceptions at whatever level of government. What this means is that all persons and every public authority must regard themselves as bound by, and entitled to the benefit of, laws that are openly and publicly administered in our courts.
Time is very short and I have only a few points that I can make, particularly in relation to judicial review and the tests—the permission test, the borderline test and the residence test. I would invite the Minister to have regard to a paper circulated on 25 June by Dr Nick Armstrong of Matrix Chambers in which he analyses the costings of these various proposals. For example, with prison law he draws attention to the fact that of the overall savings in the proposals that the Government have in mind, which are assessed to be £6 million, £4 million of those are said to come from prison law. Dr Armstrong, however, has indicated—his work has been seen and approved by the Parole Board—that the additional costs that result from these savings may come to as much as £10 million as a result of the continued detention of people who have no access to prison law. That is quite apart from the constitutional implications.
The truth, if one has regard to the consequences of these proposals and burrows underneath what is being proposed, is that the efficient functioning of the rule of law will no longer be there for everyone. As so often one finds on further examination, it is the weakest, the most vulnerable and, let us face it, the most unpopular who are at risk of being unprotected. For them, the rights that are at issue here are the most basic rights of all, and the savings are at risk of being overtaken many times over by increased costs.
On the permission test, to which the noble Lord, Lord Marks, referred, why not fund the early stages of seeking permission before it is sought? At present, 60% of cases are resolved at that stage, especially social welfare cases, so it seems odd that the work done by the firms that provide these services should not be paid for so that they can meet the costs of running their businesses.
Time is too short for me to go further. However, I respectfully ask the Minister to do two things. First, I ask him for an assurance that the Government’s mind is still open on all these issues and that they will look at the costings in the paper to which I have referred. Could he say how it is proposed to bring these proposals into force, given that they raise fundamental constitutional issues? I endorse what has been said by the noble Baronesses, Lady Deech and Lady Kennedy, that detailed parliamentary scrutiny, line by line, is required. This is a matter that requires primary legislation. I hope that we will not have to face up to a succession of regret Motions on delegated legislation, which would be wholly unsatisfactory.
Baroness Hamwee
My Lords, it is entirely sensible that anyone who feels in need of legal assistance will seek it and will seek the best—the Government themselves do that. Many Members of this House have said to me, “You’re a lawyer; you must understand such and such”, which is not always true, but I say that both to declare an interest as a non-practising solicitor and to remind myself that we in this House are a very advantaged group.
What is “best” is different in different circumstances. I want to deal with one type of best. First, I will mention something that I heard earlier this week about refugees applying for family reunification, which is a right, who are unable to tackle the complicated application without legal help or who borrow from loan sharks in order to get that help. That is an example of the “underclass” to which Treasury counsel have referred.
The authors of the many and substantial briefings that we have received will be disappointed that it is not possible to include all their material. However, we have read it—I put that on the record—and, more important, so will the Government, along with the 16,000 responses to the consultation. I welcome the fact that there will be a re-consultation, which must itself give time to be real.
We used to be concerned about Tesco law; it may now be Stobart law. Although the supermarkets have established small outlets, they are small versions of the same; the specialist stores have disappeared. I want to mention the specialist firms, which have a national reach—not that they get paid for travelling. Niche providers need to be national to generate sufficient volume to be sustainable; I know that the Secretary of State is concerned about that. Many such firms have chosen to remain small so that each solicitor has the ultimate responsibility for the client and sees a case through. Being specialised gives you the ability to deal efficiently with complicated issues, to recognise core issues and to gain the client’s confidence—and it is important to have their confidence in order to give difficult advice such as whether to plead guilty. A single solicitor who supervises a number of unqualified or less qualified paralegals will not inspire that confidence. I know all this from my own experience of struggling occasionally with unusual cases.
The Justice Secretary at the Select Committee said last week that,
“the most important judge of quality is the qualification”.
That is by no means the whole of it. The CPS has also commented on this:
“There are some types of case … that require a specialist service if they are to be dealt with efficiently and fairly”.
Of course, there are specialists in a number of areas; children and juveniles have been mentioned. Among these are many that involve the state very directly: human rights, civil liberties, terrorism, the police, trafficked people, asylum-seeking children where there is a dispute as to age, challenges to the UKBA and a raft of immigration issues.
Almost all miscarriage of justice cases have involved small firms. The proposals extend, too, to the experts who often complement lawyers in complex cases involving vulnerable individuals—the interface between law, psychiatry and psychology, as has been said. We must be careful that, in reducing fees, we do not have the obvious effect on the market in relation to the experts available.
I have mentioned cases to which the state is party; I do not mean just routine crime cases. I am particularly concerned, like other noble Lords, about the combined impact of tendering and the proposals for judicial review—the state restricting challenge of the state or in other cases a sort of double denial of access to public services. Lawyers bringing weak cases no longer being reimbursed makes me wonder whether we have learnt anything from conditional fees, but there is no time for that today. Nor is there time to say anything more on the residence test than, number one, babies and, number two, it depends on whether you see tax as what you pay for the sort of society you want or as a price paid on an individual basis to gain entry to the club.
I would like to say more about whether the public disquiet that we are told about is general or whether it is about those obviously hugely wealthy individuals mentioned by my noble friend who manage somehow to qualify. I would like to say more about conflicts of interests and the market. I appreciate that both clients and lawyers must be disincentivised from thinking that there is a sort of TARDIS of a piggy-bank available for legal aid, but few think that. Most lawyers I know want to do their best for the clients, even if they become fat along the way, although I point out that my noble friend the Minister does not use that term. They want their clients not to be subject to luck-of-the-draw representation and justice and they want to train their successors and to secure the legal service for the next generation.
Lord Scott of Foscote
My Lords, I join all noble Lords in thanking the noble Baroness, Lady Deech, for arranging this debate. I also thank noble Lords who have already spoken, because they have said virtually everything that could possibly be said. I support what they have said and have heard nothing with which I have disagreed.
The subplot to this debate about legal aid and proposed cuts is the rule of law and access to justice. Everyone in this Chamber would accept the importance of the rule of law in a civilised country. It depends on many features, one of which, of course, is access to justice for people who need to go to the courts. If they need to claim something they believe to be due to them, the courts are there for them—self-help is frowned on and criminalised in many cases. If they are defendants, the courts are there for them to reject the claims that they believe to be unjustified.
The rule of law requires that there be access to justice, but it has to be a reality and not just a constitutional theory. It used to be said that the Ritz was open to everyone, but of course it was not, as not everyone could afford to pay its charges. The courts theoretically at least are open to everyone, but to get in front of the courts now, whether as a claimant or as a defendant, you have to pay a fairly substantial sum up front.
I cannot remember how long ago it was—I think that it was when the noble and learned Lord, Lord Mackay of Clashfern, was Lord Chancellor—that the then Government introduced the notion that the civil justice system had to be self-financing, with substantial charges for commencing or defending an action or putting in a reply; practically any step you took in the action was subject to a fee. It was a relatively expensive matter to embark on litigation or to defend it. However, in those days, although the civil justice system had to be self-financing, it was not proposed that the fees paid by litigants should cover the cost of legal aid assistance. That was left alone. It is being introduced now as a feature. The Government need to save money to cut down on public expense, and the legal aid bill, whether for criminal or civil legal aid, is looked at as one of the means of reducing government expenditure to balance the books. The object is one with which one cannot possibly quarrel, but the Government have to bear in mind what this process may do to the justice system.
I want to concentrate my remarks on the civil justice system, because, as all my colleagues will know, I know precious little, or nothing, about the criminal justice system. In the civil justice system, individuals need to have access and, if they cannot have access to it to defend themselves or prosecute their claims, their respect for the justice system will be affected. Respect for the rule of law is a cultural advantage, which this country shares with many others, but there are many countries in the world where the rules and regulations that appear to provide for the rule of law lack reality, because the laws in question do not command respect.
In this country, individuals, of course, disapprove of some laws that they may be required to obey, but, broadly speaking, one of the features of living in this country is that the population and the public as a whole respect the rule of law. That respect is cultural, however; it is not to be found in every country and it is not necessarily immutable. Let us think of what may happen if there is a substantial number of people whose access to the courts to prosecute claims that they think they are owed, or to defend themselves against claims that they think are unjustified, is made impractical or impossible because of the difficulties of financing the entry into litigation or paying for lawyers to argue their case. Some may try to argue the case themselves, with all the difficulties that they must know that will involve because they are not lawyers—or at least in general circumstances they are not lawyers, and the law is not always something that appears simple to non-lawyers; sometimes it does not appear simple to lawyers, either.
Respect for the rule of law, which is so important, is capable of being forfeited and lost if excessive cuts are made affecting potential litigants. I wish that the Government would bear that in mind in considering how far to take the inroads into the legal aid bill for the purpose of cutting government expenditure. I hope that it will not happen to a point that the rule of law loses the respect that at present it commands. It cannot be taken for granted by the Government that that will not happen and I hope that they keep that in mind.
Lord Bach
My Lords, not for the first time the House owes a debt of gratitude to the noble Baroness, Lady Deech. By securing this important debate, she has not only obliged the Government to defend their past conduct and current proposals in Parliament, something that I suspect they are not overkeen on doing, but she has attracted a stellar cast of speakers, and not just great lawyers and judges. I pay special tribute to the noble and learned Lord, Lord Hope, whom it is great to see back in his place in this House again. There are others here who are not lawyers who recognise just how important these matters are to our whole way of life and our status as a civilised country.
The debate takes place in the middle of a lovely summer afternoon, and many who are outside will be more interested in getting some sunshine or finding out how the Ashes are going. But we would be foolish to underrate how many out there are listening one way or another to what we are saying and, in particular, to what the Minister will say in due course. There is a lot at stake here.
The Government’s latest proposals, following on frighteningly fast from the implementation of part 1 of LASPO, have been the subject of sustained and deadly attack during this debate. For example, my noble and learned friend Lord Irvine effectively pulled apart the proposals for judicial review, particularly the residence test, revealing it as a tawdry ideological assault on the rule of law and the Lord Chancellor’s duty to uphold it.
The Lord Chancellor himself let it slip, in his session at the House of Commons Justice Committee last week, that it was not cost savings that underlay these proposals, it was “ideological”: that word was used. Does the Minister agree? Is it part of his ideology too that if there was a case in the future like, for example, the Baba Mousa one, it should be outside the scope of legal aid? Or does the Minister still stick to the line that it is the costs that justify these proposals, though the Dr Armstrong paper referred to earlier demolishes the costs argument pretty conclusively as far as JR is concerned?
Is it the philosophy that the right to legal aid—and thus the ability to make a claim against a state—should be based on the status of the claimant? Is our system, with its grand tradition of protecting the rights of all, to become so diminished that it will not allow justice, where it is necessary, for all those who need it? As far as I am concerned, these proposals are much more dog-whistle politics than they are thought-out legal proposals. The Government sometimes give the impression that they are careless about the importance of ensuring access to justice. They would, perhaps, like us to forget what has already been done in the name of cost-savings or ideology or both.
We are three months into LASPO and the Government intend to have post-legislative scrutiny within three to five years of Royal Assent. What will they find? If the first three months are anything to do with it—and they should have been the easiest months—there will be practically nothing left apart from, perhaps, a few providers dotted around the country with vast deserts of no social welfare law provision at all: a sort of wasteland. Let us look briefly at the evidence. Birmingham Law Centre has closed down and advice is not being given on 2,000 cases of social welfare law each year. Will the Government consider saving Birmingham Law Centre in the same way as the Government of whom I was proud to be a member saved South West London Law Centre when it was in difficulties?
The Mary Ward Centre, which has given 100 years of service to the poor in London, is now turning away 15 people each week. It has no contracts in benefit cases because that is out of scope. It has four debt cases where there were 400 this time last year. What are poor Londoners going to do when the Mary Ward Centre cannot look after them? The Government cannot hide their eyes from this. Social welfare law helped hundreds of thousands of people who were given quality advice on legal issues that affected their everyday lives, for less than one tenth of the whole cost of legal aid. Lawyers did not get rich on it, but poor people got some access to justice.
George Orwell wrote:
“Whether the British ruling class is wicked or merely stupid is one of the most difficult questions of our time”.
Perhaps only an old Etonian could have put it in those terms. Of course Ministers are not wicked—indeed, in my experience, they are pretty nice people who mean well. But Part 1 of LASPO, taking away the possibility of many of our poorest citizens getting some access to justice, is pretty close to the second word that he used.
Ministers should think again before it is too late. I do not hesitate to use the quotation which was used many times in the LASPO argument. It is from the late Lord Bingham who said that,
“the denial of legal protection to the poor litigant who cannot afford to pay is one enemy of the rule of law”.
That is what this debate has been arguing.
Baroness Howe of Idlicote
My Lords, like other noble Lords, I have significant concerns about all these proposals. However, I shall focus my comments on the impact that they will have on children and young people.
This generation of children and young people is a particularly important one upon which we will all need to depend. Regrettably, they are facing unprecedented challenges in achieving their potential and negotiating a smooth path to a happy and successful adulthood. The phenomena of high youth unemployment, rising youth homelessness and widespread adolescent mental health difficulties are well documented. They help to highlight why it is incumbent upon our lawmakers to ensure that children and young people are able to receive all support to which they are legally entitled and to consider what impact new policies and laws will have on young people.
I understand that the Government have yet to publish any kind of age impact assessment relating to these proposals. This is highly regrettable and I hope that the Minister will be able to reassure the House that the Government intend to publish such an assessment. If they do not, there is surely a danger that they will be in breach of their commitments and undertakings, including those under the United Nations Convention on the Rights of the Child, to protect children, and that the changes will be open to legal challenge.
In the mean time, we should all listen carefully to expert voices, such as that of the Children’s Commissioner, who has expressed her concern that the legal aid proposals that we are debating today will have a disproportionate and profoundly negative impact on children and young people by curtailing their access to justice. I am indebted to JustRights for its detailed assessment, which makes it clear that children and young people’s very safety and well-being would be jeopardised if the proposals were to be implemented. In other words, the changes would have major implications for child protection as well as for access to justice.
I shall give two examples. I shall not go into trafficking in detail because it has already been dealt with by the noble Lord, Lord Touhig. However, the Court of Appeal has recognised the importance of treating people who have been trafficked as victims. The proposals would take away a crucial route to protection for trafficked children and young people who are extremely vulnerable to sexual exploitation, abuse and violence. Extraordinarily, even British-born babies aged less than 12 months will be excluded by the residence test. Also, the removal of prison law from scope will deny children and young people in detention access to legal aid. These young people are in another exceptionally vulnerable group, often with learning difficulties or mental health problems. Many will have endured troubled childhoods and spent time in care. It is simply inhumane to deny them a crucial route to challenging and preventing bullying and abuse in prison or obtaining support to aid their resettlement on release.
Meanwhile, limiting the circumstances in which judicial review can be brought will have a devastating impact on young people. For example, where a local authority has not, as corporate parent, provided the correct package of support to a young person in care or a care leaver, or has housed a young person in unsuitable accommodation, the circumstances under which its decisions can be challenged will become very limited. The power imbalance inherent in the relationship between the individual and the state, and between a child or a young person and the state in particular, necessitates mechanisms for challenging decisions and unfair treatment by state authorities that, if left unchallenged, can often have devastating consequences for the young person well into their adult lives.
We are all aware of the Government’s need to find savings but this cannot come at the expense of weakening our systems for protecting vulnerable young people and exposing them to abuse, homelessness and destitution. Common sense tells us that these proposals would cost the public Exchequer far more in the long term than the Government hope to save. This is confirmed by rigorous research for Youth Access, which shows that a young person with a legal advice problem typically costs local public services as much as £13,000 before they manage to obtain advice. Much of this cost falls on councils, social services, housing departments and on the NHS. Huge savings could be made by ensuring earlier advice.
The noble and learned Baroness, Lady Scotland, and the noble Lord, Lord Bach, reminded the House that its support for protecting access to legal aid for children and young persons was abundantly clear during the passage of the LASPO Act. Indeed, I remember it all very deeply myself. Therefore, I hope that the Minister will tell us how the Government intend to ensure that children and young people will be able to continue to receive age-appropriate legal advice and representation if they push ahead with these ill conceived proposals.
Lord Beecham
My Lords, in our many debates about legal aid, the Minister has constantly justified government policy by referring to the need to cut public expenditure. While making every allowance for the need to make savings, some of us have all along suspected an ulterior motive. Those suspicions were explicitly confirmed, as we were reminded by the noble and learned Lord, Lord Irvine, by the Lord Chancellor in his recent evidence to the Justice Select Committee when he affirmed that the proposal to reduce funding for legal aid to prisoners was ideological, rather than driven by financial considerations. Given the minimal amount that the proposals were supposed to save, that is not surprising. When one takes into account that the savings engendered by denying access to legal aid to prisoners seeking redress is very likely to be outweighed more than fourfold by the costs—for example, of delayed release or of Parole Board hearings, matters referred to by the noble Lord, Lord Carlile, and the noble and learned Lord, Lord Hope—the economic case falls away completely.
This is not the only area in which the Lord Chancellor’s ideological proclivities are shaping policy. The residence test for legal assistance, like its proposed equivalent in the health service, is, as my noble friend Lord Bach has pointed out, another blast on the Tory political dog whistle which is likely to cost more than it saves, apart from its malign consequences for a particularly vulnerable group of people, including children, immigration detainees or even Gurkhas. Are these people to be treated, in Kipling’s words, as,
“lesser breeds without the Law”,
but in this case at our behest, not theirs?
In the crucially important area of judicial review, the savings are estimated at all of £1 million for each of the two proposed restrictions: where legal aid is withheld until permission is granted to proceed with a judicial review, as mentioned by the noble and learned Lord, Lord Brown, and where the case is borderline, even where there may be a public-interest element. Here, the Government’s use of figures would do credit to one of those bankers manipulating LIBOR. They rely on the fact that over half of legal aid applications for judicial review are ended prior to permission being granted. However, as the respected Bingham Centre for the Rule of Law points out, a much higher percentage of cases are abandoned or lost at the subsequent stages by claimants who do not have legal aid. Moreover, as the noble Lord, Lord Low, pointed out, many cases are withdrawn because a defendant body, perhaps a local authority in a planning matter, recognises its mistake and corrects it before the case proceeds.
Again and again, eminent judges, including the president of the Supreme Court, the Master of the Rolls and the noble and learned Lord, Lord Woolf, have stressed the importance of judicial review as a means of holding the Executive and public bodies to account and as a cornerstone of our judicial system, much as our courts uphold the human rights legislation which we should be proud to have caused to be secured in the European convention, but which Tory Ministers seem constantly to denigrate. Even the Attorney-General has expressed his concerns about the impact of these proposals on judicial review. Can the Minister really be comfortable in this tainted company? Is he really a willing accomplice to the political offence of obtaining parliamentary votes by false pretences? I think more of him than that. Indeed, there are false pretences on the strategic scale, not just in relation to the particular issues that have been canvassed today.
The cost of legal aid is falling, not rising, even before taking into account the fact that the cost includes VAT, which of course goes to the Treasury—assuming that HMRC collects it, which it is not always capable of doing, as we have heard recently. From a peak of £2.237 billion in 2009-10, the bill has fallen to £1.917 billion; that is a significant reduction. In cash terms, it now stands at marginally above the cost of legal aid in 2007-08. If one takes into account VAT and the impact of inflation on those figures, it is clear that the cost is not out of control; indeed, in real terms, it is falling and has fallen substantially.
Moreover, as the National Audit Office pointed out, the overall cost of our justice system, including legal aid, is not at all out of line with that of other European jurisdictions, at 0.33% of government expenditure. That is equal to the average. However, as the noble Baroness, Lady Deech, pointed out—I join others in congratulating her on securing this debate—you cannot really compare different legal aid systems when they apply to different judicial systems. In any event, overall, the expenditure on the courts and the justice system is not greater here than elsewhere. In any case, the Government are yet to explain how they will achieve their £220 million saving when their estimates disclose that the figure for 2016-17 is only £118 million.
We are now in the middle of a consultation on the proposed changes to criminal legal aid, which remain highly contentious, despite the fact that a defendant may now choose his lawyer rather than have one appointed, as in the Moscow magistrates’ court of old, by the state. How that will work in the world of the proposed tendering process, not to mention the ludicrous proposition of the fees for guilty and not guilty pleas being the same, is wholly unclear. The noble Baroness, Lady Deech, referred to that clear anomaly. Will any changes to the criminal legal aid scheme be subject to parliamentary scrutiny and, if so, in what form?
Contrary to the impression that Mr Grayling likes to convey—I do not accuse the Minister of this; he is not guilty on this particular charge—concern about the effects of the existing and future cuts to legal aid is not confined to lawyers or expert witnesses, who will also be badly affected. Last week, the Judicial Executive Board, which includes the Lord Chief Justice, the Master of the Rolls and the heads of the main divisions of the High Court, joined the chorus of criticism and concern, while rightly acknowledging the need for savings to be made.
A wide range of voluntary organisations, from Citizens Advice, Mind and Shelter to the 26 children’s charities who signed a letter published in today’s Daily Telegraph—and even several Conservative MPs in a House of Commons debate—have expressed their profound worries about what has happened and what portends. They do so because the cuts already made are having dire consequences. Law centres, CABs and other third sector advice agencies are trapped between soaring demand and reduced resources.
The Newcastle Law Centre, which I played a small part in creating and supporting, is now down to one lawyer and can undertake legal aid only for immigration cases, and even those cases are financed by the council’s Newcastle Fund for voluntary sector projects. Since 29 April, it has had to turn away 80 cases out of 138 which would previously have qualified as being in scope. The cases were mainly on family, welfare and immigration matters. That matches a 59% reduction in cases lost after the cuts at the Islington Law Centre. Newcastle Citizens Advice Bureau has lost qualified professionals and in three months has had a 40% increase in welfare cases, with 157 people who are now out of scope for tribunal representation having to be given unlimited advice on self-help, 83 of them seeking to challenge Atos assessments. As we have heard, fees for interpreters and doctors’ letters can no longer be funded. The CAB in Gateshead lost £500,000 of funding. The Newcastle bureau has to rely on Big Lottery funding for projects, which now have to be bid for every six months—and on a different basis each time.
For hundreds of thousands of people and their dependents, there is a no entry sign where once there was access to justice. As we have heard, that applies to judicial review, to family cases including domestic violence, to prisoners, to immigration, to trafficking, to debt and welfare cases and to children and young people. I hope that the Government will listen to the debate today, which has been virtually exclusively critical of what they are doing and think again about the impact—perhaps not foreseen—that they are having on the lives of too many of our fellow citizens and other residents of this country.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, it is important that I put on the record the Government’s point of view in this important debate, so I will not be able to follow the usual courtesy of a detailed response to the many individual points and questions raised. However, I will treat the Hansard of this debate as an input into the consultation under way, and I will see whether I can cover some of the specific points raised in an omnibus letter that we will circulate to noble Lords.
First, I, too, congratulate the noble Baroness, Lady Deech, on securing a debate on this important subject. It has attracted a speakers list of great experience and expertise, and the debate as a whole has been a major contribution to what I emphasise is a consultation still in progress. This debate and the consultation that has initiated it take place against a background of two inescapable realities. The first was stated by the noble Baroness, Lady Deech, herself when she spoke in the debate on the gracious Speech on 9 May. She was also quoted today by the noble and learned Lord, Lord Hope. She said:
“It is self-evident that there cannot be a bottomless fund for legal aid”.—[Official Report, 9/3/13; col. 101.]
The second reality was made clear by the noble Lord, Lord Carter, in his review of the procurement of legal aid conducted in 2006. He said:
“A healthy legal services market should be driven by best value competition based on quality, capacity and price. All three of these factors should lead to the restructuring of the supply market”.
Of his own proposals, he said:
“The emphasis of the proposals has been upon providing incentives for firms to structure their businesses in such a way that legal aid services can be procured more effectively, and that the service is delivered more efficiently”.
It is therefore no surprise that previous Governments wrestled with this issue.
The establishment of the Legal Services Commission in 1999 reformed the part of the system which funds legal aid services but not the part which delivers them. Costs continued to increase, giving rise to several series of fee cuts. The case for reform was certainly enough to persuade the Opposition to include a commitment to find greater savings from the legal aid scheme in their 2010 manifesto. Their consultation document, Restructuring the Delivery of Criminal Defence Services, published earlier that year—this was quoted by the noble Lord, Lord Faulks—said:
“Currently the criminal defence service is highly fragmented, with a large number of small suppliers and relatively few large suppliers”.
The need for reform of legal aid-funded services in order to deliver a cost-effective, sustainable legal aid scheme is well established, but it is not the only driver for reform of the legal professions. Changes in technology and its increasingly fundamental role in the functioning of the criminal justice system demand the kinds of changes to working practices and business models seen throughout the public and private sectors. The introduction of alternative business structures, Jackson reforms and an increasingly well informed customer base are all examples of changes which present their own challenges that the legal professions must meet. Those changes are accompanied by the brutal fact that the number of businesses providing criminal legal aid services now vastly outstrips demand for such services.
The realities have been gathering force and relevance for decades, so it is absurd for the professions to claim that they have been bounced by a short and ill considered consultation. When I first came into this office in 2010, the Bar Council was starting to consider ways to restructure the way that it delivers its services. It was looking at what it called procure co-type organisations. I had a very interesting discussion with the then chair of the Bar Council about its vision for the future of the Bar. I understand that work to explore such arrangements ceased at the request of senior members of the Bar due to concerns that it would aid the Government in introducing competitive tendering. We want the Law Society and the Bar Council to engage with changes which are in many cases inevitable.
The Government recognise that the services the professions deliver are a vital component of our legal system and ensure access to justice and equality before the law. We recognise that the independent judiciary—perhaps the most critical element of our justice system—could not survive without drawing from the pool of talent that the professions create.
However, alongside the need to ensure access to justice and a healthy, sustainable legal sector, the professions must also recognise that the Government are entitled to seek the best possible value for money from the legal aid budget. The coalition’s programme for government made a commitment to review the legal aid scheme with the aim of finding savings, culminating in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. This will have removed around £320 million from the legal aid budget by 2014-15—largely, as has been explained, from the civil legal aid budget—as well as strengthening accountability and introducing a more rigorous approach to financial management by creating the Legal Aid Agency.
However, the current financial climate means that it is necessary to look again at everything that the Ministry of Justice is doing, including in relation to legal aid, in order to make further savings, particularly in respect of criminal legal aid. This was the focus of the consultation, which has recently concluded, and the aim is to further reduce the legal aid spend by around £220 million by 2018-19.
The consultation, published in April, included a proposal to move to a model of price-competitive tendering in the criminal legal aid market. Conscious of the professions’ objections to the principle of “one case, one fee”, we proposed to exclude criminal advocacy from the competition model, instead proposing to restructure the Crown Court advocacy scheme. Being mindful of the great disparity in the level of fee income received by advocates for Crown Court work, our proposals would rebalance fee income so that those at the top end took the greatest reduction and the lower earners the least. Indeed, some lower earners may see a small increase in their fee income.
Alongside this, we sought to further increase efficiency by proposing a sensible reduction in the use of multiple counsel. To ensure public confidence in the level of expenditure on the longest and most expensive cases, as well as delivering the necessary savings for the legal aid scheme, we propose to reduce the rates paid for criminal, very high-cost cases by 30%. We have also included some small but important reforms to civil legal aid and expert fees to ensure that these, too, are fair and proportionate, and consistent with those paid for similar work elsewhere.
Our proposals also seek to address a number of issues where the savings may be small but we believe that the impact on public confidence in the legal aid scheme is significant. We propose to reduce the scope of prison law cases funded through legal aid, directing less serious matters to the internal prisoner complaints process. The prisoner complaints system was updated in 2012 and has recently been audited with a review of the adequacy, effectiveness and reliability of controls over prisoner complaints, with no significant concerns identified. Criminal legal aid will remain for a significant number of cases where liberty is at stake, such as parole hearings, or where there is a risk of extra days being added, such as in disciplinary cases.
By proposing a Crown Court eligibility threshold, we are ensuring that those who have the means to pay for their own defence do so. By setting it at twice the average household disposable income, we have ensured that it is fair.
In introducing a residence test, we seek to ensure that civil legal aid expenditure is targeted at those who have a strong connection to the UK. As with other public services, legal aid is paid for by UK taxpayers and we do not believe that it should be provided to those who have never set foot in this country or whose connection is tenuous.
We have already proposed an exception for asylum seekers in recognition of their particular vulnerability—
Lord McNally
No, I am not giving way. I am sorry. I have five minutes left. It is a time-limited debate and the noble Lord has had his time.
Lord McNally
I am answering the debate.
We have already proposed an exception for asylum seekers, in recognition of their particular vulnerability, and made clear that persons who did not meet the test would be entitled to apply for exceptional funding. We have heard the concerns raised during the consultation and in today’s debate in respect of the impact of the test on other groups of people or types of cases. We will reflect carefully on these points before making any further decisions.
We recognise judicial review as an important tool of redress which balances the power of the state. We continue to believe that it is important to make legal aid available for most judicial review cases. Under this proposal, legal aid for the earlier stages of a case would not be affected. Payment would continue as now for work to investigate the strength of a claim or to engage in correspondence as required by the pre-action protocol. This is important as many cases will settle or conclude at this point without issuing an application, avoiding further costs to the legal aid scheme, the courts and public authorities. However, we are concerned that legal aid is sometimes treated as a resource to further pursue weak cases that have little effect other than to waste taxpayers’ money. We do not think it is fair for taxpayers to pay the bills for weak cases that have little effect other than to incur costs for public authorities and the legal aid scheme. We set out our initial assessment of the impact of the proposals along with the consultation paper and invited consultees to comment on the extent and range of those impacts and set out any concerns that they had in this regard. We are now carefully considering all responses and the issues that they raised.
Much of what has been said about our proposals on price competition has quite simply been false. The debate has been dogged by a baffling conflation of the Government’s intention to manage the criminal legal aid scheme, through around a quarter of the current number of contracts, with a mythical intention to see only around a quarter of the present number of firms. Some of the rhetoric has risked misleading the public that legal aid would no longer be available. However, the professions have made clear their views on the importance of client choice both for the benefit of clients themselves and for the health of the market more generally. As the Justice Secretary told the Justice Select Committee last week, we have listened and will put forward revised proposals in the autumn. We have also listened on the proposed residence test and will consider the issues raised as well as the comments made across the proposals from nearly16,000 responses.
This House has much collective wisdom and experience about the issues that we have been discussing today. I want to make it clear that this is a real consultation and we are listening. The decision that Ministers have to take will be in the context of the economic realities from which the legal aid fund cannot escape. There will be cuts that will mean some tough choices. However, when the cuts have been made we will still be left with one of the most generous legal aid schemes in the world. I would make the point that although I have never compared it with continental legal aid schemes, I have compared it with common law legal aid schemes in Australia, Canada, New Zealand and elsewhere—and noble Lords will find that it is one of the most generous in the world. I am proud of that fact. I want us to have a generous legal aid scheme. Access to justice is important. I want us to work on ways and ideas, some of which have been thrown up by the consultation, which will give long-term sustainability to legal aid.
However, long-term sustainability means the legal professions facing up to some hard facts. There continues to be oversupply in both parts of the profession, with too many lawyers chasing a limited amount of publicly funded work. Lawyers themselves have to address the further issues of quality and consolidation which will remain long after this present argument has been settled. Alternative business structures, the Jackson reforms, no-win no-fee, damage-based agreements and conditional fee agreements, will all impact on the organisation and structure of the profession. There are wider issues, such as a lack of social mobility and diversity which cannot be solved simply by tweaking the legal aid scheme.
In some ways, I have been disappointed at the way in which those who have responsibilities in these areas have refused to engage with these fundamental issues. I agree with my noble friend Lord Marks that we have to seek a new settlement in this matter. There is still time to do so. Our legal system, our respect for the rule of law and the eminence and integrity of our judiciary are precious gifts passed down from one generation to another. We all have a duty to protect what is best while managing the change that is inevitable. That is the task before us now, and I again call on all those who care about the system of justice to join us in that task.
Baroness Deech
My Lords, I have the impression that there is no time left save for me to thank all noble Lords and all noble and learned Lords who have joined in from different perspectives. They have been almost unanimous in encouraging the Government: first; to make sure that there is primary legislation; secondly, to undertake a real impact assessment; and thirdly, to take a holistic view of the costs of the legal system in order to make cuts where they are most needed.
I thank the noble Lord, Lord McNally, for listening. I remind him that the Bar could certainly move faster were there not so much red tape and duplication in the Legal Services Act 2007, but I am sure that it will do its best. I look forward to further proposals from the Government to rescue this most important pillar of our democratic society.
Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2013
Baroness Hanham
That the draft regulations laid before the House on 20 May be approved.
Relevant documents: 2nd Report from the Joint Committee on Statutory Instruments, 5th Report from the Secondary Legislation Scrutiny Committee.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, the regulations laid before this House on 20 May 2013 introduce new and amending regulations to support recent planning reforms—reforms that will give applicants the confidence to submit planning applications for development, that will give businesses the confidence to invest to support growth, and that will give greater certainty for communities.
The proposed changes to the fees regulations emanate from a variety of changes in both primary and secondary legislation as well as from policy, which I will attempt to outline to noble Lords. The draft regulations were approved in the other place on 26 June 2013 and, if approved by this House, would come into force on 1 October 2013.
The Growth and Infrastructure Act 2013 introduced measures to enable quicker and better decisions where there are clear failures in local planning authority performance. We are all aware that delays in getting a decision on a planning application can mean frustration, unnecessary expense and the loss of investment and jobs. Where a planning authority has been designated, planning applicants will have the option of submitting applications for major development directly to the Planning Inspectorate on behalf of the Secretary of State.
I should emphasise that this reform does not remove any powers from underperforming authorities; it merely gives applicants the choice of applying to the inspectorate where this is clearly justified. We have been working closely with the Local Government Association to ensure that any authorities that are designated will receive the support they need in order to improve.
The Secondary Legislation Scrutiny Committee has questioned why we are bringing forward changes to the fees regulations to implement this measure ahead of the order setting out how applications will be handled where they are submitted to the Secretary of State. We have made very clear in our response to the consultation on this measure, published on 4 June, how such applications will be handled, including the very small number of tasks that designated authorities will still be required to do.
We have been equally clear that we would like to make any initial designations by the end of October this year so that any cases of sustained poor performance are tackled as soon as possible. To meet that schedule we have prioritised the regulations that are before the House today, but there should be no doubt about our intentions for how the rest of the process will work. The response that we issued on 4 June makes that clear.
Regulation 3 allows the planning application fee to be paid to the Secretary of State rather than to the local planning authority. This will enable the Planning Inspectorate to cover the cost of determining the planning application in place of the local planning authority. It is important that a fee is paid to cover the cost to the planning inspector of determining the application, especially as applicants can expect to benefit from the increased development value that planning permission brings, otherwise the benefit derived would be at a cost to taxpayers. The fee will be exactly the same as would have been paid to the local planning authority. It is simply going to a different place, where the applicant chooses this alternative route. There will be no difference for the applicant.
Local authorities will not benefit from the fee as they will not be dealing with the application, which is something we discussed at length when the Growth and Infrastructure Act was in Committee. Local authorities will be required to undertake some work in connection with the application, but this will involve only keeping the planning register updated and notifying neighbours of the planning application. The designated authority will also be required to send any planning site history to the Planning Inspectorate. This work is minimal and will not be burdensome on local authority resources, particularly as it will impact only on the small number of authorities who are designated.
Pre-application discussions on planning proposals can help to iron out issues at an early stage and avoid time being wasted on ill-conceived applications. Local planning authorities are able to charge for such advice under Section 93 of the Local Government Act 2003. We want to make sure that pre-application advice is available to applicants who choose to apply to the Planning Inspectorate. Regulation 2 makes provision for the inspectorate to make a charge for such advice, strictly on a cost-recovery basis, as is the case for local planning authorities.
The planning guarantee was put in place in The Plan for Growth to promote timely decisions on planning applications. This provides certainty by setting a one-year limit on the time that any planning application should spend with decision-makers so that, in practice, there is no more than 26 weeks to decide an application and no more than 26 weeks to decide any appeal that may follow a decision on the application. We are strengthening this by underpinning the guarantee with a refund of the application fee where a planning authority fails to determine the application within 26 weeks from the date that a valid application is made, as set out in Regulation 5.
The statutory period for determination is 13 weeks for major applications and eight weeks for other applications. This means that the time allowed under the planning guarantee is twice as long as the statutory period for major applications and more than three times that for other types. We believe that it is manifestly unreasonable if no decision has been issued within that period and that, therefore, the applicant should have the fee reimbursed. We want to ensure that the system speeds up decisions and operates fairly. There are some limited exemptions from the guarantee to allow a common-sense approach; for instance, where the applicant and the planning authority have agreed that a longer period than 26 weeks is genuinely needed to deal with a particularly complex proposal. This means that local authorities will need to ensure that they are efficient and effective in dealing with planning applications. The fees for planning applications were raised by 15% in November 2012. This will provide an additional £32 million per annum to local authorities to fund planning services.
Furthermore, we will be working closely with the Planning Advisory Service to provide support to those authorities that are designated and those which are close to designation to help them to understand how their planning service can operate more efficiently.
The Enterprise and Regulatory Reform Act 2013 introduced changes to bring about the Government’s aim to streamline the heritage protection system. Specifically, we have introduced the provision to abolish the need for conservation area consent to demolish an unlisted building in a conservation area, but instead that it should require planning permission. This means that, where development is also being proposed, only a single consent will be required. The provisions simply replicate the existing level of protection but in a streamlined way.
Lord McKenzie of Luton
My Lords, I thank the Minister for a very clear explanation of these regulations, which concern changes to the charging of fees for planning applications and certain other planning events.
Our objection to the regulations is not so much about changing the scope of charging as the underlying policies that drive this necessity. These are, as we have heard, certain provisions in the Growth and Infrastructure Act 2013 and the Enterprise and Regulatory Reform Act 2013, the first in particular enabling applications for major developments for designated authorities to bypass the local planning authority and go directly to the Secretary of State. We opposed this during the passage of the primary legislation and continue to do so. It is the ultimate denial of localism, which for planning has been embedded in the system for more than half a century.
However, if applications are to be routed to the Secretary of State—in practice, the Planning Inspectorate—then it is obviously right that there should be a commensurate fee structure, otherwise the incentive would be for major applications always to be made to the Secretary of State. I understand, and I think that the Minister confirmed it, that fees applicable to England were last uprated with effect from November 2012; it is understood that the fees set out in these regulations would apply initially.
As we have heard, the regulations cover other fee issues, and I shall come on to those, but I have some questions for the Minister. What volume of applications is it anticipated will be received and be subject to this charging regime? During the passage of the primary legislation we had various estimates of “vanishingly few” LPAs being designated, although that was revised up to around 20 by the time we finished our deliberations. The criteria for designation were published in June in time for an October start to designation. While I accept that the final data for the initial designation will not be available until September 2013, the department must have some increasingly firm indications of the likely number of planning authorities to be designated. Can we know what that number is?
Where a local planning authority has been designated and major applications are made to the Secretary of State, directions can nevertheless be given to the local planning authority requiring it to undertake certain tasks in relation to the application. We consider it unfair that the authority should receive no part of the fee. Moreover, this is not the only circumstance where the regulations require the local planning authority to undertake activity for no fee. The changed arrangements whereby in future the demolition of unlisted buildings in conservation areas will have to be dealt with by local planning authorities also come without the right to a fee.
These regulations cover circumstances where the Secretary of State, via the Planning Inspectorate, is able to charge a fee for pre-application advice where the application is made to the Secretary of State. That developers should pay for such advice is entirely reasonable, although we would maintain that much of this work will in fact be done by the local planning authority, which will get no part of the fee. Notwithstanding that an application goes to the Secretary of State, will the Minister encourage local planning authorities to engage in the pre-application process, and how should they be remunerated if they do so? The regulations set down that charging should proceed by applying an hourly rate to the time spent by the planning inspector or planning officer. This hourly rate is to be set by the Secretary of State from time to time and must be set by reference to the average cost of providing the services of the individual. It is understood that this reflects the charging position for local planning authorities. Can the Minister remind us of what systems are in place to put this into effect? What is understood by “average cost”? Which overheads are built into the calculation? Is any differentiation made for the different levels of experience of the staff, other than planning inspector or planning officer, or indeed for the overheads of different regional locations? As for fees payable under the general permitted development order, the regulations require a fee of £80 where prior approval for change of use is required. Approval might be required from the local planning authority or the Secretary of State. Does the fee go to the person required to give approval and what is the basis for the £80 figure?
Our overall concern about these regulations is that they erode the opportunity for local planning authorities to generate fee income and therefore to sustain their planning capacity, and this at a time when there has been considerable change in the planning system, where local authority budgets have been squeezed to breaking point with further cuts to come, and when the blame for poor economic performance is all too often laid at the door of the planning system. I conclude by asking the Minister this: what assessment has been made of the capacity of local planning authorities to cope in the current environment?
Baroness Hanham
My Lords, I thank the noble Lord for his response to these regulations which, if I interpret it correctly, is: “We don’t like them but see what you’re trying to do”. I take that to be the spirit in which the noble Lord delivered his response. He asked me a couple of questions, some of which I may be able to answer directly and some of which I may not.
The first was about the increase in planning fees. As I said in my opening remarks, they were increased by 15% across the board in November 2012, so local authorities have had quite an uplift in those fees very recently.
The next question was: what volume of applications do we expect to go to the directorate? We discussed this during the Growth and Infrastructure Bill proceedings. We will know more about that when we see how many local authorities are to be designated in September. Once we see the data about which local authorities and how many are likely to be designated, it will be easier to judge that. As I said before, however, we do not expect this to be a huge number. In fact, we very much hope that there will not be a huge number, because that would mean that we were having to designate more local authorities than we wanted.
On the pre-application fee, if the developer is going to go to the inspectorate, it is very unlikely that they will want the local authority to, or indeed that the local authority would, hold any pre-application discussions. The intention is that the planning inspectorate will do any pre-application discussions and then charge a commensurate fee for them. In fact, perhaps I should rephrase that: the applicant can decide where to go, but we expect that they will probably go to the inspector if they are going to go there in the first place.
The noble Lord also asked me when information will be available about which authorities risk a designation. I think that I have answered that: September. The list will be published so they will know then. Indeed, many of them know now what the situation is because they are kept pretty well up to date with what is being put forward.
The noble Lord asked me about the £80 fee. I am now struggling a bit because I cannot remember what that was for. Would the noble Lord mind rephrasing his question?
Lord McKenzie of Luton
It was to do with the general permitted development order and the regulations. There are regulations that require prior approval from either the Secretary of State or the local planning authority. My question was: to whom does the £80 go? Is it the person who actually has to give that approval, be it the Secretary of State or the local planning authority?
Baroness Hanham
Yes, we would expect that to be more or less the local planning authority in most cases.
I hope that I have covered the questions. I am grateful to the noble Lord for the way in which he has addressed the regulations. So long as he is happy that I have more or less covered what he had to say, I beg to move that these regulations be agreed to.
Terrorism Act 2000 (Proscribed Organisations) (Amendment) Order 2013
(10 years, 10 months ago)
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Earl Attlee
That the draft order laid before the House on 8 July be approved.
Earl Attlee
My Lords, the Government are determined to do all that we can to minimise the threat from terrorism to the UK and our interests abroad. The proscription of terrorist organisations is an important part of the Government’s strategy to tackle terrorist activities. We therefore propose to add both Jama’atu Ahli Sunna Lidda Awati Wal Jihad, more widely known as Boko Haram, and Minbar Ansar Deen, also known as Ansar al-Sharia UK, to the list of international terrorist organisations, amending Schedule 2 to the Terrorism Act 2000. This is the 12th proscription order under that Act.
Having carefully considered all the evidence, my right honourable friend the Home Secretary believes that both organisations meet the statutory test for proscription and that it is appropriate to exercise her discretion to proscribe them. Section 3 of the Terrorism Act 2000 provides a power for the Home Secretary to proscribe an organisation if she believes that it is currently concerned in terrorism.
The Act specifies that an organisation is concerned in terrorism if it commits or participates in acts of terrorism; prepares for terrorism; promotes or encourages terrorism, including the unlawful glorification of terrorism; or is otherwise concerned in terrorism. If the test is met, the Home Secretary may then exercise her discretion to proscribe the organisation. In considering whether to exercise this discretion the Home Secretary takes into account a number of factors: the nature and scale of an organisation’s activities; the specific threat that it poses to the United Kingdom; the specific threat that it poses to British nationals overseas; the organisation’s presence in the United Kingdom; and the need to support other members of the international community in tackling terrorism.
Proscription is a tough but necessary power. Its effect is that a listed organisation is outlawed and is unable to operate in the UK. It is a criminal offence for a person to belong to a proscribed organisation; invite support for a proscribed organisation; arrange a meeting in support of a proscribed organisation; and wear clothing or carry articles in public which arouse reasonable suspicion that an individual is a member or supporter of a proscribed organisation.
Given the wide-ranging impact of proscription, the Home Secretary exercises her power to proscribe only after thoroughly reviewing the available, relevant information on the organisation. This includes open-source material as well as intelligence material, and advice that reflects consultation across government, including the intelligence and law enforcement agencies. These decisions are taken with great care by the Home Secretary, and it is right that both Houses must approve the order before proscribing a new organisation.
Having carefully considered all the evidence, the Home Secretary firmly believes that both organisations are concerned in terrorism. Noble Lords will appreciate that I am unable to comment on specific intelligence but I can provide a brief summary.
Boko Haram is a prolific terrorist organisation, based in Nigeria, whose ultimate goal is to establish the Islamic Caliphate, seeking to undermine democratic government through its campaign of violence and attacks. It has targeted all sections of Nigerian society—Muslims, Christians, rich, poor, civilians and members of the security forces alike—as well as members of the international community. For example, an attack near Abuja on Christmas Day 2011 that killed at least 26, and an attack on a bus station in Kano City in March 2013, that killed more than 60, were both attributed to the organisation.
The organisation has also sought to attack western targets in Nigeria. In August 2011, it claimed responsibility for a suicide attack against the UN building in Abuja that killed 26. They have also targeted westerners for kidnapping in the last few years.
I stress that the Government are aware of the concerns over the approach used by the Nigerian Government to defeat Boko Haram. While the UK Government continue to work with Nigeria to fight terrorism, we also make it clear that human rights must be respected at all times in our work to defeat terrorism around the globe.
Minbar Ansar Deen is a Salafist group based in the UK which promotes and encourages terrorism. Minbar Ansar Deen distributes material through its online forum which promotes terrorism by encouraging individuals to travel overseas to engage in extremist activity—specifically fighting. The group is not related to Ansar al-Sharia groups in other countries.
Decisions on when and whether to proscribe an organisation are taken only following extensive consideration and in the light of emerging intelligence. It is important that decisions are built on a robust evidence base, do not adversely impact on any ongoing investigations and support other members of the international community in the global fight against terrorism. It is not, of course, appropriate for us to discuss specific intelligence that leads to any decision to proscribe.
The proscription of both these organisations will contribute to making the UK a hostile environment for terrorists and their supporters, and will signal our condemnation of these organisation and their activities.
I should make it clear to noble Lords that proscription is not targeted at any particular faith or social grouping, but is based on clear evidence that an organisation is concerned in terrorism.
I have already said that the Government recognise that proscription is a tough power that can have a wide-ranging impact, so the legislation provides an appeal mechanism. Anyone affected by the proscription of an organisation can apply to the Home Secretary for the organisation to be deproscribed. If refused, the applicant can appeal to the Proscribed Organisations Appeal Commission, a special tribunal which is able to consider the sensitive material that often underpins proscription decisions.
In conclusion, I believe it is right that we add both groups to the list of proscribed organisations under Schedule 2 to the Terrorism Act 2000. I beg to move.
Baroness Smith of Basildon
My Lords, I am grateful to the noble Earl for the explanation and the information he has given to us today. I understand that he is restricted in what he can say for reasons that are obvious to us all, but I appreciate the information he has been able to give. We also understand that Governments do not act unless they are assured that the information available is accurate and up to date. I feel some sympathy for the noble Earl on these issues as I did in connection with the Misuse of Drugs Act, in that some of the words can be quite difficult to pronounce. I commend him on his efforts.
Obtaining evidence on which to bring forward such orders is obviously time consuming, painstaking and can at times be very dangerous. I am sure that your Lordships’ House wishes to pay tribute to the work of the agencies that undertake such investigations. As the Minister said, a group can be proscribed under Section 3 of the Terrorism Act 2000 if it,
“commits or participates in acts of terrorism, prepares for terrorism, promotes or encourages terrorism, or is otherwise concerned in terrorism”.
On the basis of the information provided by the noble Earl, we are content to support the Government in this proscription.
This is the third time I have spoken for the Opposition on proscription orders; unfortunately, each time a different Minister has spoken for the Government, but I hope that the noble Earl has had the opportunity to look at some of the previous debates we have had on the other two orders. He will have noted that last year I queried why action had not been taken against the Boko Haram sect, given that the organisation that we were then taking action to proscribe, Ansaru, was in fact a breakaway group from Boko Haram and had been in existence for a much shorter time. I asked then that it be kept under review as we were somewhat surprised not to be discussing this group then, given the evidence of their activities that was available.
I understand the need to have accurate, up-to-date information, but there is also the need to act swiftly and decisively. Are the noble Earl and the Government content that they have acted quickly enough? It would be helpful if he could give some explanation about why there has been a time lag between these two orders, given that we previously knew about the activities of Boko Haram when we discussed this issue last year. The evidence appears overwhelming and the Government are quite right to bring it before us; the Minister described some of the large-scale terrorist attacks that have claimed many lives.
That brings me to one aspect that is of concern; I do not know how the Government are seeking to address it. One core or central organisation may have many different parts, and as one group or organisation is proscribed, another ready-made organisation takes its place and carries on with its deadly mission. I appreciate all the issues we have discussed about action having to be evidence-based, but I am pretty sure that the security services must have some kind of organisational chart or map of the relationships between different groups and individuals and how they interact. It would be helpful if the noble Earl was able to say something about how we can address this issue of different organisations being proscribed and then others springing up.
In both the previous debates I raised the issue of Hizb ut-Tahrir. The noble Earl will recall that when the Prime Minister, David Cameron, was the leader of the Opposition, he was in no doubt that Hizb ut-Tahrir should be proscribed. He repeatedly attacked the Labour Government for not doing so. The Minister, rightly, has been very clear today that action to proscribe a group has to be taken on the evidence available. I know how complex and difficult it is to get all that evidence and present it in an appropriate manner. However, unless David Cameron was acting irresponsibly as leader of the Opposition, he must have examined and considered the issue and the information at that time and made the judgment that Hizb ut-Tahrir should be proscribed.
At Gordon Brown’s first Prime Minister’s Questions in 2007, David Cameron made this his first topic. He said:
“Hizb ut-Tahrir … should be banned—why has it not happened?”.
When it was pointed out that evidence was required, Mr Cameron criticised that and said:
“What more evidence do we need before we ban that organisation … when will this be done? People will find it hard to understand why an organisation that urges people to kill Jews has not been banned”.—[Official Report, Commons, 4/7/07; cols. 951-52.]
The party opposite has now been in power for more than three years and still Hizb ut-Tahrir has not been banned but there must have been evidence available for the then leader of the Opposition to make the very bold statement he made on many occasions in the House of Commons.
I am not going to make the same points that were raised against us when we were in government. I thought at the time that it was inappropriate and irresponsible and it would be inappropriate and irresponsible for me to do so as well. However, I ask the Minister to assure your Lordships’ House that this organisation is under observation and review and that there will be no unnecessary delays in bringing forward a further order if the evidence warrants it.
Is the Minister aware of the evidence presented in the 2011 review of the Prevent strategy that Hizb ut-Tahrir is targeting universities and seeking to radicalise students? That was confirmed in a Parliamentary Answer to Diana Johnson MP last week. The Minister, James Brokenshire, said that,
“we believe there is unambiguous evidence to indicate that some extremist organisations, including Hizb-ut-Tahrir, target specific universities and colleges … with the objective of influencing and recruiting students to support their agenda”.—[Official Report, Commons, 4/7/13; col. 786W.]
I know the noble Earl understands the danger of home-grown extremism. Your Lordships’ House was shocked, angered and deeply saddened by the horrific killing of Lee Rigby in London. I do not think that there is anything more that I, or anyone else, can say that makes a more powerful and compelling case for reviewing all measures in place for tackling this kind of recruiting behaviour to ensure they are appropriate and effective. I hope the Minister can give an assurance today that there will be such a review to ensure that all the current measures to tackle recruiting behaviour are effective and if not, that they will be strengthened to ensure that they are. Can I also ask the noble Earl about the funding for the Prevent strategy and similar work and if any changes have been made to that in the past three years?
Towards the end of his speech the Minister referred to organisations that could be deproscribed on application to the Home Secretary and, if the response was unsatisfactory, by judicial review. As I understand it, the independent reviewer, David Anderson, has proposed that there should be a process for organisations to be deproscribed. I am not convinced that the Government have acted on that yet. It would be helpful if the noble Earl could say something about that. On both points I am happy for him to write to me.
We support this measure and I hope the noble Earl can address the points I have raised. We are deeply grateful to those who obtain the evidence required and appreciative of the dangers they face in obtaining such evidence. I also want to impress on the noble Earl how important it is that we act on accurate information as swiftly as possible.
Earl Attlee
My Lords, I am grateful to the noble Baroness for her response. She referred to the work that various agencies do and the risks that they take and, I share in her thanks. It is also important to understand that we use all available sources of information and not just HUMINT.
The noble Baroness quite rightly asked why we did not take action earlier. She said we should act swiftly and decisively. However, there are tactical considerations as well, regarding the optimum time to intervene. We also need to work in collaboration with our international partners; there may be a reason why they do not want us to take action at a particular point.
She also mentioned the important issue of splinter groups and new names. Derivative organisations which are effectively the same organisation operating under a different name can be dealt with under the negative procedure so it is a bit easier in parliamentary terms. The same tests have to be met for splinter organisations and there are the same considerations regarding international co-operation.
The noble Baroness, unsurprisingly, talked about Hizb ut-Tahrir, which is not proscribed in the UK. Proscription can be considered only when the Home Secretary believes that an organisation is concerned in terrorism, as defined by the Terrorism Act. We cannot proscribe for political reasons; if we did, we could be challenged in the court. We have to apply the tests in the legislation, and then the other considerations that I referred to in my opening comments on when it is the right thing to do at the time. However, Hizb ut-Tahrir is an organisation that the Government have significant concerns about, and we will continue to monitor its actions very closely, as suggested by the noble Baroness. Such groups are not free to spread hatred and incite violence as they please; the police have comprehensive powers to take action under criminal law to deal with people who incite hatred, and they will do so. We will seek to ensure that Hizb ut-Tahrir, and groups like it, cannot operate without challenge in public places in this country; we will not tolerate secretive meetings behind closed doors on premises funded by the taxpayer. We will ensure that civic organisations are made well aware of Hizb ut-Tahrir, and groups like it, and any of the names under which they operate and the ways in which they go about their business.
I agree in general with the points that the noble Baroness made about the need to prevent terrorism, but that is also the reason for applying the law, or the tests, properly, and not proscribing an organisation, as I gently suggested, for political reasons.
The noble Baroness also asked about the Anderson report. The Government noted David Anderson’s comments in his report about the deproscription process, and responded to his report in March. Cross-government officials continue to explore options for improving the deproscription process; the Government will, of course, inform Parliament of any resulting changes to the regime. Under the current regime, any person affected by a proscription can submit an application to the Home Secretary with the question of whether she considers that organisation should be deproscribed. She has not received any deproscription applications, and I understand that none has been received by her predecessors since 2019.
In conclusion, I strongly believe that both Boko Haram, and Minbar Ansar Deen should be added to the list of proscribed organisations under Schedule 2 to the Terrorism Act 2000. The proscription of Boko Haram demonstrates our condemnation of this group’s activities; proscribing it will also enable the police to carry out disruptive action against any of their supporters in the UK and ensure that they cannot operate here. The proscription of Minbar Ansar Deen will be a powerful tool for the police to help to disrupt the organisation successfully and send out a powerful message that the promotion and encouragement of terrorism are not acceptable, and that we will take action against organisations who partake in such activities.
Tourism: Music
(10 years, 10 months ago)
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Lord Storey
To ask Her Majesty’s Government what plans they have to support and promote the impact of music upon tourism.
Lord Storey
My Lords, I was tempted—and have decided to do so—to start this debate on music tourism by saying, “Yeah, yeah, yeah”. As we know, in recent decades our music industry has moved from strength to strength. Indeed, we can hardly ignore the explosion of music events, be it classical, dance, folk, jazz, metal, pop or rock; we are spoilt for choice. The world-famous Glastonbury festival, which just hosted an astonishing 120,000 festival goers this year, is but one of hundreds that are now a regular occurrence up and down the land, from the Isle of Wight festival on the south coast to T in the Park in the Scottish Highlands. Festivals undoubtedly play an essential role in local and regional economies. I can speak for Liverpool and comment on the impact that music has historically made upon her tourist economy, but, of course, the same applies to exotic lands further afield, notably, the flourishing St Lucia jazz festival.
As I mentioned, this year’s Glastonbury festival was fantastically successful. It is too soon to gauge the full economic impact, but the last detailed economic assessment in 2007 reported direct spending of £73 million, with 23% going directly into Mendip’s local economy. As well as money pouring into local economies, festivals are attracting unprecedented numbers of overseas visitors. It may interest noble Lords to know that Brazilians are the most active in this regard, followed by New Zealanders and Norwegians. Research undertaken by UK Music shows that international music tourists attending large-scale music events contribute at least £247 million to the UK economy. I look forward to reading its new report, which is due to be published next month, as it will reveal how many people attend live music concerts and festivals each year. Specifically, we will learn what proportion of live music audiences are comprised of music tourists as opposed to the local population, as well as how much this spending benefits the regional and national economies and employment.
It is important to place music tourism in its international context so that we can learn how further to bolster and improve this country as a music destination. Is it any wonder that two of the top five international music festivals take place in the UK? Music festivals underpin our efforts and many places become synonymous with music hotspots. Many cities are excellent at creating such imagery, keen to harness the benefits as visitors descend on their musical events. For example, Berlin’s annual Love Parade—a celebration of club and techno culture—attracts more than 1 million visitors every year. The New Orleans jazz festival draws in over 400,000 people, and the Salzburg festival attracts over 200,000. The St Lucia jazz festival, which I mentioned earlier, makes a profit of nearly $6 million, and the Australian Festival of Chamber Music brings in $4 million to the local economy.
These regions have successfully marketed themselves as attractive music destinations. It is true that large music tourism developments are based in locations with the most famous scenes, styles and individuals. Salzburg has Mozart and Memphis has Elvis, but this has not stopped other cities building upon lesser reputations or seeking to create music tourism economies where little or no musical association previously existed. Great Britain simply has too much potential for musical tourism for the Government to stand idly by. I note from VisitBritain’s survey of 20,000 overseas panellists that music is seen as being very much an integral part of our culture and heritage. Indeed 44% of those asked feel that music is a cultural activity that they would expect to be produced by UK plc.
We are a talented nation. This House and the country can be extremely proud of last summer’s Olympic and Paralympic Games. The events brought untold success for our athletes, but they were also very significant for the capital and the nation as a whole. There is a catalogue of economic reports about the Games’ legacy and impact. However, I would suggest that what is missing is an attempt to take a broader look at the impact that music played during the Games. Many of us will have watched the brilliant opening and closing ceremonies that celebrated the success of British music throughout the ages. They showcased how British music has been and is of world-class standard. By the time of the closing ceremony, Chinese media were showering Britain with praise as a “holy land for music”. Equally, the Germans believed that the Games showcased the UK as the great power of pop music and culture. Even Russian newspapers believed that British music made the Games truly unforgettable. Our worldwide success propelled UK artists’ share of total global album sales. I firmly believe, and I am sure noble Lords will agree, that the Olympics showcased the importance of British music not only to the nation, but to the entire world. We have a very proud history of producing stellar musicians and the Olympics were an opportunity to celebrate this proud heritage.
However, Great Britain has always had world-class music talent in every genre, from the Rolling Stones to the Halle Orchestra, and I am proud to say that the UK is one of three net exporters of music throughout the world. Our music success has the potential to propel Britain’s profile as a music destination even further and the Prime Minister acknowledged as much at the British Recorded Music Industry’s 40th anniversary party. Now more than ever we must harness the international goodwill that the Games have rekindled for British music. The real impact will not come just from visitor footfall, but from businesses keen to see the country at its zenith. Music tourism, if supported properly by government, can and will play a vital role in attracting even more guests and even more spending, year after year.
As I mentioned earlier, my own city of Liverpool is steeped in musical tradition. We are the city that gave the world The Beatles, but there is still a host up of up-and-coming talented musicians including The Wombats and, although yet to be recognised, The Stopouts. Most importantly, Liverpool’s music scene has always been supported by the community. This has been its key to success. Beat in the Mersey, a tour that opened a few weeks ago, aims to tell the story of Liverpool’s musical history through song, dance and music. It concentrates on the period when Liverpool was the second city of the then British Empire, drawing millions to her port, who brought with them music from around the globe. It is easy to romanticise about the period when Liverpool became a musical sponge, soaking up influences from the many thousands who passed through its docks. As Beat in the Mersey makes clear, the seven miles of dockland spread along Liverpool’s shores were crucial to her musical and cultural development.
Only yesterday, I was delighted to read in the local press that the Liverpool International Music Festival will be boosted by the EU’s commitment to inject more than £2 million into its leisure and tourism offer. This, I hope, means that an extra 2.5 million visitors will flock to Merseyside and pump £200 million into the local economy by 2015. Liverpool as a community has been keen to promote itself beyond a shrine to John, Paul, George and Ringo. It is a city where musical talent is intrinsic to the very people who walk her streets. Indeed, the Royal Liverpool Philharmonic Orchestra has been organising events with schools and the community since the 1940s, when Sir Malcolm Sargent introduced concerts for schools. By 2009, the orchestra was reaching out to some 45,000 people, including 22,000 children, every year. The desire to bring out the best in Liverpool’s musical community can also be seen in the Knotty Ash Youth and Community Centre, which is used as a music rehearsal space for future musical talent. It engages with young people in innovative ways, using music as a way to develop the individual.
Community musical groups, along with up-and-coming musicians, have been aided by the Live Music Act 2012, which was initiated by my noble friend Lord Clement-Jones and shepherded through the other place by Don Foster MP. The Act has removed a lot of unnecessary bureaucratic red tape, and now community organisations and music venues can put on even more events designed to bring local people together. Now that venues have more freedom to host live events, British artists have more opportunities to develop their talents. This will serve only to enrich our local communities and the economy overall. UK Music estimates that the Live Music Act could enable 13,000 more venues to start holding live music events. Who knows? Of those 13,000 venues, we could have another Cavern Club with new musical talent waiting to jump on to the world stage.
The globe’s evident love of our musical heritage must be harnessed and used to support music tourism. I strongly urge the Government to consider how best to implement a well defined music strategy. Northern Ireland is already engaged in such an activity. The strategy rests on enabling the music industry to realise its full economic potential. It has been informed by detailed consultation with more than 80 representatives from the industry, as well as with public agencies interested in the sector’s development. The strategy aims to develop a creative and vibrant music sector to achieve consistent and sustainable economic growth. This will create jobs and contribute to wealth. This, in turn, adds to a positive image of Northern Ireland on the world stage. By devising and implementing a music strategy, Northern Ireland is making the most of a tangible economic and cultural opportunity. We as a nation must do the same to attract even greater numbers of overseas music tourists. Our approach should emphasise and engage with existing tourist bodies and authorities across Britain, and help them to market themselves as music tourist destinations.
I am sure that we all agree that our great cities have provided the world with fantastic music and musicians—from classical to jazz, from reggae to pop. Liverpool launched four young men to unparalleled heights, Manchester gave us Oasis, Birmingham produced Led Zeppelin and London propelled Adele from obscurity to near universal fame. We are extremely lucky to have such a strong and vibrant musical history and, if we are to be successful in the future, not only must we build upon the country’s musical titans, but our communities, schools and people must also play their part. As the song goes,
“I should have known better”.
I suggest that we do know better and I hope that the Government will lead the charge in creating a national music strategy.
Lord Black of Brentwood
My Lords, we should all be indebted to the noble Lord for securing this debate. I wholeheartedly endorse everything he had to say about our extraordinary musical heritage. At a time when so much attention is rightly being paid to reducing the deficit, it is crucial that those of us who love the arts, and classical music in particular, trumpet—no pun intended—the contribution that they make to our economy. This debate affords us a perfect opportunity to highlight the role of music in tourism, which is one of the engines of economic growth. I declare an interest as a member of the council of the Royal College of Music, home to some of the world's most remarkable young musicians.
As we have heard from the noble Lord, Lord Storey, this country is blessed with an energetic and colourful musical life, whether it be the grand set pieces such as the BBC Proms, the constant supply of glorious music at the Royal Festival Hall, Covent Garden, the ENO, the Barbican Centre, Wigmore Hall and many other cultural centres, or programmes of astonishing music-making most nights of the term at our conservatoires. Moreover, this pattern, as the noble Lord also said, is mirrored throughout the regions. On any day of the week, we are able to join in any variety of musical experiences, from the “Ring Cycle” at the Proms, to “Peter Grimes” on Aldeburgh Beach, to Beethoven at the Barbican or to Schubert songs at Wigmore Hall. Indeed, we can probably hear the great master works of the noble Lord, Lord Berkeley of Knighton. Our artistic repertoire is not limited to the great composers. Key to our musical tapestry, I believe, is the way in which we blend together household names with those who are not so well known, whether it be string quartets by Dittersdorf or the remarkable six-handed piano works of Gurlitt, both of which I have heard recently, as well as nurturing new talent.
This extraordinary musical offering, as we have heard, attracts substantial international audiences. For so many visitors to our shores, music is the magnet that lures them here. In a recent London Visitor Survey, some 60% of overseas visitors said that theatre, music and arts performances were either very important or important in their decision to visit London. It is estimated that, of the 4.2 million people attending classical concerts, opera or ballet in a year, 10% are from overseas. That, of course, has a big economic impact in not just around £10 million in ticket sales but in the spending on hotels, restaurants and souvenirs. A trend has been assiduously tracked over time by UK Music, which plays such an important and energetic role in the advocacy of music’s economic power.
The main point I want to make today is that great music-making by 50,000 performing musicians in the UK does not just happen by chance. There has to be a steady supply of new, well-trained entrants to the profession who can both perform and teach. If we want to will the ends—in other words, increased tourism and revenue—then we must will the means, which means keeping our music teaching the best in the world, as I believe it is. That is why the UK's conservatoires are of fundamental importance to this debate. As a report last year by the LSE entitled The Impact of Three London Conservatoires on the UK and London Economies concluded:
“The conservatoires are a key factor in the development and sustainability of London as a world music centre. Their graduates are heavily involved in the classical and modern music production which is crucial to London’s role as a leading centre of the arts … The conservatoires are an integral part of a network that provides London with benefits arising from this agglomeration both in terms of the music industry and through its symbiotic relationship with tourism, other creative arts, and the cultural industries generally”.
Crucially, the conservatoires train musicians, who then take part in the orchestras, choirs and chamber ensembles that make up our national music tapestry. The three conservatoires which commissioned the LSE report together produce each year some 300 music graduates. Therefore, over a 20-year period, they educate some 6,000 musicians, a significant proportion of the total number of musicians working in live performance. That includes many of the highest-achieving musicians, whose work, according to the LSE report,
“is likely to be fundamental to the entire music sector, on which the other performers also depend”.
That point is underlined by the fact that employment levels for conservatoire alumni are extremely high.
Recent figures from the Higher Education Statistics Agency show near full employment for conservatoire graduates, at a time when 10% of graduates from other universities are not in work or further education six months after leaving. Moreover, as Unistats Key Information Set statistics show, that work is overwhelmingly in the profession for which they studied. For the Royal College of Music, for instance, that means that 80% are in the artistic category and a further 10% are in teaching. Similarly, a study by the Musicians’ Union quoted in the LSE report analysed the educational origins of players in four major London orchestras in the early 2000s and found that two-thirds came from the leading conservatoires, with the Royal College of Music topping that list with just under 22% of graduates. If we want great orchestras, we must have great conservatoires.
It is not just classical music and the big orchestras which depend on conservatoire graduates. They also make up a high percentage of performers in London’s West End musicals. According to the Society of London Theatre, more than 8 million people attended a musical in London in 2011, with revenues that year of £329 million. Musical theatre is of course also a major export earner for the country. Whether it is “Les Misérables”, “Mamma Mia!” or “The Phantom of the Opera”, conservatoire graduates are at the centre of the musical action.
In terms of the ratio of their economic worth to the funding which they attract, our conservatoires provide enormous value for money. Central government grants to the conservatoires total about only £17 million each year, including a modest but crucial amount of exceptional funding. In turn, they play a disproportionate role in supporting a sector that is worth nearly £800 million to the economy in ticket sales to visitors from overseas and the wider value added from classical music and musical theatre. That seems to me a not inconsiderable bargain for the taxpayer and one that we must protect.
This debate asks the Government to address what plans they have to promote and support the impact of music on tourism. The most vital thing that the Government can do is to ensure that music teaching in the UK remains as vibrant, energetic, imaginative and inspirational as ever. I ask my noble friend to do three things. The first is to reaffirm the Government’s commitment to our conservatoires, on which they have rightly and commendably always placed such value. The second is to note, as we move through tough economic times, that any cuts to capital spending will disproportionately affect conservatoires because their facilities, in terms of both estate and instruments—in particular, pianos—are integral to the replication of professional conditions.
The third, given that music-making is international in its scope and that we need to attract the brightest and best from across the globe to our conservatoires, is to ensure that the visa regime works in a practical and effective manner to allow that to happen. That is particularly important for professional performers who wish to remain in the UK after their studies. Those are three important things we can do to ensure that music continues to play its full part in attracting visitors to our country and underpinning the tourism which is such an important engine of long-term, sustainable growth.
Baroness Liddell of Coatdyke
My Lords, I join others in congratulating the noble Lord, Lord Storey, on securing the debate. It is timely for all sorts of reasons, which I shall come to in a minute. It is also important to focus attention, as has the noble Lord, Lord Black, on the huge potential that we have in the United Kingdom. I echo his remarks about the visa regime for incoming musicians. It is a challenging issue. I see my noble friend Lord Boateng in his place. He and I have both struggled with visa difficulties that international musicians face in coming to Britain. I should draw attention to the fact that I am a non-executive director of VisitBritain; that is in the Register of Members’ Interests.
The noble Lord, Lord Storey, talked about the Glastonbury festival, the biggest and one of the most exciting music festivals in the world. I want to begin by talking about another music festival that I attended last weekend, the East Neuk Festival in Fife. The East Neuk of Fife is a tiny corner of Fife. At the north, there is St Andrews, famous as the home of golf and also as the meeting place of the Duke and Duchess of Cambridge. Nobody is 100% certain where the East Neuk ends, but it is probably about 10 miles further down the road.
The East Neuk Festival began because of an initiative by half a dozen people 10 years ago. It is largely a chamber music festival with poetry and other elements. Last Friday, I attended a concert in Crail parish church by the wonderful musician Christian Zacharias. It was standing room only, and outside there were two coaches that had come from the west of Scotland, a journey of about two hours on not particularly good roads. Last year, the East Neuk Festival attracted just short of 19,000 people to three events and sold 6,000 tickets for concerts in church halls, scout halls and a nuclear bunker. It is not “Your Hundred Best Tunes”. You will get Schubert, Schumann and Chopin. Last Saturday afternoon, I listened to the “Inuksuit” percussion suite by John Adams. I did not think I would enjoy it, but it was stunningly done in a walled garden. The festival is a lure to people not just in Scotland but even more widely.
Tonight, 20 miles away at Balado in Kinross-shire, there will be tens of thousands of people making their way to T in the Park. Balado is not in the Highlands. The great advantage of T in the Park is that it is an hour from Glasgow and an hour from Edinburgh. Each day, 85,000 people will make their way to Balado, a former RAF base whose day job is as a poultry farm. T in the Park is in its 20th year and is internationally renowned. My daughter is a marketing executive with T in the Park and you have no idea how popular that makes me with some Members of your Lordships’ House and the other place when the tickets come on sale.
Festivals like that are a key part of the GREAT strategy to promote tourism that brings in UKTI and the British Council. It is about celebrating everything great about Britain. A few months ago in New York there was a major presentation as part of the GREAT strategy of Britain’s modern music interest. One part of the GREAT celebration is King Tut’s Wah Wah Hut; it is not quite a cabin, but it is getting there. It is one of the great venues for modern indie bands. In case noble Lords do not believe that I have been to King Tut’s Wah Wah Hut, I have. I confess that it was for a very nice lunch, but if my favourite indie band, the Black Hand Gang, plays there, I will be first in the queue.
The reason I make these points is that we are blasé about the fact that we have all this. The noble Lord, Lord Berkeley, is in his place. The Last Night of the Proms is a global phenomenon. I have watched it in far-distant corners of the world; it brings a focus and a determination to people to visit this country. In the world brand index we are the fourth best nation for culture out of 50. That is partly driven by our ranking third for contemporary music, films, art and literature.
That sounds like a great story, but it could be a much better story. We are not doing as well as we could for music tourism. We need to have more resource behind promoting our music tourism. We need to address the visa issue. The opening and closing ceremonies of the Olympic Games were a wonderful marketing opportunity. Music tourists spend more than most other tourists. Overseas music tourists account for 5% of music tourism but 18% of music tourism spend. We need to encourage more people to come here to benefit from what we have to offer in our musical offering. As the noble Lord, Lord Storey, pointed out, it is very interesting that it is Brazilians, New Zealanders and Norwegians who come here. I have come across many young people all over the world who would love to be able to come to Britain. Some of the challenge is the visa issue and some is cost. However, I will not say anything about air passenger duty—although I just have. Issues such as those act as inhibitors. We have a huge opportunity to showcase our best.
I hope that when the Minister replies to this debate she will concentrate to some extent on what is going to happen to the budget of the Department for Culture, Media and Sport. With my VisitBritain hat on, I am delighted that we have taken only a 5% cut in our budget. If we keep cutting and cutting, however, we are going to get to the stage where we lose the critical mass that allows us to promote industries such as the music industry all around the world. It is a potentially enormous earner. At the same time, it is here in Britain that many modern technological developments such as the iPod have allowed more and more people to listen to music. People have been able to buy into the nature of the culture that we have.
To coin a phrase, we have something that is great. Let us celebrate it, but let us not be gooey-eyed about how good we are at it. We can be better—we can be world leaders. We have the talent, the determination and the worldwide focus. Let us make this a key pillar of our tourism strategy into the future.
Lord Clement-Jones
My Lords, it is a pleasure to follow the noble Baroness with her great rallying cry for our tourism industry. I also thank my noble friend. In recent years, I have spoken many times on tourism—about how we can take advantage of its huge potential for economic growth—and on live music, especially in the context of deregulating many aspects of promotion and performance, but always as separate issues. However, I am delighted that, thanks to my noble friend, they have been brought together in one debate, and I agree with nearly everything that has been said so far.
That iconic Rolling Stones live concert in Hyde Park in 1969 remains in the memory of many people of my generation, even if we were not there. Major live music concerts have been an essential part of our enjoyment for many years. My noble friend rightly lauded the Olympic and Paralympic opening and closing ceremonies at the 2012 Games, which particularly showcased British music and demonstrated its international appeal. He also mentioned Glastonbury. Just in the past few days, we have been reminded of its recurring appeal to a huge audience. Then we have the BBC Proms, mentioned by the noble Baroness, Lady Liddell. The last night, in particular, has a global audience. The Notting Hill Carnival is one of the largest street parties in Europe and attracts about 1 million people each year.
There are also our destination venues, whether for opera, classical music or rock music, mentioned by the noble Lord, Lord Black. The O2 has been the most popular live music venue in the world for five years running. Now, the Olympic Park is itself becoming a major venue for live music events. Then, of course, there are music destinations such as Liverpool. Is there anywhere quite like Liverpool, that place of musical pilgrimage and my noble friend’s native city?
The CEBR/Arts Council report made it clear that there was a very strong link between arts and cultural engagement and tourism. I welcome the news that UK Music will shortly be publishing a major update on the contribution that live music makes to tourism in the UK. As my noble friend mentioned, UK Music’s last report in 2011, Destination: Music—the Contribution of Music Festivals & Major Concerts to Tourism in the UK, first documented the significant contribution that live music makes to tourism. Because of this ground-breaking work, we now know that live music attracts millions of tourist visits each year and that these music tourists account for around 40% of live music audiences. Most of these visitors are domestic tourists and, although overseas music tourists make up a very small proportion of live music tourists, there is still massive potential. While overseas visitors account for 5% of music tourists in terms of numbers, they account for an amazing 18% of spending.
I am a trustee of the Barbican, home of the LSO. We know only too well the importance of tourists to our music events. As was shown by a recent survey conducted by BOP Consulting for the City of London Corporation, a significant percentage—some 7%—of bookings for ticketed performances at the Barbican are from abroad. They come from at least 106 different countries.
We all believe that the UK is the centre of the world for live music but we need hard facts to establish this and the role that live music plays in generating tourism. The new UK Music report will be very welcome, especially if it can demonstrate what proportion of live music audiences is comprised of tourists as opposed to the local population, and the economic impact of their visit to the live music event. I hope that this new information will really prompt the Government, DCMS, BIS, DCLG, Defra, the Home Office and the Treasury—all relevant government departments—to get together with VisitBritain, VisitEngland, UKTI, the British Council, the Arts Council and both the music industry and the tourism and hospitality industry to identify the real levers and barriers to growing music tourism at national level.
We need a properly joined-up strategy, particularly in terms of reducing regulation. In that context, I very much welcome the Government’s intention to improve on the Live Music Act by raising the audience level where no entertainment licence is needed to 500. The new higher audience exemption should have significant benefits for the tourism sector, where many businesses look to provide customers with live music as part of the overall visitor experience. I have a few suggestions for further government action regarding music performance and the issue of flyer distribution, which is dealt with by my Private Member’s Bill.
I welcome the fact that music is part of the GREAT campaign, but we absolutely need to make sure that our British brand is sold abroad. However, we still need to ensure co-ordination so that UK artists touring abroad can make the best use of networks provided by our British embassies, UKTI and the British Council. In that context, we should ensure that music and cultural industries are represented in trade missions. I am a great believer in the power and potential of British cultural diplomacy. We need to sort out the major issue with national insurance contributions for entertainers, on which HMRC is currently consulting. As the noble Baroness, Lady Liddell, mentioned, we also need to sort out the perennial issue of visas for visitors to this country.
We need to take care to ensure that the late-night economy is able to flourish, and to tackle anti-social hotspots so that people feel safe when they go out. I am delighted that the late-night levy is reduced for pubs which join a community scheme, such as Purple Flag. For larger venues, we need to sort out the scandal of secondary ticketing and ensure that fans are not paying over the odds or being scammed by online ticket touts by going along the lines of the Olympics legislation, so that the bands and their promoters receive the full ticket price. At the end of the day we need to acknowledge in our IP policies the central importance of copyright to the recording industry, which makes the primary investment in artists’ development. That of course means, I hope, implementing the Digital Economy Act earlier than 2015.
Having visited the BRIT School a couple of times recently, we also need to make sure that the live music sector has enough people with the right skills—the subject of Darren Henley’s brilliant review. I very much welcome the resulting national plan for education and the establishment of the new music education hubs in particular. In addition to promotion and action at national level, it is clear from the recent live music roundtables conducted by UK Music that we need strong local strategies. There are some serious lessons to be learnt from local and regional successes, involving public and private sector partnerships.
My noble friend mentioned Liverpool, which is a prime example of how music has been used to attract visitors to a city. In London, I know that the mayor, building on the 2010 Cultural Metropolis strategy and the World Cities Culture Report is keen to promote London’s music heritage much further, which is greatly to be welcomed. He has conducted a London Music Education Survey and is keen to work on music tourism campaigns telling the great story of London as a global capital of music. PRS for Music Foundation has, over the past decade, supported a significant number of local and regional festivals both with direct funding and collaboration with other bodies, such as the Arts Council. There are some good examples, including the St Magnus International Festival, Manchester Jazz Festival, and so on.
Such public-private partnerships reap important economic and cultural value to local communities across the UK, as we have heard from all around the House already today. I will, I am sure, be validated by the forthcoming UK Music report. With real understanding of the potential, both locally and nationally, we can unleash the power of music tourism for all our benefit.
Lord Aberdare
My Lords, it is a privilege to follow the noble Lord, Lord Clement-Jones, who has done so much for the cause of live music. I congratulate the noble Lord, Lord Storey, on obtaining this debate and introducing it with such flair. He considered starting with, “Yeah, yeah, yeah”, and I might just go with, “Hear, hear”, because I have agreed with so much of what we have heard so far.
This is an important and wide-ranging topic covering a plethora of related issues, which has proved quite challenging in thinking about how to focus my remarks. Music is a major element in the UK’s tourism offer, both for tourists within the UK and those from overseas. UK Music’s 2011 report on music tourism tells us that UK music festivals and concerts in 2009 attracted more than 7.7 million music tourists who spent more than £1.4 billion, boosting the UK economy by at least £864 million and sustaining almost 20,000 jobs. As the noble Lord, Lord Clement-Jones, told us, although only 5% came from overseas, they accounted for 18% of spending.
It is clear that this is one of the UK’s tourism strengths. We have five major festivals in the international top 20 led, of course, by Glastonbury. The Showcase guide lists 578 music festivals in the UK. Wales, the land of my fathers, attracted 252,000 music tourists in 2009. The noble Lord, Lord Storey, also mentioned the musical focus of the Olympics and Paralympics ceremonies last year. He rightly asked what was happening to build on that in terms of a music legacy.
Focusing on classical music, my personal passion, we have six major opera companies covering Wales, Scotland and the north as well as London and the south-east. But in addition, we have a seemingly ever-growing number of smaller opera companies putting on a wide range of high-quality performances at all sorts of venues. Only recently, I attended the Wagner “Ring Cycle” in a former chicken shed in Longborough. There are some 70 established professional orchestras and ensembles, and between them they put on more than 3,700 concerts a year in the UK, as well as some 450 abroad. We have a number of fantastic classical music festivals. Among them are: the BBC Proms, with over 100 concerts attracting more than 300,000 people last year; Aldeburgh; Edinburgh; the Huddersfield Contemporary Music Festival; the Llangollen International Musical Eisteddfod; the Three Choirs Festival and, of course, the recent BBC Cardiff Singer of the World event.
It seems incontrovertible that music is important to tourism and that the UK does it well, but that raises two questions in the context of today’s debate. First, could we do better, as the noble Baroness, Lady Liddell, asked, and, secondly, are there barriers to our success that could be removed? One of the difficulties of addressing such questions is that,
“the benefits of music tourism do not always show up as distinctly music-derived”,
to quote a recent report relating to Scotland. Success in this field is the product of a complex and interlocking infrastructure. That includes the organisations that provide the music, such as the orchestras, opera companies and festivals—not forgetting an enormous range of commercial bodies in the popular music arena, including the performers and musicians themselves.
One of the causes of our strength is surely our whole music education system, with nine world-leading conservatoires at its pinnacle. As the noble Lord, Lord Black of Brentwood, reminded us, they not only train UK students to world-class standards but attract talented students from overseas. The ability to hear top performers from all around the world is another factor that boosts UK music tourism. I would also like to mention the National Opera Studio, which runs master courses for young opera singers and pianists—repetiteurs. I would challenge your Lordships to attend an opera in the UK without finding at least one NOS alumnus among the cast.
Other elements of the infrastructure for music tourism include suitable venues for concerts and events—such as the country houses that have become such a feature of the opera scene—hospitality and catering, transport facilities, marketing campaigns so that potential visitors are made aware of the musical opportunities available, and all the necessary ticketing and access and customer support facilities. I understand that the Arts Council of Wales is looking at a possible digital music resource to provide information about music across Wales to help increase music tourism.
Let me suggest a couple of things that might enable us to do better. First, I am not aware of any mechanism—or at least I was not until the noble Baroness, Lady Liddell, mentioned one—for taking an overall look at how to maximise the UK tourism benefits of the music sector across all the areas that I have mentioned. I gather that some other countries and regions, such as Ontario, have been successful in adopting a more strategic approach. Perhaps that might be achieved by designating a Minister with specific cross-departmental responsibility for promoting live music tourism, or even appointing a live music tsar.
Secondly, music tourism is disproportionately concentrated, as is so often the case, in London and the south-east, areas which attract almost half of all music tourists, whereas Wales accounts for only 3%, and Scotland for only 2%, just ahead of Northern Ireland. Could VisitBritain be encouraged to give greater emphasis to promoting music tourism outside London, working in a joined-up way with regional bodies such as Visit Wales to ensure that the benefits of such tourism are more evenly and widely spread?
Another question relates to removing barriers to success. There has been some good progress in this area, not least as a result of the Live Music Act, championed by the noble Lord, Lord Clement-Jones. I was going to say that the issue of visas for musicians seems to be less vexed than it has been, although two noble Lords have mentioned that as a continuing concern. I would mention two specific issues in the hope that the Minister will be able to comment on them. The first relates to VAT. The UK is one of only four EU countries that do not take advantage of the option to apply a reduced rate of VAT on visitor accommodation and one of only nine to apply the full rate on admissions to cultural attractions. So tourism, our sixth largest export industry, is the only one subject to VAT. Other countries, including competitors such as France and Germany, have gained additional investment, employment, particularly of younger people who are disproportionately represented in the tourism sector, and growth through applying reduced VAT rates in this area. It has been calculated that every pound invested by the Treasury in this way would generate £18 of extra inbound tourism revenue and other significant growth benefits.
The second issue relates to the carriage of musical instruments on aeroplanes. Musicians need to travel to perform, quite often by air. Yet there is no consistent policy about carrying even smaller instruments on airlines, and the ISM has collected more than 1,350 individual reports of difficulties faced by musicians when travelling with their instruments, including cases of valuable instruments being damaged beyond repair. I appreciate the Government’s reluctance to intervene in commercial matters, but even if they do not go as far as the US Government, which have now issued regulations to allow small musical instruments as hand baggage, they could at least put pressure on airlines to follow the welcome lead of easyJet in this area.
This debate focuses on the contribution of music tourism and the economic benefits that that can bring, but let us not lose sight of the ultimate value of music, as described in a quote attributed to Plato in the Times last month. Sadly, I have not been able to track down where he said, “Music is a moral law. It gives a soul to the universe, wings to the mind, flight to the imagination, a charm to sadness, and life to everything. It is the essence of order, and leads to all that is good, just and beautiful, of which it is the invisible, but nevertheless dazzling, passionate and eternal form”. We need more of that in the UK, even if it did not bring such significant tourism benefits with it.
The Lord Bishop of Derby
My Lords, I, too, congratulate the noble Lord, Lord Storey, on securing this debate. The noble Lord, Lord Clement-Jones, mentioned the iconic Rolling Stones concert in Hyde Park in 1969. Perhaps I should put on record the fact that I was there.
As we have just heard, music is not only important but a much underrated offer that we make to the rest of the world through tourism. When people come here for music tourism, they engage in making community and in being joined with others in a common culture through hearing a common language. Such things are very important for us to offer across the world as well as across the regions in this country. It is important that we do not just measure its significance in terms of economic impact, although that is important, but that we recognise a cultural, human hinterland that is enriched from Plato onwards and we must be proud of it and contribute to it.
The VisitBritain document, Delivering a Golden Legacy, identifies four principles to encourage this kind of tourism. The first is to recognise our international image, which is about heritage, arts and music—as the noble Lord, Lord Black, mentioned. The second is to develop an overall product so that performance, hotels, shopping and local businesses are all connected. The third is to be ambitious in our invitation and the variety that we offer. Fourthly, tourism needs to be embedded in other strategies for other sectors. Many noble Lords have spoken in this debate to illustrate some of those principles.
The UK Music report, Destination: Music, starts, as did the noble Lord, Lord Storey, in his speech, with Glastonbury. The research is based on concerts and events of 5,000 people or more. That is very important, but I want, in just a few brief words, to go to two other areas which fall below the radar of that kind of scale but which show the importance of music and culture for tourism.
They both come from the east Midlands, which is where I operate and which has the exact national average proportion of music tourists—that is, 5% of the tourist mix. We need to increase that of course. The first area is the story of the Buxton Opera House and the Buxton Festival. If any noble Lords are looking for some wonderful entertainment this weekend, I can tell them that the Buxton Festival is still in operation—you can go to its website. In 1976, a fairly decrepit building with “Opera House” over its door was on the verge of being turned into a cinema. Three years later, by 1979, local residents together with the Royal Northern College of Music and the Welsh National Opera—contacts in those places—opened the first Buxton Festival. It now has a turnover of £1.4 million and receives only 10% of its income from grants. I want to emphasise that, because many people look at the arts, especially music, and think that it needs very heavy subsidy. In fact, a mere 10% of the building’s running costs enable a turnover of £2 million into the local economy. We are not asking a great deal, but strategic investment can create such opportunities locally for music tourism to flourish. The Buxton Festival works through a partnership between local enterprise, VisitEngland, Visit Peak District and local businesses.
Of course, the opera house has to be very nimble in what it offers because it needs to run all year. It runs a programme that includes everything from Abba tribute concerts to opera and all the things in between. It has to be nimble and offer a very catholic range of music.
I have told this story because it has moved from 1979 to 2015, which is the projected opening date for the Buxton Crescent and spa hotel—a crescent that has been carefully restored and will become a hotel destination for international tourists in that part of England in 2015. It has taken all that time, from 1979 to 2015, to establish a festival, to establish international links and for there to be a demand to come and stay in that kind of quality of accommodation. I therefore urge the Government to take seriously not only the regions and the small scale but the need for secure and sustained support for such incremental growth that will be the backbone of a national policy for music tourism.
The second area that I want to mention but which, again, does not feature in the most recent report of UK Music is of course—and you would expect me to say this from these Benches—church music and especially cathedral music. We have recently launched in Derbyshire a diocesan tourism website, because churches are a key part of the fabric of the tourism offer and we need to be organised to present them attractively. A key bit of that is music, because churches are among the few places that you can go where there will be a guarantee of music of some sort or other. Just this last weekend, in the parish of New Mills, we have had a festival of choirs—five choirs making the festival over the weekend. On the same weekend, in a parish called Fairfield, there was a five-day music festival with blues, the vicar getting together an impromptu jamming band and all kinds of music to bring people in. Our cathedral, like others, has an extensive programme of concerts, organ recitals and lunchtime events.
I go to a lot of these things and I spent 10 years working in a cathedral. Something that strikes me all the time is that when one goes to the door after a concert, particularly of the English choral tradition, it is people from overseas who want to say how amazing that kind of music is. It is something they rarely experience live in other cultures. The English choral tradition and English church music are a great jewel in our musical armoury and we need to ensure, as part of a tourist offer, that we can make them available and support them in small ways. That 10% investment in the Buxton Festival is an example of how small support can create stability, incremental growth and an attractive offer.
I invite the Minister to comment not just on the large-scale music offer to tourists but on how the Government can encourage support for smaller-scale events such as the Buxton Festival and for the English choral tradition and English church music, something that is unique and right at the heart of how we are perceived internationally in terms of heritage, art and music culture. How can we make that a key part of what we offer? I want to finish by reiterating that I think our musical heritage is a key ingredient for encouraging international tourism. In an age of terror and despair, we have a rich gift to offer and we must do all we can to make it available and to secure its sustainability.
Lord Haskel
My Lords, I, too, congratulate the noble Lord on organising this music fest. The noble Lord, Lord Storey, told us that now is the time when music tourism is at its busiest. I quote the words of the Minister for Culture, Communications and Creative Industries, Ed Vaizey, who said that,
“our creative and cultural sector is such a vital element in delivering economic growth, by encouraging economic investment through tourism and business”.
As the noble Lord, Lord Storey, also reminded us, when responding to a debate last month in your Lordships’ House, the Minister told us that four in 10 leisure visitors to the UK cite heritage and culture as the primary motivation for their visit. This means that in 2011 more than 10 million inbound visitors to the UK engaged in some form of arts and culture. How much is related to music? UK Music commissioned research from Bournemouth University’s International Centre for Tourism and Hospitality Research. It told us that music contributes £864 million a year to the national economy with an amazing 19,700 full-time jobs. This, of course, includes all kinds of music. My particular interest is in tourism and classical music, partly because I have always felt that festivals of classical music are less disruptive and classical music tourists seem to spend more and stay longer. Also, like the noble Lord, Lord Aberdare, I just like classical music.
There are classical music festivals all over the country. The Manchester International Festival is on at the moment. The Proms start tomorrow. Music festivals at Edinburgh and our other great cities certainly attract people who would not normally come. The noble Lord, Lord Storey, told us about Liverpool and there are a large number of smaller music events at stately homes, churches and cathedrals, and other buildings in towns and villages. My noble friend Lady Liddell told us about such events in Scotland and the right reverend Prelate the Bishop of Derby told us about the festival in Buxton, which I attended last year. All of this illustrates the power of music to increase the number of people who come to a tourist destination.
Certainly, Arts Council England is aware of this. It is investing £3 million in cultural destinations to boost international and domestic tourism to these special places, both to stimulate the local economies and to provide visitors with world-class cultural experiences. Surely one such destination is Aldeburgh, a place mentioned by the noble Lord, Lord Aberdare. Of course, Aldeburgh would attract tourists without music because it is a charming seaside town on the Suffolk coast in an area of outstanding natural beauty, but music has transformed it into a world-class cultural and learning centre that attracts tourists throughout the year, contributing to the excellence of our musicians, about which the noble Lord, Lord Black, spoke. Music sustains a whole infrastructure of places to stay, eat, shop, play and hear music, learn and improve musical skills and develop talent, as well as all the other fringe activities—and all this with the attraction of being in an area of outstanding natural beauty.
The point that I wish to make is that 66 years ago the festival was started by Benjamin Britten and Peter Pears as a two-week event. Through hard work and clever and innovative management, Aldeburgh now attracts tourists not just for the two weeks of the festival but throughout the year. There is a prom season during August for holidaymakers, with proms featuring every kind of music. There are residences, masterclasses and orchestral and vocal development courses, and all of these involve concerts and are themselves a tourist attraction because of their excellence.
The noble Lord, Lord Clement-Jones, spoke of the need for hard facts. I shall give him some. To give a measure of what happens at Aldeburgh, the number of tickets sold during the two-week festival is 25,000. The number of tickets sold through the year is 100,000, music bringing tourism all year round, and not only from Britain. At this year’s festival alone, audiences were from more than 20 countries. Some 117 journalists visited the festival, with 43 from abroad representing 16 countries.
I hope that the Minister will join me in welcoming this successful model and congratulate the staff on turning a two-week festival into a year-round attraction. However, that has not been easy. First, Aldeburgh is away from the amenities of London and other major cities. Secondly, overnight the Government removed its co-ordinating structure, the only one available in this rural area, by abolishing the regional development agency. It was abolished at a time when the year-long Britten centenary celebrations, as well as all the other activities, were being planned in association with various arts organisations, the BBC, tourist organisations, schools, transport and the 101 other things that you need to co-ordinate arts and tourism successfully—just the kind of local co-ordination about which the noble Lord, Lord Clement-Jones, spoke.
Therefore, in addition to planning the music, a new organisation had to be set up—a destination management organisation to promote tourism on the Suffolk coast. Indeed, Aldeburgh Music must be one of the few arts organisations, and perhaps the first, to become involved in setting up such an organisation. Yes, the work is being endorsed by the Norfolk and Suffolk local enterprise partnership, but it is new and still pretty embryonic. Perhaps the regional development agency had its faults but, instead of removing it on an ideological whim, the right thing to do was to rectify the faults and maybe reinvent the RDA to build on what was there. I hope that the Minister can assure me that in future more thought will be put into these changes, and that the institution that is now being built up will be sufficiently independent so as not to become a political plaything with an uncertain lifespan but, hopefully, can look forward to 10 or 20 years of life to develop arts, heritage, culture and tourism on the Suffolk coast.
My noble friend Lady Liddell said that we have to do better. That may mean money but, in the overall scheme of things the amounts of money are small. So I have two suggestions. They have been made before. After taking money from the lottery for the Olympics, I hope that the Government will review the lottery distribution and be generous to music. There is also the question of tourism and VAT, as mentioned by the noble Lord, Lord Aberdare. The Government are looking for growth. As other noble Lords have spoken, I have tried to show how music and tourism can deliver this. I hope the Minister will tell us how the Government will enable this. The right reverend Prelate reminded us that music raises our quality of life. There is another advantage. Music has shown itself to be an extraordinary driver of social mobility. We should all welcome that.
Lord Berkeley of Knighton
My Lords, it has been extremely pleasant to hear such endorsements of the profession of which I am delighted to be a member. I started off with a score in mind, but this concert, so ably conducted by the noble Lord, Lord Storey, has been through virtually all the possible movements. I am reminded that music is essentially a form of variation; everything is a variation of what has gone before. So I have torn up my score and I will, like all good jazz players, improvise on the themes that I have heard.
The noble Lord, Lord Storey, mentioned the Proms, which are about to begin, so for my first variation I would like to talk about the BBC, which I broadcast for and on which I have had my music played. I would like to compliment Roger Wright and his predecessor Nicholas Kenyon not only on building incredibly successful seasons, but on taking music into different spheres, whether they be film music, jazz, popular music or the musical. It is important that we are an all-embracing family.
The BBC does extraordinary work across various networks. However, I have always felt that praise is more credible if it is balanced by criticism. On this particular day, and on behalf of so many people who work for the BBC on the shop floor, I must say how outraged I am to read that, when those of us who work there are being cut back on the programme-making side, absolutely staggering sums have been given as golden handshakes. It is essential that the public have confidence in the BBC. They must know that when people get it wrong, whether in the Civil Service, the Government or the BBC, they are not simply moved sideways, but pay the price that most people have to if they make a huge mistake. Margaret Hodge has done a very fine job in focusing on this particular subject and holding people to account. My noble friend Lord Hall, with whom I worked very closely at the Royal Opera House, is now the Director-General. If anyone can turn that around, he will. The BBC is worth saving because it is a marvellous ship. The world—I say the world, not just this country—would be a poorer place without what the BBC achieves.
I shall move on to a couple of specifics. I would like to look at some of the ways in which music is allied to other arts, an example of which would be dancing. I was very much involved with the Royal Ballet and in fact I still am. One of the great problems we had at the Royal Ballet School was to do with visas. It was so difficult to allow young students to dance on the main stage. It is absolutely crazy that young people who are really gifted come into your school, but you are prevented from letting them get the experience they need on the main stage, either at the Royal Opera House or the Royal Ballet, because of what are essentially visa restrictions. I would ask the Minister to look at that. I know that some progress has been made, so I feel that there is a conversation carrying on.
While I am on this particular tack of asking the Minister to follow up on a couple of things, I will also mention the British Academy of Songwriters, Composers and Authors, which represents everyone from Paul McCartney to Harrison Birtwistle. When somebody wants to commission a composer—I had a conversation about this with one of your Lordships recently—they say, “I have no idea what it costs to commission a piece of music”. The BBC is wonderful at this, but we need to disseminate music—to Buxton, to small groups, to churches and cathedrals, so that the new music being created will be the music of tomorrow. When someone goes to the academy, which is our representative, and asks, “Can you give us some idea of how much money is involved?”, it has to answer, “We’re not allowed to tell you”. That is because the Office of Fair Trading has said, “Because you are not a union, you cannot give guidelines”—and they are only guidelines. I cannot believe that a Conservative Government feel that this is right. However, because our representatives are not a union, they are not allowed to give guidelines for fees. If that could be looked at, a great problem could be solved for us all.
We talked earlier about the regions. It is very easy to talk about the Proms and the Royal Opera House, so it was lovely to hear comments from all over the country—from Scotland, for example—about how important music is. We heard about Plato, and of course there is Socrates, who towards the end of his life intimated that rather than be a philosopher, perhaps he really should have been a composer. Music, in its abstraction, can do something that takes us further inside ourselves and allows us to see society in a wider and much more generous context.
The British Council has been mentioned. The work that is done overseas is terribly important. I am sorry to reference this to myself, but it is difficult not to. I was in Rome because the British Council had helped to put on a performance of an opera I had done with Ian McEwan; the British ambassador was incredibly helpful. That would not have happened without these people holding hands. I loved something that happened to Ian McEwan and me—of course, he is a far more famous person. We were walking through the streets of Rome and got lost while looking for a restaurant. Here is an example of British success. A Vespa screamed to a halt. “Ian McEwan!” said the driver. Ian was very taken aback. “I love your books”, the man said. “Is there is anything I can do for you?” “Yes”, Ian said. “You can tell us how to get to a particular restaurant that we’ve been looking for for three hours”. The fact that the arts are recognised abroad is terribly important. However, a recent UK survey shows that of London households, 36% had been to an orchestral concert more than once, although that is over a period of six years, it has to be said. I find that fantastic. The equivalent figure for other ticketed arts events is 21%. That is an amazing achievement which speaks volumes about what I feel that music can do.
I will finish by talking about sacred music. I completely agree with the right reverend Prelate the Bishop of Derby that this is an area that has to be protected, but it is an area where we speak to a huge audience. I think of people like John Taverner or Arvo Pärt whose music can hold people; it is a way of connecting to something higher. You do not need to believe in God to feel that you are experiencing something that transcends everyday life. I have had some marvellous experiences in places like Durham and Ely, Westminster Cathedral, Westminster Abbey and St Paul’s, where great architecture and great music combine to lift the soul in a quite staggering way. This surely is part of what tourists also find marvellous about this country. Which other countries have quite the same cathedrals that we have in East Anglia, for example?
Recently, I was very privileged to be able to write a short anthem for the enthronement of the most reverend Primate the Archbishop of Canterbury. He chose words from the Rule of St Benedict. The opening line of the anthem is,
“Listen, listen, O my child”.
We have to provide all our children with things to listen to.
Lord Stevenson of Balmacara
My Lords, I congratulate the noble Lord, Lord Storey, on securing this debate and thank all noble Lords for their contributions. I should declare an interest, I suppose: I am a participant in the subject of this debate since I sing in the Parliament Choir, which is well known for attracting tourists to come and listen to us. I also sing in a festival choir, which gathers for a week and sings in a glorious cathedral of the type mentioned by the right reverend Prelate. I mention this only because it also has a tourist dimension which I do not think has been widely noticed yet. There seems to be a growth in choral tourism. When we sat down on the first day to rehearse the Mozart “Requiem” we were about to deliver we were joined by three substantial Russian contraltos who told us that they spent their lives going round the globe singing in such events. They popped up everywhere and after they had sung in our event they were going to Salzburg to sing in the Mozart “Requiem” that was being performed there. There is a tourism aspect to all aspects of music.
This is my third tourism debate and I have noticed that there is a tendency among those who participate—not that I wish to decry it in any sense —to indulge in a tour d’horizon of their favourite tourist spots or, in this case, the events they have enjoyed on a trip around the UK. This debate did not disappoint. We have a glorious range of opportunities, starting in Liverpool, reaching far up to Scotland and spending quite a lot of time in East Anglia. This is all to the good. We learn a lot more about what we should be doing in this House.
Tourism is exceptionally important to the UK economy. It is the sixth largest industry, third largest export earner, and accounts for around 9% of employment if its indirect impacts are taken into account. It generates more than £3 billion in tax for HM Treasury. It is a very interesting industry because it has quite wide economic effects. It employs a lot of non-full-time workers and more women than men. The proportion of jobs in tourism is much higher in Scotland, Wales and Northern Ireland than it is in England and it encourages entrepreneurship as there are some 200,000 SMEs in the tourism sector, most with a very low turnover but still making a contribution.
Of course, there is a soft power dimension to this. Culture, which was defined in a recent Demos report as,
“the means we use to express ourselves through art, film, music, dance, literature and so on”,
provides a bridge between people. No less a person than the Chinese former leader Hu Jintao regretted the fact that although Chinese economic power was huge the soft cultural power still resides with Europe, in particular in Britain. It is something we have to account of and it is distinctively different from any other sector of the economy.
In the debates I mentioned, particularly those sponsored by the noble Lord, Lord Lee of Trafford, who has been a stalwart in this area, we have covered some of the problems affecting the tourism sector. As the noble Lord, Lord Clement-Jones, reminded us, there is a need for a joined-up approach in government. Tourism is exceptional in the degree to which it cuts across different policy areas, organisations, government departments and geographic areas. The industry would like to see a cross-government co-ordination group, particularly on regulation. I would be grateful if the Minister might refer to that when she sums up.
A number of noble Lords brought up the problem of air passenger duty, which needs to be addressed. The issue of visas has come up every time we have debated this subject. The UK visa regime is a major drag on in-bound tourism and it particularly affects those involved in the music industry.
There is also concern about the way promotion of tourism is going. The current Great campaign will cost about £100 million but at the same time core grant in aid funding has been reduced and it is not clear yet whether the campaign is going to achieve its very ambitious targets. I would be grateful if the Minister could respond to that.
It is believed right across the industry, and we have heard it today, that British music has the ability to help VisitBritain achieve its goal of 9 million more tourists by 2020, but the debate actually asks the Government what plans they have to support and promote the impact of music on tourism. In other words, what is the structure under which these issues will be addressed? What can the Government do to help?
The noble Lord, Lord Black, reminded us that if the Government are to will the end they must also will the means. We have heard that we need a strategy to maintain our advantage in music tourism and to support the industry that drives it. That includes, I think, the points made by the noble Lord, Lord Clement-Jones, about the Digital Economy Act and the issue that has been raised more recently in relation to the Intellectual Property Bill about the rather damaging split between the approach being taken by the DCMS and that now being taken by BIS. Can more be done with UKTI? That is an important issue, because that aspect of support and underpinning of export potential is very important.
We need a skills and training regime that ensures that a new generation of the people who actually do the work in many music activities—the riggers, the technicians and managers, as well as, of course, musicians—are supported. What do the Government plan on that? There is also a need to access specialist finance to ensure new music-related businesses develop and flourish. We know that bank lending is down, but what about the special additional problems posed in the hit-based industries, such as music and film?
One problem at the root of some of these issues is that it is very difficult to get a proper measure for the success or otherwise of the industry. Current SIC and SOC codes, which give us the national economic picture, are totally inadequate for music, especially live music. The millions of jobs supported by live music are coded in many different ways. According to ONS data, of the 10,000 businesses represented by PRS for Music and PPL, only 14% were accurately coded by ONS in the national accounts. That is something that the Minister should respond to when she sums up.
I took from today’s discussion a theme that we are good at music and also a good tourist destination but that we could do better. I look forward to hearing what the Minister has to say to inspire us about that.
Baroness Northover
My Lords, I, too, would like to thank my noble friend Lord Storey for securing this debate, and I pay tribute to all noble Lords for their contributions. Once again, noble Lords have demonstrated remarkable expertise. Mentally, we have travelled to Glastonbury, Liverpool, Northern Ireland, Fife, Aldeburgh, Buxton, Hyde Park and wider.
Noble Lords are right to emphasise the importance of both music and tourism. This morning, I see that the new inbound tourism figures from VisitBritain show that the tourism spend in Britain was 5% higher than in May last year, which is very encouraging. The ONS tourism satellite account shows that in 2009 tourism direct gross value added—and I asked my son, who does economics, what that meant—was £45 billion. Thus the tourism sector is approximately five times larger than the agricultural sector and about half the size of the construction sector. Further work by Deloitte suggests that, if the indirect economic effects of tourism are also included, gross value added could be as high as £115 billion. Domestic tourism is also hugely important, worth some 80% of tourism receipts.
Our rich culture marks us apart in the world, as the noble Baroness, Lady Liddell, and others have emphasised. Music from classical to rock is a crucial part of Britain’s tourism appeal, both in terms of attracting visitors to the UK and encouraging spend while they are here. It forms a major theme of the GREAT campaign, which is the Government’s most ambitious international marketing campaign ever, to which the noble Baroness referred.
The music, visual and performing arts industry is undoubtedly one of our most successful creative industries. Our artists’ share of global album sales in 2012 was the highest on record, and British acts have now claimed the world’s top-selling album for five of the past six years. The industry estimates that it generates over £4 billion every year for our economy and helps to keep 300,000 people in work.
We have heard how Liverpool produced the Beatles, Manchester Oasis and London more recently Adele. As we see, we remain very much at the forefront—and when our nation celebrates, we celebrate with live music. Some 1.4 million people applied for one of 10,000 tickets to attend the Queen’s Diamond Jubilee concert in 2012. My noble friends Lord Storey and Lord Clement-Jones and the noble Lord, Lord Aberdare, noted the Olympics and Paralympics. The BBC reported that the opening and closing ceremonies of London 2012, which were absolutely stunning, sparked a big surge in music sales worth a retail value of over £2 million.
We are a nation of music lovers and festival goers. In 2011, the O2 Arena sold more tickets than any other arena in the world, making it the most popular music venue for five years running. As my noble friends Lord Storey and Lord Clement-Jones noted, Glastonbury is the biggest music festival in the world in terms of attendance by day, and contributes over £100 million annually to the economy. Even in times of austerity, I note that this year Glastonbury sold out in less than two hours.
Many noble Lords have paid tribute to UK Music and so do I. The UK Music report, Destination Music, published in May 2011—the first study of its kind—highlighted the important economic contribution of music festivals and major concerts to tourism throughout the United Kingdom. The study revealed that they attract nearly 8 million visits from those defined as music tourists who spend £1.4 billion during the course of their trip. While domestic tourists make up the majority of these audiences, the contribution of overseas visitors, who spend up to four times as much per capita during their visits, is also very important.
I read that report with great interest and noted the regional differences in the types of music that attract tourists in. It is not surprising that in London, as my noble friend Lord Black emphasised, classical music and musicals play a key part. Elsewhere, it may be festivals but in the north-east, for example, it is concerts rather than festivals. The noble Lord, Lord Aberdare, noted many across Wales and elsewhere and the need to study this further. UK Music has contributed to our understanding of this. The noble Lord, Lord Black, spoke of the need to support music teaching in the conservatoires which underpin our orchestras. It is important to recognise not only their cultural contribution but also the contribution that they make to the economy generally, and I can assure him of our continued commitment to the conservatoires. It is because of the need to understand the impact of music on tourism and the economy that we look forward to UK Music’s new report which will be issued shortly.
We are supporting these sectors. According to UK Music, many festival organisers credit the Government’s Licensing Act, which assisted in streamlining the local authority licensing process for big events, with helping to double numbers of music festivals over the past decade. My noble friend Lord Clement-Jones’s Live Music Act extended the range of live music performances that can take place without a licence and we are committed to doing more. My noble friend Lord Clement-Jones noted that we will extend the audience limit for some events at small venues from 200 to 500. He also asked me about his leafleting Bill. I was here at Second Reading and he made a very cogent case but he will also have noted the assurance from my noble friend Lord De Mauley that while we are still seeking to reduce litter—the purpose of the original legislation—we will also consider guidance issued to local authorities. I look forward to further debates.
The industry can also benefit from business funding schemes established by Government and is well represented on the Creative Industries Council which proposes ways of overcoming barriers to growth. We provide funding for music through the Arts Council England which will invest over £70 million a year in music organisations up to 2015.
Music also forms an integral part of our major cultural events. My noble friend Lord Storey should be extraordinarily proud of the success of Liverpool 2008 which was, arguably, the most successful European Capital of Culture for many years. That clearly continues in Liverpool and I look forward to hearing more about the band The Stopouts. So successful was Liverpool 2008, generating over £800 million for the local economy and an extra 3.5 million new visitors, that the Government launched the UK City of Culture programme. Derry/Londonderry, the current title holder, has carried on this cultural torch, and is cited by the international Rough Guides as one of the must-see destinations in the world for 2013.
The right reverend Prelate is right to emphasise the unique contribution this country has made to church and cathedral music. In this debate—a music fest, as the noble Lord, Lord Haskel, put it—we have seen how diverse our music heritage and current activities are. I can assure noble Lords of our awareness of this. In answer to the noble Lord, Lord Haskel, the Arts Council has invested more than £1.25 million in the Benjamin Britten centenary celebrations. I note that several noble Lords mentioned Aldeburgh.
Noble Lords have flagged up one or two key issues and I shall do my best to cover them as rapidly as possible. I thank the noble Baroness, Lady Liddell, for recognising the good settlements that DCMS managed to secure in very difficult circumstances. However, I hear what noble Lords say about the pressure on budgets.
I heard what the noble Lord, Lord Aberdare, said about VAT, and I can assure him that the Government have considered that matter. The Treasury could not see a causal link between VAT rates and tourism levels, so I am afraid that the Treasury is thus far not persuaded. No doubt, it will note what the noble Lord has said.
I was asked about visas. We are of course continually seeking to improve our visa system to balance the need to protect the UK with a strong desire to ensure that requirements are as clear and straightforward as possible. I thank the noble Lord, Lord Berkeley, for recognising the efforts that we are making. I should point out that we are looking at improving the pre-entry visa experience as part of our tourism strategy. Our visa applications are now translated for the first time into the local languages of our key markets—namely, into Arabic, Chinese, Hindi, Russian, Turkish and Thai. I am astonished that that was not the case previously. We had a target of delivering 90% of online applications by December 2012, which has been exceeded. At present, more than 95% of applications are carried out online. I can assure noble Lords that we are very much aware of the importance of this area.
My noble friends Lord Clement-Jones and Lord Storey, and the noble Lord, Lord Stevenson, asked about a national strategy for music. I can assure my noble friends that music is a key part of the strategies in a number of organisations that work closely together to further the interests of our music sectors. The Arts Council’s strategy, set out in Achieving Great Art for Everyone, includes music as an integral part of our creative industries. It is also well represented on the Creative Industries Council. We also have our national plan for music education, which delivers £196 million for music education hubs. In February this year, the Arts Council and VisitEngland announced a strategic partnership outlining priority areas on which the two organisations will work together. Music is integral to our GREAT campaign whereby the issues facing the promotion of music can be considered. A strategy is indeed being brought together.
My noble friend Lord Clement-Jones emphasised the importance of the promotion of music abroad by trade envoys. He will know that my noble friend Lady Bonham-Carter is newly appointed by the Prime Minister as a trade envoy for the creative industries. I know that she regards this work as very important. I gently point out to the noble Lord, Lord Berkeley, that this is not a Conservative but a coalition Government and that I happen to be from the other part of that coalition, as is my noble friend Lady Bonham-Carter, who was appointed by another part of the coalition, the Prime Minister. We achieve most by working together. I can also assure the noble Lord, Lord Berkeley, of our great support for the BBC, which was echoed in the Chamber when he spoke today. We have confidence that the issues that he has raised will be addressed by the BBC. The noble Lord asked me to look into guidelines on fees, and I will do so.
I realise that my time has run out. If there are any other issues that I have not addressed, I will answer those by letter. It has been an extremely interesting and enlightening debate. Noble Lords have made extremely clear the contribution of music both to our culture, not least as expressed by Plato, and to our economy, and how music plays its part in contributing to tourism, and we welcome that enormously.