Grand Committee
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Arrangement of Business
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The Deputy Chairman of Committees (Lord Brougham and Vaux) (Con)
My Lords, welcome to the Grand Committee. We are expecting Divisions, in which case I ask the noble Lord who is speaking to stop while we adjourn for 10 minutes.
Olympic Legacy (S&T Report)
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Lord Krebs
That the Grand Committee takes note of the Report of the Science and Technology Committee on Sport and exercise science and medicine: building on the Olympic legacy to improve the nation’s health (1st Report, Session 2012-13, HL Paper 33).
Lord Krebs (CB)
My Lords, I start by thanking the members of the Science and Technology Select Committee for their excellent contributions to this report, and our specialist adviser, Professor Ian Macdonald, Professor of Metabolic Physiology at the University of Nottingham. I also thank the Minister for the Government’s response to our report. I am particularly delighted to see that the Minister who will respond to the debate is from the Department of Health as many of the recommendations in our report refer to health as well as to sport and exercise.
We conducted the inquiry, which resulted in the report Sport and Exercise Science and Medicine: Building on the Olympic Legacy to Improve the Nation’s Health, during the run-up to the 2012 Olympics. The inquiry had two purposes. First, we wanted to find out how robust the research and evidence base for improving the performance of our elite athletes is. Secondly, we asked how this knowledge for helping elite athletes might be translated into treatments and preventive interventions that could help improve the nation’s health. Our focus was on biomedical research rather than the engineering science that refined and improved the equipment used by elite athletes and amateur sports men and women alike.
Our inquiry included sport and exercise science, which is about understanding the physiology, nutrition, genetics and biomechanics of the human body in order to improve performance as well as sport and exercise medicine, which is about the treatment and prevention of ill health that might arise from exercise: for instance, muscle strain or joint injury. We did not investigate the important issue of behaviour change—how to encourage people to become more active—because we had already completed an inquiry into this topic in 2010. Although we focused on sport, we recognised that exercise includes a much broader range of activities, such as recreational walking, gardening and housework.
Both of our questions were highly relevant to the Government’s two objectives for the Olympics. These were, first, to ensure top performance of our athletes in winning medals and, secondly, as part of the legacy of the Games, to encourage the nation to be,
“healthier, happier and more active”.
On the first of these two objectives, Team GB surpassed expectation, winning more medals than in any Olympics since 1908. The haul of 65 medals, against a target of between 48 and 70, included 29 gold, placing Britain third in the gold medals table and fourth in the total medals table. This was a stunning success, but might the performance of Team GB have been even better with more systematic appliance of better science? One of Team GB’s greatest Olympic successes was in cycling, winning seven out of 10 track cycling gold medals. While the majority of this remarkable success is down to the athletes themselves, it is thought that some of it is attributable to the meticulous attention to detail of Matt Parker, “head of marginal gains”. He analysed down to the last detail the factors that might make that marginal difference between a medal and no medal: techniques such as spraying tyres with alcohol to remove dirt and increase the friction at the start of a race; heated shorts for the cyclists to keep their muscles warm; and measures to reduce the chance of athletes succumbing to performance-diminishing infections may all have contributed to the fraction of a second difference that is needed to win gold instead of silver.
However, as our inquiry showed, even in the outstanding cycling team, not all the techniques believed to enhance performance of elite athletes are based on sound evidence. For instance, we were told by an expert witness that feeding elite athletes large quantities of antioxidants to help muscle recovery not only does not have a beneficial effect but may even be detrimental. So when we look ahead to the next Olympics, there may be room for even better performance by our athletes by deploying the best scientific knowledge.
Our second question was about using scientific knowledge to help the Government’s objective of getting the population as a whole to become healthier through exercise. The health benefits of exercise are undisputed and affect a wide variety of health outcomes. The Department of Health told us that there was research to show that exercise could help to prevent or manage more than 20 chronic conditions, including coronary heart disease, stroke, cancer, type 2 diabetes and a number of mental health problems. Yesterday’s news story about an article in the British Journal of Sports Medicine lamenting the lack of exercise by children even used the emotive language of “child neglect” to refer to the health problems that will arise because children are not encouraged to do enough exercise.
Scientists do not yet understand the biological mechanisms that give rise to such far-reaching benefits of exercise. One theory is that exercise promotes a process called autophagy, in which worn-out surplus or malformed proteins and other components of our cells are recycled. Perhaps an understanding, through research, of exactly how exercise benefits our bodies would help to improve and enhance the advice to the population at large on exercise, and thereby increase the benefits.
How robust is the research into sport and exercise science and medicine? One fundamental problem of research on elite athletes is that, by definition, there are very few individuals to work on. Furthermore, elite athletes are understandably reluctant to be exposed to invasive measurements that might interfere with their training or become part of a control group in an experiment to test the efficacy of a particular intervention. For this reason, most of the research on elite athletes is observational and anecdotal. That is not to say that all sport science and medicine is weak, but several of our witnesses, including the Physiological Society and the Ministry of Defence, were critical of weak methodologies.
One way to improve the quality of research is to carry out the work on non-elite athletes and the wider public and explore the two-way flow of understanding between those groups and elite athletes. We heard about examples of well known techniques that are supported by good evidence—altitude training to improve stamina, and carbohydrate loading for long-distance runners—as well as those for which there is no evidence of benefit, including taking ice baths after vigorous sport and, as I have already mentioned, taking antioxidant supplements.
UK Sport is the arm’s-length body of DCMS charged with funding research to enhance the performance of elite athletes, with a budget, we were told, of about £20 million over the period between 2009 and 2013. We were surprised that DCMS did not appear to have in place any mechanism to ensure that UK Sport was commissioning science of the highest quality, comparable to that in fields of basic biomedical research. The Government’s response did not specifically address that point, and I would welcome clarification from the Minister about how DCMS carried out that quality assurance.
I now turn again to the relevance of sport and exercise science and medicine to the wider public. Most but not all of our witnesses agreed that the findings from research on elite and non-elite athletes had relevance to the wider population. Examples include the use of exercise and muscle conditioning to improve back and knee pain in osteoarthritis, conditions that affect many people in this country.
Advice to the public on exercise is contained in the Chief Medical Officer’s guidelines on physical activity. These guidelines exist, but how many people are aware of them? I have no doubt that all noble Lords in this Room are acutely aware that the CMO recommends that 19 to 64 year-olds do 150 minutes of moderate exercise or 75 minutes of vigorous activity a week, and that there are specific guidelines for people such as myself who are over 65, but we found in our inquiry no strategy for ensuring that those guidelines were more widely disseminated to the public. Indeed, we were told of one survey of 48 GP practices in 28 London boroughs, which found that none of the GPs was aware of the latest CMO guidelines.
The Government welcomed our recommendation that training at all levels for health professionals should include the need to support the prescription of exercise for both prevention and treatment of ill health. We also suggested that physical activity should be added to the quality outcomes framework for GP practices. I would welcome comment from the Minister on what progress has been made in this area and whether any measurable change in disseminating activity guidelines and encouraging physical activity by health professionals has been achieved.
At the same time, the National Institute for Health and Clinical Excellence—NICE—has a role in ensuring that any prescription of exercise for chronic disease is based on sound evidence. Could the Minister please update us on NICE’s assessments and how they are being translated into recommendations? Many of us who exercise do things that we believe—and are told—are good to do, like stretching before or after exercising, or engaging in muscle-strengthening as well as aerobic exercise. I would be interested to know how robust the evidence is to support these particular pieces of advice and information that are in the general public’s mind.
Finally, I turn to the National Centre for Sport and Exercise Medicine, which the Government established as part of their commitment to a lasting public legacy from the Olympic Games, as well as to improve support for elite and non-elite athletes. The Department of Health’s vision for the centre was for it to be,
“a hub of clinical and research expertise”,
used for the following objectives:
“increase exercise in the community; develop strategies to prevent diseases related to inactivity; and prevent, diagnose and manage injuries for both professional and amateur athletes”.
The centre was established with a £30 million grant to three consortia. However, we were told in our inquiry that no ongoing funding for posts or research was provided and therefore there is a question about the sustainability of the centre. We also suggested that the centre should take the lead in developing a national strategy for sport and exercise science and medicine. Could the Minister please update us on the progress of the national centre and how its sustainability is being established, and also on the production of a national strategy?
No one can doubt the importance of sport and exercise. The health of the population at large would be hugely enhanced if people exercised more. The prestige and entertainment provided by our elite athletes was vividly demonstrated by our national success at the 2012 Olympics and by Andy Murray’s Wimbledon triumph. Science and medicine can make an important contribution to the realisation of these benefits of sport and exercise. The United Kingdom has an absolutely outstanding science base in the biomedical sciences but the evidence that we heard suggested that there is insufficient cross-fertilisation between this excellent science base, carried out in our world-class universities and institutes, and the application of that science to improving the performance of our elite athletes and the health of the nation. I look forward to hearing other noble Lords’ contributions to this debate and the Minister’s reply. I beg to move.
The Earl of Selborne (Con)
My Lords, the Committee will be most grateful to the noble Lord, Lord Krebs, for the way he introduced this debate and for chairing the inquiry. I served on that committee and was enormously interested and impressed by it, particularly at the seminar that started our deliberations where I learnt a lot about the quality of the sport and exercise science and medicine in this country. It seemed very timely with the Olympics just about to start to have an inquiry into the extent to which the two objectives set out in paragraph 1 of our report were being delivered.
I will confine my contribution this afternoon to the second of those two objectives: how can the R&D base,
“be translated into treatments and preventative interventions to improve the nation’s health?”.
After all, if one thinks about it, the justification for spending public money on sport and exercise science must ultimately rest on its role in improving national health. That is not to say that winning more medals is not a perfectly laudable objective; it is clearly good for national morale and we should be proud about it. However, Dame Tessa Jowell, who we quote on page 8, paragraph 3, was right when she said that the goal of increasing participation in sport was,
“not just about increasing participation in sport for the sake of it … it was also to tackle one of the most serious health epidemics facing the UK, that of obesity”.
When you realise that the Department of Health had put an estimate on the direct and indirect cost of physical inactivity in England among our population at large at approximately £8.2 billion, you realise that we are talking of sums that concentrate our minds wonderfully.
We have not gone into behavioural change. It is one thing to estimate the cost but one knows how difficult it is for the most observant commentators to change even their own behaviour, let alone that of other people. Nevertheless, it is clear that this goal is well worth achieving, and if sports and exercise science and medicine can impact on the population at large and reverse what is, in the case of obesity, an epidemic that has been running for many years, it will be something well worth attempting. As well as mentioning obesity, as the noble Lord, Lord Krebs, reminded us, Tessa Jowell could have mentioned the 20 other chronic conditions identified as lending themselves to prevention or alleviation through physical activity. So we seek to increase participation levels in sport and exercise for all ages in order to capture the health benefits for the population at large.
The Government must be given credit for having put together a number of cross-departmental initiatives, listed at paragraph 45. They involve, of course, the Department of Health, the Department for Transport and the Department for Education. It was a bit of a surprise, I have to say, that the then DCMS Minister, when giving evidence to us, said that,
“the baseline for ... the whole sport plans, is driving up participation in sport; it is not a bigger drive on the nation’s health”.
That does not make a lot of sense. We all agree that we want more people to participate. Why? I think we all recognise that it is because there are going to be those benefits. I say again that it is perfectly reasonable for UK Sport—a DCMS arm’s-length body, as the noble Lord, Lord Krebs, reminded us—to spend government money and, for that matter, lottery money on promoting the agency’s primary objective of winning more medals in competitions. I am all for that. UK Sport also receives money from third parties that are not subject to the same commitment to share the benefits that derive from public funds. With commercial organisations there may well be a confidentiality clause, and I recognise that. However, it should be a condition of receiving public funds for there to be an obligation to promote the sharing of the research findings that I mentioned in order that the wider public might benefit. That is not happening; the links between some of the elite research, other athletic research and the wider public are not as strong as one would have hoped.
For healthcare professionals plenty of information is available. We have heard about the Chief Medical Officer’s guidelines on physical activity. However—I repeat what the noble Lord, Lord Krebs, told us—there does not seem to be an effective mechanism for promoting this information, the guidelines and other advice, to the medical professionals. Surveys show that their knowledge of the guidelines is, frankly, disappointing. At paragraph 36 we point out that Sport England told us that exercise prescription should “sit alongside” pharmaceutical and surgical interventions. Yet GPs have no incentive to prescribe exercise; I can quite see that many GPs say that that is all very well but it is most impractical for them to tell some of their more obese patients to go out and take exercise. What they want is a prescription. Nevertheless, as a layman, I am fairly confident that in many cases a prescription which simply said “Go out and take more exercise” would be a jolly sight more effective than a surgical or pharmaceutical intervention.
If you think about the quality and outcome framework, there are incentives to GPs to do this, that and the other. One incentive is to list those of their patients who fall into the category of obese, but the incentive is to put them on the list, not to take them off it. Once they are on the list, GPs get paid for keeping them there. That is not exactly an incentive for them to tell their patients how to get below the magical figure at which they are considered obese. Clearly the quality and outcome framework needs to be revised. Adding physical activity to the quality and outcome framework, as Sport England suggested, might be a good start. It would save a lot of money—I am quite confident of that. You would perhaps even make a very modest dent in the culture change we are looking for so that people recognise that exercise can help solve some of the problems that we are facing as an ageing and ever more obese population. We need to raise the profile of physical activity.
We have heard that there are up to 20 different chronic conditions which could benefit from physical activity, and I shall not repeat them. I am surprised, as a complete layman, how little understanding there appears to be of why physical activity can help with so many of those conditions, including, for example, mental health problems, cancer, type 2 diabetes and the like. This is clearly a field of great potential interest and benefit and one where sports and exercise medicine has a unique contribution to make alongside the medical and biological sciences. It would be enormously helpful if there could be much greater collaboration in order to ensure that these helpful insights are captured. However, as I said earlier, that will happen only if we have a culture where research findings—particularly those funded by the public—are made available to the wider research community and, through that, to the public at large.
Lord Addington (LD)
My Lords, this is one of those papers that when you pick it up and read it makes you think, “Oh!”. I have raised sport and exercise medicine on numerous occasions, and the noble Lord, Lord Hunt, and the noble Earl, Lord Howe, have been dragged in. My approach has always been about enhancing general medicine and making sure that people are encouraged to take up sport, because they are put back together again quickly to carry on with the rest of their lives and to carry on with sport.
This report is a fairly academic paper, and I feel that it misses some of the point. You do not play a sport or push yourself to keep fit; that is a by-product. If we could all stay fit by jogging 2.3 miles every third day or whatever it is, everybody would be happy. We would have the medical benefits. We could get on with it without trouble, but we do not. We know we do not. We need an incentive and a reason to take the exercise to get the benefit. This report slightly missed the point that you do sport because it gives you a buzz. Enjoyment is not quite the right word. Sport at various levels gives you a buzz, a feeling of achievement, the competition and the thrill. Exercise sometimes provides you with another good feeling: the chance to get outside. These feelings are going on. Although the report mentions the psychology, I do not think it got under the skin of why you are doing it.
Having said that, the report is right about the fact that we do not co-ordinate, in trying to make sure that we get the benefit of the health agenda—and, presumably, the preventive health agenda—and the saving that the nation gets. The two bits do not speak to each other.
I have come to the conclusion that sports are slightly worse than political parties for wanting to sit in darkened rooms talking to each other about themselves—only slightly, but probably worse. They do not like people intervening on what they do, and change is usually forced on them—usually by a failure to perform at a certain level, to achieve an increase in numbers or, classically, to compete at the level to which they aspire or that they are used to. So when the report says that the science of elite-level sport is unclear, that does not surprise me very much. I suspect that the art of coaching and getting the best out of people is at odds with scientific method. The psychology involved, and the signs that you are responding to what goes on around you, are probably not approached best by this. There is also resistance to intervention. Sharing—and we are much better at sharing now than we were before, probably because we have to take on funding from outside government, and it is taken seriously—still has not gone into the culture.
One obvious thing that I had not even thought about until this report came out is that, if you are an elite-level sportsman, you do not want to be experimented on. It is a bit of a no-brainer. Who does want to be experimented on, to be perfectly honest? They want to be treated, helped, supported—yes. But they will take on a revolutionary new course of action only if they absolutely have to. That is a very logical point of view to take. It is always going to be anecdotal when slight changes in practice occur.
I am increasingly aware that I am not qualified in my own sporting life. Although I flirted with the top of my sport, I am totally aware that we were amateurs; although we did not think that we were amateurs, we absolutely were. I remember the shock when a first-class rugby club got its first diet sheet. Those days are long gone. But having worked a little bit with the elite level, I can say that trying to change the culture of behaviour, when people’s whole lives have been dominated by trying to achieve performance, is something that acquires scientific language, if nothing else. Trying to identify exactly what you are getting out of it is a very important factor here. To get benefit for wider society in terms not just of health but of community support and interaction is another very important point that is not covered here.
Sports medicine has important lessons to teach ordinary medicine. It is a simple fact that a sportsman knows that, if you get a bump, you get it treated quickly; you do not go to your GP and wait three weeks for a physio appointment, because then you would find that a muscle was weakened or that there was a slight imbalance in how you walked that has led into an imbalance in your entire body, which means that you might have to take time off work. The noble Lord, Lord Hunt, said that it was a very sensible idea to get more physios involved in accident and emergency, when I raised this issue a few years ago. We are still not quite there yet, because we do not take soft tissue injuries seriously enough. Sport has already taught us, and given us examples, that you should intervene early on those things to stop them becoming chronic. We have simply not adopted that yet.
I have always been something of a fan of having sport more closely linked to the Department of Health so that we can get those benefits together, especially preventive stuff. Certainly, exercise is a factor in controlling weight and gives you an incentive not to carry extra weight—by which I mean surplus weight. My rants against the body mass index are well recorded here, and I think that we will leave the subject there. But a sensible approach to how to control weight and stay healthy is something that probably should be led by the Department of Health.
The report is interesting because it starts to open a door to what is going on. When you open a door you do not know what you will find, but here was a corridor leading to interesting places which was perhaps felt to be irrelevant to sport, at least at the moment. It is an interesting start but to think that the Olympics would change the culture overnight was a total misconception. It will not be the only misconception about the Olympics. My noble friend and I have been sitting on a committee which looked at this issue and we got the impression that many people felt that, once the Olympics arrived, the days would be longer, the summers warmer and we would be guaranteed to win gold medals not only for the next 20 years but for the next 30 years.
This has been an interesting start to a debate that needs to go further, and for that I thank all noble Lords who sat on the committee.
Lord Moynihan (Con)
My Lords, I congratulate the noble Lord, Lord Krebs, and his Select Committee on their report on sport and exercise science. It considers in detail whether there is any evidence that the Games have left a lasting legacy to encourage the nation to be,
“healthier, happier and more active”.
It questions whether the science-based support for high-performance athletes, as measured by medals at the Games, was sufficiently comprehensive and adequately disseminated to assist future generations. In commending the work of the committee on reviewing sport and exercise science as applied to elite athletes and how that work can be disseminated to a wider public, it is of no surprise to me that very little elite research is published in the United Kingdom.
It is certainly true that some sports fare better than others in this respect but in our flagship sport—football—those who earn a living dance to the tune of the paymaster. When Alex Ferguson employed a team of sports scientists, he did not want its work made publicly available to Chelsea. As a result, the Premier League has no research-based ethic, in part because of the powerful marketing machine of professional sport in the United Kingdom, and in part because there is little equipment research as the great confounder is the constant change of kit for commercial gain. The public want to buy the style of football boots used by Messi or Bale. The money is in the kit that people want to own. Tennis players will employ one model of shoes for a year and the likes of Adidas and Nike, with their research teams, will fiercely guard their commercial-in-confidence research. Every season brings a new range of kit—new ski shapes and sizes; new tennis shoes. That commercial reality is a major inhibitor to long-term research.
Secondly, it is very difficult to extrapolate the science of elite sport down to the recreational player. The science required to provide a marginal gain to Chris Hoy is of little relevance to the recreational cyclist in the country lanes this weekend. The outstanding work that Sir Clive Woodward, his team, the coaches and the intricately woven sports scientists undertook for Team GB in 2012 only marginally impacts on wider participation. For this is specialist science; it is world-leading scientific knowledge. It was borne out by 29 gold medals, as opposed to one in Atlanta only 16 years before when such specialist knowledge was absent.
This valuable work is now being taken forward by UK Sport and its subsidiary the English Institute of Sport, focusing as they are on performance solutions based around a holistic range of science, medicine, technology and research designed to increase the probability of success by optimising training programmes, maximising performances in competition and reducing the number of training days lost to injury. Clive Woodward was a pioneer in aligning and integrating this approach for the British Olympic Association—I declare an interest in having had the privilege of being chairman from 2005 to 2012, through Beijing and London—and while there are wider benefits we should not overstate the case for its application to recreational sport.
That said, there is room for wider dissemination of research where it does not impact competitive advantage for young athletes. Other countries do better in this respect. The NHL and NFL in the United States are examples. The NFL collates data centrally and provides public awareness programmes without disclosing the internal secrets of the sports scientists at the Miami Dolphins or Seattle Seahawks. Australia and South Africa deliver excellent sports science research.
The main reason for the difference is the sources of funding. In countries where research is funded by those without vested interests, the prospect for dissemination is enhanced. For countries such as ours, where tight funding control is exercised via our Premier League football clubs and governing bodies of sport, operating as they do in a highly competitive global market, the opportunity for long-term funded research is restricted.
On the wider issue of an Olympic legacy to improve the nation’s health, it is universally accepted that we need to address the challenge caused by obesity among young people, the expensive consequences we face as a country from having low levels of physical activity, inadequate facilities, and an absence of policies to address improving the nation’s health. I regret that we still have a department of sickness, whose default position to sport is the treatment of sports injuries, rather than a proactive Department of Health geared to improving the nation’s health. It is not as if the challenge came to light only during the Games. I would argue that government had a better approach to the subject 150 years ago, when the modern Olympic Games were constructed on the premises of preparing a physically active and fit generation—in that case, principally of men to fight for king and country.
Indeed, between the two world wars the British Government made comparisons with Germany and Italy and quickly recognised that as a nation we were physically ill prepared. The then Minister for Health, Sir Hilton Young, later Lord Kennet, asked at a dinner of the BMA in 1935 whether something could not be done,
“to bring home the benefits of physical culture, which was a culture of mind as well as of muscle”.
The challenge was accepted and was followed by the establishment of the BMA’s Physical Education Committee, the Central Council for Recreative Physical Training, which became the CCPR and now thrives as the Sport and Recreation Alliance under the chairmanship of Andy Reed. It was established then, in 1935, as the first significant body to receive government funding to meet the grave concern about the physical health of the community. It is indicative of the approach at the time that of the 34 original members of the council, no fewer than 14 were members of the medical profession. I declare a somewhat distant interest in that one of them was my grandfather, who was the president of the Royal College of Surgeons at the time.
Alongside those 14 sat seven physical educationalists and three prominent politicians, including Herbert Morrison. The wider aims they pursued resonate to this day. They sought,
“to establish the closest link between the Council and those responsible for physical activities in voluntary organisations and to investigate the best methods of placing the specialised knowledge of the physical training associations at the service of the population”.
They wrote their own mandate,
“to help to improve the physical and mental health of the community through physical recreation, by developing existing facilities for recreative physical activities of all kinds and also by making provision for the thousands not yet associated with any organisation”.
The last 80 years have seen successive Governments struggle to translate these aspirations into political reality, despite subsequently hosting the Olympic Games in London on two occasions.
However, as the Select Committee report and its recently published sister report on Olympic legacy highlighted, hosting the Olympic Games in London offered a unique opportunity to this country to raise the bar. Those of us involved with sport saw this as being a once-in-a-lifetime opportunity to take wide-ranging steps to create opportunities for a more active society on a national and integrated scale. Hosting a great Games was always, in my view, more than 17 brilliant days of Olympic sport and the breathtaking excellence of the Paralympic Games. As important was the objective to leave a lasting sports legacy for young and old, able-bodied and disabled, the length and breadth of the country. The sponsoring department for the Games—the DCMS at the time we won the bid to host the Games in 2005—set a target shared with the departments for education and health in the DCMS public service agreement 2005-2008 to:
“Halt the year on year increase in obesity among children under 11 by 2010”.
In reality we have witnessed a growing prevalence of obesity among all age groups during this time.
So why were the Olympic Games so important in this context? I would argue that the remarkable success of the Games—the brilliance of Sir John Armitt and Sir David Higgins in overseeing the design and build of the facilities for the Games on time and on budget, and the platform they created for the BOA to field its largest and most successful British team in over a hundred years, coupled with the work of the organising committee in putting on the Games—led to a level of national commitment and inspiration that was unparalleled in our time.
Lord Moynihan
My Lords, for politicians the Olympic Games were manna from heaven. The inspiration was there, and public enthusiasm backed by all-party support was in abundance. What was needed was the political will to translate inspiration into participation through improved facilities and a transformational change in priorities capable of matching the brilliance of the Games.
The opportunity for health and education to lead this agenda remains as strong as it did 80 years ago. Physical activity, not just sport, is the key to keeping people healthy and reducing the burden on the healthcare system. In Raising The Bar, the report I wrote with Kate Hoey when the bid was won in 2005, we called on the Government to: begin work on pioneering a nationwide programme of sport and exercise medicine, echoed in parts of this new report; substantially increase the number of training schemes for GPs as well as for sport and exercise positions; prescribe physical activity to patients, both for remittal and for preventive healthcare goals; and plough half the money saved by the proposals into the provision and maintenance of suitable sport and recreational facilities.
Of course, at the heart of such a programme is the need for co-ordination in government. In my view, the Department of Health should lead a major cross-government strategy to promote the health benefits of physical activity, so as to reinforce its importance. It was hoped that the Cabinet committee would launch this nationwide sports legacy to encourage the nation to be, to quote from the report,
“healthier, happier and more active”.
Indeed, we have had a raft of welcome initiatives labelled legacy projects, but no more initiatives in total than have been launched on an annual basis since the inception of the National Lottery. To us who are passionate about sport they are very welcome—to many other people they may pepper the daily bulletins with government press releases—but they have not transformed the landscape of the health of the nation. Now we have this report which concludes with disappointment at,
“the apparent lack of joined-up thinking in Government about the Olympic health legacy”.
The scientific case for a unified, high-priority national campaign could not be stronger. The twin causes of so much of the burden on the National Health Service are either genetic or environmental. On the environmental side, so many diseases are preventable if you maintain a healthy lifestyle. We need lifestyle departments, with teachers qualified in relevant disciplines in every school, both primary and secondary. We need to design opportunities which young people enjoy. If you want to try to improve the health of the nation it has to be through a sport that people can do by themselves. A sport requiring 22 people to take part is never going to be easy to facilitate and roll out nationwide. If you want to get girls involved, which should be a priority, it has to be in activities they want to do. They do not all want to take part in outside team sports, which is why dance is such an important option.
In closing, the report also calls for further work to be undertaken on international best practice. There is no better place to begin than Finland. No more than 30 years ago—I speak with affection and respect for that great country—it was characterised as a heavy-smoking, heavy-drinking, unfit country. It has completely changed. The past two decades have been marked by a major shift in emphasis from competitive and elite sports to health-enhancing physical activity for all, as seen most clearly in two successive sports Acts and a government resolution. Now, increasingly, multi-sectorial initiatives have led to substantial changes in the public funding of sports organisations, services and the construction of sport and recreational facilities. It is a system built on the enthusiasm of volunteers. In stark contrast, it is also a country where local authorities are central to the delivery of facilities. In the UK, sport and recreational provision is a low-priority, discretionary-line item in local authority budgets, too often to be cut first.
Finland’s sports policy places health enhancement before competitive or high-performance sports. It prioritises well-being and health and supporting children’s and young people’s growth through sports. It recognises the health benefits of the cradle-to-grave approach that is so important. We need a health and fitness programme that is both low-cost and designed from cradle to grave. Cycling, swimming and, in Finland, cross-country skiing figure prominently—all activities that you can do from five to 105. A similar nationwide approach in this country would be politically popular. I can think of no better leader of that initiative than the Minister.
We have a nation inspired by the Games. Surely it is time to translate that inspiration into participation and, in so doing, embed recreational activity as a fundamental building block for a true Department of Health in the 21st century.
Baroness Grey-Thompson (CB)
My Lords, I thank noble Lords for allowing me to speak briefly in the gap.
I am a huge fan of the benefits of sport and exercise science if it is used in the right way. In my career I have undergone numerous tests, aerodynamics, skinfold measurements, maximum lung capacity testing, something called a VO2 test—there is nothing like pushing on a treadmill until you feel you are about to collapse, and then having needles stuck into you—and I can confirm that ice baths are indeed vile. On one memorable birthday, my husband bought me three metres of aluminium so that I could build a racing wheelchair that was one kilogram lighter than that which was commercially available.
I agree with the noble Lord, Lord Moynihan, about history. There is an assumption that not much has gone on before and that sports science testing has been used for a long time. I also agree with the noble Lords, Lord Krebs and Lord Addington, that athletes do not want to be used as guinea pigs—I certainly did not—unless it is your own idea, and then it is marvellous. However, it is quite difficult sometimes to get sports scientists to think about doing things in a different way.
Within limited careers, it is important that we disseminate the information so that it goes through to quality coaching, the teaching of good physical literacy, and enables us to educate our young athletes right through to senior squad level, so that they remain injury free for as long as possible.
One of the problems I see going forward—and I have seen way too much of it—is that of literally reinventing the wheel: we do not learn from the past, somebody comes along with a new idea and sometimes wastes money doing things that have previously been done. Overall, lottery funding has significantly helped our athletes by ensuring they get the right support at the right age. As an athlete who benefited from it, I think that is tremendous. We need to keep urging national governing bodies to invest and use sports science. Some sports are using less of it now than they were 15 years ago.
Overall, there has been a positive influence on the general population. The design of sports equipment at Paralympic Games level has led to better design of day chairs. They are lighter, stronger and more aesthetically pleasing. Certainly in amputee running, the work that has gone into the development of prosthetics for sprinters has had a massive positive influence on non-runners in terms of their walking gait and equipment, and it is more generally accepted that they deserve really good prosthetic equipment. There have been some very positive things that we need to keep pushing forward.
Finally, I commend the work of the committee. I am very pleased and I am grateful for being allowed to speak.
Lord Hunt of Kings Heath (Lab)
My Lords, I, too, welcome this debate and the report of the committee chaired by the noble Lord, Lord Krebs. I think it is a truth universally acknowledged that the Olympic Games in London were outstanding and never to be forgotten and that the legacy is as important. The argument for investing in sports science in elite performance and in non-elite sports and exercise has been very persuasively put by all noble Lords who have spoken in the debate this afternoon.
The question first posed by the noble Lord, Lord Krebs, was: the performance of Team GB in the Olympics was outstanding, but could it have been even better if even more use had been made of science? The noble Lord, Lord Moynihan, answered in the affirmative and pointed the way forward in terms of there being a very strong case for future investment in science in relation to elite sport.
The noble Lord, Lord Krebs, referred to heated shorts. As a commuting cyclist, I am very attracted to the idea, particularly as Christmas is coming up and the winter will, no doubt, get colder. More seriously, it would be good to hear from the noble Earl, Lord Howe, about future investment in sports science in elite and non-elite sports. The noble Lord, Lord Moynihan, made a very important point when he said that there is a problem with the sharing of knowledge with the vested interests of investors in sports science as opposed to the non-vested interests. That does not necessarily have to be government, but government can, no doubt, play an important role.
The other question that arises from this is about the extent to which we are investing in science to increase our knowledge of the impact of exercise on good health. This is the second argument that has been put in your Lordships’ debate this afternoon. The noble Lord, Lord Krebs, and other noble Lords referred to the health benefits of exercise, and it is striking that although this is increasingly known about, it does not seem to have much impact on the general public’s desire to exercise. The post-legacy figures for the public taking up sport or more generally taking part in exercise have been very disappointing. The figure of 150 minutes of moderate exercise per week seems as far off for many of the population as it ever was. Noble Lords probably know that I live in Birmingham, and my understanding of the latest statistics there is that 22% of young people in Birmingham are classified as obese. That is a shocking figure. We know the impact that that will have in future years in terms of health inequalities and demands being made on the health service. As we know, we have an epidemic of diabetes in many parts of society and of the country. As regards the figure of 22% obesity among young people in Birmingham, you do not need much knowledge of science to know that that will lead to huge pressures being put on the health system in that city in the coming years.
I wish to ask the noble Earl, Lord Howe, about the role of general practitioners. A number of points have been made in that regard. It was argued persuasively that if GPs were to prescribe exercise that might have a positive impact in terms of people’s response. We know that as regards health issues, particularly smoking, nothing is more effective than a GP telling a patient that he or she needs to think about giving up smoking. It would be helpful to ensure that GPs are all facing in the right direction on this issue.
Does the noble Earl think that health and well-being boards ought to prioritise investment in sport and exercise vis-à-vis local authorities and the health service? After all, health and well-being boards recognise that local authorities have a big role to play in this area. Local authorities are also responsible for running extensive leisure services—or at least they were—and have a wider role in this area in liaising with schools. Surely sport and exercise ought to be a major priority in joint strategic needs assessments, which attempt to bring together wider health policies. Will the noble Earl assure the Committee that the Government will push health and well-being boards in that direction? I would argue that they could be the local equivalent of the committee set up by the BMA in the 1930s, and its successor organisations, to which the noble Lord, Lord Moynihan, referred.
Another very important point raised by the committee of the noble Lord, Lord Krebs, was the attitude of the Department for Culture, Media and Sport towards the health benefits of sport. The Government reject the committee’s assertion. My own experience in government suggests that there is a gap between the Department of Health’s policy of encouraging exercise and the DCMS’s focus on sport. Indeed, I have taken part in theological debates between the two departments on where one element ends and the other begins. This is a fruitless exercise as it is patently obvious to anyone with any common sense that sport and exercise go together. If those departments find it difficult to resolve that issue, something else needs to happen. That could involve assistance in the form of a Cabinet committee, to which the Government refer in their response to the report of the noble Lord, Lord Krebs, or, as the noble Lord, Lord Moynihan, suggested, we should simply make it clear that a good health outcome is the number one priority. I believe that something more needs to happen in this area.
Noble Lords have not really mentioned the role of the Department for Education despite the fact that it has a crucial role to play in this area. We have seen very regrettable reductions in government support for school sport and I hope that the noble Earl’s department has actively pointed out to Mr Gove the error of his ways. Following the reaction to the original cuts in government support for school sport, the Department for Education partly retracted its proposals and established the School Games project—as we are told in the Government’s response—which attempts to provide more opportunity for pupils of all abilities to take part in competitive sport in schools. But I would like to see more—and I would like to see the Department of Health become the champion in Whitehall of the need to promote school sports, competitive sports and other exercises.
I would also like to hear more about how we can encourage sports clubs to work in schools. The noble Baroness, Lady Heyhoe Flint, has done so much to encourage girls to take part in competitive sports; she will know of the Chance to Shine project, which is about encouraging state schools to come back to playing cricket. Part of that approach is to encourage local cricket clubs to send their coaches into schools. I would like to hear more about how the Government might encourage that in future.
We then come to the issue of investment. The noble Lord, Lord Krebs, referred to the role of the National Centre for Sport and Exercise Medicine. Clearly, there is a concern here about its future viability. Can the Minister give the Committee some comfort that the Government recognise that continued funding support needs to be provided? Does he think that the Department of Health’s own research and development fund could come up with some support? It seems a persuasive argument that, given that the department is concerned with improving the health of people in this country, and given that sports and exercise clearly have a vital role to play in doing so, I would have thought that the argument for some support and funding from his own department’s R&D fund, which is not extensive but is very significant, ought to be considered.
The noble Lord, Lord Addington, suggested that the noble Earl, Lord Howe, and I were interlopers in this debate. However, I have no doubt that the encouragement of sports and exercise can play a critical role in improving the nation’s health and well-being. I am also in no doubt, having listened to the debate and read the report, that investment in science and science research could help us and use that knowledge to encourage more of the population to play a part. When one looks at some of the great health problems that we face—of frailty, dementia and obesity—one can see emerging research that suggests that exercise and sports can very much help us to meet some of those challenges. Given the department’s role, does the Minister not accept that it could play a much bigger role in this whole area in future? I hope that the department will accept that opportunity.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, first, I congratulate the noble Lord, Lord Krebs, on securing this debate and on the excellent work of the Select Committee on Science and Technology, which he chairs, in highlighting the important issues associated with sport and exercise science and medicine. The Government have welcomed the Committee’s report and its focus on the quality and application of research in this area.
We agree that the biomedical basis for improving performance of elite athletes needs to be of the highest quality possible and meet international peer review standards. For this reason, UK Sport and the English Institute of Sport have robust processes in place to quality-assure the projects that they support. For example, all projects are reviewed by an independent research advisory group, which includes a number of leading experts in the field of sport science.
Our elite sport programme is the envy of the world. UK athletes continue to perform strongly at the highest levels, thanks to the funding and technical support they receive from UK Sport and the home country sports institutes. Based on Team GB’s performance, there is no reason to doubt the quality or appropriateness of the research.
In the light of this success, it makes sense for this knowledge to be shared so that it might benefit non-elite sports men and women. Indeed, there are a number of ways in which UK Sport disseminates research findings. However, it is important to remember that the end goal of research is to support and maximise athletic performance on the world stage. Although UK Sport and the English Institute of Sport concede that more could be done to disseminate their findings, they need to do so without compromising the UK’s competitive edge.
The committee’s report rightly highlights the societal and economic costs of inactivity—a point well made by the noble Lord, Lord Hunt—and the benefits of exercise in promoting health and treating chronic disease. Indeed, the UK CMOs’ report, Start Active, Stay Active, contains recommendations across the life course on the levels of physical activity needed to achieve these benefits. The noble Lord, Lord Hunt, mentioned the research funded by my department. I can tell him that the department’s National Institute for Health Research funds a wide range of research on the benefits of physical activity.
I completely agree with my noble friend Lord Selborne that it is of crucial importance that breakthroughs in sport and exercise science and medicine are translated into health benefits for patients and the public whenever relevant and applicable. For example, characterising the mechanisms by which heart function improves with exercise in elite athletes and the military can help explain how heart function is impaired in people with diabetes or with high blood pressure. There are numerous examples of where the work of UK Sport and the English Institute of Sport is linked to benefits in the health and wellness domains. These typically involve partnerships with universities and necessitate the sharing of knowledge—for example, vitamin D supplements for bone injury and soft tissue injury recovery. There are a number of other channels, including formal and informal events where knowledge is shared within and outside the elite sport community. I think we can therefore be reassured about one of my noble friend’s central points—that taxpayer funding should lead to benefits to the wider public.
Translational health research is a high priority for the Government. In August 2011 we announced a record £800 million to support this through biomedical research centres and units funded by the National Institute for Health Research. Some of this money has been used to establish a new research unit at Leicester and Loughborough. This unit is helping to expand lifestyle interventions available for the prevention and treatment of chronic diseases. The funding is also enabling the NIHR biomedical research centre at University College London Hospital to study the mechanisms through which exercise promotes health, and how to deliver effective exercise strategies.
An important link in all this, which was mentioned by the noble Lord, Lord Krebs, is the first ever National Centre for Sport and Exercise Medicine, a legacy bid commitment of the 2012 London Games. The £30 million project funded by health is on track, with the London hub now actively functioning and treating patients. Loughborough is anticipated to become operational in 2014, and Sheffield will be the final site to become operational in late 2015. As well as supporting elite athletes, the centre’s influence will extend to local NHS hospitals and primary care facilities to provide a service for anyone who plays sport. Public Health England is overseeing the continuing development of the national centre and is keen to ensure that the centre performs a clear leadership role for sport and exercise science and medicine for the next five years and beyond. Public Health England is supporting the national centre to position it as an international voice on sport and exercise medicine, with strong links with the wider physical activity agenda and a global academic platform. PHE is considering an outline business case for funding in 2014-15 to support co-ordination across the national centre and as pump priming for long-term sustainability. The centre is keen to be seen as an independent organisation which generates income through direct patient care and research funding. It has appointed R&D leads to start that work. We can see the makings of the centre as a sustainable long-term organisation going forward.
The noble Lord asked about the centre as a source of a national strategy. Public Health England is, once again, working with the national centre to develop a sport and exercise medicine network of academics to help collaboration in research funding bids across multiple academic units. However, potential for conflict of interests has emerged as a stumbling block in developing a national research strategy.
In the context of public health, the noble Lord, Lord Hunt, asked about the role of health and well-being boards and his view that they should be prioritising investment in exercise. Many noble Lords would identify with that view but we must remember that health and well-being boards have been given, quite explicitly, the freedom to prioritise their own spending in relation to local public health priorities. However, I expect Public Health England to show the way in the area for local health and well-being boards to follow.
We envisage that the national centre will continue to attract grants from the research councils and deliver work of the highest quality, with the support of their world-leading host institutions.
Given the important health benefits of physical activity, the Select Committee was right to focus attention on the training of health professionals at all levels to be able to prescribe exercise for prevention and treatment. Clearly, the content and training curricula for doctors is determined by the medical schools and royal colleges, but the Department of Health will work closely with Public Health England and other interested organisations to make the case for physical activity in healthcare. On a more practical level, I am pleased to announce that Public Health England has commissioned an e-learning module on physical activity for healthcare professionals, to be distributed by BMJ Learning.
The noble Lord, Lord Krebs, mentioned the National Institute for Health and Clinical Excellence. NICE plays an important role in turning research evidence into authoritative and practical guidance for practitioners and commissioners. Where appropriate, both its public health and clinical guidance recognise the contribution that physical activity can play in the prevention, management and treatment of particular conditions, ranging from obesity to osteoarthritis and low back pain. I assure the noble Lord that many of NICE’s clinical guidelines recognise the important role that exercise and physical activity can play in the management of individual conditions. For example, its clinical guidelines on osteoarthritis and low back pain already recommend exercise. I am confident that NICE will continue to consider the role of exercise and physical activity in the management of particular conditions, where the evidence allows.
The noble Lord, Lord Hunt, asked about the scope for disseminating exercise guidance for specific chronic conditions to GPs. We are exploring the options for a national dissemination of this learning, which would need to be underpinned by better training for doctors in the benefits of physical activity. The new e-learning package commissioned by Public Health England represents an important step in that direction.
Exercise professionals also play an important role in supporting the most vulnerable patients to exercise as part of their treatment for a range of conditions—for example, as part of cardiac rehabilitation. Ukactive has been working with the royal colleges and training organisations for the fitness industry to develop new professional and operational standards for exercise referral. That work is awaiting the update by NICE of its existing recommendations on the use of exercise referral schemes, which it plans to publish in September next year.
The noble Lord, Lord Krebs, asked about the possibility of incorporating physical activity into an indicator in the quality and outcomes framework. This year saw the introduction of two new QOF indicators for physical activity. Those measured the percentage of patients with hypertension who had been screened for inactivity and, of those not meeting the guidelines, the percentage offered brief advice on how to be active. I have to tell him that these indicators have been retired from the 2014-15 QOF as part of the exercise to free up space for GPs to provide more personalised care. That agreement saw a reduction of the QOF by more than a third. However, the NHS health check programme continues to recommend that patients should be screened for their physical activity levels and the delivery of brief advice or an exercise referral for those who are shown to be inactive. At the same time, we are actively considering the case for continued monitoring of the retired QOF indicators to help inform NHS England’s developing primary care strategy.
We are committed to the dissemination of the UK Chief Medical Officer’s guidelines for physical activity, to both the public and medical professionals, and we are working with Public Health England and other organisations to help make healthcare professionals aware of those guidelines.
My noble friend Lord Addington asked why there are not more sports injury people in A&E to treat soft tissue injuries. I agree that athletes understand the importance of prevention. Sport and exercise medicine is, as he knows, a young specialism. Part of the work of the National Centre for Sport and Exercise Medicine will be to scale up sports and exercise medicine services and it will be important to ensure that supply is linked to demand.
The noble Lord, Lord Krebs, asked about the quality assurance of research initiated by the DCMS. I have already alluded to that very briefly. There is no specific monitoring or assessment undertaken by the DCMS of the research commissioned by its arm’s-length bodies. However, UK Sport acknowledges that further steps are necessary to provide stringent assessments of standards and has already made progress on this for the next funding cycle from 2013-17. This includes the appointment of an independent, technically structured sub-committee in addition to the research advisory group that has been in existence for a number of years. That will provide a more extensive overview of all investments in science, medicine and engineering.
Sport is a key part of a wider physical activity agenda, with an important role to play in getting and keeping people active and thereby improving their health and well-being. All sport is physical activity but an important part of Sport England’s youth and community strategy is pilot funding to support how sport can best contribute to improving health and, at the same time, grow weekly sports participation. There are important links between elite sport and the health of the public.
Aligned to the ambition of getting more people participating in sport once a week, Sport England has focused its work on tackling inactivity as this is where we can make a significant contribution to reducing health inequalities and produce the greatest potential health benefits.
Returning to elite sport, the fruits of National Lottery funding are there to be seen in Team GB’s recent success in the Olympics. I was reminded today that in 1996 GB won only one gold medal. In 2000, that went up to 11; in 2004 it was 9; in 2008 it was 19; and last year it was 29 gold medals.
However, the lasting impact of sport and healthy living has always been at the centre of the legacy ambitions of the Olympic and Paralympic Games. Our 10-point plan includes: elite sport, world-class facilities, major sports events, community sport, the strategy for youth and community sport, the charity Join In, school games, physical education and disability sport. For example, there will be £150 million a year for primary school sport starting in September 2013 and £1 billion over four years to boost youth and community sport.
In his Autumn Statement, my right honourable friend the Chancellor of the Exchequer announced that the Government will provide £150 million of funding to continue the school sport premium into the academic year 2015-16, meaning that primary schools will be able to put in place longer-term plans to improve their PE and sport provision. This is not just about elite sport. It will help people start to be and stay active, whether through sport or wider physical activities.
My noble friend Lord Moynihan asked about a cross-government push. The Olympic and Paralympic Legacy Cabinet Committee is the focal point for legacy and is well placed to ensure a joined-up approach to sport and physical activity. The Department of Health is obviously the lead department for health in promoting physical activity. We are working with other departments to support active lifestyles. Departments have jointly made available £300 million to raise the game in primary school sport. The Department for Transport awarded £77 million to increase cycling in eight of our major cities, with £1.2 million from the Department of Health to support walking. More than a million more people are playing sport than in 2005. I suggest to noble Lords that that progress is positive. As regards the Government’s effort, all this adds up to a significant investment in health-enhancing physical activity, driven by what we have learnt from sport and exercise science and medicine.
Lord Krebs
I thank all those who have taken part in this debate. It has been a privilege to hear the contributions of all noble Lords, but particularly of those who have first-hand experience of participating in elite sports as Olympians or other forms of competing at a very high level.
One theme has come through repeatedly: the huge importance of the health benefits of sport and exercise in tackling the chronic diseases that plague the population of this country and will cost us huge amounts of money in future. The noble Lord, Lord Addington, raised a very important point when he talked about the enjoyment of sport and exercise. Perhaps the key to encouraging people to be more active is to show them the enjoyment that can be obtained from it. He also referred to the art of coaching elite sports men and women. There may well be an art to it but that does not mean there cannot be science as well working alongside the art. The point made by the noble Lord, Lord Moynihan, and others about learning the lessons of history and from other countries is immensely important. Although we are obviously doing many things very well, we must not forget the possibility of healthy plagiarism from other countries and the history books.
I thank the noble Earl, Lord Howe, for his responses to the questions raised during the debate. I was encouraged to hear about additional investment in sport and exercise science and medicine, the sustainability of the national centre and the e-learning module that will help professionals to disseminate the importance of exercise to patients and the public at large. I also noted and welcome that he said that there was an emphasis on disseminating and publishing the results of work on elite athletes so that it could benefit the wider community. I still very much hope that a national strategy for sport and exercise science and medicine will emerge in the not-too-distant future, but I am very pleased with the responses obtained.
EU: Fraud (EUC Report)
(10 years, 5 months ago)
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Lord Stoneham of Droxford
That the Grand Committee takes note of the Report of the European Union Committee on The Fight Against Fraud on the EU’s Finances (12th Report, Session 2012–13, HL Paper 158).
Lord Stoneham of Droxford (LD)
My Lords, this Motion was at one stage in the name of the noble Baroness, Lady Corston. As noble Lords may already know, the noble Baroness was unwell last week and is recuperating at home. Therefore, I am speaking on her behalf.
The European Union Committee’s Sub-Committee E on Justice, Institutions and Consumer Protection, of which I am a member, prepared the report which is now before the Grand Committee. The Motion invites the Grand Committee to take note of the report The Fight Against Fraud on the EU’s Finances. I welcome the involvement in this debate of my noble friend Lord Newby. Given his experience in Customs and Excise, I cannot think of a Minister more qualified to reply to a debate on fraud.
In July last year, under the considered and diligent stewardship of the predecessor of the noble Baroness, Lady Corston—the noble Lord, Lord Bowness—the sub-committee of which I am a member decided to launch an inquiry into fraud on the European Union’s finances. The committee sought to gauge the vulnerability of European Union funds to fraud and assess the effectiveness of the European Union’s anti-fraud system and the effectiveness of the member states in pursuing any crimes perpetrated against the European Union’s budget.
In addition, the inquiry was timed to coincide with the publication of a directive aimed at protecting the European Union’s financial interests through the criminal law. We saw more than 30 individual witnesses and some members of the committee, including myself, travelled to Brussels, where we saw all the relevant EU agencies and bodies tasked with dealing with fraud, plus a number of MEPs. We are very grateful to all those who submitted evidence to our inquiry.
Since 2011, the Commission has produced a number of legislative proposals designed to improve the protection of the EU’s financial interests which are highlighted in the report. In addition, since the report’s publication in April this year, the Commission has also brought forward a regulation reforming Eurojust—the European Union’s criminal justice agency—and the controversial proposal introducing the concept of the European Public Prosecutor’s Office, which is designed to prosecute crimes affecting the Union’s financial interests. The Government have decided not to opt in to the Eurojust proposal, against the express view of this sub-committee, and the coalition agreement has ruled out the UK’s participation in the European Public Prosecutor’s Office.
European law makes combating fraud on the EU’s finances the responsibility of both the European Commission and the individual member states, but the member states’ authorities remain responsible for administering 80% of the money. Given this fact, the overwhelming weight of responsibility for the protection of the EU’s financial interests falls on the individual member states and, in the context of criminal frauds, their crime-fighting bodies.
The report recognises the hidden nature of criminal fraud. We understand that estimating the levels of fraud perpetrated in the individual member states with any degree of accuracy is very difficult. These problems are magnified once you introduce the additional complexity of the European Union’s 28 member state structure, but these difficulties should not allow the member states to ignore their responsibilities.
I plan to concentrate on four key aspects of our report: first, the vulnerability of EU funds to fraud and their potential scope for fraud; secondly, fraud specifically in the UK related to EU funds; thirdly, the European fraud concerning VAT; and, fourthly, the European Union’s anti-fraud structure. I turn first to one of the main conclusions of our report; namely, the vulnerability of EU funds to fraud. In 2011—the year that forms the main focus of the committee’s inquiry—the EU’s budget was €141.9 billion. In 2011, the total government revenue in the UK for the same year was £589 billion. The UK’s budget is three and half times the EU budget.
Under its obligation to report annually on its anti-fraud work, the Commission produces a figure for fraud in the European Union based on the frauds reported to it by the relevant member state authorities. The figure for 2011 was €404 million, or 0.28% of the EU’s 2011 budget. Many of our witnesses told us that this was an underestimate of the problem, and Rosalind Wright QC, former director of the Serious Fraud Office in the UK, said this figure represented the tip of the iceberg. The Commission rejected the iceberg analogy and suggested that EU funds were no more prone to fraud than national budgets, while the UK Government argued that EU funds,
“will always be vulnerable to fraud”.
The UK’s National Fraud Authority which, until its recently announced abolition by the Home Secretary, was tasked with co-ordinating anti-fraud action in the UK, told us that the current level of fraud suffered by the UK public purse amounts to about £20.3 billion per annum, which suggests that for 2011 in the UK, 3.4% of the public purse was lost to fraud. So, in line with the Commission’s evidence that the EU’s budget is no more prone to fraud than national budgets, the committee took the estimate for fraud in the UK and applied it to the EU’s annual budget for 2011 and arrived at a figure for fraud on the EU’s budget for 2011 of €4.82 billion, a figure more than 10 times more than the Commission’s official figure.
The committee’s report recognised the various caveats and warnings that have been applied to the process of deriving these figures for fraud on the EU’s budget from national figures. Nevertheless, it is clear to the committee that the Commission’s official figure for 2011 of €404 million offers only a glimpse of the levels of fraud perpetuated against the EU’s finances. If the Government are right that EU programmes will always be vulnerable to fraud, and in some member states increasingly so, the final figure will be even greater. I note that in its recent impact assessment in support of the proposed European Public Prosecutor’s Office, the Commission suggested that the actual level of fraud on the EU’s budget was in the region of €3 billion, so it is moving towards the committee’s figure.
In their formal response to this report, the Government expressed concern about our estimate of the level of EU fraud, adding that they did not recognise the committee’s figure. We were disappointed with the Government’s lack of engagement with this key conclusion of our report, so I offer the Minister an opportunity during this debate to engage with this aspect of our conclusions. Given this disappointing context, we were unable to see how the member states’ and Commission’s claims to protect the EU’s financial interests could be justified. We hope that the introduction of the directive on protecting the EU’s financial interests via the criminal law, which introduces an EU-wide definition of fraud on the EU’s finances, will help to alleviate this problem.
We also looked specifically at the extent to which fraud against the EU’s budget was committed from within the UK and assessed the rigour of the Government’s duty to report evidence of fraud to the Commission. I regret that the picture that emerged was not good. The committee recognised that the same difficulties that apply to estimating fraud on the EU’s budget also apply to assessing the levels of EU fraud committed from within our shores. None of our witnesses was willing to place a precise figure on the problem, but the National Fraud Authority suggested a figure of £41 million, about 1% of the total EU-funded expenditure in the UK. However, it warned us to treat this estimate with a “high degree of scepticism”.
What emerged is that no single government department or body appeared to co-ordinate or take ownership of the UK’s fight against EU fraud. The Government told us that they take all these matters seriously and EU fraud “extremely seriously”, but the responsibility to deal with fraud and to report it to the Commission falls on the individual department dealing with the relevant funds. When asked, the Minister was not “sure” whether the Government collated all the different departmental figures into one place. This lack of co-ordination concerned us and confirmed our view that individual member states, including the UK, do not devote significant resources to pursuing EU fraud and, as is their responsibility under EU law, to reporting it to the Commission.
We therefore recommended in the report that the Government nominate a single department or agency to co-ordinate the fight against EU fraud in the UK and to take responsibility for attempting to quantify the problem. In their response to us, the Government agreed that this information should be shared between government departments and that, while there is room for improvement, such sharing already takes place. We welcome this, although we have wondered why it has been so difficult for the committee to get a clearer estimate of the level of the problem in the UK, even allowing for the nature of fraud, from those witnesses we saw from the relevant national bodies.
Furthermore, on 2 December the Home Secretary by way of a Written Statement announced the abolition in March 2014 of the National Fraud Authority. I note that her Statement makes no mention of EU fraud, nor does it assign responsibility for dealing with the problem to any specific UK body. I therefore have to ask the Minister: who will be responsible for leading the fight against EU fraud in the UK after 31 March 2014?
I turn now, briefly, to VAT fraud or carousel fraud, as it is often known. This is a highly technical fraud perpetrated against the VAT system involving a series of often non-existent transactions involving the purported movement of goods and services within the EU’s single market. At the outset of our inquiry, the Government were of the view that VAT fraud was outside the scope of our investigations, but it was clear from the evidence received that this remains a very significant problem throughout the EU. The report is clear that the committee understands the Government’s opposition to any EU measure or action which would extend the EU’s competence into tax enforcement in the UK, but we argue that this legitimate concern should not allow fraud which diminishes the amount due to the EU to be ignored or not pursued with vigour. We have our doubts that existing EU measures are tackling this problem and, therefore, the report called on the Government to suggest alternative robust measures to combat VAT fraud. In their response the Government reassured us that they are fully committed to fighting VAT fraud and that it is “pursued with vigour” by HMRC. Perhaps the Minister will confirm what that figure will be. We do not doubt their determination, but are the Government sure that the other member states’ authorities pursue this problem with similar enthusiasm and vigour?
The committee considered the quality of the EU’s current institutional framework for dealing with fraud. We found that OLAF—the EU’s anti-fraud body— remains an agency of limited powers. Budgetary restrictions force it to be selective about the cases it pursues. We are concerned that if OLAF were to be seen as a body whose recommendations are never followed up by the individual member states which lack enthusiasm in dealing with EU fraud, its effectiveness will be questionable. We also fear that the relationship between the EU’s crime-fighting agencies—Europol, Eurojust and OLAF—as currently constituted represents a tangled web which undermines any co-ordinated response to fraud on the EU’s finances.
Finally, given that it was repeatedly proposed as a solution to the problems inherent in the EU’s anti-fraud system, the report briefly addressed the then unpublished proposal for a European Public Prosecutor’s Office. This was brought forward by the Commission in July, and we issued a reasoned opinion challenging the proposal on subsidiarity grounds. We concluded the report by asking the Government how they would propose tackling the flaws identified in our report without participating in the European Public Prosecutor’s Office proposal. We have as yet not received a satisfactory reply to that question and would be grateful if the Minister could address the issue in his reply.
While combating fraud in the EU’s finances may pose unique challenges for both the EU’s institutions and individual member states, protecting the public purse in these difficult economic times remains the responsibility of us all, as we say in the opening chapter of the report. Those of us committed to countering negative public scepticism about EU institutions also have every interest in a more vigorous approach to eradicating the perception and reality of fraud. I beg to move.
Lord Bowness (Con)
My Lords, I thank my noble friend Lord Stoneham of Droxford for his comprehensive introduction of this report and for his support—together with that of the noble Lords, Lord Rowlands and Lord Anderson of Swansea, the noble Earl, Lord Sandwich, and my noble friend Lord Eccles—during the conduct of this inquiry under my chairmanship of the sub-committee. I am sure that we all want to send the noble Baroness, Lady Corston, good wishes for recovery from her illness.
I am delighted that the House, albeit eight months after publication, now has the opportunity to debate this report. I will emphasise a few points, although they have been covered very adequately by my noble friend. I particularly regret the rejection by Her Majesty’s Government of the suggestion that one department have overall responsibility for ensuring that the fight against fraud is kept to the forefront of everyone’s attention. I note from the response that the Government believe that individual departments are best placed to detect, prevent and rectify fraud or irregularities and that reducing this to a single department would lead to duplication and slow down the process. Of course, the report did not advocate that but rather that one department should have responsibility for co-ordinating the efforts of each. While we understand a lack of knowledge of the amount of undetected fraud, it is less understandable why, in evidence, the Government were unable to give us a total figure for detected fraud.
We also advocated one point of contact between OLAF and the United Kingdom. The Government highlighted the difficulties of different jurisdictions within the United Kingdom. However, that should not create a problem. This is still one country with a national Government. There could well be a single point of contact. What happens thereafter would and should remain a matter for the relevant devolved Administrations.
We are also well aware of the Government’s position on the European Public Prosecutor’s Office. Indeed, the Committee and the House made their position on that clear. I do not know whether the present proposal will go ahead under enhanced co-operation but the recommendation in the report urged the Government to make clear what proposals they would bring forward to tackle this problem. Like my noble friend Lord Stoneham, I ask the Minister to explain further.
We were singularly disappointed by the apparent lack of engagement by the Government and HMRC in the course of this inquiry and report. That appeared to stem from the belief—a proper one—that matters of taxation are the exclusive prerogative of the member states. However, protecting one’s turf should not exclude recognition of a problem or the search for a solution. That I felt particularly true of the problem of VAT fraud and its international elements, coupled with the complicated and some may say tenuous connection between VAT gathered and money due to the European Union. It seemed and still seems to be an area of legitimate inquiry for the committee. That view was confirmed when the Minister told us, “Oh, it was only a very small proportion of the money that went to the European Union compared with VAT totals as a whole”. That small sum was £2 billion.
The committee went to Brussels and saw OLAF. We were singularly concerned about the apparent discord between the director and the supervisory committee, which evidenced itself in the morning that we were there. I do not know what the outcome is. Perhaps the Minister, having seen our report and the response, will be able to bring us up to date on the present position.
We also talked to a number of MEPs and the relevant committees. They showed considerable concern and awareness of the problem—a view shared, I believe, by my colleagues on the committee—but perhaps do not have the power necessary to make a real difference. I will be interested to hear from the noble Baroness, Lady Morgan of Ely, who is winding up for the Opposition for the first time in a European debate in which I have taken part, how, in the light of her considerable experience in the European Parliament and of matters of this kind, she sees the problem being dealt with.
Having been got up at a somewhat ungodly hour to be interviewed about this report by a radio presenter, he missed the whole point of the report and raised with me the question of the European Union’s accounts not having been signed off by the auditors. I suggested to him that it was not really relevant to the point. However, perhaps we should remember that it is not an easy matter to deal with. The stringency of the rules and the fact that the money is dealt with by member states leads to a difficult situation in the Union’s accounts. To put that in context, I read in the Times this morning that the Auditor-General has declined to sign off the accounts of the Department for Work and Pensions and that depending on whether you believe the Telegraph or the Daily Mail this is the 24th or 25th consecutive year in which that has occurred.
Lord Davies of Stamford (Lab)
My Lords, I congratulate the noble Lord, Lord Bowness, who was the chairman, and his sub-committee on their decision to focus on this extremely pertinent matter and on the thoroughness of their engagement in this revealing inquiry. I also take the opportunity to welcome my noble friend Lady Morgan to the Front Bench on a European issue. It is the first time I have had the privilege of standing beside her or behind her on a European subject on which she has been leading for my party.
Three particularly striking and salient points emerge from this report. The first relates to the amount of fraud. The Commission suggests that fraud was running at €400 million in 2011—I have taken this figure from the report—which would be 0.28% of the current budget of the EU. That is a very low figure indeed. The committee obviously thinks that that is an understatement and has decided that it wants to multiply that to produce a figure that corresponds to the fraud estimated to exist in this country as a proportion of its public expenditure. It came up with a figure roughly 10 times greater than the commission has proposed. It does not have any reason for that particular multiple and it may be that the truth lies between those two figures. However, what is inconsistent with the picture given by this report is the notion, which is purveyed the whole time in Eurosceptic propaganda, that the European Union is a sink of iniquity in terms of fraud. Clearly the level of fraud is, at worst, comparable with the level of fraud in this country. That is a bad situation. All fraud is regrettable and must be dealt with thoroughly. It should be of particular concern to parliamentarians because it is our job to monitor the performance of governance in this area. Nevertheless, the figures before us will be quite surprising for the British public, who are used to being fed the propaganda line by the media in this country that the level of fraud in the EU is vastly greater than here. Some of the analogies that the noble Lord, Lord Bowness, has cited about British government departments’ records in that area reinforce that.
The second matter is very salient. It is quite clear that the overwhelming majority of fraud, perhaps 99%, arises in the area where national Governments are disbursing EU programmes. It does not arise in the institutions of the Union where fraud is an extremely rare event. That is even more striking in relation to the false propaganda that I referred to. There is an irony here because the Eurosceptic lobby in this country, which is very powerful, as we know, always makes out that this fraud is a consequence of too much European integration and is part of the evil of European integration or, they would say, the evil of European federalism. In actual fact, ironic as it is, it is quite clear from these figures and from the reality of the position that the reverse is true. If in fact these programmes were all run by the European Commission with disbursements under the CAP, the structural funds or the cohesion funds and were the responsibility of European officials, there would not be anything like the same kind of problem. There would be vastly less fraud. The problem is that the national states are disbursing this money, and it is in the national states that the losses, fraud and corruption occur, in some nation states much more spectacularly than in others. I shall come on to that in a moment.
In a way, the reality is not evidence of an excess of federalism in the European Union but an argument for an insufficient degree of federalism in the European Union. I do not suggest for a moment that it is practical to have all the community budget disbursed by an enlarged Commission. In the United States, a lot of federal programmes are actually run by the individual states, and they are responsible for making disbursements under those programmes. Nevertheless, that is a very important and authoritative corrective to the prevailing and utterly false impression given in this country quite cynically by the media purveying a picture that is the exact obverse of the truth.
The third salient point that emerges very strikingly from this report is that there have been quite serious impediments in some of the member states in following up on allegations of fraud or prima facie evidence of fraud that have been brought to their attention by OLAF. I refer noble Lords to the very interesting Table 1 on Page 29 of the report. It is headed,
“OLAF referrals to Member States”.
The left-hand column shows the number of referrals by OLAF of prima facie evidence of fraud. All the columns are interesting but for the sake of brevity I switch right away to the far right-hand column which shows the level of convictions. Noble Lords will see that for all 27 member states—there were 27 at that time—there were 199 convictions out of 1,030 referrals. I calculate that as being roughly 18%. That is the average. One sees immediately that the United Kingdom is slightly below that. I calculate that figure as being about 15%; so in this country we are not quite as good as the average. The worst performers are Italy, Poland and Greece, which all have a record of about 6% or 7% of convictions in relation to the number of referrals. Far and away the star performer is Germany, with almost 40% of referrals resulting in convictions.
OLAF is a single organisation involving people who will be working on different cases involving different fraud allegations in different parts of the Union at any one time, so one can assume that their standard of performance and the solidity of the cases that they make will be the same irrespective of the member state where the fraud happens to have occurred. That means that there is an enormous discrepancy in the extent to which these allegations of fraud are followed up. That is a very serious matter for EU taxpayers as a whole. The question is: what do we do about it?
The report does not avoid the question of what we do about it and the inquiry took a lot of evidence on that subject. For example, I refer noble Lords to the testimony given to the committee and quoted on pages 34 and 35. Paragraph 97 states:
“The Director-General of OLAF”—
that is one perspective, but a very important one—
“gave us a vivid account…of the multi-jurisdictional problems confronting OLAF on a routine basis. He argued that such multi-jurisdictional crimes against the EU’s budget are ‘European by nature, because you cannot say it is specific to this nation or that one’. He was clear”—
this is my emphasis—
“that the solution to this problem is an EPPO”—
in other words, a European Public Prosecutors Office.
“Most of the witnesses agreed … Rosalind Wright QC”—
she is, of course, a former director of the Serious Fraud Office—
“offered two reasons in favour of an EPPO; first, the current unwillingness of the Member States to prosecute these crimes … and, second, the fact that ‘most of these very large frauds are committed across national boundaries’. Drawing on her time at the Serious Fraud Office, she explained that in such cases it had been hard to bring everyone together under one jurisdiction and that an EPPO would help”.
The committee itself, which is an all-party organisation and has always to express itself with great reserve and care—I understand these things because I sit on another sub-committee of this House—is absolutely clear, using parliamentary language. It said that,
“it is unfortunate that the Government have ruled out participation without first having had the opportunity of considering the details of any proposal and without knowing what form an EPPO would take”.
It is quite obvious what is going on here: the Government are not taking into account the national interest. They are not making, or even attempting to make, an objective analysis of where the national interest lies in this matter and what the right solution to those serious problems should be. They are not doing that and should be. It is what they are paid to do and it is what we expect a Government to do in a democratic country but they are not doing it. They are excluding the obvious, pragmatic solution, a priori, without waiting for the details and on the basis of what one can only describe as prejudice or ideology. That is simply not good enough.
Now, I am very familiar with this Eurosceptic prejudice—it is nothing more than that: a refusal to look pragmatically and open-mindedly at issues involving anything to do with the European Union. That is very pervasive in the Tory party and was one reason why, seven or eight years ago, I left the party. We have before us now a Minister who is a Liberal Democrat. I did not think such prejudice was pervasive in the Liberal Democrat Party and look forward with great interest and expectation to see how he will defend the actions, or deliberate inaction, of this Government in a case where an important national interest is being explicitly and deliberately neglected.
The Earl of Sandwich (CB)
My Lords, I follow the noble Lord, Lord Davies, in much of what he said. As a former member of sub-committee E, I thank the noble Lord, Lord Stoneham, for his introduction of the report and our chairman, the noble Lord, Lord Bowness, for all that he did. I also thank our senior legal adviser Mike Thomas, ably supported by Messrs Ridout, Mitchell and others. Mr Thomas’s outstanding work on this made the evidence much more intelligible and our conclusions more fit for purpose. We wish him well in his retirement next year.
As the noble Lord, Lord Davies, said, the subject of fraud in the European Union is enough to get everyone excited, not only the Eurosceptics but also those who consider the UK to be free of blame and squeaky clean. The fact is that fraud exists everywhere: not just abroad but in this Palace, in the City and in businesses all over the country. Noble Lords will remember that one of the biggest frauds occurred in the al-Yamamah contract. After that was investigated by the SFO and discussed at length in Parliament, it was abruptly hushed up by the then Attorney-General in the public interest. Of course, that was all about a princely sum, even for a prince, and it was assumed by most people that it was the way things worked in Saudi Arabia. But no: the SFO calmly and correctly reminded us that there are two parties to every contract who shared responsibility equally. That is worth mentioning in this case.
This country is in no position to complain about the European Union or other EU states. In fact, if our consultants wish to teach anti-corruption measures to developing countries, as they do daily around the world, they may be qualified to do so but they cannot expect countries such as Kenya and Afghanistan to look up to us as angels of accountability. We may be higher in the transparency index but we are all in the mud together. The Commission protests that fraud in the EU is no worse than fraud in the member states and it is right that there always seems to be a presumption of member state innocence. The EU institutions usually get blamed for the failure to prosecute when in fact it is more likely to be the individual country concerned. As our report states, responsibility for avoiding fraud does not rest solely with the Commission. The treaties require both the EU institutions and the member states to counter fraud affecting the financial interests of the EU.
There are, of course, recent examples of general fraud in both the EU and national Parliaments, and the issue can lead to strong emotions. In some cases, it can come to blows; last June, an Italian MEP called Raffaele Baldassarre was caught red-handed on YouTube entering a lift in the European Parliament. He proceeded, on camera, to box the Dutch journalist who was accusing him of fraud. Astonishingly, in southern Europe, the public do not always notice when their representatives are accused of fraud. There was another case, which I shall not go into, of a Maltese MEP who faced criminal charges for alleged fraud over three years. This was uncovered by the anti-fraud office, OLAF.
That brings me to one of our main recommendations, that while OLAF itself needs to improve its act and protests that it is already doing so, member states must give more support to OLAF, including taking the decision to prosecute. We were told that, in principle, to investigate a case of fraud against the EU budget, OLAF is supposed to request information from the judiciary in the member state involved. As the noble Lord, Lord Davies, said, one of our key witnesses, Rosalind Wright QC, said that judiciaries in member states are,
“in some cases … reluctant to investigate their own nationals for a fraud on a subsidy that is being paid centrally from Brussels”.
We heard from Professor Spencer and others that, even after an investigation, OLAF has no powers to compel member states to act. Some call it toothless—but that is just the point. It was a conscious decision of the member states not to give it those powers. Because of this, at €404 million in 2011, the total amount of fraud is being wholly underestimated by the Commission.
The Government’s response throws doubt on the estimates of €5 billion, although they are derived from National Fraud Authority figures. As the noble Lord, Lord Stoneham, said, in explaining the difficulty of estimating the amount, the Government say that the Commission’s database is constantly being updated and that it makes no distinction between “suspected and established fraud”. Irregularities are sometimes included and sometimes not. Again, if we and other member states are reluctant to investigate, we are never going to find out how serious the problem is; we are just going round in circles.
Communications with OLAF have been inadequate, to say the least, and what we call a lack of enthusiasm all round for reporting fraud is, to me, the most serious issue. A related problem for OLAF is that there is no single point of contact in the UK Government and very likely not in other Governments either. The Commission’s response agrees with our analysis, saying that member states have a continuing duty to provide the information. The Commission refers to the recent tightening of the system through new investigative procedures, mentioning a new regulation establishing a clearer legal framework. Her Majesty’s Government’s comment is that “progress is being made”. We shall hear in a minute what that means.
The Commission invests rather a lot of hope in establishing an EPPO, which it conceives as a “decentralised structure” integrated into the national judiciaries. We all hope that that will never happen.
On the question of a UK focal point, the Commission says that there must be a national body designated to co-ordinate what it calls anti-fraud co-ordination services, which will strengthen the co-operation between OLAF and member states. Perhaps the Minister will update us on the likelihood of any such co-ordinated service in the UK, and on any further conversations between the Home Office, the City of London police and others involved.
The Government’s response merely says that there is room for improvement; it quite reasonably rejects the idea of a new department, mentioned by the noble Lord, Lord Bowness, but it seems to me and to him that we are putting off the more fundamental question of co-ordination—unless the Minister proves us wrong.
Viscount Eccles (Con)
My Lords, I go back a long way to 1949 and the Council of Europe. If ever there were a referendum, I cannot imagine voting to come out of the European Union. That does not mean that I cease to think about the problems facing Europe and speculate a bit on how much of a contribution we can make to the solutions to those problems.
I have to record that I was new to the committee when it started this inquiry, and new to the procedures of sub-committees preparing reports, although I had read quite a number of them. As I went into that I thought about the background—the financial crisis, fairly rapid change, the expansion of the membership of the Union and the identification of problems. There is of course a rather large gap between the identification of problems and the practicality of solutions to them. I was also minded to think that many empires have fallen because they were top heavy. Today we know very many things and how to do them; in fact, there is a lot that we know about how we could do them if we had the resources, but we do not. We do not have the money and, more importantly, we do not have the people. The people who are capable of implementing some of the things that we would like to see implemented are spread very thin.
In considering the report, I wondered: where do we, the United Kingdom, rightly come into this picture? The report says with great accuracy that fraud is opaque. As the noble Earl, Lord Sandwich, said, it is also endemic. It does not matter what we are going to do, it will not disappear, because human nature is best seen as a constant. Therefore, the first question that we might ask is: how many programmes do we want? What level of expenditure within those programmes do we want? What complexity do we want those programmes to have? What are we actually trying to do with them? If we had fewer programmes we would have less fraud. The more complex the programmes are, the greater the army of people. I have applied for European money in the past, and the number of people who will advise you on how to knock down that money from the tree is legion. It is a profession—and, of course, those people could be doing something else, perhaps adding more value. So is that the right use of resources? We should think rather more seriously about the objectives we are looking for.
We then come to another danger and another question. Are we right to be judging others by ourselves? Almost certainly not. The Commission, after all, is sui generis, and I join others in saying that there is absolutely no point in being highly critical of the Commission because there is fraud against its programmes. That does not make any sense at all. I completely agree with that. Then we think about the members, their objectives, the reasons why they are members in the first place and their capacity to implement programmes. If they take advice, which they do, there are many imaginative ways of providing that advice. That imagination can extend into how you spend the money, as well as how you get it in the first place.
I cannot get excited about the uncertainty in the figures. My question is: what do you do about the situation? What is the United Kingdom’s contribution to wise implementation of answers to these problems? When there are problems there is always a temptation to design new institutions or seek more legal procedures. However, in my experience, for all the people who claim to have a good plan to do this or that, few could implement such a plan if it were put into place. Therefore, for me, it is important to implement measures within the existing systems. How can we make the existing structures work better? Reference has been made to OLAF and I completely agree that there is a pressing need to co-operate and exchange data. Whether it is sensible to have that channelled into one place, I leave to others to decide. If people are willing to work with and talk to one another, we do not necessarily need just one focal point.
However, of one thing I am certain: that is, in the difficult circumstances that pertain, particularly within the eurozone, we need to work with what we have. I do not see any future in having new centralised institutions. As for the United Kingdom, we should cope better than we do with any fraud that is perpetrated here. We should seek to minimise fraud and prosecute those committing it. As regards cross-border fraud, we should offer others maximum co-operation, but seeking a centralised, European Union-wide silver bullet to solve these problems will not work and we should not contemplate it.
Lord Rowlands (Lab)
My Lords, while I have listened to the debate I have tried to recall the evidence we received and the witnesses we heard. I regret to say that my abiding impression of the evidence we took and the witnesses we heard was that there was a kind of collective buck-passing going on and that no one was willing to accept responsibility. Everybody said that they hated fraud and that it was a serious issue, but you did not sense that dealing with it was a priority for any of the institutions. I do not know whether other members of the committee were left with that impression.
Our report found a lack of enthusiasm, a lack of uniformity of approach and weakness in the ability of OLAF to fulfil its remit. The noble Lord, Lord Bowness, reminded us of the rather extraordinary day when we witnessed a kind of internal warfare going on before our very eyes. I hope to goodness that when the Minister replies to the debate, he will reassure us that OLAF has got over that spat. This lack of co-ordination and enthusiasm are partly reflected in the incredible divergence of assessment in relation to the size of the fraud, which reflects the fact that there is no collective grappling with this problem. Incidentally, there is no lack of activity on this issue. I calculated that no fewer than 13 documents and legislative proposals dealing with various aspects of fraud were presented to our committee. It is not a question of lack of activity on the part of the Commission or anyone else but rather, it seems to me, a lack of effective follow-up, and of matching that activity with effective operational action on the ground across the piece.
There have been suggestions about reforming OLAF and Eurojust, and my noble friend Lord Davies mentioned the EPPO. The committee did not, and has not, endorsed the concept of the EPPO. I am sure that he did not intend to create the impression that it had. It did not endorse that concept in the report and has not undertaken a full inquiry into it. I hope that noble Lords do not have the impression that it has endorsed that concept. That is certainly not the case. Of course since we did our report, the Commission has come forward with a proposal. I am afraid to say that, as it was brought forward, it certainly would not have gained my support in any shape or form; I am not sure about other members of the committee. I shall tell my noble friend why. First, this House, the other House and indeed 11 Parliaments found the Commission’s EPPO proposal offensive to the whole principle of subsidiarity.
It is not only that. I have one other suggestion why the Commission’s proposal is fundamentally flawed, and it is exactly one of the points that my noble friend made. The draft seeks to propose exclusive criminal jurisdiction to one office, seeking to override national needs and priorities. I am afraid that that does not make any sense. As my noble friend rightly points out, 80% of the budget is delivered at national level. It cannot be the exclusive criminal jurisdiction of one new office to deal with the issue, when in fact the disbursement of such money is overwhelmingly conducted at national level. It has to be a shared responsibility with shared co-operation. Indeed, the treaty obliges the Commission and member states to deal with this together. Therefore, rather than looking for a solution in a brand new, single office of the kind my noble friend obviously rather likes, I would look for an alternative form of enforced shared co-operation between institutions, governments and national and European agencies. That is where the future solution to these problems lies.
My final point is that, within those improvements that we should have in co-operation and shared responsibility, and within our own arrangements, is the question of having a single agency or point of contact. Interestingly, over a year ago in the evidence that we received, there was a volunteer: Commissioner Leppard of the City of London Police volunteered to be the first point of contact, as members might recall. Indeed, in his evidence, he said that his force was in discussion with the Home Office to develop the concept of the first point of contact being the City police. That was November 2012. We are a year on. How much progress has been made? Is the proposal still considered significant? How far have we got with it? If we have got very little from it, it will only reflect what we all fear: that there is not a willingness to carry some of the reforms and changes through.
That specific proposal was put on the table just over 12 months ago—one organisation saying, “We will be the only point of contact to co-ordinate activities, including the devolved Administrations”. When the Minister comes to reply I would be grateful if he would tell us how far that proposal has gone. I would judge the success of the changes that have occurred by our doing at least the one thing that we can do ourselves: to decide on one single point at which the co-ordination of these activities takes place. If we do not do that, we will not be seen as combating European fraud.
Baroness Morgan of Ely (Lab)
My Lords, I thank the noble Lord, Lord Stoneham, for his introduction. I also thank the committee for its work not just on this report, but over many decades. The reputation of this committee is second to none. Certainly during my years on the budget control committee in the European Parliament, we used to look forward to giving evidence to your committee because we knew that there would be a thorough investigation, with sophisticated understanding of the complexities of the way in which EU finance works—so I feel privileged to speak in front of you today.
The clamour for change and the screaming headlines against the EU when the Court of Auditors published its annual report were things we learnt to live with on an annual basis. I learned then—this is underlined in the report—that the picture is much more complicated. There needs to be a better understanding than the one those screaming headlines suggested.
We need to be absolutely clear of what we are talking about when we discuss fraud. The Court of Auditors first takes sample payment transactions in the EU at EU level, national level, regional level and even down to individual beneficiary level. Any errors found in these audits are classified as either quantifiable—which means there is a potential impact—or not. The impact rate of the error is then extrapolated to reach a most likely error rate. That then applies to each department, and then to the budget as a whole. It is completely different from the way in which we do things in Britain and that is probably part of the reason for the misunderstanding.
We should be clear that those error rates cannot simply be translated into an amount lost. Let me give an example. If you have a tender process to build a road and someone completed the forms in a way which did not comply with all the rules, that does not mean that the road was not built or that you did not get value for money; it means that the forms were not completed in the correct way. That would be counted as a problem; it would be put into the figures as problematic.
As the noble Lord, Lord Stoneham, reminded us, 80% of finance is controlled by member states. In fact, the money never leaves Britain. It does not go to the EU and come back; it never leaves Britain. Therefore it is expected that member states should put systems in place to protect the EU’s financial interests.
It is also worth noting that the Court of Auditors has signed off the EU account for the sixth year in succession. It has given a clean bill of health to the Commission’s accounting books. That means that every euro spent from the EU budget was duly recorded in the books and properly accounted for. However, for payments the court requires an error rate of less than 2% before the EU budget can be declared to be free from material error. At the moment the error rate is below 5% but, as it is not close enough to that 2%, it will not sign off the payments account.
Turning to the subject of the report, deliberate fraud is different from errors. It constitutes a criminal action and has to be dealt with severely. The question being asked in the report is whether the systems and mechanisms that are in place are adequate to measure fraud and defend the EU against it. Is the UK taking up that responsibility and policing this area seriously?
The recommendations made in the report seem eminently sensible. The proposals to establish a government agency or department to take overall responsibility and for OLAF, the anti-fraud unit of the EU, to have one point of contact make sense. OLAF did not exist when I was in the European Parliament but was set up while I was there. I can assure noble Lords that there was a great deal of in-fighting when it was set up, but I hope things have settled down since then.
It makes sense to have one point of contact. I was a member of the budget control committee in 1999 when the Commission was forced to resign in response to the failure to take seriously the matter of fraud against the EU budget. The subsequent report written by the wise men suggested that it was impossible to find anyone, at any level, in the Commission to take responsibility. That phrase stood out to everyone. My concern is that having sat in the European Parliament for 10 or 15 years considering this issue and hearing that it is up to the member states to do something about it, I do not want to come back to the UK and hear, “It is not our problem. It is a difficulty for the EU. We all have to work together”.
This falling between two stools is the problem here. It is a fate that we must avoid in the UK. Knowing who is responsible for collecting and collating information and where the buck stops is fundamental to good governance. I take issue with the suggestion that the multiple jurisdictions of the UK provide a block to this. We manage to organise this for every other aspect of the EU’s relationship with the UK, so why not in the area of fraud?
Of course, the amount of fraud is by its nature difficult to quantify, so the Commission’s figures are only estimates, but it seems that there is a lack of enthusiasm to engage with the detection and reporting of fraud against the EU. This is underlined by the fact that the Commission has reported a very low number of irregularities as fraudulent in the UK, which has a relatively high EU spending rate compared with other member states, suggesting a degree of non-compliance with reporting principles. Will the Minister therefore explain what control systems and mechanisms are being put in place to detect fraud, in particular in the higher risk areas?
It was extremely disappointing that the Government did not answer the issue of VAT fraud against the EU budget seriously. Of course, a larger proportion of VAT goes to member states, but the contribution to the EU’s budget is fundamental. The figure of £2 billion that was suggested by the noble Lord, Lord Bowness, is fundamental to the revenue stream of the EU. Carousel fraud is not insignificant. While nobody is suggesting that the EU should extend its competence into tax enforcement, it is entirely legitimate for the Commission to question member states on their pursuit of this fraud which has a material effect on the Commission’s budget.
The prosecution of fraud remains a national matter, and while the UK does not want to sign up to the European Public Prosecutor’s Office, I question whether we take our responsibilities seriously in terms of prosecuting fraud against the EU budget. I remember on several occasions hearing how OLAF investigations were passed on to member states but were not pursued with any vigour in the member state. We heard evidence from some very senior British police enforcement representatives who suggested that although they understood their responsibilities, they had an inbox full of domestic crimes and targets on specific crimes that they had to meet so, somehow or other, EU fraud cases always seemed to find their way to the bottom of the in-tray. What is the Government’s target for prosecution? We have heard that 18% are prosecuted. What is the target? That seems to be a way to get this to the top of the in-tray of those police enforcement agencies.
Finally, will the Minister outline the timetable for the proposed fraud directive, and explain how he intends to use the expertise of the European committee in the Lords for those deliberations?
Lord Newby (LD)
My Lords, I am extremely grateful to my noble friend Lord Stoneham for his introduction to this report, to all noble Lords who have spoken and to the committee itself for the detailed report into the fight against fraud on the EU’s finances.
It may be blindingly obvious, but I start by saying that the Government also take fraud and the management of taxpayers’ funds very seriously. We have adopted an increasingly robust stance on financial management, and we remain committed to securing and enforcing the most effective means of fighting fraud at both a national and EU level. Fraud against the EU budget remains a matter of great concern, and this Government have adopted a leading role in calling for improvements to the way EU finances are managed.
I remind noble Lords that we are the first Government to take a firm stance on fraud against the EU budget by voting against the Council’s decision to recommend discharging the Commission of its responsibility to manage the EU budget. We took a stand by abstaining on the Council position on discharge of the 2009 EU budget and increased the pressure by voting against the Council’s recommendation to discharge in 2010 and 2011. We have also continued to encourage like-minded, budget disciplinarian member states to join us in sending the strongest possible message that financial management needs to be improved. In 2010 and 2011, Sweden and the Netherlands joined the UK in voting against the Council’s discharge recommendations and issued a joint statement calling for improvements to the way EU funds are managed.
We have also been at the forefront of the drive for real changes to improve errors within EU budget expenditure. For example, in the light of the European Court of Auditors’ reports confirming that much of the expenditure error is due to excessively complex rules, the Government successfully worked with allies to push for the significant simplification of the complex rules for beneficiaries of EU funds. I note what the noble Lord, Lord Bowness, said about it being disappointing that the Court of Auditors has been unable to provide a positive statement of assurance for the most recent budget, as has been the case for a number of years. The noble Baroness, Lady Morgan of Ely, explained why it is quite difficult to get to the necessary level of assurance. As the noble Lord reminded us, and as I have, over the years, reminded Eurosceptics within your Lordships’ House, it is a very long time since the DWP budget received a similar assurance statement.
When the Government replied to the report in July, the Financial Secretary gave a detailed response to all the findings. While that response still reflects the Government’s overall position, I will seek to respond to some of the additional requests for clarification made by noble Lords.
A number of noble Lords raised concern over the estimated level of fraud against the EU budget. The Government appreciate that the Commission’s assessment of the amount of fraud against the EU budget is an estimate and cannot give a full picture, by which I mean that the real level of fraud is necessarily going to be higher than the figure that it has produced. In order to get more nearly to a figure, it is therefore important to ensure that the quality and consistency of reporting by all member states is of a standard that allows the Commission to receive accurate information upon which to base its estimate.
It is also important that other contributing factors, such as the constant updating of the database, are resolved to improve the data that the Commission receives and holds. The noble Baroness, Lady Morgan of Ely, explained some of the complexity of the process, and although it is very easy to damn it on the basis that it should be possible to sort this out, in practice it is extremely difficult in a 27-member Union to get the kind of consistency and quality of reporting that gives us absolute confidence that the final correct figure has been reached. As the recipient of reporting information from member states, the Government believe that the Commission is best placed to provide such a clear estimate, but more work needs to be done.
I am sorry that the committee finds the Government’s decision not to recognise its estimate of actual fraud disappointing, but we maintain the view expressed by the Financial Secretary in his substantive response. I have a lot of sympathy with the noble Viscount, Lord Eccles, who said that we should not get excited about the absolute estimate of fraud but should worry much more substantively about bearing down on it.
With that that in mind, I turn to our reporting of fraud against the budget. The Government remain committed to this work and do not accept the view that we are lacking in enthusiasm or drive in our approach to tackling such fraud. In line with existing reporting obligations, the Government rigorously collate comprehensive data on fraud and consistently report them to the Commission.
As identified in the committee’s report, the UK does not have a central department or agency responsible for the fight against fraud. Individual departments and agencies are responsible for monitoring and acting on fraud against the EU funds they receive and spend. This does not demonstrate a lack of commitment or dedicated resource but reflects the UK’s national arrangements for handling EU funds. When one is talking about funds being spent by Administrations in Northern Ireland and Scotland, it is natural for them to be contacting the EU directly with information. Furthermore, the Government have a new approach to fraud because the creation of the National Crime Agency has given us the opportunity to pull expertise in anti-fraud work into a dedicated Economic Crime Command. The ECC will work closely with national police forces and partners, as well as with the EU and international equivalents. However, the Government remain of the view that the Commission, as the recipient and collator of fraud statistics, is best placed to provide a breakdown of fraud at an EU level and within individual member states. I shall come back to the question of the single point of contact.
A number of noble Lords raised the issue of VAT fraud, which has been and remains a significant problem. It is, however, worth pointing out that since 2005-06 NTIC fraud estimates have decreased from between £3 billion and £4 billion to around £1 billion in 2011-12, which demonstrates that effort has been put in to tackle this very serious, arguably the single biggest, area of EU fraud that affects the UK. We have had a significant positive impact.
We take seriously all forms of fraud, which is why in the 2010 spending review HMRC was allocated an additional £917 million to help it recover unpaid tax and excise duties in the next four years, of which some £90 million is being spent on tackling organised criminal attacks, and we have had some significant successes. Further, the number of criminal prosecutions across a range of taxes, including VAT, is to be increased fivefold. I am not sure that that is quite the target that the noble Baroness was looking for, but it is an indication of the Government’s ambition in this area. However, it is clear that VAT fraud is not solely a concern for the UK and, noting the committee’s concern and points raised by noble Lords, I can confirm that we encourage other member states to maintain the pressure to reduce VAT fraud within their jurisdictions with the same enthusiasm and vigour that we employ.
I turn to our engagement with the European anti-fraud office, OLAF. It is clear that its success relies on effective co-operation with partners in member states, third countries, international organisations and EU institutions. The Government fully cooperate with OLAF’s work in the UK. Its efforts to detect and tackle fraud, including through seeking financial redress for the EU budget where possible, is highly important to us. The UK, through the National Crime Agency, provides a number of UK-wide liaison services and is taking steps to improve our engagement with Europol, Eurojust and OLAF. This includes, through the NCA, providing bureau services to Europol and Interpol and being home to the UK Financial Intelligence Unit. It does this through the Europol national unit, which is based in the UK International Crime Bureau of the NCA and is supported by the UK national unit based in The Hague. The ENU provides a channel for all UK law enforcement engagement with Europol. The Government believe that the NCA’s work with these agencies and services, including Eurojust, Europol and OLAF, will strengthen co-operation with our European and international partners to fight cross-border fraud.
I return to the question that many noble Lords raised about our response to the requirement to provide a single point of contact. This is, as noble Lords mentioned, something that has been under discussion for some time. City of London Police has indeed offered to be such a contact point and continues to be in discussion with the Home Office. As noble Lords will be aware, the Home Office works in an extremely deliberative way and I hope that we will have a decision on this as soon as possible.
Lord Rowlands
I apologise for interrupting the Minister. What is “as soon as possible”, given that we have already had a 12-month pause?
Lord Newby
My Lords, it is a slightly flexible definition. The best I can do is draw to the Home Office’s attention the strength of feeling that clearly exists in your Lordships’ House that this decision should now be taken quickly.
Moving on to the European Public Prosecutor’s Office, the Government accept that multijurisdictional crime against the EU budget is European in nature but believe, as noble Lords pointed out, that an EPPO is not the only or the right solution to the problem. The noble Lord, Lord Rowlands, gave some of the arguments for that, but I repeat our view: a centralised European prosecutor with harmonised powers to initiate investigations and order investigative measures is incompatible with the division of responsibilities in many EU countries where law enforcement and prosecutors have different roles from that of the independent judiciary. As such, it would require fundamental changes to those member states’ legal systems and existing operational structures to implement the Commission’s vision of a supranational body with powers of investigation or prosecution within UK jurisdiction.
The Committee asked how the UK would address the shortcomings in existing processes for tackling fraud in the absence of being a participating member of the EPPO. The Government will continue to focus on preventing and tackling fraud against the budget and draw on their new approach to policing fraud. On the response to identified crimes, the Serious Fraud Office uses a similar model to the EPPO by bringing prosecutors and police together to fight serious fraud but there are differences. There are limits to the SFO’s statutory investigative powers but the existence of the SFO at national level is evidence of a domestic model that is similar to the EPPO proposal. Further, the creation of the National Crime Agency’s Economic Crime Command means that we have an opportunity to pull expertise in anti-fraud work into a dedicated policing unit. The ECC will work closely with national police forces and partners as well as the EU and international equivalents.
Lord Davies of Stamford
I am grateful to the Minister for giving way. If, as on the Minister’s own admission, the Serious Fraud Office and the ECC have structures that are very similar to the proposed EPPO in that they combine investigative and prosecuting functions, what is the ideological objection to accepting the EPPO? It appears that we have already accepted that those two functions should be shared by the same agency. The Minister will know that there is no suggestion that the courts—the judicial function—should be combined with the EPPO. The EPPO having decided to prosecute would have to do so in front of judges who would be quite independent from it.
Lord Newby
As I said, among other things there are differences between the SFO’s investigative powers and the EPPO proposal’s powers. As I should have said, it was a component of the coalition agreement that the UK would not support our involvement with such an organisation. That remains our view.
Lord Davies of Stamford
I am grateful for what is clearly a very honest and frank statement by the Minister. That gets to the heart of it. His previous remark left the impression that he was desperately trawling around to find some minor detail of difference between the structure of the SFO and the proposed EPPO to justify a decision that cannot be justified on pragmatic grounds. As he said, it is essentially a political decision. The Committee, the House and the public will be grateful for his frankness.
Lord Newby
My Lords, I think that the noble Lord is slightly confused about the difference between a political decision and a sensible decision. Just because something is in a political agreement does not mean that there are not very serious substantive reasons for it, apart from any reasons that he would disapprove of. I am sure that that is the case in this particular example.
There were two final things that I wanted to pick up on. The noble Lord, Lord Bowness, asked about the relationship between OLAF and the Supervisory Committee and what could be done and might be happening. This is an extremely unfortunate dispute that has arisen, and there is a limited amount that the UK Government can do on their own to resolve it. We accept that the Supervisory Committee has an important role but, equally, it is important that it does not operate in such a way as to impede OLAF’s work. We are trying as best we can not to knock heads together—that is perhaps too strong—but to use what influence we have to get these two bodies to work together. It is extremely depressing to read that part of the committee’s report and evidence because it is the kind of thing that legitimately gets the EU and its ways a bad name.
The final issue that I want to address, which the noble Baroness raised, is on how we would engage with committees on the PIF directive. This has raised difficult issues for the UK, and Ministers across government have been considering how best to approach the proposal. Discussions within government are now reaching their final stages, and we hope to be in a position to offer the relevant scrutiny committees a fuller explanation shortly. At the same time, we will seek to address the concerns about the opt-in trigger point.
This has been an extremely useful debate on an extremely important issue. I hope that I have been able to explain how the Government are tackling it. I realise that I will not have satisfied noble Lords in every respect, but I will speak sternly on noble Lords’ behalf to colleagues in the Home Office so that we might make progress at least in that respect.
Finally, I thank the committee for its work and for holding the Government to account in this area of our work.
Lord Stoneham of Droxford
I thank my noble friend for his response and everybody who has spoken in this debate. I have already thanked, but would like to do so again, the noble Lord, Lord Bowness, for his leadership of this group. I would also like to mention Tim Mitchell, as well as Mike Thomas, and thank them for their support during this investigation.
We had a number of speeches from members of the committee, and I appreciate their support and also that of the noble Lord, Lord Davies. It was good to hear a pro-European being so pointed in his comments, both on our report and on the Government’s approach.
On the Government’s response, I understand that my noble friend was in great difficulty in going further than the response that we have already had, but those of us who were listening carefully appreciated a number of his comments. He said that more work needs to be done on estimating the level of fraud, and the committee will certainly welcome that. He talked about the new approach with the National Crime Agency; that is something that we will want to look at, particularly with its additional emphasis in setting up a special group on economic crime. I am not sure that we got quite the single-source co-ordination that we were looking for, but we appreciate the efforts that the Government and Treasury are making on tax fraud in general and his reassurances on the work being done on VAT.
I accept that it is very difficult to give a perspective on OLAF, but my noble friend said that the National Crime Agency would strengthen relationships with OLAF and Eurojust, which we welcome.
I am sure that we wish to emphasise and support the strength of feeling that my noble friend will communicate to the Home Office, via the strong arm—we hope—of the Treasury, in relation to what needs to be done regarding the single point of contact. We look forward to the Government developing their alternative to the European Public Prosecutor’s Office proposal. I thank all Members of the Committee for their support in what has been a very interesting debate.