Grand Committee
Pensions Bill
(11 years ago)
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The Deputy Chairman of Committees (Baroness Gibson of Market Rasen) (Lab)
My Lords, I must first announce that if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume again after 10 minutes.
Clause 1: State pension
Amendment 1
Baroness Turner of Camden
Baroness Turner of Camden (Lab)
My Lords, I should explain to the Committee that a number of amendments that I have tabled to the Bill have been tabled after I have had a fairly lengthy discussion with the pensions officer of the union Unite, of which I am a member. As the Committee will probably know, for many years, I was a national officer of one of the founding unions of Unite, and that is where I come from on pensions. The union has always been very interested in pension provision, and the amendments have been tabled as a result of discussion with large sections of the membership.
This amendment arises because of the exclusion of certain people from the capital altogether. The reform proposed in the Bill has been brought forward at a time when half of all existing pensioners qualify for means-tested benefits and one-third of all pensioners with incomes below the guaranteed credit level for pension credit are not getting the benefits.
I am told that there is huge resentment among today’s pensioners that they are being ignored, and special resentment on the part of those who feel that they might have benefited from the new legislation but have lost out because of the cliff edge presented by the effect of the April 2016 date.
For those reasons, I tabled the amendment that the subsection should be deleted. As I understand it, the policy of the union is that government policy ought to be focused on raising the level of the basic state pension for all pensioners. That is what the union is standing on at the moment. It is for that reason, and to test the feeling of the Government on the issue of the concern of existing pensioners, that I have tabled the amendment. I also fully support Amendment 2, with which it has been grouped, because, again, it is concerned with the poverty of existing pensioners, which is something we should all be concerned about. I beg to move.
Baroness Greengross (CB)
My Lords, under my Amendment 2, the deletion of Clause 1(2) would extend the single-tier pension to all pensioners from 2016. My proposed new subsection would require the Government to publish details of measures which would end pensioner poverty. As the noble Baroness said, current pensioners and others due to reach state pension age before 6 April 2016 have been excluded from the single-tier pension. Current pensioners should also benefit from the single tier. A number of options are available to achieve this. For example, the Government could consider extending the single-tier pension to current pensioners. Another approach would see the level of pension credit guarantee increased to the level of the single tier for current pensioners, who will otherwise miss out.
We know that pensioner poverty has fallen over time from 2.9 million in 1998-99 to 1.6 million, of whom nearly 900,000 are in severe poverty, with incomes of less than half median income. Proposed new subsection (2) would make the Government set out a timetable and a strategy for reducing and eventually abolishing pensioner poverty.
Lord Flight (Con)
My Lords, I have encountered more upset in relation to this aspect of the Bill than what I would hope was support for having a state pension above the level of income support. Quite simply, we are talking about individuals who have paid their national insurance, who are too old to benefit from the 2016 changes, whose pensions are less than that, and who feel somewhat aggrieved that many people who have not paid their national insurance will qualify for the increased pension after 2016 when they will not. I appreciate that it is all about money, but I wonder whether a full calculation has been done of the net real costs of putting everyone who is entitled to a pension on to the new arrangement in 2016; I suppose that is unless they have qualifications that exceed that. However, I can only think that there would be a significant net-off in terms of other welfare payments if people’s pensions were slightly larger. This is a fundamentally good piece of legislation on which there is relatively cross-party support. However, I slightly warn the Government that this issue—that those who are too old to benefit from the 2016 reforms will often be worse off than those young enough to benefit—is rather spoiling the welcome to these changes.
Baroness Hollis of Heigham (Lab)
My Lords, I would like to ask a simple question that relates to one of the hopes that some of us had a year or so back. The greatest proportion of those claiming pension credit tend to be elderly widows—when the husband died, the pension died with him—over the age of 80 or 85. I fully understand that to bring all pensions on to this would be a big-ticket item for any Government to contemplate; that is not in doubt, as the previous speaker mentioned. However, what if we were to introduce the pension not just for people reaching pension age in 2016 but for those over 85, and then for the next decade bring the 85s down by a year, with the 65s going up a year, as they will? They would meet in about a decade for men, perhaps slightly later for women. In about a decade or so, virtually all pensions would be covered on an incremental basis. I have not been able to cost that. I was told, teasingly by the Minister in the other place, that he thought it would probably cost half a billion pounds, but whether that was per year or in total was not made clear to me. Have there been any thoughts about how we might progressively increase the coverage?
Lord Stoneham of Droxford (LD)
I would like to make three points. I hope that there will be cross-party support but, if we are now saying that the higher pension should apply to everybody, clearly we need to know the cost. I have to ask the question: why did Labour not do this in its 13 years if it does not cost money? The point has to be made. Resentment could build up among those who see younger people coming forward on larger pensions. We know that there is a problem with women in the 1951 to 1953 age group. We have to understand exactly how much this is going to cost. The noble Baroness, Lady Hollis, is absolutely right: it is not necessary for this legislation, but in the future obviously we should look—as the country can afford it—at how we can phase in for various groups of pensioners the higher rate and get rid of means-testing for them. We need to know about the money but we also have to be realistic. You have to start somewhere on this higher-rate pension, and where the Government have tried in difficult circumstances to start is the best that can be done at the moment, I think. Obviously we should look at the future at some stage, once we are aware of the cost and how we can afford it.
Lord Kirkwood of Kirkhope (LD)
My Lords, I would like to add a more operational note to the questions raised by the important amendment from the noble Baroness, Lady Turner of Camden. She makes a powerful case, but the financial circumstances suggest to me that there is more likelihood of eventually getting into the position that was explained by the noble Baroness, Lady Hollis, than she was suggesting.
The implication of the amendment is that it would extend the single-tier pension to all pensioners. I have some questions about the operational capacity of the system to deliver sensibly some of these significant changes. In the first place, the Green Paper suggested that we should be looking at this by 2017. That has been brought forward; there are obvious advantages to that but it has caused some people to raise questions with me. Some of that is informed by the current controversy about the efficacy of the systems for universal credit, which are of course of a different order in terms of the IT systems. It also has to be acknowledged that the Pension Service has a very good record of implementing some of this stuff; when pension credit came in, it was done in a way that got very high marks from the National Audit Office, as I recall. So it may be that everything is going to be fine, but if the national insurance records are not all clean data then we could be facing some serious difficulties in delivering the payment of pensions on time. There are other operational matters that I am sure are concerning people at Longbenton in Newcastle, as they should be.
Speaking for myself, I would be very pleased to get some kind of assurance at some stage in Committee that with regard to this huge and significant change, affecting a number of very vulnerable households, the department, having regard to the recent reductions in staff and all the other matters, is in place to be able to deliver this efficiently and on time in the way that is proposed.
Baroness Sherlock (Lab)
My Lords, in speaking to Amendments 1 and 2, I look forward to a productive time in Grand Committee. I assure the Minister that there will be cross-party consensus over the direction of travel; this very much carries on the direction that Labour took in government, and I look forward to being able to debate the detail. This first group has already highlighted a number of the issues that we are going to want to explore over the next few weeks. The point about cost made by the noble Lord, Lord Flight, and my noble friend Lady Hollis is an important one, and I hope that the Minister will be able to give us an indication of both the cost of bringing all these people into the system but also the cost drivers that might help us to understand better my noble friend’s point. If he could cost her ingenious scheme before we got to the end of this stage of the Bill, that would also be very helpful.
The point made by the noble Lord, Lord Kirkwood, about operational issues is going to become very important. There are amendments later on in which we will begin to explore how the department will communicate with people, and that will surface many of those issues. The Minister may want to be prepared before we get to that stage.
I, too, have heard concerns from all kinds of people. I know that Age Concern has been very worried; it has been getting letters, e-mails and phone calls from people who are anxious about the fact that they will not get this new pension that they have read so much about. One of the requirements on the Government from a very early point is going to be to try to manage their communication better, as I will say later on when we come to discuss information. The Select Committee found a huge amount of confusion among the public about who would get what and when. It is not surprising, therefore, that people are as anxious as they are.
Will the Minister reassure the Committee that the Government are alive to the concerns of those who have already reached state pension age or will do so before implementation, and will carry on listening? Will they consider the impact on those pensioners as the system is brought in? Will the Government, maybe at the next Committee day, take the opportunity to explain to us the impact of the new amendments tabled in the wake of the autumn Statement? That could be helpful, and we could look at it later this week.
Will the Minister help the Committee to reflect on the position of those who retire before implementation on modest incomes? Will he clarify that those who have saved with the second state pension or its predecessors will find that any amount they get in future which is above the single-tier pension is in fact uprated only by CPI? There is a perception that everybody before the transition gets one thing and everybody after it gets another, when in fact, as we will unfold, it is going to be a lot more complicated than that.
Is the Minister concerned at all about the distributional impact for those in that area of modest earnings? He will know that S2P is distributive because it treats anyone earning between the lower earnings limit of £5,668 and the lower earnings threshold of £15,000 as though they earn £15,000. That distributive element is quite important in protecting those on modest incomes and making sure that they can save for the future.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, I thank the noble Baronesses, Lady Turner and Lady Greengross, for their amendments, which cut to the heart of the rationale for these reforms and provide an opportunity to discuss how this Government are committed to a decent and secure income for all pensioners.
Clause 1 is a landmark in the history of British state pensions. It creates a single state pension in place of the current two-tier system. It marks a return to the simplicity that Beveridge had in mind in 1942 and a withdrawal of the state from earnings-related pension provision. The fact is that we now need a new pension system to meet the needs of today’s working-age population. We estimate that 13 million people are not saving enough for retirement.
The single tier will provide a flat-rate pension above the level of the basic means test to most people in the future. This goes hand in hand with automatic enrolment and will help to give those saving today for their retirement far more clarity about what they can expect from the state. The reforms will also help to dispel any perception that people’s own savings could be offset by a corresponding loss of means-tested benefit.
The key point here is that the reforms are about restructuring spending to support saving. They are not about spending more or less on future pensioners, and they have been designed to stay within the amount that we were projected to have spent if we had rolled the current system forward. In designing the transition, we have been able to right some historic wrongs, as the Minister for Pensions has often said.
I turn to the question from the noble Baroness, Lady Turner, about what she calls the cliff-edge effect. Around three-quarters of pensioners retiring in the five first cohorts will see a change of less than £5 a week compared with if we rolled the current system forward.
Lord Freud
I think that in practice it will be a mean average. However, I will make that absolutely clear.
By withdrawing the facility to build a pension above the flat rate and modernising the system, removing elements such as savings credit and derived entitlement that no longer reflect the needs of the working-age population, we are able to fund the single-tier pension and improve the outcomes of groups such as the self-employed, carers and low earners, who have historically seen lower state pensions. It follows, therefore, that there are two means by which we could apply the new state pension to existing pensioners.
First, we could simply increase the pension of all existing pensioners to the full single-tier rate, if they are currently receiving less. In response to the question asked by my noble friend Lord Flight, we estimate that this would cost around £10 billion.
Baroness Hollis of Heigham
I think that by the time we have a rolling cohort, by definition that cannot be the case. I realise that we are pressing the Minister for information while he is on his feet. It would be very helpful if, perhaps towards the end, he could pick up points on which we have asked questions.
Lord Freud
I will confirm the precise parameters around that £10 billion figure to the Committee as soon as I have that information.
On the question raised by the noble Baroness, Lady Hollis, on rolling together from an 85 base, we do not have those particular costs, as she might imagine. However, we can look at the numbers, although it will be a very complex exercise, not least because some will have a current pension in excess of the £144 base we are using on an illustrative basis.
If we were to take those extra costs they would fall to today’s workers; the risk would be that that would undermine the trust between the generations, which is at the heart of our pay-as-you-go national insurance system.
The alternative would be to assess the single-tier entitlement of this group and pay this amount. If we did this, and fully brought forward the single-tier rules for existing pensioners, this would entail removing some pension already in payment, such as derived entitlement and the savings credit. I suspect that we would all agree that this would be totally unacceptable.
However, this Government are equally clear that it would be unacceptable for today's poorer pensioners to get left behind, and have taken many steps to ensure this is not the case. We have restored the earnings link to the basic state pension. The coalition’s introduction of triple-lock uprating on top means that the level of the basic state pension is now at its highest proportion of average earnings in more than 20 years.
To ensure that the poorest pensioners benefit from the triple lock, this year the pension credit standard minimum guarantee was increased by the same cash amount as the basic state pension, and that will happen next year. These measures have been particularly key in the unusually uncertain economic climate we have seen in recent years. In a time of austere spending decisions, we have protected key benefits for older people, including winter fuel payments.
The noble Baroness, Lady Greengross, is right to highlight the importance of effective monitoring of pensioner poverty and the effects of these reforms on retirement incomes; indeed, her sterling work as the co-chair of the All-Party Parliamentary Group for Ageing and Older People has continued to champion this cause. The latest figures, for 2011-12, show that the rate of relative poverty among pensioners is close to the lowest ever recorded. It is at 14%. I recall with slight irony that when we debated the Child Poverty Bill in 2009, the expression “eradication” was used about bringing the poverty figure for children down there to 10%. The DWP publishes annually the households below average income report, a national statistic which provides a full analysis of the levels of relative and absolute poverty for pensioners, and pensioner material deprivation. In addition, in order to look at the impact of the Government’s pension reforms as a whole, the Government published a framework for the analysis of future pension incomes in September 2013, which provides an overview of projected future retirement incomes.
I will pick up the question from my noble friend Lord Kirkwood, who asked for reassurance on the delivery plans for the single-tier state pension. As noble Lords are all aware, it will be introduced from 6 April 2016. The single-tier programme was set up in early 2012 to undertake early feasibility work and test deliverability of the policy as it was being developed. It is a DWP programme, with changes being delivered by the DWP and HMRC.
We are confident of delivering by April 2016 for several reasons. First, there is broad consensus on the main principles of the reform, which provides a helpful basis to plan for implementation. The main development of systems will commence once the Bill gets Royal Assent, at which point the key legislation will be settled. This will ease the challenge of developing systems while policy is likely to change.
Secondly, the key change needed to deliver single tier is to reform the way we calculate state pension, based on an individual’s national insurance contributions. We have long-standing experience of using national insurance contribution records held on HMRC systems to calculate pensions. Single tier is just a variant of that process. We will, however, aim to use this opportunity to make improvements to the way that we deliver our services.
Thirdly, both departments have the capacity to deliver the programme, have a good recent track record of making major changes to pensions calculations to tight timescales and have successfully delivered previous pension reform changes. The programme will use a process of phased development of systems and processes to minimise any risks to delivery of single tier. Both the DWP and HMRC will use existing staff who have expertise in dealing with NICs and pensions to deliver these reforms. HMRC also has experience of managing the end of contracting out for defined contribution schemes in 2012. This will stand it in good stead for introducing the changes for defined benefit schemes.
Finally, we will engage users and interested parties in a very practical way, helping us to test each stage of developments to make sure that they work to provide an accessible and easy-to-use service. The new systems will be tested in advance of April 2016, through the advance claims process. Additionally, we are building in contingency to ensure that the existing telephony channel can be used, just in case the digital solution does not work on day one.
A clear governance structure exists to manage the implementation. A DWP programme board, on which HMRC sits, is in place to oversee delivery of single-tier pension and delivery teams have been set up in both departments. Both departments believe that delivery of the single-tier reform is challenging but doable. The main change needed to deliver single tier is to reform the way we calculate state pension and that remains the focus of the programme. We do, however, need to take this opportunity to move to a more efficient and customer-focused business delivery that meets the government commitment to deliver more services digitally. To achieve this, the programme team is working closely with the Cabinet Office. The department is also building its capability in developing digital services through the appointment of a director-general with introduction of single tier as a digital service as his primary responsibility.
To conclude, I agree that reducing pensioner poverty is crucial. The steps already taken by this Government will help to do so and the measures in the Bill will provide for a more secure future for generations to come. I therefore ask the noble Baroness, Lady Turner, to withdraw her amendment.
Baroness Sherlock
My Lords, I wonder if I could just follow up on a couple of points. I thank the Minister for that response and I understand that, certainly at a £10 billion a year price tag, this would be a challenging reform to adopt. Could I ask him—I may have missed it and I apologise if I did—to respond to my questions about pension credit and passported benefits? If the Government are not going to able to bring existing pensioners into the new system can he give us a categorical assurance that pension credit will last throughout, and if so that the passported benefits on the back of that will come?
Lord Freud
My Lords, we are not changing the existing system for people who are on that system. Therefore that system, with the way that pension credit is set up, will not change for those people.
Baroness Sherlock
Forgive me, but may I therefore invite the Minister to put it this way: the Government have no plans to end savings credit, change its current value or change access to benefits currently passported on it?
Lord Freud
My Lords, I am happy so to confirm. As I say, for existing pensioners we have no plans to make any changes to the way that pension credit works. I have got a little bit more information. The cost of £10 billion is to get everyone on to single tier, and that is the cost to get all current pensioners to the illustrative £144 per week. I can confirm that cost is £10 billion per annum. This is a figure taken at 2016 and clearly that would reduce over time. The other issue that we discussed as we went through this was the 75% of people who see a change of less than £5 a week: this is not an average and most people will see only a small change compared to the current system.
Baroness Hollis of Heigham
I will first follow up on my noble friend’s point on savings credit. The Minister says that it will remain unchanged, but given that it is going to be CPI uprated, where the guaranteed pension credit is earnings related, at what point does the Minister expect savings credit to no longer exist because the guarantee has caught up with it? Therefore, although it is technically true that there will be no changes none the less it is surely also true that, X period of time on, given assumptions about inflation and so on, savings credit will in practice no longer exist.
Baroness Sherlock
I thank my noble friend. I think that when the Minister comes to read Hansard, he may notice that I asked him to confirm that its value would not change and I am sure that he meant to clarify the level rather than the value. One of the reasons is that, since they came to power, the Government have frozen the maximum level at which savings credit can be obtained. I wonder whether they intend to carry that on, in which case would we find that its value did, in fact, diminish.
Lord Flight
I am sorry to bother the Minister but is the £10 billion figure what I call gross or net? The key issue is that many older pensioners who would not otherwise qualify will qualify for various forms of income support in whatever is left of pension tax credits, and there really is a need to net all those projected costs off if they are not covered in the £10 billion to see what the actual net extra cost is. If, in that exercise, the Government discovered that the cost was much less than that, then I think this is something that could be thought about.
Baroness Hollis of Heigham
In particular, my Lords, given that the Government are proposing to remove AIPs for those over 75, there is therefore going to be an annual means-testing of pensioners who, if they were 10 or 12 years younger, would have that £144 as of right.
Lord Freud
My Lords, I shall respond where I can. I think that I shall have to write on the future of the savings credit as a result of an earnings increase of guaranteed credit, as it is quite complicated. At this stage, I shall also have to write to confirm exactly where we are on the question of whether the figure is gross or net. In practice, I think that I will end up writing quite often on these figures because they are quite complicated and one wants to double-check them carefully. Offering responses on the hoof may be a little dangerous and I shall be reduced to writing more often than would be the case with some of the other things that we discuss. With those issues raised and with a process to deal with them, I again ask the noble Baroness to withdraw her amendment.
Baroness Turner of Camden
I thank everybody who has participated in this debate, which has been very interesting. It has demonstrated that there really is a bit of a problem here with current pensioners who feel that they have been neglected, and I think that they have some justification for feeling that. I am very interested in what the Minister had to say, particularly on pension credit. I shall look at that very carefully when we have the opportunity to read what he has said this afternoon.
I am surprised that there has not been a rather better reception for the amendment tabled by the noble Baroness, Lady Greengross. Quite frankly, I cannot see what there is for the Government to lose by having an annual review of pensioner poverty. I should have thought that it would be a very good idea, and it would certainly ease some of the concerns that pensioners have at the moment. In the mean time, I shall withdraw the amendment—
Lord Freud
I want to make it absolutely clear, if I did not do so in my answer, that that information is provided annually. I was by no means not accepting that amendment; I was just making the point that it was a good idea and, as such, had already been implemented.
Baroness Turner of Camden
I accept that the Government have the information and I am very grateful for that. On the other hand, we were hoping that there would be an opportunity in Parliament to discuss the results of a review annually. That would give us the opportunity, as parliamentarians, to see what the position was annually as far as poor pensioners were concerned. That was one of the aims of the noble Baroness’s amendment. However, I am very grateful for what the Minister has said this afternoon. We will look at it with a great deal of concern because we are still worried about what happens to existing pensioners. We know that some of them are upset and worried that they have been missed out in the pension review, which is what this Bill is all about. Therefore, I will certainly have a look at what has been said not only by the Minister but by everyone else in this very interesting debate. In the mean time, I beg leave to withdraw the amendment.
“( ) Notwithstanding subsection (2), regulations may provide that any woman born between 6 April 1951 and 5 April 1953 and ordinarily resident in the United Kingdom shall be eligible to receive benefits under this Part.”
Baroness Hollis of Heigham
My Lords, to try to pre-empt any teasing I shall apologise for putting my notes on a stand, but the alternative is to have them in very large font.
I support the equalisation of the pension age, although I think it has been too compressed. However, one cohort of women feel that they have been unjustly treated. I want, in particular, to raise the issue of those women born between April 1951 and April 1953. Women older than them will have retired at a younger age and enjoy their pension for longer. Women younger than them will qualify for the new higher pension. They are caught in the middle. They have experienced up to three years’ delay in receiving their own BSP from the age of 60, only to find that men born in the same year as them will, unlike them, get the new state pension.
Men are sailing smoothly towards the new pension, and for them nothing has changed. Women have faced mounting instability as their pension age is deferred. They have waited longer but got nothing for it, and they cannot afford to defer which, if taken as a pension increment, might bring them to the new state pension level. This is essentially the problem of government introducing a new and very welcome state pension, while being still in the process of equalising the state pension age. I recognise the difficulties that inevitably come with that.
I suspect that the Minister will say that given that women are drawing the old pension for two extra years, and that given women’s greater longevity, they will on average—and I bet it will be another mean average, not a median—be better off than men. There will be a sort of bell curve; they will be better off at the beginning, then not better off, and if they live that long, there will be a crossover point where women who live longer—it could be at 81 or 82—finally draw ahead in this lottery.
Averages, as the Minister knows very well, are deceptive. A working-class woman is likely to live less long than most of your Lordships—male Lordships—in the House at the moment, and therefore those figures will not apply. We will return to that debate obviously at much greater length when debating life-expectancy increases. Therefore any particular women may well be worse off.
However, it was noticeable that the Minister in the other place, while using those arguments in the debate on this issue in the first amendment there, did not draw the Committee’s attention at any point to the pension credit rules. Those rules are very interesting, very relevant, and, I think pretty devastating of the Government’s case. Is it not funny that they were not mentioned?
At the moment, many poorer men who have dropped out of the labour market between 60 and 65 are able to draw full pension credit on equal terms, ages and rates with women who are getting the BSP plus pension credit. In the same way—and this is, of course, part of the European directive on equality—men could get a winter fuel payment or a bus pass at the same age as women, which was at women’s BSP age, from 60 on, not at their own retirement age. The same rule applies to pension credit.
Therefore, when women’s BSP age was 60, men could draw pension credit to top up their IS for five years before becoming eligible for their own BSP at 65. When women’s BSP age rose to 62, men could draw pension credit from 62 until their retirement age—there are no cliff edges for them. They are now effectively getting an income the same as the BSP and the same as women at age 63.
Currently 167,000 men between 60 and 65 draw pension credit. That tops up their income support of nearly £70 to the standard pension credit figure of nearly £140. It doubles it. Incidentally, a higher number of men between the ages of 60 and 65 draw pension credit than the number of men between 75 and 79. To put it another way, just under a fifth of all men who draw pension credit—although some, of course, may be in couples—draw it before their state pension age. That is great for them. However, unlike women, when they reach 65, after 5 April 2016, they move smoothly on to the new and more generous state pension. We did not hear a word of this down the other end but, in other words, men have had a double protection: pension credit on women’s terms, followed by the new state pension on men’s terms. Not only were they not disadvantaged by being male, they were actively protected and, to that degree, favoured.
Baroness Sherlock
My Lords, I shall speak to Amendments 4A and 6, which are in my name and that of my noble friend Lord Browne of Ladyton. Amendment 6 is a probing amendment that would require the Government to conduct a review to determine whether all the women born on or after 6 April 1951 should be included in the scope of the new state pension arrangements. Amendment 4A—I apologise for its late tabling—would require a detailed assessment of the impact on those women who benefit as a result of derived entitlements.
We on these Benches will use the device of asking for reviews more than once in this Committee. I have said already that we are very supportive of the aims of the Bill and regard its direction of travel as continuing the work that we began in government. Labour understands the challenges of reform on this scale and the potential fiscal implications of some of the changes that many people will want to see to the system. However, we need to understand precisely what the implications will be and what the impact of these changes will be on different categories of people who will be affected by them. I have been very grateful to officials for doing their best to provide us with information, and I thank the Minister for giving us access to them and to it. However, it has still not always proved possible or straightforward to understand the impact of these changes on particular categories of people, and this cohort of women is a prime example.
It is our role in this House during Committee to try to get to the bottom of the detail of the impact of these Bills, and I hope very much that this review would enable the Government to do that. However, maybe the Minister can give us the information that would make that unnecessary. Despite the goal of a simpler system, there is still a lot of complexity in the system, as we have already heard—often, inevitably, in the transitional provisions. However, we will need to understand what the impact will be.
I have received a great deal of correspondence on this issue, as I am sure other noble Lords have, from individual campaigners and organisations concerned about the position of women born between April 1951 and April 1953, and my noble friend Lady Hollis has set out a range of concerns about their position. The headline concern that has been raised most often with me posits the position of a pair of male and female twins, born on the same date in that window, who are treated differently. The man will get the new single-tier pension and the woman will not, even if both have worked for 35 years or more or even if both of them are still working, with the woman having deferred her pension. My noble friend made the important point that unemployed men are treated effectively as if they are retired and get the equivalent to the amount that the woman would receive in pension. Those women are caught in the equalisation of the pension age. They say that they do not object to the equalisation but they feel that they have lost out in comparison with other women because, unlike women born before April 1951, they could not retire at 60 on a full pension. Those born after April 1953 get the full STP at the age of 63—that is, up to one year and 10 months earlier than men born after April 1953.
At Second Reading my noble friend Lady Donaghy gave a moving account of the life courses of many women of that age and the extent to which the way they are treated by society and the state has changed so markedly over their lifetimes; they really are a transitional generation. Whatever the Government finally decide, it is important that Parliament and the Government listen to their concerns before making a decision that they cannot be included.
We acknowledge that a line must be drawn somewhere but there are some questions to which I have not yet had satisfactory answers. First, as my noble friend Lady Hollis noted, there is the position of men born between 1951 and 1953 who are unemployed and get treated as if they were pensioners. Currently, a man in that situation who cannot claim the state pension, where a woman of the same age would, can get pension credit. Will the Minister confirm that that is the case? If so, the question has been raised with me as to whether these women have a claim in law on equality grounds and, if so, what that would mean. It might be helpful if the Minister could tell us whether the Government have sought legal advice on this matter and, if so, have they been assured that their position is safe? I assume that they were or the Minister would not have felt able to sign the habitual statement at the start of the process, but it would be helpful to clarify that.
The second big issue was the impact on this particular cohort of women. From having read the proceedings in another place, I think that the Government’s case is this: there are always cliff edges; there are always winners and losers and these are just the unlucky ones; these women will already be pensioners and some will have been able to draw their pension before 2016; they can always exercise the right to defer drawing down their pension and get a 10% uplift each year, which would effectively bring them up to the STP level by 2016; and only 70,000 of those 700,000 women born between 1951 and 1953 will be worse off, and the median loss will be only £6 a week.
The response of the campaigners to that case is this: some people will lose more than £6 a week, but even £6 a week is a lot of money, especially for 25 years. They are getting their pension earlier, but over their lifetime they will be disadvantaged. I would be grateful if the Minister could confirm that that was the case and, if so, when the break-even point comes, since they could be expected to live for a further 10 to 15 years and in some cases many more, we hope.
Thirdly, the campaigners say that most women spend most of their working lives expecting to retire at 60, so this is a shock to them. Finally, they point out that not many people can afford to defer taking their pensions. The figures that were supplied to us by the department suggest that only 0.9 million people in Great Britain get an increment as a result of deferral, as against 10.8 million who do not. I think that the figure in total was 1.2 million. If that is the case, inevitably it is a minority activity. Effectively, therefore, the right to defer your retirement date is a bit like the right to shop in Harrods: we can all do it but we cannot all afford to do it, so I am not sure that that totally answers the question.
That leaves us with some unanswered questions which I invite the Minister to address. First, there seems to be agreement that 70,000 women from this cohort will lose out. I do not yet understand the Government’s case for saying that they are so confident that the other 630,000 will be better off remaining in the current arrangements. The Government claimed in the other place that most women would be better off under STP. In the Committee there, the Pensions Minister said that, in the first few years, 700,000 women would be better off on STP by an average £9 a week. The impact assessment says that, as a result of the STP valuation, around 650,000 women who reach state pension age in the first 10 years after implementation will get an average £8 more in state pension in 2013-14 earnings terms.
The question then is this: how is the cohort of women born from 1953 to 1960, to whom those figures refer, so different from those born from 1951 to 1953? In other words, if the people who just get in will be better off in the new system, why would the people who just miss out be worse off? I hope that the Minister can explain to me the reason for that.
I want to drill down into this. The only reasons that I can think of come in the form of questions. First, the Government say that 30,000 people will lose from the derived entitlements post 2016. Can the Minister tell us how many of this cohort—that is those 1951 to 1953 women—would have derived entitlements? If not, perhaps he would smile upon our Amendment 4A. Secondly, some divorced couples with pension-splitting arrangements might be worse off under STP. Does the Minister know how many of those are within that 630,000? Thirdly, do most of those women have 30 years’ national insurance credits? Is that a factor? How many of them would have enough to get access to a full single-tier pension? Fourthly, how many of those women are better off as a result of their getting pension savings credit? What might happen in the future given the direction of travel on that?
My final question is about the costings. In Committee in another place, the Minister suggested that the costs for bringing this group into the system would be an initial £150 million a year, peaking at £300 million, and cumulatively costing about £4 billion. I am not an economist so I am not disputing the figures, but I do not understand them. If only 70,000 women are worse off and by a mean £6 a week, I make that—admittedly, using my calculator—£21 million a year. Even if they live for 25 years after retirement, I cannot get that above half a billion pounds. I am not suggesting that that is a small sum, nor offering to spend it; I am just trying to understand why I am so far out from the costings given by the Minister in the other place. I apologise for asking so many questions, but this is a complicated matter. Before we make any decisions and before the Government are to proceed on this, we need to understand the implications.
Lord Paddick (LD)
My Lords, as the noble Baroness, Lady Sherlock, said previously, there is great confusion among the public about the consequences of the Bill. I have to confess that that includes me. I, too, am feeling my way here rather than making authoritative statements.
The noble Baroness, Lady Hollis of Heigham, spoke about the men between 60 and 65 who are treated as pensioners because they are unemployed. I presume that that is a small proportion of men in that cohort and that the overwhelming majority have to wait until 65 to receive their pension, as opposed to those men who are unemployed during that period. Therefore, the statement that all men are treated the same as women applies only if they become unemployed, if I understand the situation correctly.
Lord Kirkwood of Kirkhope
My Lords, I wish to comment briefly on this group of amendments as much as anything to apologise for the fact that I should have declared an interest earlier. I am the chairman of the General Medical Council superannuation fund, as declared in the register of interests.
This is an important debate. We are all very familiar with the unintended consequences of different parts of the system affecting people in a way that might not have been fully appreciated, and I want to look carefully at what the noble Baroness, Lady Hollis, has said. However, on a more strategic basis relating to the policy contained in the Bill, no one is denied any accrued rights, and that is a quintessentially important protection in provision. I was concerned that that was not the case but the foundation calculation is based on actuarial calculations with which we are all familiar within the basic state pension. Therefore, of course we need to look at some of these anomalies, and that is what this Committee is for.
In passing, the debates in the other place have all been based on this being a nil-cost reform within its own terms. However, my position is that that does not take account of the substantial savings that the Government will make over a very long period. For my money, I am willing to look beyond the self-contained envelope if the case is made properly, but, for me, the absolutely important and cardinal thing is that accrued rights have been protected.
Amendment 4, in the name of the noble Lord, Lord McKenzie, is very important and well crafted but my real reason for speaking to it is that I think that everybody should be written to. Everybody who is subjected to this change should get a letter from the Pension Service, although obviously that cannot happen until Royal Assent and other mechanics have taken place. I was grateful for the very full answer earlier from the Minister, and I shall study it with great interest. That is the very least that is required. My noble friend Lord Paddick is absolutely correct that there is confusion. We are all slightly finding our way through some of these policy and operational matters. Within the terms of Amendment 4 as it is currently cast, I do not think it is unreasonable to ask for individual letters looking at the foundation costs and calculations that apply to each individual so that everybody knows where they are before this policy takes shape.
Lord Freud
My Lords, these amendments centre on the group of women who will receive a state pension under the existing system, while men born on the same day as them may be eligible for a single-tier pension. We recognise that people are concerned about this issue and we have already reviewed the position of this group of women. Having looked at the numbers, our analysis shows that about 90% of the women in this group will receive more in state pension and other benefits over the course of their retirement than a man born on the same day as them with the same national insurance record who will be getting a single-tier pension. To be specific, this comparison excludes pension credit but includes savings credit.
The reason is that those women reach state pension age between two and four years before their theoretical twin brothers. Indeed, almost half the group are already drawing their state pension and, on average, will have drawn up to £26,000 before their male twins have begun to draw their pensions. I am excluding from that the unemployed group to which the noble Baroness, Lady Hollis, drew our attention. This group of women were not affected by the Pension Act 2011 pension age changes; their state pension age was set back in 1995. We are increasing pension age to maintain sustainability and fairness between the generations. These interactions with pension credit are inevitable consequences of introducing single tier at a time of unequal pension ages. We do not want to wait until late 2018, when pension ages will have equalised, before introducing single tier.
In addition, being a single-tier pensioner, especially in the early years, does not necessarily mean people receiving a full single-tier pension. Under the current system, the median average entitlement for the women in this group is projected to be £125 per week. A similar valuation based on single-tier rules results in a figure of £131 per week—a difference of £6. These are median averages; about half the group would see no change in their entitlement at all. To pick up the point made by my noble friend Lord Paddick, these women have benefited from the triple lock. Basic state pension will be £8 higher per week in 2014-15 than if their pensions had been uprated by earnings since the start of this Parliament. Almost half these women already drawing their state pension are benefiting from the triple lock.
It is often assumed that the new system will simply be more generous than the current system but, as the Committee will be aware, and as we will discuss in depth later, that is not necessarily the case. We will put in place a minimum qualifying period and close access to the savings credit. We will also reduce the deferral increment rates and cease the ability to derive pension from a spouse’s record. Many people will gain from single tier but there are those who will receive less, compared to the current rules. In response to the questions on costings from the noble Baroness, Lady Sherlock, we assume that these women could choose the system that is better for them, although that is not necessarily an easy choice. However, that is the basis on which we have got to those particular costings.
Baroness Sherlock
On that point, have the Government therefore costed what might happen if they simply included this group in the system and not allowed them to choose?
Lord Freud
I will have to write with that estimate. There is every way of doing these estimates that one can imagine. That brings me to the amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, which is to review how many women in this cohort are projected to derive a pension based on their spouse’s record. We have published a paper on derived entitlement, which covers the projected outcomes for people as a result of removing these provisions. As one may expect, individuals reaching pension age in the few years before April 2016 will have similar national insurance records to those reaching pension age in the few years after April 2016. As such, we can assume that the proportion of women in the cohort under question retiring under the current system who benefit from derived entitlement is broadly similar to the proportion of women reaching pension age just after 2016 who may be disadvantaged.
Baroness Hollis of Heigham
Will the noble Lord write to us and spell that last comment out? If I understood it correctly, it was very revealing. He might like to repeat that last sentence for us and then perhaps enlarge on it in a subsequent letter.
Lord Freud
My Lords, it is now in Hansard. We will spend some time on derived entitlement in later clauses, rather than going through that issue now. We will, I know, spend an awful lot of time on derived entitlement thanks to a certain set of amendments from the noble Baroness, so I have no fear at all that I will not be utterly explicit on this matter before the end of this Committee.
At Second Reading, the noble Baroness, Lady Sherlock, recognised that a line had to be drawn somewhere, but she asked the House to think carefully about whether it is right that twins of different genders should find themselves in different positions. Equally, one could ask whether it would be fair for people who reach state pension age on the same day—for example, the 65 year-old man and the 61 year-old woman—to be in different positions. The noble Baroness, Lady Sherlock, is absolutely right that a line has to be drawn. We have been clear and consistent that only people reaching pension age after the new system is implemented may receive a single-tier pension.
The noble Baroness asked whether these women would lose out. It is not a question of this particular cohort losing out; they simply will not receive a single-tier pension, just like everyone else reaching pension age before 2016. The Government have not changed these women’s state pension age and so there has not been a change in the pension that these women were expecting. Regarding the leading question on discrimination raised by the noble Baroness, I can confirm that any difference in treatment is as a result of the legislation providing for the change in pension age, which is not in this Bill, and we are satisfied that there is no breach of Article 14 of the ECHR on grounds of sex. This is justifiable in helping to pursue legitimate aims and achieving them in a timely way to achieve an equality of state pension outcomes between men and women generally.
Baroness Sherlock
I am trying to address these questions as I go, otherwise I will forget them. Does that legal advice also cover domestic law?
Lord Freud
That legal advice covers the full gamut of the legal position. On pension sharing, the average number of share orders is currently running to around 100 a year, so there is in practice a negligible impact on the gains and losses. We have written to all the cohorts affected by equalisation—
Baroness Hollis of Heigham
We will come on to pension sharing later in much greater detail, but I am sure that the Minister will want to confirm to my noble friend that, as I understand it, the number of inquiries is 20,000-odd, compared to the number of take-ups. Secondly, I presume that what he is talking about is pension sharing in future only of the additional state pension, whereas of course at the moment anyone divorced can also take on the existing NI record—the basic state pension—of their former spouse if it is more favourable than their own. There are two sets of preferences or advantages to divorcees in play and only the first of those will continue, while the second will go.
Lord Freud
I can confirm what the noble Baroness says: I am talking about the additional pension, not the state pension.
To summarise: the women in this group are getting the pension that they expected when they expected it. We have produced analysis on this group of women as well as on the impact of changes to derived entitlement. We need a clear start for the changes and, in line with the 2010 reforms, believe that that should be based on reaching state pension age. I urge the noble Baroness to withdraw her amendment.
Baroness Sherlock
Before my noble friend responds, I think that the Minister has ticked off all my questions and said that in fact these were incidental in terms of differences between the 1951-53 group and the 1953-60 group. Given that, I wonder if he could come back to the question that I posed: how is it, then, that those who retire in the first 10 years after implementation are apparently mostly going to be better off, whereas those in this group immediately before that will actually be worse off if they move on to the new system?
Lord Freud
It will be easier if I push that analysis of the figures into the letter-writing process rather than trying to summarise it off the top of my head, because it is quite complicated.
Baroness Hollis of Heigham
The Minister has been generous in giving us access to his Box, but a lot of our queries and questions came up as we were writing our amendments, after we had talked to the Box. We therefore fully understand that the Minister is not able to give us some of the detail, which requires some fairly elaborate statistical cross-cutting behind the scenes.
Lord Freud
I thank the noble Baroness for that. I was going to suggest that we can come back to this. We have run some sessions with the team, who are doing a magnificent job. This is central stuff; all the things that we are covering today and on Wednesday are technical and difficult. One of the things that I could offer would be another session on this area between Committee and Report. I think that on Report we will want to boil down what the real issues are and what the real amendments should be, because otherwise we will spend a lot of time, sound and fury on issues that are not quite the point that anyone was trying to make.
Baroness Hollis of Heigham
I think that that is prudent. We are dealing with a lot of stats. Certainly, I read the evidence from people who were witnesses to the Committee in the other place, as well as some of the stuff that came out in the Minister’s interrogation and speeches in Committee. Some of the discrepancies between that and what I call the “Apple Green Paper”—as that White Paper is neither white nor green—are because they cut the stats in different ways, and it is very difficult, if you do not have research staff, to recalibrate them to address some of the questions. We are not in any sense trying to put the Minister on the spot; we just want to elucidate, as far as we can, the information, so that we have a shared common body of knowledge on which we can base our estimate and analysis of this Bill. As the noble Lord will agree, that is primarily the job of this House, above all others.
I thank the noble Lords, Lord Paddick and Lord Kirkwood, for commenting on this amendment. In response to the noble Lord, Lord Kirkwood, I took it for granted that there would be accrued rights. However, if there had not been, the courts would have rather a lot to say about that. In every pensions Bill we have ever done—the 2004 Act, and so on—that has been established. It is good that the calculations, certainly in the paper and all the rest of it, are so clear as to what people can expect. That is very welcome.
To the noble Lord, Lord Paddick, I say that the point that I was trying to make is not that all men were in the same position as all women between the ages of 60 and 65. However, essentially, of men who chose to take early retirement only about 2% or 3% chose to go on to JSA or incapacity benefit in that period. The others went on to IS and were topped up by PC. Those men who chose to take early retirement were effectively retiring at the same age as women. That may, to a degree, have been forced on them by unemployment, but they had a choice. They could have gone on to JSA but, perfectly sensibly, they chose not to do so. Instead they went into effectively a pension regime, originally from the age of 60, which was when the age for women was the same.
Of course, other men, who were in work, carried on building up their pension until age 65, primarily because those between 60 and 65 on PCs still carried on adding to their NI years, as I recall. However, those other men were able to build up their additional pension and thus protect it as they went through—essentially, SERPS. Women of that age would have had little, if any, entitlement to SERPS. They would have had entitlement—as will younger women—to S2P, primarily because of the extension of the credits that apply to them, particularly for childcare. Those were introduced quite late, so those women will not, for the most part, have had access to an additional state pension. Men who continue to work to 65, as most of them will—the noble Lord is right on that—will continue to build up that additional pension, which will be protected after they are 65.
The Government are taking a swings and roundabouts approach on this. I think that 167,000—originally 235,000 in 2009-10, and before that a higher figure—had the choice of the same pension as women, age for age. Women have had no such choice. That is why they face cliff edges in a way that men do not. The problem for us has been about cliff edges. The point that I was trying to push was that men did not face any cliff edges. Whatever their age when they retired after 60, they could have a smooth pension level that was the same as women, then they progressed quite nicely at 65; if that happens after 5 April 2016, they will move on to the new pension. Women have no such choice. If they tick their pension, the same as the men, at 63 the shutters come down and they can never move that next step on to the new state pension, which men could in their situation. Women have a cliff edge, while men have a nice smooth path down to paddling in the sea. That is what I was primarily concerned about.
The problem comes as we recognise that we should try to equalise the state pension age at the same time as the Government are introducing the new state pension. I recognise the difficulty. When I started work on this I took pretty much the Minister’s line—that this was on the one hand or on the other—but the more I worked on pension credit, the more I saw the number of people claiming it and how substantial their numbers were. Not 5,000 or 10,000 but a fifth of all men claiming pension credit claim it before they are 65. That means, in terms of savings and the rest of it, that many of them will have gone on to claim that after 65 under the old system. Given that substantial number, it is worth emphasising that women have had a double hit and men have had a smooth transition throughout. Whatever the Minister may argue—and I understand his stats—if you hold up the gender filter to this issue, you can see exactly, as my noble friend said in her speech, why women, rightly, feel hard done by. They are faced with a cliff edge and have no way of ameliorating it, unlike men have had over the past few years—in some cases the past five years—of their working-age lives.
However, we have gone as far as we can until we get further information from the Minister that may or may not help us to progress on this issue. With the consent of the Committee, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
“( ) The Secretary of State shall ensure the timely provision of relevant data to persons who may become entitled to a state pension at a full, reduced or transitional rate.
( ) Relevant data shall include such information as will reasonably enable a person to be aware of state pension accrued at 6 April 2016, the basis of which it may be revalued and the number of further qualifying years, if any, required to achieve a full state pension.
( ) Such information shall be provided as soon as reasonably practicable after 6 April 2016 and from time to time thereafter.”
Lord McKenzie of Luton (Lab)
My Lords, this is a gentle, probing amendment designed to give some respite to the Minister and to explore further the details of what is planned about the nature and extent of the communication strategy envisaged for the introduction of the single-tier state pension. The noble Lord, Lord Kirkwood, touched on this, as did the Minister in responding to the first group of amendments.
We have been provided with a certain amount of information in the various briefing packs and we have had the opportunity to peruse the overarching strategy for communicating the reforms, which has been made available in the Library. I take this opportunity to commend the Bill team. We do not want to heap too much praise on them, as this is just the start of our proceedings, but I think that we have had some genuinely good information packs, which have helped. The problem with good information packs, of course, is that they generate additional queries, so forgive me if I pursue some of them.
One objective of the strategy is, rightly, to inform people about the impact of the reforms on their individual circumstances and the actions that they may take to improve them. That aspect is of particular relevance to the amendment. It seems to me that the state pension statement is to be the key way in which this communication is delivered, so the Minister may wish to comment on the statutory underpinning of such statements, if it exists, and on whether this might be improved.
Although the amendment focuses on STP, it does not negate the need to communicate to those who retire before 6 April 2016, especially in relation to the extended arrangements for paying voluntary NICs and the new class 3A NICs to improve state second pensions. I ask the Minister specifically what is planned in this regard. I suppose, given our earlier debates, that the key communication issue for those who retire before 6 April 2016 is why they are in a separate category, although I do not want to revisit the debate that we have just had.
Issues relating to the new class 3A have obviously not yet been fully developed and those who might be eligible are a definable group of all those who reach state pension age before 2016. The group that are particularly in need of information are those who are entitled to a state pension at the transitional rate. If they are to be encouraged to make rational savings decisions, such information as their foundation amount, any protected payments, the rebate derived amount where appropriate or any derived and inherited entitlement is key. Individuals should be made aware of how the revaluation of the various components is to work and they will need to be alerted to their potentially not meeting the minimum qualifying period, having fewer than 35 qualifying years, as well as not being able to add further to their STP.
It is understood that this information is still to flow via state pension statements, but following implementation of the STP it is not planned to make it proactively available, either as soon as the NIC information is available up to 5 April 2016 or otherwise. A post-implementation statement will be provided on demand and digitally but not otherwise, as I understand it.
A number of questions therefore arise. Can the Minister clarify precisely what is to happen between Royal Assent and in advance of implementation so far as state pension statements are concerned? Will these be made available proactively or will individuals have to ask for them? It is understood why a digital service is to be developed for post-implementation—that is to be welcomed—but there will be some for whom the digital approach will be difficult. That is surely the experience of universal credit. What other support will be available to these people? There is clearly some merit in being able to take stock of one’s state pension provision as close to 6 April 2016 as possible, so can the Minister say how long it is expected to be before the 2015-16 national insurance data will generally be available at individual level? How long does it take for that to filter through to the records?
Given more complex situations, how quickly is it envisaged that individuals will be informed of all their pension components, including the rebate-derived amounts, after 6 April 2016? What, if any, capacity will there be in the system for individuals to query, challenge or even appeal the details that they receive? We are told that there is not the capacity in the system to provide full details to everyone proactively—like the noble Lord, Lord Kirkwood, I think that there is a measure of concern about that. Just what is the capacity to provide such details for those who would likely be entitled to a state pension at the transitional rate? We are told that, post-implementation, state pension statements are to be provided on demand. Those who are clued up and digitally savvy will cope, but what monitoring will be undertaken to see what is happening to those who are not? What particular communication strategies are to be focused on the self-employed, who will be brought more fully into the system than hitherto?
Although the components of the calculation will generally be more straightforward for those who grow up entirely in the new system, they will still need information so that they can be reassured on their likely level of state pension income and the desirability of saving. Of course, some may enter the new system part way through their working life because, for example, they had been working abroad or had just decided to join the labour market. What in terms of communications is planned for those in this position? I accept that much of this will be work in progress, but I do not want to miss the opportunity to get an update on the latest position before we leave Committee. I beg to move.
Baroness Hollis of Heigham
My Lords, I want to comment very briefly. I declare an interest, which I know is relevant to this amendment, as a board member of the Pensions Advisory Service. TPAS has recently completed a survey of just under 1,000 women on their pensions which makes the point absolutely for my noble friend’s request for an information and communication strategy to go out to prospective pensioners and pensioners. Of that 1,000 women, 36% did not know when their state pension would be paid; 74% did not know how much they would receive; 57% did not know whether there was a shortfall in their NI record; 25% do not know that the age is likely to change again; 54% have made no changes to their retirement plans; 27% wonder whether they will have to work longer; and 76% do not expect to be financially comfortable in retirement. I have before me a lot of quotes, some of which I may choose to use later on. Those figures suggest how wilfully uninformed far too many women are about what will happen to them over the next couple of years. That evidence from a TPAS sample substantiates my noble friend’s points.
Lord German (LD)
My Lords, I shall have to speak very quietly because I have lost my voice, so if anybody fails to hear to me, I will shout a bit louder after a few days. I just wanted to add to the important points made by the noble Lord. I can always remember receiving my state pension statement. It was a bit of a shock, because I always thought that I was so young that I would never receive one, but it did happen.
The most important aspect of this legislation is clarification of the words as they are written out, because this is a very complex set of arrangements and they need to have clarity of language. Those statements which I have seen are quite clear. I do not hold so negative a view as to how people will see the future world of their pensions. Just today, we have heard that we have now reached 2 million people enrolling in auto-enrolment for pensions—that is, 2 million more than there were 12 months or so ago who know about a pension because they have got into it. We have 3,500 employers. I welcome the British Heart Foundation, which has recently enrolled all its staff. So we know that people are becoming more involved and engaged with their pensions.
The second thing relates to something which happened to me last Friday. I was doing Lords outreach with two schools and the pension question came up. I do not know whether it had been planted by a teacher in advance but it came up. It is quite clear that when these matters are scrutinised, young people are beginning to realise that if we do not put those matters right they, too, will be having to pay more. I always save for my grandchildren, who are enthusiastic to hear that they will be paying to sustain me into older life—but, of course, I am not a recipient of the new single-tier pension. However, when we talk about this issue I wonder whether we should also try to include in it education from a younger age, so that when people receive any financial education within their school life, they can understand that pensions are not a matter for tomorrow or for when you are retiring; they are a matter for the day on which you start to pay and earn. This is a probing amendment but it is very important that, along with other measures which are going on, pensions are seen as an issue for all from now on and not one for when you are retired.
Baroness Greengross
My amendment is about a public education programme, which is necessary as so many people are in the same position, as has been outlined in noble Lords’ statements. Amendment 30 seeks to ensure that individuals are made aware of both their responsibilities and expected outcomes here; for example, in terms of state pension contribution years and amounts, and what outcomes they can expect and when. Given longer life expectancy and extended working patterns, it is not unreasonable to increase the number of national insurance contributory years from 30 to 35. People who have contributed for less than 35 years but for at least the minimum qualifying period of seven to 10 years are going to receive a proportion of the pension. However, it is absolutely critical that this change is clearly communicated to all individuals so that they can ensure that any years outside of work—for example, because of ill health or caring responsibilities—are counted as years of contribution and so that they can make appropriate private pension arrangements, should they wish to do so.
Baroness Sherlock
My Lords, these amendments relate to the crucial question of information. The Government have stressed at different stages of the Bill the move to reduce the complexity of the state pension to make sure that people understand their likely entitlement and are therefore incentivised to save enough to complement the support that they can expect from the state. This came up a lot when the Work and Pensions Select Committee looked into the matter. Citizens Advice, in its written evidence to the Select Committee, noted that a considerable complexity would remain in the system, mainly as a result of transitional provision. It accepted that as being unavoidable but said that:
“A commitment to a sustained communications programme could improve outcomes, manage expectations, minimise misinformation, promote action on NI contributions, and support personal saving for retirement”.
I think that was nicely put. The ABI said this to the Select Committee:
“Adequate communication of the change will be essential, or the clarity and simplicity of the new system could be undermined … No-one should feel unclear about the amount they will receive—and therefore need to save personally themselves”—
—a common view between the ABI and Citizens Advice.
The Select Committee noted that various witnesses focused on that issue. Sally West of Age UK said that,
“we are finding a lot of people are understandably confused”.
I think that that is an understatement. The Select Committee reported considerable confusion about the reforms. Many people wrongly believed that the introduction of the STP would mean that everyone would get £144 a week in state pension, because they did not understand the eligibility criteria. Others thought that there would be no means-testing at all; others thought that if they were due more under the current system, they would lose all that and get only what was due under the new system. The implications of having been contracted out or of not knowing whether you were contracted out or in was another area of confusion. It was noted that it was therefore important to,
“ensure that people have full information about their own future entitlement as well as a reasonable understanding of the reforms”.
Lord Freud
My Lords, I thank the noble Lord, Lord McKenzie, and the noble Baroness, Lady Greengross, for this opportunity for the Government to set out our actions to support people in this area. I need to point out that when the noble Lord, Lord McKenzie, says that he is offering some relief, I am reminded of the song by Tom Lehrer about sliding down the razor blade of life, but there we are.
On the noble Lord’s first question about the new class 3A voluntary NICs, we will have a debate in the new year, and will work with stakeholders to get a clear and simple offer to pensioners, which will include how we publicise that new scheme, so that information will be available.
Including financial education in the school curriculum and increasing young people’s financial capability is an issue of importance to this Government and apposite to the point raised by my noble friend Lord German. In July 2013, the Department for Education published a national curriculum framework with increased focus on financial literacy in both the mathematics and citizenship curricula. This will be taught in schools from September 2014. In 2012, we established the Money Advice Service to help people manage their money more effectively and better understand financial products, including pensions. The Money Advice Service is one of our key partners in providing information to individuals who are being automatically enrolled into workplace pensions. The department has also played an active role in developing the Money Advice Service’s new financial capability strategy to help tackle the knowledge gaps which can inhibit individuals from saving in pensions.
We know that the delivery of information and government policy around financial capability has the potential to build trust and engagement in pension saving, and we are proud of our progress in this area. Our Automatic Enrolment and Pensions Language Guide, developed with partners in the pensions and financial services industry, promotes a consistent and simplified use of language in order to ensure that individuals seeking advice can better understand the information. In October this year the Government published updated regulations setting out the information that occupational and personal pension schemes are obliged to provide to their members, and the frequency with which this is to be done.
I turn specifically to the state pension reforms in the Bill. We are committed to taking action to help people to understand the reforms that we are making and what it will mean for them. As noble Lords know, the current state pension system is fiendishly complicated. In a 2012 survey, in response to a simple true/false question, only one-third of people agreed that it was true that the Government provided a second state pension related to previous earnings. The noble Baroness, Lady Hollis, noted its complexity and gave lots of saddening statistics. That is precisely why we are reforming the system to make it—in principle—comprehensive to as many people as possible. We are tackling this systemic problem by creating a simpler state pension so that everyone can know both what counts towards their state pension and how much they can expect to receive. However, we recognise that the benefits of this simpler system can be realised only if we communicate the changes effectively to the public.
I turn to the noble Lord‘s amendment about the timely provision of individualised state pension information. The Department for Work and Pensions currently offers a state pension statement service, which allows people to request an estimate of how much state pension they may get, based on their national insurance record to date. Last year, 2012-13, over 600 statements were provided.
Lord Freud
Six hundred thousand statements were provided. I assure the noble Lord that we intend to continue to provide people with an on-demand state pension statement service after the introduction of single tier in 2016. Our intention is that the service will be predominantly, though not exclusively, digital—
Baroness Hollis of Heigham
Why on demand? Why not automatically, as a right?
Lord Freud
The cost of providing it to absolutely everyone in the country would be large and, in capacity terms, would be too great to be able to cover everyone on that basis.
Lord McKenzie of Luton
If there were increased demand because of the changes that are taking place in the broader communications strategy, what is the capacity to deliver individualised statements? How many could the department cope with?
Lord Freud
One of the issues here is that we will need to talk, or write, to people who cannot get the information in the digital way that we are planning as our primary way of communicating. Clearly we will be in a position to do that but, until we have the service up and running, it is difficult to estimate what the underlying demand might be.
Baroness Hollis of Heigham
The more the Minister describes this, the unhappier I get. The people who most need the information are those who least know that they need to know it—they do not know what they do not know. For me, that was the clear result from the TPAS survey: they did not know that changes were happening and they did not know when they were going to retire or how much they were going to get, and they had not done anything about it because they did not know what to do. That is the first problem: that those who request it—the Minister’s 600,000 a year—are those who are probably more alert to pension issues and more capable of responding in that way.
The second point if we are going to do this digitally is that we are talking about a group, particularly women, who may very well not have access to any such digital back-up at all. My housing association is already seeing issues with this in spades regarding the universal credit. I am doubly worried if, first, we are only responsive to requests and, secondly, if we propose to do this digitally, those who most need help will not get it and they will be the ones who suffer an impaired pension, even though, had the Government acted differently, they might have had enough time to turn the situation around.
Lord Freud
Well, my Lords, I can just take you through our plans in this area so let me continue to do that. For those who cannot get digital information, we will ensure that they can still get the information they need. Our statements will give individuals their up-to-date state pension position, including their foundation amount, based on their national insurance record to that point. Where appropriate, the statement will tell them how many further national insurance qualifying years they need to reach the full amount of single-tier pension. As noble Lords will appreciate, it takes a few months at the end of every tax year to ensure full consolidation of national insurance records. However, as now, people will still be able to get a statement based on their contributions up to the previous tax year, and we will update our statements to reflect people’s full record for their pre-2016 years as soon as the relevant data are in place.
PAYE records are now mainly electronic but we are working on an assumption that records on account should be ready by October 2016 for the April introduction. As for the timetable for sending out statements, we can give people accurate information on their single-tier position when all their contribution and credits to that point are recorded on their national insurance record. From Royal Assent, we will include simple information about single tier, including the relevance of this estimate in terms of working out their single-tier foundation amount. From implementation in April 2016, our intention is to provide an on-demand, largely digital, statement service.
Regarding the noble Lord’s question on querying the details, in practice relatively few people currently actually do query. However, we want to ensure that the default position is as simple as possible and we will, as now, ensure that where it is required people can get a detailed breakdown of the calculation. For people who are unable to access digital media, we will ensure that they receive the support they require in a non-digital way and we will work that up. To revert to the point on the implied question of issuing everyone with a statement, the issuance of a large number of unprompted statements—potentially millions of statements—would be expensive in terms of IT costs, production costs, postage and staff. Our evaluation of previous unprompted statement exercises show that there has been little, if any, benefit, and solicited statements are a better way of getting information to people.
I turn now to the amendment of the noble Baroness, Lady Greengross. We know that the statement service alone will not be sufficient to inform and educate the public about the simplifications to the state pension system. We are developing a wide-ranging communications strategy, informed and supported by work across government to build financial capability. This will sit alongside the work I described earlier around improving the provision of information across the pensions industry.
To communicate on the single-tier reforms, with HMRC we are already carrying out research, testing language and building on the lessons learnt from automatic enrolment. We are in contact with front-line workers and consumer representative groups. Clearly, it will be important to have an effective mechanism in place for assessing the impact of our communications activity. This will form a key part of our communications strategy. We will publish a detailed update of our communications strategy in the new year, setting out how we will raise awareness and understanding. We will of course communicate that with noble Lords from the outset.
I hope that I have assured the noble Lord and the noble Baroness that the Government are fully committed to ensuring people will continue to have access to information on their state pension position to enable them to plan effectively for their retirement and, as previously stated, we will share our communications strategy with noble Lords.
Lord McKenzie of Luton
As ever, I am grateful to the Minister for his full reply. I think that I have ended up slightly more concerned than when I started on this amendment. I also thank all noble Lords who have participated in this debate. First, specifically the Minister referred to the opportunity to challenge a statement to see whether the information was right, which is not routinely done at the moment. I can understand that. Is there technically a right of appeal or does that arise only when the pension falls due for payment?
I do not think that we got an answer to the point made by my noble friend Lady Sherlock as regards at what point someone would receive a communication. I think the answer to that is that it would be only at the point at which they asked for it. I can see that an educational policy, financial literacy, and all those issues dealt with by the noble Baroness, Lady Greengross, and the noble Lord, Lord German, are important and may give an enhanced understanding for people. I am trying to understand what would happen if there is no proactive approach. You could end up with very few people asking for a statement, and the percentage of people in the new system getting an early statement seems to be low. I still do not think that we have the answer to the question about the capacity of the department to respond to queries if there are more than the current 600,000 requested statements. I would have thought that there is at least some prospect of a bit of a flood of inquiries at least at the start when people seek to understand the new position, particularly if the broader education approach is to help and encourage people to understand what their potential provision will be in due course and, therefore, what additional saving they might, if they are able, undertake.
I am grateful to my noble friend Lady Hollis, as ever, about some very helpful data which really underlines the importance of getting these communications right. The noble Lord, Lord German, made the point that this is not just for people who are retired or just about to retire. This is a broader issue about helping young people as well to understand the importance of saving. I had not heard the figure of the 2 million people who auto-enrolled. I am grateful for that. It is a huge achievement and it is great to have it announced while sitting next to my noble friend who was so instrumental in getting that under way.
Obviously, I will withdraw this probing amendment. I hope that the Minister may be able to fill in some of the gaps but I am still left very uncertain as to how most people will get that information expeditiously. I would have thought that most would want it.
Baroness Hollis of Heigham
Will the Minister think about the possibility of, say, when someone hits the age of 50, a pension statement or whatever being sent out? The whole push of the Government’s programme has been that people should have enough time to be able to make good any shortfall in their record.
They cannot do it six months before they are due to retire. If a statement was sent at 50 and then the usual one was sent a year before retirement when people may or may not be in a position to consider voluntary NICs or something like that, even that would be helpful if a statement cannot be sent out each and every year. I take the point about cost and effort but people need some snapshots so that they know what the position is as they go along at the ages of 50, 55, 60, 64 or whatever. Otherwise, we will find that a hell of a lot of people are going to remain on pension credit and two legacy systems will be running for 40 years.
Lord Freud
My Lords, I shall try to consolidate where we are here. We will provide full information on our communication strategy, and noble Lords will see that. We know that how and when you communicate is very important, and having a generalised communication strategy may not be most appropriate. As the noble Baroness said, there are particular points where we might want to get over particular bits of information, as is currently the case where people are informed about, for instance, the number of years of national insurance contributions that they have made when they reach a certain age. I would imagine that a sensible communication strategy, which we will show to noble Lords, will incorporate that kind of thing.
To pick up the point made by the noble Lord, Lord McKenzie, on appeals, people can appeal but not until state pension age, not least because, as the noble Lord will be fully aware, before then the pension is often a guesstimate. We are not able to tell people in advance what they are likely to get because the issue is so fiendishly complicated. The real question, which the noble Lord may ask, is whether, when the matter becomes dramatically simpler, we can provide that information, but then there will probably be no need for appeals.
The department tried automatic statements between 2003 and 2006, when more than 17 million were sent out. We stopped this activity after research showed us that it had a limited impact.
One issue on which we need to communicate is shortfalls and the opportunity to buy voluntary NICs. Rather than generalised information, some very targeted bits of information, particularly around that area, are far more likely to get people to respond and focus their attention on their interests.
Baroness Hollis of Heigham
Perhaps I may give the noble Lord another example, and this will apply to other amendments later on. You begin to get an increasing degree of ill health among some people at the age of 50. Women are now very often entitled to a carer’s credit, which, as the Minister will know, is much less heavy in its requirements than the carer’s allowance. However, the take-up is very low. Most people do not know about it at all and it is very hard to claim it retrospectively. Only when the Minister says to people at, say, the age of 50, “You’ve got this but the following credits may be available to you under certain circumstances”, will we know whether women, as they approach 63, 64 or 65, have built up an NI record on their own. The Government cannot be passive about this; they have to provide appropriate information to allow people to know both what they need and what they can do about it. It seems that the Minister is basically responding to those who already know that there is an issue and not to those who do not but should.
Lord Freud
My Lords, just to wrap up this position, I do not think that any noble Lord in this Room will be under any illusion that we are not utterly determined to drive forward a transformation in both working-age and pension-age systems. One of the guiding principles for both those is simplicity so that people can understand what they are entitled to and there is an automatic process where you do not have to do so much work. It is an example of the kind of chaos that we have at the moment that people do not understand what their entitlement is. I am equally conscious of the figures in universal credit, where you have a clean working-age benefit. Two-thirds of the uplift of more than £2 billion per year that we are able to put through to people is due to giving them benefits that they do not currently claim. I do not think that there is any difference. Clearly, simplification and transformation are right at the heart of the Government’s strategy.
Lord McKenzie of Luton
My Lords, before I withdraw the amendment, can I check on two points? The Minister said that it would be possible to go to the previous year’s statement on the normal basis by 6 April 2016. Would that statement include any estimate of what life would be like under STP or would it just be on the old basis? I accept entirely the Government’s intent to communicate effectively on this. It would be crazy to develop a policy like this and then let it fall because there had been inadequate communication, so there is not a challenge on the Government’s intent here. However, how will they spot the difference between those who are digitally able and those who are not? How long will it take for them to realise that there is a group of people here or there who have not accessed the system and that they therefore need to do something else?
Lord Freud
I shall take the noble Lord’s second question first. We realise that some people today are not necessarily digitally able or on the net, but this is the way of the future and we are looking to increase digital take-up and access and a lot of investment is going into that. It is interesting that the divide currently seems to be at age 45, with people pre-45 tending to be relatively familiar and people post-45 tending to be less so—this tells us something about the nervousness in Lords committees. However, clearly, as the system moves ahead over the decades, more and more people will take digital involvement for granted. For those who cannot today, we will need to supply other means of support and we have said that we will do that.
Statements before April 2016 will contain information to help people understand what the amount stated will mean if they reach state pension age after 2016—in other words, what the foundation amount that they could expect represents.
Lord McKenzie of Luton
I am grateful for those further clarifications. I have just one final point—I promise no more. Is there a statutory underpinning for state pension statements? If there is not, should there be one?
Lord Freud
I complained about razor blades before. I am pleased to be able to inform the noble Lord that, no, there is not a statutory underpinning. I am not utterly sure as to why there should be one and whether that is a loss to the system.
I should be very interested if the noble Lord can explain why there should be one and to think about that.
Lord McKenzie of Luton
Perhaps I could write to the noble Lord. It just seems to me that one would have assumed that the Government were authorising some formal way to produce this information, or have an obligation to. Perhaps that is the difference here: the more we move to a statutory basis, it imposes a stricter obligation on the Government. We might reflect on that, but we have cantered around the issue, so I withdraw the razor blade and beg leave to withdraw the amendment.
“Calculation of state pension
Regulations may provide that the state pension shall not be less than the single rate of the standard minimum guarantee pension credit plus 2%.”
Baroness Hollis of Heigham
My Lords, I hope that Committee will forgive me if just for a second I revisit Amendment 3 and pension credit costs. I pressed the Minister, but he did not give me an answer—I would be very happy for him to write me—about the annual savings from each cohort of men falling out of pension credit and where those savings go to. That was not part of his reply and it would be good to know.
This amendment proposes a 2% head space between the new state pension and what someone would get on pension credit. Obviously, it is a probing amendment, a peg to explore what the future level of the state pension vis-à-vis pension credit will be, and to give us information about some of the winners and losers on the income analysis, on which I am sure that my noble friends will be pressing the Minister.
In particular, I want to focus on the issue of means-testing. As far as we know, eventually only something like 3% of the means-testing in the system will drop out as a result of the proposed changes. One of the great virtues of the new proposed pension was that by bringing together the BSB, S2P and pension credit, it was to leapfrog some means-testing. As my noble friend Lady Sherlock said, we had to use means-tested pension credit when we came into government because pensioner poverty for the bottom third was so acute and the number was so large that we could not financially manage a sufficient flat-rate rise for all. So we targeted our resources, and the policy worked. However, as my noble friend Lady Turner will remember, although we pushed the policy through, it was not without insistent, noisy and continuous haranguing from the late, splendid Barbara Castle, who used to sit right behind me, muttering very loudly to Muriel as I would reach some fancy point in policy, “What’s she trying to say now? What’s she trying to say now?”, to the great amusement and glee of those on the opposition Benches.
That policy removed hundreds of thousands of people from poverty, so pensioners are now less likely than any other group to come within that category of poverty. However, it came at a price. As we know, means-testing is disliked, especially by older people and, no, it is not the same as giving your income details to HMRC for tax purposes. It is highly expensive to administer and open to error—I will not say fraud—for this group.
Above all, as the Minister rightly and sympathetically identified in his previous answer to my noble friend Lord McKenzie, those entitled to pension credit, such as the self-employed unsure of their income or elderly widows whose husbands’ pensions have died with them and who have never handled the financial pension arrangements between them, do not always claim. Unlike lone parents, who are savvy and feisty about their benefits—well, usually—and have very high claim rates, pensioners do not. For example, fewer than half of those entitled to savings credit claim it. In the past, fewer than two-thirds of those entitled to council tax benefit claimed.
Endless studies were undertaken into why, and I congratulate the DWP on its fascinating in-house research published last year by Maplethorpe et al on whether we could get a significant increase in the take-up of pension credit if pensions were made to the department’s random sample of 2,000 entitled non-recipients automatically and a further 2,000 ENRs who were followed through by DWP visitors. That was an imaginative and welcome piece of research.
It is a pity that the results were, for everyone I think, really rather disappointing. The money was welcomed at the point but after the trial period of three months DWP had added only about 10% to the number claiming pension credit, which was useful but not a breakthrough, when pensioners were required to submit their own forms—in other words, take the initiative in a means-testing pension credit. As the research identifies, it is about stigma and difficulty with the forms, but also we have long found that if a pensioner had applied in the past for another means-tested benefit—HB, for example—and been refused, they thought they were ineligible for any other means-tested benefit so did not apply. If a friend or member of their family had been refused after applying, they assumed that the case applied to them too.
Many of them felt that the money they got at the end of a lengthy process was too little to be worth it. They may be right because although the savings credit mean figure is something like a loss of about £34 a week, the median is infinitely lower because it is skewed by a few very high numbers at the end. However, pensioners worried—this is partly the result of some of the problems with tax credits—that if they were wrongly paid they might face having to repay money that they subsequently could not afford. Nor are they clear about income and savings rules; some pensioners with £5,000 tucked away for funeral costs think that that disqualifies them. A few thought that as they could manage without pension credit, although they were entitled, it was morally wrong to claim it.
This research, which builds on two previous pieces of research that the DWP has done over the past 15 years on pension credit that I am aware of, suggested to me that means-tested benefits are almost inherently troubled by the failure of a substantial number of pensioners to claim, and that the new state pension is absolutely the right way to go for the future. It has to be on an automated basis. Whatever may happen to other means-tested benefits, we hope that at least pensioners’ basic income in the new state pension will be safely delivered and in full. However, means-testing will continue for the 25% of future pensioners who are not owner-occupiers but who are on housing benefit in the rented sector, or for those with incomplete NI records. The reduction in means-testing is mainly because the new pension incorporates the means-tested guaranteed credit while abolishing the means-tested savings credit. That is actually why the numbers fall.
However, if the new pension is to reduce means-testing, as we hope it will do—though at the moment the statistics do not suggest by as much as some of us had hoped—it must, to use the phrase, put clear blue water between it and the new pension. At the moment, the difference between what a pensioner would get under the three tiers of state pension, possibly some additional pension and pension credit under the new state pension, could be less than £1 a week, although the triple lock for the pension, unlike the earnings link for pension credit, should widen that gap over time if the triple lock remains. Age UK has provided figures showing that means-testing will have fallen by just 3% by 2014 from what it would have been as a result of this. However, as my amendment suggests, 2% would provide a rounder figure—a £3 gap, I guess.
I am hoping that the Minister will give us some guidance on the difference in income for each path that a person registering for the new pension will take, and the winners and losers as a result, so that we can work further on those stats before Report. The Select Committee recommended such a clear space, although it did not suggest a specific sum. The Government’s response was rather interesting. They agreed it was necessary to establish,
“a firm foundation for saving”,
but believed that it was not necessary to put that in the legislation. I do not think that is good enough. Put very crudely, there is not much point in having a massive and welcome reform of pensions structure if at the end of the day many future pensioners, mainly women, lose derived rights, and many other pensioners, mainly women, are no better off than they would have been on pension credit because the new state pension is financially not sufficiently distinctive. I beg to move.
Baroness Drake (Lab)
My Lords, I shall take advantage of the helpful peg of this amendment moved by my noble friend Lady Hollis. I completely accept that moving more rapidly to a flat-rate pension will bring losers and gainers. However, we need to have some confidence about the initial value of the single-tier pension and how its value will be maintained over time, in order to have confidence about the assessments of gainers and losers.
The figures and statistics that we have are based on the assumption of triple-lock uprating, which is far from assured over time. We know that the single-tier pension has to produce a series of outcomes: it has to be above the guarantee credit to address the disincentive to save; it has to be set at a level which reduces reliance on means-tested benefits; and it has to provide a firm foundation for private saving. However, whether it achieves those intentions depends in part on the starting value of the single tier and how its value moves over time. The White Paper therefore suggested that a single-tier pension should be worth £144 in 2012-13 earnings terms, but the extent to which the single-tier pension figure is to be set above the pension guarantee credit is very unclear.
At the time of the White Paper’s publication in January 2013, the illustrative £144 was only £1.30 higher than the guarantee credit—less than 1%—which was lower than the figure in the Green Paper, when the £140 illustrative figure was £7.40 above the guarantee credit, which is nearly 6% higher. In 2013-14 earnings terms, £144 would be worth £146.30—just 90p above the guaranteed credit of £145.40. We therefore have a lack of confidence about what the level of the single-tier pension will be at its introduction, what its uprating is likely to be over time and what its relationship with the guarantee credit is likely to be.
The rate of the new state pension will be set in regulations, and it is important to have some confidence about government thinking. The Delegated Powers and Regulatory Reform Committee commented that,
“we draw to the attention of the House that, for the first time, the rate of the state pension will be specified only in subordinate regulation”.
The Government’s impact assessment assumes uprating by the triple lock, but the assumptions about gainers and losers and pension adequacy could be significantly different if the triple lock were not applied. I also note that, when it comes to assessing gainers and losers, the notional figures include the previously contracted-out individuals. In one of the very helpful briefing sessions that we have been afforded, I asked whether we could see the notional figures for gainers and losers, excluding those contracted out at April 2016, in the hope that we could get a clearer picture of winners and losers. I was particularly interested in understanding more clearly who the winners and losers were from the base of the actual amounts that contracted-in individuals receive. I was interested to read a report this weekend, albeit in the Corporate Adviser. I quote from the article:
“The figures for mean gross state pensions, which give the clearest official picture of the level of combined basic and secondary pension of contracted in workers, have been omitted from the ONS’s 2013 Pension Trends paper”.
I understand that the reason for that is information provided by the DWP. For the sake of debate and for clarity, net state pension figures are only those payments paid directly by the state, whereas gross state pension figures are estimates of the total entitlement to additional state pension, which include those elements paid by private pension schemes that are contracted out.
Baroness Sherlock
My Lords, I shall say very little. I am so keen to hear the answer to that last question that I shall race through my contribution even more so than normal.
My noble friend Lady Hollis has done the Committee a service by opening up the question of the level at which the single-tier pension will be set at introduction. Both she and my noble friend Lady Drake have drawn attention to the rather dusty view taken by different bodies of the Government’s refusal to do this.
The Work and Pensions Select Committee was very clear about the fundamental importance of the principle that the STP should be set above the level of pension credit. That is primarily about means-testing, and I was grateful to my noble friend Lady Hollis for making the point that, contrary to what one would think from some of the headline messages, the percentage-point reduction in means-testing is really very small, being somewhere between 2% and 3%. That is not very surprising. One of the notes that we were given explaining means-testing and single tier confirmed what I think a number of us had expected, which is that, while there is a small reduction in the number of pensioner households claiming guarantee credit—pension credit—a considerable part of the reduction in means-testing on pension credit relates to those who would have received savings credit. It has always been very easy to reduce the number of people involved in means-testing: just make benefits less generous or take them away faster. You simply reduce the level at which you can get them. Taking a benefit away from people may reduce means-testing; it is not in itself an achievement. More interesting is what the combined effect is.
The Government’s response to the Select Committee was to confirm that it was indeed a principle of the STP that it should be set above the standard minimum guarantee and would be thus set, and that Parliament would be able to debate it as the regulations would be affirmative. However, as my noble friend Lady Drake said, the Delegated Powers Committee pointed out that this is the first time that this is being set not in primary legislation but simply in regulations which cannot be amended. I confess that this is not an area of expertise—along with many things that I talk about—but I presume that the reason for this is that, when Parliament is debating the introduction of a new system, it is impossible to understand the implications for anybody involved unless one knows the level at which it will be introduced.
I spent the entire weekend, apart from a brief outing to the marvellous Durham Johnston Christmas concert, going through all the details trying to understand the impact on different people of all these changes. They are all predicated on the assumption that this will be set at £144. If that assumption proves to be untrue, or indeed if the triple lock proves not to be the case, then I have no idea what the impact will be or who the winners and losers will be, and all our debates today and in the many joyous weeks that we have to look forward to will be rather academic. Can the Minister be tempted to give us some level of clarity, at least about what the minimum level might be, in order that we can understand better the assumptions that the Government are making? I raised this question at Second Reading and, I have to say, got a rather dusty reply. The Minister said simply:
“We will need to decide that closer to implementation when the level of the pension credit standard minimum guarantee for 2016-17 is known. I am afraid that I cannot reveal all tonight”.—[Official Report, 3/12/13; col. 192.]
So I confess that it is not with a hopeful heart that I await the Minister’s response, but I await with fascination his response to my noble friend Lady Drake.
Lord Freud
I shall start with the question from the noble Baroness, Lady Hollis, referring to the previous amendment regarding men coming off guarantee credit. I commit to write to her with the data on the numbers coming off.
The central principle that these reforms represent is that the full amount of the single-tier pension will be above the basic level of the means-tested support for a single person. This provides a clear foundation for both private saving and automatic enrolment, and it builds on the broad cross-party consensus that has characterised the debate that there has been on pension reform: people need to save more, and to do that they need to know what they are going to get. The reforms are therefore not so much about spending more or less money on future pensioners but about restructuring the system to provide clarity and confidence to help people today to plan for their retirement.
In the White Paper, published in January 2013, we used an illustrative start rate of £144, which was above the minimum guarantee and forecast to stay within the projected spending on the current system. Every extra pound added to the start rate increases annual costs by £500 million in the 2030s. A start rate of 2% above the standard minimum guarantee would incur significant additional costs.
On the question from the noble Baroness, Lady Drake, on the narrowing of the gap between the standard minimum guarantee and the start rate of the single tier, the Green Paper said explicitly that the precise value of that start rate would need to be set at a level that met the affordability principle. The start rate that we will fix will need to be set closer to implementation, when the Government will be able to factor in both the 2016-17 level of the standard minimum guarantee and the latest economic and forecasting data.
The Committee will note that the regulations to set the start rate will be subject to affirmative resolution and will therefore be debated in this House. The noble Baronesses, Lady Drake and Lady Sherlock, asked why this is being done by affirmative resolution as opposed to in the Bill, as is the existing position. The different approach was flagged up by the DPRRC, although, interestingly, it did not recommend that we changed our legislative approach. That approach is consistent with recent legislation, such as establishing both the ESA and universal credit, and it is driven by not currently knowing what rate to use, given the enormous costs involved of getting that rate out even by a small amount from what it should be, relative to the means-tested level.
On contracting out, there is not a clear distinction between the people who are contracted in and contracted out. We estimate that even by the 2030s about 80% of people will have been contracted out at some point. The analysis we have done in the IA, as the noble Baroness, Lady Drake, pointed out, is based on the net state pension outcome, not the gross.
The stated intention of the Government is that the start rate should be above the standard minimum guarantee, and it is the Government’s intention that it should remain above the standard minimum guarantee into the future. That is why the Bill sets out that the single-tier pension will be uprated by at least earnings growth. There is flexibility in the legislation for discretionary above-earnings uprating, depending on the fiscal circumstances at the time.
I point out to noble Lords that where a couple both receive the full amount of single-tier pension, as a household they will receive almost a third more under the new system than the couples’ rate of the standard minimum guarantee. To promise a single-tier start rate at 2% above the basic level of means-tested support would mean that we could not guarantee that the reforms would be cost-neutral. With these reforms, we aim not to increase the amount spent on pensions but to provide clarity to support private saving.
On the question from the noble Baroness, Lady Sherlock, on the decrease in the numbers of those who are means-tested being driven by the end of savings credit, clearly the answer is yes, in part. However, that money is being used to provide the flatter state pension that is central to these reforms and it allows us to provide the single tier in a cost-neutral package, while simplifying the system. Although there is no Baroness Castle to barrack us from in front or behind, or wherever she did it, it clearly makes sense to go to a system that is less—or as little—reliant on means-testing as possible. This is the way to do that and I urge the noble Baroness to withdraw her amendment.
Baroness Drake
Was I correct in understanding that the noble Lord confirmed that the figures that we have show that notional gainers and losers are based on the net state pension figures, not the gross, and that a certain category of payment was therefore excluded in that analysis? Those net figures will not include total additional payment entitlements.
Lord Freud
The noble Baroness is correct that the analysis is done on a net basis. I am dubious about whether a gross basis is even possible, so I will not promise to have an additional analysis done on a gross basis.
Baroness Drake
That prompts the obvious question: why not? However, will the Minister write to us on why the net rather than the gross figures are used, and why the gross figures cannot be used, so that we can fully understand the implications of the gainers and losers analysis with which we have been provided? Certainly I had not realised that there was that distinction. I was scrabbling at or delving into trying to understand this issue when I asked some of my questions at the briefing. However, I think the distinction between net and gross is quite significant, and it would be helpful to have an understanding of those two issues.
Lord Freud
I will certainly be pleased to write on the thinking behind why it is net. As I say, I am not in a position to commit to anything on the gross figures at this stage, but I will set out the latest position in that area in that letter.
Baroness Sherlock
It would be very helpful if the Minister could write and confirm that it was net. It would also be helpful if he confirmed that the gross figures were not available to him and explain why not. It would be helpful if he could simply clarify why they are not available or why he does not have them.
Lord Freud
For the noble Baroness’s sake, I shall repeat what I just said. I will write to confirm that they are net, although I hardly need to do so. I will write to say what the position is with gross analysis at this particular moment. I do not know whether that is to say that they are available, not available or whatever. I will just write to let the noble Baroness know the position.
Baroness Hollis of Heigham
I am sure that the Minister will understand our need for clarity on some of these issues—whether it is net or gross; mean, median or average and so on—because they completely reshape the statistical base on which some of us are trying to base some of our contributions. The Minister is patient in taking our comments on this point, but we really need to know and we have not always had the statistics in ways that have allowed us to read across in a straightforward and simple form. This is not the fault of the Box; it is simply because that is the way in which, classically, statistics have been collected.
I am grateful to my noble friend Lady Drake, who emphasised both the need to deliver the Green Paper promises of a substantial headspace between the pension credit regime and the new state pension, and the way in which this is becoming narrowed. As my noble friend Lady Sherlock said, it is becoming very hard to calculate. I was checking back on what the Select Committee on Work and Pensions actually called for, and I really do not understand why the Minister cannot do this for us. The committee said in paragraph 34:
“There is no certainty about how long the triple lock will be in place and we believe that it is important that there is as much clear water as possible between the rate of the STP and that of Pension Credit. There appears to be scope for a bigger differential (either at the outset or over time) given the increased National Insurance revenue that the Government will derive from the ending of contracting-out and the overall long-term savings which will be made on”,
pension credit,
“expenditure as a result of the introduction of the STP. We therefore recommend”—
and I do not understand why the Minister cannot go along with this—
“that, when the Bill is before Parliament in the summer”—
that is, in the prior discussions at the other end—
“the Government publishes an analysis of (a) the cost of setting the STP rate at a range of higher levels; and (b) the level at which the STP could be funded if the additional NI revenue was used for this purpose”.
The Minister says that the whole of this project has to be cost-neutral. Yes, to an extent, but of course it is cost-neutral within a growing demographic population. When he talks about it being cost-neutral, I am never sure how much he is looking at the rise in life expectancy and so on and therefore at the number of claimants coming through, particularly for the post-war bulge. After all, the GDP figures show a drop for this group in going to pensions of something like 8.9%—I think I am right; I am doing this from memory—or about 8.23%. That is a significant drop in projected GDP going to a cohort that will actually have increased in number. When the Government say that this has to be cost-neutral, therefore, it seems to me that in practice, unless I have misunderstood the Minister, that could be achieved only by allowing the real value of the new state pension to fall simultaneously with the real value of pension credit. Perhaps he might like to write to us to confirm whether that is the case. However, as I have said, I do not understand why he cannot respond to what seems to be an entirely appropriate piece of analysis that was recommended by the Select Committee. Perhaps he could write to us and explain why it cannot be done.
Lord McKenzie of Luton
Before my noble friend sits down, does she agree that the drop in the share of GDP would have been even greater had the uprating been by way of earnings rather than by the triple lock? It is maintained even at that 0.6% drop because of the triple lock assumption, which is far from guaranteed, as I understand it.
Baroness Hollis of Heigham
My noble friend is exactly right and I thank him for that. Perhaps the Minister could write to us on why this is not possible. Why we cannot follow previous legislation in doing pension Bills, I do not understand.
Lord Freud
Maybe to save myself a bit of ink in letters, I should point out that we have done the range of start rates. In the White Paper, we showed it at the £144 point and the £145 point, and to increase the figure by £1 would cost £500 million by 2030.
Baroness Hollis of Heigham
On what price basis—is that in real terms, in today’s money? What are we talking about?
Lord Freud
Clearly, a quote done at that time would be using the money of the day. We would not be doing it in cash terms; we would be doing it in today’s money, or the money of that day. Yes, it was 2013-14 money.
On the question of neutrality, the reforms would cost no more than the current system overall and will not be more generous to future pensioners, so the additional national insurance revenue will not be recycled within the state pension system but will contribute to other reforms such as the cap on social care costs and the employment allowance, as announced in the Budget 2013.
Baroness Hollis of Heigham
My Lords, I have to say that I am not persuaded by those responses but at this point, I will withdraw the amendment.
Baroness Hollis of Heigham
My Lords, Amendment 7 is another probing amendment so that we understand the buyback rules. By virtue of the Bill raising the number of qualifying years from 30 to 35, there will be some people, mostly women, who will come to retirement age with an incomplete NI record. I should emphasise here that in terms of buyback I am not talking about class 3A—the new proposals for the additional pension. Some of those missing basic years may have occurred before 2016; some may occur afterwards. It is crucial that we help people to have a complete record, otherwise many will need topping up by pension credit.
Buyback, as members of the Committee will know, comes through making class 3 contributions—what we call voluntary NICs. They cost around £13 a week, which is about £700 for the purchase of one year, and add £3 to £4 to your pension, for life, so that you get a payback within three to four years. That is a return of more than 25% on your capital, so it is a very good deal if the arrangements stay the same. Obviously, the class 3A proposals are meant to be actuarially neutral, so I imagine that they will not be as attractive. You can buy those extra years in the year that you are missing a class 1 contribution—husbands have sometimes bought them for their stay-at-home wives and rich kids have sometimes had their parents buy them for them—or you can revisit the record of your NI contributions close to retirement and see how many more you need to get a full state pension. If you can afford to, you can then buy back contributions for the missing years.
In the past, you were allowed to buy back your missing years either as you went along, so that they were current, or to buy back the last six years, especially at retirement. If you had missed a year, say 15 years before, it meant that you could not retrospectively cover it by buyback. That was changed after 2006 so that you could buy back any six years. That was particularly useful to women who might have taken a year or three off, say 10 years before, when they accompanied their husband to his new job in a new city or because her working life had, for a couple of years, been interrupted by caring responsibilities for which she could not then have been credited.
The Government have said, as I understand it, that up until April 2023 you can buy back missing years to 2006, which is good news. I have some questions. First, will that happen if you have already retired? In other words, could someone retiring in 2021 decide to buy back additional missing years? Or must, as in the past, that purchase take place within a year of retirement? Secondly, are you limited in the number of years you can retrospectively purchase to, say, six years within those 16, or could you in theory purchase up to 16 years at or after retirement—for example, if you are lucky enough to have a legacy, or something?
Thirdly, are you still able to purchase up to six missing years in any years before 2006, or has that now been wiped out? That is key. Those were the years for which women particularly suffered before the credit system was made more generous. I think that I am right to say that women who gained NI credits for their children up to 16, which is now reduced to 12, should be okay, given buyback to 2006, but what of the situation of a woman carer not eligible for the carer’s allowance but who today would be eligible for carer’s credit, which did not exist before 2006? If she were caring for a couple of elderly relatives, between, say, 2000 and 2004, she might well have lost several years of NI credit. Can she buy those years back?
As I said, I am not referring to the new class 3A. I would be grateful if the Minister could clarify that and put the rules on record. I beg to move.
Lord Browne of Ladyton (Lab)
My Lords, I am grateful to my noble friend Lady Hollis for opening what appears, from the expressions of those in the Minister’s Box, to be an unexpected line of engagement in the complex issues with which we are dealing.
The issue of buying back national insurance contributions has been engaged with most recently, as the Minister will realise, in 2006, when the six-year buyback was relaxed in certain circumstances of some complexity. I am conscious that we are moving inexorably towards the clauses in the Bill which in the House of Commons were described as being the complex clauses, which deal with transition. Clauses 2 and 3 deal with entitlement to single-tier pension where the national insurance contributions are all close to 2016, because of the provision in Clause 4(1)(c), but this seems as good a place as any to deal with this issue, which may well have been properly engaged with under a later clause because it lies within the years that my noble friend is interested in—more in the transitional phase than the projected phase of post 2016.
It is none the less a valuable issue. It allows me to take advantage of a completely coincidental e-mail which I received at exactly 4 pm today. With the permission of the Committee, I will read this set of personal circumstances to the Committee. I think that it illustrates the real challenge that the limitations generate for real people. I cannot imagine that this woman who has written to me and, probably, to other Members of the Committee, is unique. I will protect her identity by anonymising her, but will read just a couple of paragraphs to the Committee, if I may.
Lord Freud
I thank the noble Baroness, Lady Hollis, for this amendment on voluntary national insurance contributions. Of course, I register what was a very moving excerpt from the letter that the noble Lord, Lord Browne, received today. A number of noble Lords may remember the significant concession that the noble Baroness, Lady Hollis, secured—or introduced —during the passage of the 2000 Act to smooth the cliff edge resulting from the reduction to 30 years of the number of qualifying years needed for the full basic state pension.
Lord Browne of Ladyton
I am grateful to the Minister. On this side, we heard 2000.
Lord Freud
My Lords, I must have swallowed my “eight”. I apologise for my grammar. I add that there is no cliff edge with these reforms.
I welcome the opportunity to put on the record that single-tier pensioners will continue to be able to fill gaps in their national insurance record by buying back qualifying years of voluntary national insurance contributions. These will be taken into account regardless of when they are paid. If they correspond to a pre-2016 tax year, they will be included in the calculation of a person’s foundation amount. If they are paid in respect of a post-2016 year, they will count towards their total single-tier amount.
Given that we are in the process of reforming the state pension system, the Government have recently made changes to the arrangements for voluntary contributions to ensure that people can wait until they are able to request their foundation amount after implementation, before making decisions on buying additional years. We have adjusted the rules for people reaching state pension age under single tier to extend the time limits for paying voluntary contributions to 5 April 2023, for the tax years from 2006-07 to 2015-16. Usually, contributions are paid at a higher rate if more than two years have elapsed from the year in which they were due, but this rule will be suspended until 6 April 2019. This will mean that a person retiring after 2016 will have had a considerable amount of time, up to 17 years since the relevant gap occurred, in which to decide whether to pay voluntary contributions.
So people will be able to buy after the state pension age point. They can buy back as many as they need, right down to 2006, so if someone reaches their state pension age in, for instance, 2018, they can buy 12 years. I hope that I have addressed the noble Baroness’s points, and ask her to withdraw the amendment.
Baroness Hollis of Heigham
My Lords, what the Minister has said is what I expected to be the case. However, he has failed to say whether the changes that we made in 2008 will be sustained—that is, whether, either before 2016 or after it, you can buy back years that were missed before 2006. I am perfectly well aware that you can go back to 2006 and carry on buying back to that date right up until April 2023, and I am pleased that the Minister was able to confirm that for us, but can you buy back years that were missed in, say, 2000 or 2003, up to 2006, which was sustained as a result of the 2008 Act? This all came into being in the first place because NIRS2 was flaky, and we turned mechanical failure into a moral virtue.
Lord Freud
No, let me provide clarity. The system does not let people buy back years before the 2006-07 point. We have relaxed the time limits because of the uncertainty around the new system. However, it is an insurance system, with the basic principle that you cannot insure after the event.
Lord Browne of Ladyton
I may need to go and do some research, but my understanding of the 2008 Act was that there were circumstances in which you could buy back beyond the six years for a further six years, under very limited circumstances. It was open to married women in particular, I think, though I am not entirely sure and I will need to go back and check all this. However, maybe the Minister may just conclude this debate on the point at which the six-year limit is fine.
Lord Freud
My Lords, I thought that I had just said that we had made that concession a general one in practice.
Lord McKenzie of Luton
My Lords, I wonder if I could help my noble friend Lady Hollis here, although on this issue I am not sure why I should, as I was the Minister dealing with this and she was on the Back Benches giving me a hard time. My recollection, although I have not gone back over the detail, is that there was the opportunity to buy back outside of the six years, but you had a limited period in which to do that. I have forgotten what the deadlines were and I do not know whether that time has expired now; maybe it has and we are therefore back to the usual six years, with the extension that the Minister has explained. There were two systems and there was a limited opportunity to go back—for any length of time, as I recall—and you had to go back within a fixed period of time.
Lord Freud
Without indulging in too much nostalgia, particularly as I was not present in 2008—or was not present here—that relaxation was because of the change from 39 qualifying years to 30. That was specifically introduced to exclude the cliff edge, and the concession was only for people reaching their state pension age before 2008. As I said, I do not think that we need to get over-nostalgic. As they move through into the new single-tier system, both before and afterwards, people now have a broad ability to purchase extensive voluntary national insurance contributions, and of course we are adding to that capability with the new class 3A voluntary contributions. Therefore, there will now be a substantial opportunity for people to buy state pension.
Baroness Hollis of Heigham
My Lords, I am sorry but I really disagree with the Minister on this. My noble friend Lord Browne showed rather movingly how losing the 60% dependency pension along with a failure to claim credits and the limitations on buyback that will continue to happen interlock to ensure that a woman who has done “the right thing” by her family at every point that she has been asked to make a decision, putting her family interest ahead of her own, will end up with an inadequate, incomplete and pretty minimal basic state pension. That was why we fought quite hard in those years to enable people to buy back missing years. I can see no moral difference between a rich kid living in Antibes having the money paid for them by their father as they sail around the place and a woman who failed to complete a year’s contributions because she accompanied her husband when he moved jobs or because she was caring for somebody and was not eligible for carer’s credit and is not allowed to buy back. The time limit of six years or so is entirely arbitrary to suit the convenience of the DWP and to try to impose this measure on people’s very different and complicated lives.
I still think that our position was right and that the position taken by the department and the Minister is wrong. By 2030 or so this will not be an issue, but a lot of people are going to retire in 2016 and their missing years will not be from 2006 to 2016 but from 1995 or 2000. The Minister is now telling us that those people cannot buy back the missing years, even at an appropriate price, although it will be no problem for somebody 10 years down the road to buy back years from 15 years beforehand. That inconsistency, as well as a failure to recognise the problems that many women have had in the past—which have bedevilled pension issues—in building up a coherent NI record, will remain with us if the Minister is not able to move on this front.
Lord Freud
Perhaps I may respond to a clearly impassioned speech by pointing out that we have announced the introduction of the purchase of voluntary national insurance class 3A contributions, and that is there precisely for the reasons that concern the noble Baroness. There will now be an opportunity to buy voluntary NICs and we will give full details of that.
Baroness Hollis of Heigham
Forgive me, but class 3A is for the additional state pension and not for the BSP. It will also be actuarially neutral, which means that it is going to be infinitely more costly. Nor have we heard any details. Unless I am mistaken, I do not think that this addresses the fact that a diminishing cohort of women will have spotty NI records by virtue of putting their family first at key points in their lives, just as my noble friend so eloquently described to us. The Minister has made no provision for them at all.
Lord Freud
My Lords, I need to point out that we have a comprehensive means-tested system. People who have fallen through the net will be supported by that system. That is the way in which we have devised the support network for people who do not have a contributory record.
Baroness Hollis of Heigham
My Lords, I shall withdraw the amendment, but I would have thought that the Minister would do everything possible to reduce the number of people having to fall back on pension credit as a safety net as opposed to getting them into the new system provided they pay their way. They have taken on these family responsibilities and are willing to pay for it, and the Minister is saying no.
Lord Browne of Ladyton
My noble friend may wish to take this opportunity to have recorded the apparent inconsistency between the new policy, which allows class 3A national insurance contributions to be paid in an unlimited fashion—or if not entirely unlimited then in an extensive fashion—and the restriction of six years on class 3 national insurance contributions. She may wish to consider whether there is some indication of a relaxation of the clear policy until now of restriction in relation to national insurance contributions.
Baroness Hollis of Heigham
My noble friend is absolutely right, but we have probably pushed this matter as far as we can tonight. However, I am simply very unhappy about this. It is an unnecessary abatement of the possibility of allowing women who have done the right thing and put their family first at difficult points in their lives to make good their deficit in the NI record, whereas if she were wealthy, well informed, stayed at home and bought a year every year, she would be okay. That is not only a failure to recognise her family responsibility but a failure to recognise the position in which low-income women have always been placed in relation to pensions. We can do better than that. I hope that the Minister might want to see whether he can meet us on this in any way. I beg leave to withdraw the amendment.
Baroness Turner of Camden
Baroness Turner of Camden
My Lords, this amendment is about the 35-year qualification period to get the full-rate single-tier pension—of course, that also applies to the reduced rate pension. I have tabled the amendment because a lot of concern has been expressed to me. Presently, there are 30 qualifying years for the basic state pension. That period of 30 years has been achieved after a fair amount of agitation in the past, and people are anxious to retain it. The Government, however, apparently argue that the 35 years is associated with a higher benefit, but this argument ignores the fact that most people will also have established some rights to the second-tier pension at that stage.
Under the present framework, a low-paid employee can establish an entitlement to a level of state pension equal to £144 if they have 30 qualifying years’ contributions or credit for the basic state pension, and of course they have to have 22 years for the second state pension. Putting in 35 years instead of 30 seems to a number of people simply to be going backwards. It is obvious that other people feel like that as well because my noble friend Lady Sherlock has tabled Amendment 16, with which my amendment is grouped and which again raises doubts about the 35-year provision. That amendment suggests that there should be a review to determine costs and benefits and so on.
I would be in full support of that if my amendment was not accepted. I would prefer of course to have 30 years rather than the 35, but my noble friend’s amendment at least suggests a review and would ensure that the matter was thoroughly discussed and a report issued to both Houses of Parliament. I would be in support of that as well. I beg to move.
Lord Browne of Ladyton
My Lords, I am grateful to my noble friend Lady Turner for her amendment, which, as your Lordships will have noticed, is grouped with an amendment in my name and that of my noble friend Lady Sherlock, which calls for a review of the phasing.
For the sake of some chronology in our thinking, a similar amendment to this was considered in the House of Commons after Clause 4. That was to the benefit of the debate in relation to it. The call for a review really belongs with Clauses 3 and 4 because it relates to transition whereas, as I have indicated earlier, Clauses 2 and 3 relate only to people whose qualification in terms of contributions has been achieved post-2016. In the words of the Pensions Minister, that makes it much easier and simpler to understand Clauses 2 and 3 than it does Clauses 3 and 4, which are significantly complex. However, my noble friends will be pleased to hear that I do not intend to go into the detail of all the elements of the transition. There are complexities there, some of which it would be helpful if the Minister explained to the Committee so that we had an understanding of the complexity and the consequences of it for individuals.
I will first address the amendment in the name of my noble friend Lady Turner, which challenges the imposition, as it were, of a qualifying period of 35 years so soon after we changed the law to reduce the qualifying period for the state pension to 30 years. It would be to the benefit of the Committee’s understanding of the Bill and the policies that instruct it if the Minister addressed himself, as I am sure he will, to the way and the processes by which that figure of 30 years was arrived at. It was probably best explained by the Pensions Minister at col. 141 of the House of Commons Committee stage on 2 July. He set out broadly that the existing state pensions structure had two elements to it: the basic state pension, for which there was a 30-year qualifying period, and then the additional pension—as we have come to know it in terms of the Bill, but which has different elements depending on which years one looks at—which could be built up from rights that have been built up over as much as 49 or 50 years of a working life.
The Minister then explained that in arriving at a period of contributions that should entitle one to an amalgamation of these two rights, he looked for a “weighted average”. He was challenged, probably correctly, as to why in earlier consideration of where it should lie he had favoured or indicated—at least in his evidence to the Select Committee—the figure of 30 years as opposed to any later figure. He was asked pointedly by my colleague Gregg McClymont whether there was a financial consideration as opposed to just some broadaxe approach at trying to work out somewhere that was appropriate, and which could do justice to those two elements as they were brought together.
The advantage that my noble friend Lady Turner gives the Committee is that she gives the Minister an opportunity to explain in more detail how the 30-year figure was arrived at and how it can be justified, as opposed to some broadaxe, weighted average-type judgment. If it is just a judgment that had to be made for speed and efficiency, the Committee ought to know that it is about the right figure and there is nothing more to it than that. That is the strong implication of the way in which the Pensions Minister approached his explanation in the debate in the House of Commons.
We on these Benches support the single-tier pension and recognise that at some stage, judgments have to be made, but it is much easier to support judgments if there is an explanation of the reasoning behind them to convince us why it should be 30 years rather than 32, 33 or whatever. Those figures are very important.
I do not think I will detain the Committee for nearly as long as my honourable friend Gregg McClymont engaged the Committee in the other place on the amendment that now stands in my name and that of my noble friend Lady Sherlock. However, in introduction, I want to tease out one or two observations about the amendment that I think should properly lie in our discussion after the debate about Clause 4, to explain why a review is necessary. Once one gets a sense of the complexity of the transition and the interaction of different calculations, one begins to realise just how important it is to have a review informed by reality. Of course, a part of that reality is the level at which the single-tier pension is fixed so that one knows who are the losers and who is being affected
What really instructs the review is a defeat of expectations. The Pensions Minister engaged with the perception rather than the reality. I am not keen on trying to argue policy changes on the basis of perception. That is principally because for two years I was a Minister in Northern Ireland, where I was repeatedly told, “In this country, Minister, you have to understand that perceptions are much more important than facts”. No matter how good my arguments were, I was told, “But that is not how it will be perceived” in one community or another, and that perceptions were much more important than facts—so much so that I thought for a period of having one of those famous signs on the desk that Ministers and executives often have made, reading, “In this office, facts are more important than perceptions”, but I thought that that might have been provocative and decided that it would not be a good idea.
Greg McClymont argued, and I support him, that there is a significant group of people who have a similar experience to that expressed in the e-mail that coincidentally I received this afternoon—people who have a set of expectations that are defeated. Unless there is engagement with those issues and some sense of fairness, the fairness, simplicity and other measures that the Government have set for these changes will not be met.
In this case, there is a group of people who have an expectation that they will get the full rate of whatever the state pension is after 30 years of work or 30 years of national insurance contributions. They will be met with the reality that it now requires 35 years. I will come to this in some detail—I am not going to take that long about it—but I know that one can say to them that 30-35ths of this figure is more than 30-30ths, or more than 100%, of the figure that they were expecting. However, they are retiring into an environment in which other people are getting not 30-30ths of the figure that they were expecting but 100% of what the new figure will be. That is an important point to make.
Lord Stoneham of Droxford
With respect to the noble Lord, it is slightly unfair to criticise this document for being so long and then not get the point that the pension for 30 years is £110, and the pension for 30 to 35 years will be £123. That means that somebody is better off. That is the point, is it not? It was unfair to attack civil servants for writing that long brief to make that point, when I am not sure that the noble Lord got it. They will be better off under this system.
I should like to make two other points. If we set it at 30 years now, there is no going back. We might like it to be 30 years, but the fact is that if we set it at 30 now there will be no going back if it does not work out. If we cannot afford it, it will not go up to 35 and we will have to stay with it; whereas, if it is at 35, there is the possibility of review and it could come down.
Lord Browne of Ladyton
Clearly, my carefully constructed argument was utterly wasted. I just want to make two points to the Minister, who may well not have been intending to look at me. I am not arguing for 30 years; I am arguing for a review. I was commenting on an earlier amendment, which is not in my name and which I do not support, for a reduction to 30 years, suggesting that it opened up an interesting debate about why it is 30, not 32 or 35. That is not for me to explain. The noble Lord can be reassured that I understand the mathematics, or the arithmetic, on this. I am just arguing for a review for reasons to do with the expectations of people whom I think are entitled to have those expectations.
Lord Stoneham of Droxford
I am sorry if I lost the noble Lord’s argument in not realising that he was arguing for a review; I thought he was arguing to reduce it to 30. I think that makes my point, actually: it is easier to have the higher figure to start with and then review it down than to start with something lower that you then cannot afford.
My other point is that the additional contributions are very beneficial in their rate of return. Under the scheme, we are trying to encourage people to save. That is one of its main merits and motives.
Lord Freud
My Lords, under the single-tier pension we will be merging two schemes: the basic state pension, which requires 30 qualifying years for the full rate, and the state second pension, which you can contribute to for up to nearly 50 years.
Requiring 35 qualifying years for the full single-tier pension strikes the right balance. It will enable the majority of people who contribute to achieve a full state pension through either work or the comprehensive system of credits available to people unable to work, while still retaining the contributory principle. This leaves considerable leeway for people to have gaps of up to around 15 years in their working life and still qualify for the full rate. In 2020, the significant majority of single-tier pensioners—around 85%—will have 35 qualifying years or more. Our analysis suggests that in 2020 around 90% of male and 80% of female single-tier pensioners will have 35 or more qualifying years.
There is a simple response to the point that the noble Lord, Lord Browne, raised about expectations. In the existing system, we have no such thing as a full state pension. We have £110 basic, plus who knows how much additional pension. It is complex and people do not know what to expect. That is exactly the point that the single-tier pension will address.
In the early years after implementation, people in Great Britain with between 30 and 34 qualifying years are just as likely as those with 35 or more qualifying years to have a higher state pension under single tier than under the current system. The transition calculation provides for a “better of” comparison at April 2016 so that the person receives the higher of their national insurance valuations based on old and new scheme rules, with the old rules being based on 30 qualifying years.
That will, in fact, advantage some people because, where someone does not have the 35 years needed for the full level of single-tier pension, they will receive a pro rata amount according to the number of qualifying years that they have built up, provided that they meet the minimum qualifying period. Someone with 30 qualifying years would therefore get a single-tier valuation of 30-35ths of the full rate, or around £123 per week, as my noble friend Lord Stoneham pointed out, less any adjustment for contracting out based on the illustrative single-tier rate of £144. In many cases, the single-tier valuation will be higher than the valuation that people would get under the current system, as 30 qualifying years of basic state pension gives an income of £107 a week in 2012-13 terms.
Furthermore, where someone’s foundation amount in 2016 is below the full single-tier rate, people will have the opportunity to increase this amount by gaining additional single-tier qualifying years before reaching state pension age through work, paying voluntary contributions or receiving national insurance credits. The current broad range of credits will be mirrored under single tier, and when universal credit is in place, it will extend credits to an additional 800,000 people who do not receive them under legacy benefits.
These arrangements recognise people’s contribution records in the existing scheme and allow people to have significant gaps in their national insurance record while still ensuring that 80% of new single-tier pensioners reaching state pension age by the mid-2030s receive the full rate of the single-tier pension.
The amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, would require the Government to conduct a review of a phased transition for the move between 30 and 35 years for a full pension. I hope that I have reassured noble Lords that there is little evidence that such transitional arrangements are needed. However, I need to point out that, if a review were to recommend a single-tier pension based on a 30-qualifying-year requirement, this would carry with it cost implications. The estimated cost of such a system, compared to a 35-year model, would be around £700 million per annum in 2030 and £2.9 billion per year by 2060.
Furthermore, to reinforce the point about uncertainty raised by the noble Lord, Lord Browne, a delay in defining the qualifying requirements for the new system, which a review would necessitate, would introduce uncertainty for those closest to retirement. The period following Royal Assent will be a crucial time for the delivery of single tier, and making fundamental changes at that point might well delay implementation. This moves back to the amendment raised by the noble Lord, Lord McKenzie, about the importance of communicating the reforms and a clean communication. The point on the move from 30 years to 35 seems more of a communications issue than one of principle. To this end, helping people to understand how they may be affected, we have been conducting field work on communicating the impacts of the policy. I therefore ask noble Lords to withdraw these amendments.
Baroness Turner of Camden
I thank everyone who has participated in the debate because it has been very interesting. However, I have listened very carefully to the Minister and I remain unconvinced. Many people will wonder why on earth there is the change to 35 years when they were used to 30 years for the basic state pension that they have in operation now. They do not understand why there should be this difference and neither, in fact, do I. The Government have produced some information about costs, as has the Minister this evening, that seem quite fantastic to me. I will look at them very carefully because I will probably want to come back again, perhaps in a different way, when we look at the whole thing on Report. I will look carefully at what everyone has said in the debate because it is an issue that is of interest and concern to many people, otherwise I would not have put it down. However, in the mean time I beg leave to withdraw the amendment.
House of Lords
Death of a Member: Lord Roberts of Conwy
The Lord Speaker (Baroness D’Souza)
My Lords, I regret to inform the House of the death of the noble Lord, Lord Roberts of Conwy, on 13 December. On behalf of the House, I extend our sincere condolences to the noble Lord’s family and friends.
United Nations High Commissioner for Human Rights
(11 years ago)
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Lord Avebury
To ask Her Majesty’s Government what was the outcome of their discussions with the United Nations High Commissioner for Human Rights, Navi Pillay, during her visit to the United Kingdom on 6 November.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, my right honourable friend the Foreign Secretary met Navi Pillay, the United Nations High Commissioner for Human Rights, during her visit to London on 6 November. The High Commissioner discussed with the Foreign Secretary a range of human rights issues including Syria, Burma, Sri Lanka and Iran, and our preventing sexual violence in conflict initiative.
Lord Avebury (LD)
My Lords, the noble Baroness has left out one of the items which I know the High Commissioner discussed with Ministers, and that is the call that she made for the strong and swift implementation by the Government here of their new legal obligation to extend the Equality Act to include caste in the list of protected characteristics. Postponing that question until the other side of the general election is incompatible with the obligation. In the light of the High Commissioner’s advice, can my noble friend say whether the Government will speed up the timetable?
Baroness Warsi
My Lords, the Government are committed to outlawing caste discrimination. However, we are aware that legislating on the basis of limited evidence carries a serious risk of unintended consequences, and we need to get the detail of the legislation right. My noble friend has been a huge campaigner on this issue. I can assure him that the Government are committed to it, but it is important to ensure that the consultation on what that legislation would look like is completed, as well as making sure that the relevant groups that would be affected are fully brought into the process. He will be aware, of course, of the report of the National Institute of Economic and Social Research, published in December 2010, which unfortunately proved to be quite divisive because people used it to support both sides of the argument.
Baroness Kinnock of Holyhead (Lab)
My Lords, Navi Pillay has called for an international inquiry into war crimes committed during the Sri Lankan civil war and has said that the regime is now showing signs of moving in an increasingly authoritarian direction. Following the Prime Minister’s attendance at the CHOGM, what diplomatic efforts are the Government making to secure support for a strong resolution on Sri Lanka at the March 2014 session of the UN Human Rights Council?
Baroness Warsi
Of course, at the time that Navi Pillay visited the United Kingdom, the CHOGM had yet to happen. It was one of the issues that was discussed with the Foreign Secretary. We are keen to see some incredibly robust language and text at the Human Rights Council in March 2014.
Lord Alton of Liverpool (CB)
My Lords, given that the visit of Navi Pillay took place just a few days after the United Nations Commission of Inquiry was here at Westminster taking evidence about the egregious violations of human rights in North Korea, and given the events of last week with the execution of Chang Song-thaek and the Amnesty International report which shows the expansion of political prison camps as part of the gulag system that incarcerates more than 300,000 people, can the Minister say whether Navi Pillay spoke to Ministers about the situation in North Korea and whether this was one of the issues we had on the agenda for that meeting?
Baroness Warsi
She did discuss that matter with the Foreign Secretary and it was one of the issues on the agenda. The noble Lord may be aware that an Urgent Question has now been granted for Wednesday specifically on North Korea. I look to the Lord Speaker to confirm that but, if that is the case, I can, I hope, answer that question in much more detail on Wednesday.
Baroness Thornton (Lab)
My Lords, to return the Minister to the Question asked by the noble Lord, Lord Avebury, the paving legislation on caste discrimination was agreed by this House in 2010. There was an overwhelming majority in the House in favour of including caste discrimination in our legislation not that long ago but it looks like that will not be implemented until after the next general election. The United Nations High Commissioner has asked for strong and swift implementation of the legislation. Can the Minister say whether that is compatible with her statement and the fact that it will now have taken more than five years to implement if the Government stick to their current timetable?
Baroness Warsi
As it stands, the timetable is that the public consultation will be held around February and March next year. That will be followed by some targeted sector-specific engagement with groups that need familiarisation with the new legislation, including certain employers, public authorities and the judiciary. It is anticipated that the legislation will come into force in October 2015, but I am quite happy to take back the noble Baroness’s comments to the Minister who deals with equality issues.
Lord Flight (Con)
My Lords, freedom of religious belief is becoming a bigger issue, sadly, around the world. What are the UK Government doing in terms of working, particularly with the Human Rights Commission, to promote freedom of religious belief?
Baroness Warsi
My noble friend will of course be aware that freedom of religion and belief is one of the six priorities for the Foreign and Commonwealth Office. Indeed, it is a personal priority of mine and something into which we have put additional resources and energy since my appointment at the Foreign Office. We are dealing with this matter on a number of levels through both the Human Rights Commission and our support for Resolution 16/18, which determined, among other things, tolerance towards minority religions. We have also instigated and chair a political track to this process. The first meeting was held at the beginning of this year and the second at the UN General Assembly in New York in September. We are proposing that a conference on freedom of religion and belief should be held in the United Kingdom next year.
Lord Hannay of Chiswick (CB)
My Lords, will the Minister perhaps say a word about the resources available to the High Commissioner for Human Rights? I understand that the Government have in fact found an extra £500,000 voluntary contribution—a matter on which I am still waiting for a reply from the noble Baroness, following the debate in the name of the noble Lord, Lord Alton, some weeks ago. What are the Government doing at the UN to ensure that the resources for the High Commissioner for Human Rights in 2015 and 2016 are not constrained and reduced, as they currently are? Are we supporting an increase in those resources?
Baroness Warsi
I apologise to the noble Lord for the delay in responding. I did in fact sign the letter on Saturday so I know it is on its way to him. It may be on his desk this morning. In relation to funding, the noble Lord will be aware that as well as making our contribution to the UN general budget, which is about 5%, we make voluntary contributions to OHCHR of about £2.5 million a year. On top of that we make additional voluntary contributions, which can be anything between £2.5 million and £4 million. We were the seventh largest donor to the office during 2012. The 2013 figures have not yet been published but I assure the noble Lord that we are incredibly aware of the pressures on OHCHR in terms of its funding and that we do feel that it should be properly resourced. However, that does not stop us from making quite strong representations for better budget management. We are asking OCHCR to do more but we also think that it should do more with the money that it has.
Lord Hughes of Woodside (Lab)
My Lords, closer to home, will the Minister take this opportunity to condemn the gender discrimination which is creeping into our universities and which apparently has the support of the people who control university education at the highest level?
Baroness Warsi
My Lords, I have strong views on this, but it may be well beyond the scope of the Question.
Lord Roberts of Llandudno (LD)
My Lords, when the Prime Minister visited China recently, did he have an opportunity to talk to the Chinese authorities about the thousands of executions carried out there every year?
Baroness Warsi
I am not sure of the specific discussions that took place on human rights but I will write to my noble friend on that point. He will, of course, be aware of the annual dialogue we have with the Chinese where these matters, among other things, are raised.
World Innovation Summit for Health
(11 years ago)
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Lord Crisp
To ask Her Majesty’s Government what is their response to the recommendation for improving mental health globally made at the World Innovation Summit for Health.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, we welcome the recommendations made at the World Innovation Summit for Health and outlined in its report, Transforming Lives and Enhancing Communities. Mental health and well-being is a priority for this Government. Our overarching goal is to ensure that mental health has equal priority with physical health, and that everyone who needs it has timely access to the best available treatment. We hope that other countries will afford it equal priority.
Lord Crisp (CB)
My Lords, I thank the noble Earl for his reply. I should have made it clear when I tabled the Question that I was really looking for a reply from the Department for International Development. I will, however, ask two questions.
I know that the Minister will be as appalled as everyone else by this report and its finding that 700 million people with mental health problems worldwide are not getting treated, as a result of which some find themselves chained up or caged. Does he think the report’s findings and recommendations are relevant in the UK as well as elsewhere, although, obviously, not in relation to being chained up or caged? DfID currently spends, essentially, nothing on mental health. What is it planning to do post-2015 to make sure that nobody is left behind, as the Prime Minister has set out in his report?
Earl Howe
My Lords, the principles espoused at WISH do indeed apply with equal force to mental health services in this country. Those principles are several, but I would draw the noble Lord’s attention to the need to draw on evidence-based practice; to strive for universal mental health coverage; to respect human rights and to take a life-course approach. We try to embody all those things in our mental health services. Regarding DfID, I can tell the noble Lord that there are a number of multilateral and bilateral programmes which are in train and supported by the Government. We are supporting work in the Caribbean and Bermuda and promoting work in a number of countries in sub-Saharan Africa. I would be happy to write to the noble Lord with a complete list of these.
Earl Howe
My Lords, in broad terms, dementia falls outside the scope of mental health but it is, of course, closely allied. Many of the principles that apply to good mental health care apply equally to dementia. We are, again, doing our best, in responding to the Prime Minister’s challenge on dementia, to ensure that those who contract this dreadful condition are looked after with dignity and respect in the appropriate setting.
Baroness Wheeler (Lab)
My Lords, the WISH report, to which the Government are signed up, recommends key improvements to community care for mental health by 2020. Yet the recent FoI survey of 51 NHS mental health trusts by BBC News and Community Care magazine shows overall budgets shrinking by over 2%, including those for community mental health support teams, despite referrals to them rising by 13%. How is this consistent with pledging to achieve the WISH goal by 2020? What leadership and direction will the Government give to preventing this very disturbing situation from getting worse?
Earl Howe
My Lords, we need to hold the NHS to account by reference to the outcomes that it achieves. I do not belittle the need to spend sufficient sums of money. The National Survey of Investment in Adult Mental Health Services has indicated that reported spend on mental health services has continued to hold reasonably steady over time. I reiterate that mental health and well-being is a priority for the Government, as I hope the noble Baroness knows. We have clear indicators in the NHS outcomes framework, which will ensure that NHS England will need to focus on this area very closely.
Lord Alderdice (LD)
My Lords, it is extremely welcome that my noble friend has emphasised again that for the Government, under the Health and Social Care Act, parity of esteem between physical and mental health is to be maintained in this country. Perhaps I might press my noble friend a little further than the noble Lord, Lord Crisp, did. Have there been discussions between the Department of Health and DfID about DfID espousing parity of esteem for physical and mental health in its proposals, and have there been discussions with other government departments, such as the FCO, about the increasing abuse of mental health and psychiatry facilities for political prisoners in various parts of the world, not least in some of those countries with which we have good relations, including Russia?
Earl Howe
I will write to my noble friend on the issue of political prisoners. On his main point of principle about parity of esteem, that principle—which essentially works to ensure that mental health has equal priority with physical health—is central to government-funded mental health programmes overseas; in particular, DfID funds programmes that promote the rights of people with mental health disorders to ensure that their needs are equally met. We recently invested £2 million for an additional three years’ support to the Disability Rights Fund, which makes disability, including mental health issues, a key international development priority.
Baroness Hollins (CB)
My Lords, people with learning disabilities are disproportionately affected by mental health problems, with three times as many people experiencing such issues. In this country we are very well aware of that, and despite our own problems, such as Winterbourne View, we actually lead the world in research and service development. This is not recognised in global initiatives such as the summit just referred to by my noble friend. What will the Government do to try to raise awareness of the mental health needs of this particularly vulnerable group of people?
Earl Howe
Often overseas we are working with very scant resources and the key is to build up the skills at primary care level in countries that are developing and may not have regarded those with learning disabilities as a priority for healthcare. It is a slow process but one that we are trying our best to support. Again, I would be happy to write to the noble Baroness with details.
Benefits: Sanctions
(11 years ago)
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Lord McKenzie of Luton
To ask Her Majesty’s Government what has been the impact of the application of the new sanctions regime for jobseeker’s allowance and employment and support allowance claimants.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
The new sanctions regime was introduced in jobseeker’s allowance from 22 October 2012 and in employment and support allowance from 3 December 2012. We have released statistics on the sanctions up to the end of June 2013. They show that there has been little change in the volume of sanctions since the introduction of the new regime. Matthew Oakley is conducting a review of how we operate the sanctions system and will report back in due course.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for that reply. It is not a matter of dispute that the social security system should involve rights and responsibilities, but I suggest that the recent, delayed data show a record number of sanctions, and raise the question of whether the sanctions are being fairly applied—particularly the JSA and ESA three-year sanctions. I ask the Minister particularly about the case of Reilly and Wilson v the Secretary of State. He will be aware that the Supreme Court dismissed the Government’s appeal and determined that the Government had a duty of fairness to provide enough information to jobseekers on an individual basis about available back-to-work schemes for them to make informed representations should they so choose. Will the Minister give an assurance that this is now happening, and that it is happening before the DWP seeks to apply the sanctions regime?
Lord Freud
My Lords, as part of the Jobseekers (Back to Work Schemes) Act we passed earlier this year, we are having a review, which is being run by Matthew Oakley. He is concentrating on precisely the issues of communication that the noble Lord raised.
Lord Stoneham of Droxford (LD)
My Lords, one of the complications of the sanctions policy could be its impact on the Troubled Families programme. Will my noble friend confirm the number of instances of second-time sanctions, and how many of them were part of the Troubled Families programme?
Lord Freud
I thank my noble friend for giving me advance notice of that question. Only a small proportion of claimants are sanctioned two or more times. For high-level sanctions, only 5% received two sanctions and 1% received a third sanction. On the specific question about the Troubled Families programme, that provision is delivered by local authorities and unfortunately we do not have the data available at the present time.
Baroness Lister of Burtersett (Lab)
My Lords, given that the Social Security Advisory Committee warned that sanctions tend to impact disproportionately on the most vulnerable and disadvantaged, and given that a recent survey of citizens advice bureaux showed that the new sanctions regime is having a severe impact on physical and mental health, with one respondent saying,
“The strain has quite literally smashed our family to pieces”,
what steps are being taken to monitor the unintended consequences of sanctions, as called for by SSAC? Will the Minister undertake to report regularly on the impact of sanctions on these groups?
Lord Freud
As I just said, we are having one review, undertaken by Matthew Oakley. My colleague the Minister for Employment is also looking at this area very closely, and I am expecting the details of the review that she is overseeing to be published reasonably soon.
Baroness Sherlock (Lab)
My Lords, the Minister said that sanctions had not increased significantly. Perhaps he would look at a Written Answer given in another place to Mr Timms on 4 July, which suggested that the amount of money withheld from JSA in sanctions in 2009-10 was £11 million. Only halfway through 2012-13, it was £60 million. If it carried on at that rate, that would constitute a tenfold increase. Anyone who has ever been to a food bank will have heard horror stories about people being sanctioned for trivial or disgraceful reasons. Can the Minister please get a grip on this?
Lord Freud
My Lords, the relative figures are that since 2010 the volume of sanctions has run at between 3% and 5.5% whereas between 2005 and 2010 the rate was running between 2% and 4%. One of the most encouraging elements of the new regime is that the proportion of people on high-level sanctions has fallen quite steeply and is now down by 40% from 10,000 per calendar month to 6,000 per calendar month.
Baroness McIntosh of Hudnall (Lab)
My Lords, will the Minister tell the House whether the officials working in the DWP are working to targets, and whether this has any impact on the number of sanctions that are applied?
Lord Freud
We are not working to targets. We have made it absolutely plain that that is not our policy. We have had a study done on that by the head of JCP, Neil Couling, which reported in May and found that we did not run targets. Obviously, we collect management information, without which we could not give out the kind of data that is requested.
Baroness O'Cathain (Con)
My Lords, will my noble friend give us some indication of the sort of training given to those who deal with some of the rather disturbed people who go to jobseekers’ offices? I have seen several instances where the people in this very difficult situation get a bit disturbed about it and need a bit more sensitivity. I have mentioned this to the Minister before. I wonder whether the responsibility lies with the local authorities dealing with these issues or with the department.
Lord Freud
Jobcentre Plus advisers are well trained to look after their clients. One of the most difficult areas for them is always mental health, and that is something that we are looking to push further forward. We are introducing a mental health toolkit along the lines of that given to prime providers in the Work Programme.
Lord Touhig (Lab)
People with special educational needs and physical disabilities are particularly badly hit by these sanctions. Will the Minister respond to the question put to him by my noble friend Lady Lister? Will he come to the House and report regularly on the impact on people with these difficulties?
Lord Freud
My Lords, I said earlier that I hope that we will be announcing the context of the review that my colleague Esther McVey is looking to produce. When I have that information, I will, of course, bring it to this House.
Employment: Tourism and Hospitality
Lord Lee of Trafford
To ask Her Majesty’s Government what is their latest assessment of the number of people currently employed in the tourism and hospitality sectors.
Lord Lee of Trafford (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as chairman of the Association of Leading Visitor Attractions.
Lord Gardiner of Kimble (Con)
My Lords, the Deloitte report Tourism: Jobs and Growth, commissioned by VisitBritain and published on 21 November, states that the tourism economy directly supported more than 1.75 million jobs throughout the United Kingdom in 2013. When the indirect impacts of the tourism industry on the wider economy are taken into account, the number of jobs supported across the UK rises to 3.1 million—in effect 9.6% of total UK jobs.
Lord Lee of Trafford
My Lords, do not those significant figures and the fact that one-third of the new jobs created in the past two years have come from tourism emphasise why politicians should take tourism much more seriously? Is the noble Lord aware that the leaders of the campaign for tourism have had a meeting with the No. 10 policy unit and there has been a reply to a letter from the Deputy Prime Minister but, unfortunately, as yet, there has not been a reply from the leader of the Opposition’s office? Perhaps noble Lords opposite will use their good offices to elicit a response. Has he also seen in the Deloitte report, to which he referred, the projection that the likely 6% annual increase in international visitor spend in this country should by 2025 produce a situation where we have a surplus on our balance of payments tourism account for the first time for 40 years?
Lord Gardiner of Kimble
My Lords, my noble friend is absolutely right in saying that tourism must be taken seriously, whether it is business tourism, sports tourism or cultural tourism. Tourism is worth £127 billion to the UK economy. I am aware of the Deloitte report and my noble friend’s reference. I am nervous of offering advice to the office of the leader of the Opposition, but I suspect that a letter should be swiftly drafted.
Baroness Liddell of Coatdyke (Lab)
My Lords, is the Minister aware that the Deloitte report also referred to the fact that 630,000 additional jobs will be created by 2025? That puts the figure at 9.9% of GDP. That is up there with some of the major industries in this country, such as financial services. There is a real need to put tourism at the heart of this country’s growth agenda. There are a couple of caveats in the Deloitte report. One is the need to encourage SMEs to get much more comfortable with the digital economy and to concentrate on emerging markets. Is there not a case for BIS, together with DCMS, to develop a programme specifically focused on encouraging SMEs to grow their offering in the tourism market? I should draw attention to my entry in the Register of Lords’ Interests.
Lord Gardiner of Kimble
My Lords, the noble Baroness absolutely strikes the right note. Tourism is at the heart of much of the UK economy. If you look at the countryside, there are constituencies where a very significant proportion of jobs are involved in tourism. It needs to be taken extremely seriously indeed. The other point is that whether the apprenticeships are in large organisations or smaller ones, there are great opportunities for young people coming into this industry. I take the point about SMEs. BIS is working extremely hard on apprenticeships. We very much hope that tourism will be part of the next tranche of Trailblazers’ apprenticeship activity.
Lord Berkeley of Knighton (CB)
My Lords, does the Minister agree that the arts in the widest sense play a terribly important role in tourism, whether it is the West End theatre, the National Gallery or the Royal Opera House? These things are very important and a lot of organisations are quite stretched with declining subsidies. Given what he has just said, does he agree that subsidies should be seen as an investment?
Lord Gardiner of Kimble
To pick up the noble Lord’s first point, it was very interesting to see in the list of those who went with the Prime Minister to China the number from the creative industries and tourism and heritage sectors. It is a very important part of why lots of people want to come to this country. It is why Britain is fourth in terms of culture and tourism on the Anholt brands index. I very much take that point. On the question of subsidy, it is a balance of the great opportunities our culture has to generate its own funds and government grant in aid.
Lord Cormack (Con)
My Lords, I welcome and endorse all that my noble friend has said. Does he accept that many tourists come here because of the beauty of our countryside, which is being increasingly despoiled by unsightly, uneconomic and unreliable wind farms? Can we have an absolute assurance that the Government will now turn their back on these curiously inefficient structures?
Lord Gardiner of Kimble
My noble friend should not tempt me on these matters.
Baroness Billingham (Lab)
Is the Minister aware that the Government have at their disposal the most wonderful Christmas present they could give to millions of people, young and old, in this country and also for tourism, which could increase by up to 10%? I am speaking, of course, of the need to introduce a lighter evenings Bill into this House. It is an opportunity that ought not to be missed and the nation would be truly grateful.
Lord Gardiner of Kimble
I would very much like to grant the noble Baroness a Christmas present but it would not be the one she has in mind. In Scotland and Northern Ireland there are very considerable and enduring concerns about this matter. I think your Lordships would expect these matters to be dealt with by a consensus across the United Kingdom—I stress, the United Kingdom.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
(11 years ago)
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Lord Rooker
“Application in Northern Ireland
This Part shall not apply to Northern Ireland for as long as it is governed by a statutory power sharing executive based upon the Good Friday Agreement.”
Lord Rooker (Lab)
My Lords, this amendment would remove Northern Ireland from Part 2 of the Bill. Before I begin my brief remarks, I welcome the noble and learned Lord, Lord Wallace of Tankerness, to the Front Bench and send my sincere best wishes to his colleague—I think we would all do that—for a speedy recovery from his operation. We look forward to his early return.
There are many disadvantaged groups in Northern Ireland. To that extent it is no different from anywhere else but when one looks at representation, there is no Protestant working class representation in Westminster. Your Lordships’ House does not have the benefit of either Sinn Fein—which gets elected but is not represented at Westminster—or the SDLP, which gets elected but does not use this place. This means that we never get the whole story from Northern Ireland, from either side of the divide. I am no expert and my 52 weeks as one of the last direct rule Ministers does not make me one. However, I did collect some messages: fairness and equality are paramount.
We reminded ourselves last week of how young democracy is in South Africa, at 19 years. It is a lot younger than 19 years in Northern Ireland. I recall being at a civil society reception. At the time I had ceased being the Minister but was still the spokesman in this House; it was obviously before the change of Government. I was asked what the approach of the new Prime Minister would be. Would he take as much interest as the previous Prime Minister had when they got devolution back? They would still want some help and some tender loving care, but not nannying—no one is saying that at all. People are prepared to learn from their own mistakes. Progress has been made. However, it was known then, before and after devolution came back, that it was a fragile situation. It is still a fragile situation today, and will be for many years to come.
I was reminded this week by boxes in the dark areas of my home of the advice given to the ministerial team in 2005, when we arrived after the election. I will not quote from it because I would be asked to provide it. However, the central message, beside minding the language one used, was about this issue of community working across the divide, in which I include the divides of rural and urban, blue collar and white collar, and working class and middle class—all of which overlaid the divide of religion and the issue of two member states sharing one island. In fact, I wish the politics were divided down class lines and other factors rather than history and religion.
I want to put to the House five short quotes from A Shared Future which was first published in 2005, but the points are as relevant today as they were then. On building a shared future, it said:
“The potential of addressing the problems of disadvantaged communities will significantly depend on closely aligning community development and community relations work. Community development in disadvantaged communities is largely delivered through the work of the voluntary and community sector that has made a powerful contribution to the achievement of better relations between communities”.
Another paragraph, about investing together, made the point that resourcing the voluntary and community sector,
“identifies the importance of the community development work of the sector and the contribution this work plays to building community cohesion. It is important, therefore, that the capacity of the voluntary and community sector to deliver community development is maintained and reinforced”.
It went on:
“In recent years there has been considerable focus on the difficulties of alienated working class communities. It should not be assumed that the needs of protestant and catholic communities, whether urban or rural, can be met through similar approaches to community development and community relations work. The needs of the two main communities—urban and rural—will be different and, therefore, different approaches … will be required”.
Talking about action at community level, A Shared Future said:
“There is a clear recognition that the voluntary and community sector has made a powerful contribution to the achievement of better relations between communities. It is important that that role is underscored, especially in the most disadvantaged and interface areas”.
My final quote from A Shared Future makes the point:
“Government also recognises the contributions made for example by employers, churches and other faith-based organisations, minority ethnic groups, trades’ unions, children’s organisations, women’s groups, health organisations and youth organisations. These organisations continue to have a role to play in helping build relationships across Northern Ireland. These contributions will be important as Northern Ireland moves forward to a shared society”.
Virtually all those groups I have just mentioned, one way or another, are involved in campaigning, however one looks at it. Looking at the situation from a Northern Ireland perspective, equality legislation is dealt with slightly differently from the rest of Great Britain. I refer, of course, to Section 75 of the Northern Ireland Act. It is paramount that the needs of that legislation are watched like a hawk by all the groups in Northern Ireland. Indeed, when I was a Minister there, it was watched by Ministers and we were held to account.
It is crucial—others in this House will know the operation of this much better than I do—that that legislation applies to Northern Ireland in a way that it does not apply to England, Wales and Scotland. There is an insistence there, from a legal point of view, on the promotion of equality of opportunity between persons of different religious beliefs, political opinion, racial groups, age and marital status, between men and women, persons with a disability and without, and persons with dependants and without. There is a meticulous approach to this and people campaign about it. I do not know how a charity or other campaigning group would be able to pursue campaigning on Section 75 around an issue that arose during the year before a general election. I am a bit concerned about that because it seems to have been ignored by the drafters of the Bill.
Baroness Blood (Lab)
My Lords, I declare an interest as patron of many charities in Northern Ireland, but mainly as a campaign chair of the Integrated Education Fund, which I shall come back to.
I strongly support this amendment, from my noble friend Lord Rooker, which I consider to be a crucial amendment to the lobbying Bill. The amendment acknowledges the unique circumstances in which Northern Ireland is governed by the statutory power-sharing Executive. I also want to take this opportunity to highlight how, in my part of the world, the work that charities and community groups carry out has never been more important.
As many of you already know, I am a proud Belfast woman and I am especially proud of how far Northern Ireland has come and grown over recent years. Since the Good Friday agreement, I have watched a fledgling Northern Ireland Assembly climb many mountains during its power-sharing journey. Throughout that journey, the power-sharing Executive have had the support and engagement of the many charities and community groups working in Northern Ireland. Before the signing of the Good Friday agreement, charities and community groups played their part in holding the front line. My standing here today and being in the position of talking to you is very much a symbol of that, as I was part of that grass-roots community movement. We were ordinary people, working on the ground, campaigning for a better, more productive and ultimately more peaceful Northern Ireland, and I believe that all of us together played our own small part in helping to bring about huge changes. Often very difficult work is still being carried out today by the different charities and voluntary groups; I could give noble Lords many examples of victims’ and children’s issues, equality issues and issues about the aged, but I am not going to take up the House’s time by going down that route. That work is relevant and vital in helping to support the work of the Northern Ireland Assembly.
Change is not easy, and democracy is not easy, and I would urge that in Northern Ireland many charities and community groups allow vital spaces for engagement, where voices can be heard. The importance of this cannot be underestimated; without these outlets, fear and frustration can only fester and grow. In many different ways and on many different platforms, I believe that these campaigning groups, referred to by my noble friend Lord Rooker, have enabled voices to be heard. A lot of the time, it may not be what our politicians have wanted to hear, but that is yet another reason why the work is so important. By listening, supporting and highlighting the voices of groups that might not otherwise feel connected in any way to the governing of the society in which they live, these organisations continue to play a vital role. This work and contribution of the community groups has helped to develop and bring about new policies designed to create a better Northern Ireland for all of its citizens.
As I have already said, this amendment highlights the special circumstances of Northern Ireland—a Northern Ireland governed by a statutory power-sharing Executive based upon the Good Friday agreement—and my noble friend Lord Rooker has already referred to many issues around that. The work of charities and community groups helped to lay the foundations on which the Good Friday agreement was built. I could give noble Lords many examples of all the charities with which I am involved, but I shall give an example of the one in which I am most deeply involved—the work that is done by the Integrated Education Fund. We do things in two ways. First, as campaign chairman, I know that we fundraise to enable schools to be opened to educate children and young people of all faiths and no faith to sit together side by side every day and to learn together. Secondly, we lobby our elected politicians to try to bring about policy change in our education system to lead to a shared future, which 90% or 95% of the people in Northern Ireland crave. No integrated school has ever been established by the system; it has always been established by parents who want to see this change. That work was crucial then and remains crucial to this day.
I began my speech by highlighting the fact that I support this amendment, and I urge the Minister to do the same. Without it, the Bill would have an immense negative impact on the work of charities and the voluntary sector in Northern Ireland.
Lord Brooke of Sutton Mandeville (Con)
My Lords, my intervention will be brief. When I came into the Chamber, I did not imagine that I would find myself on my feet so soon. I have long admired the noble Lord, Lord Rooker, through a series of mutual experiences over 30 or 40 years.
The noble Baroness, Lady Blood, will recall the run-up to the ending of the first programme of Making Belfast Work. The right honourable—and now Sir—Richard Needham, who was then the Minister responsible for the programme, discussed with me whether it would be sensible to bring the communities, particularly those in west Belfast, together at Hillsborough on a social occasion, where the total agenda would be what we should do at the end of the first four years of Making Belfast Work, particularly on community relations. It was a high-risk thing to do, and we went into it slightly quaking. I cannot remember if the noble Baroness, Lady Blood, was there, but she is nodding, so I think she probably was and I would have expected her to be there. I hope she would agree that the evening was a tremendous success in terms of the meeting between the communities on both sides. I also greatly admire what she is doing in the context of integrated education.
I return to the first thing that the noble Lord, Lord Rooker, said about community development, which I regard as being an absolutely key part of the process of reconciliation within Northern Ireland.
Lord Harries of Pentregarth (CB)
My Lords, I am glad that the noble Lord, Lord Rooker, has raised the specific case of Northern Ireland, which he did in such a deeply felt and powerful way.
The Commission on Civil Society and Democratic Engagement, which I have the privilege to chair, carried out two consultations in Northern Ireland—one before our first report and one before our second. It would be fair to say that, as a result, we became not just concerned but seriously disturbed by the possible harm that the Bill as it now stands could do in Northern Ireland. Consequently, we put forward a number of recommendations, reflected in later amendments which I am not going to mention now; I will speak to them when we reach them. However, I hope that the Government will pay particular attention to what the noble Lord, Lord Rooker, said, especially about the manner of government in Northern Ireland, which is so different from that in Wales, Scotland and England. It may be that the Government will bring forward quite specific amendments—whether or not they accept the view of the noble Lord, Lord Rooker—in addition to those which the commission will be putting forward.
Baroness Lister of Burtersett (Lab)
My Lords, I do not have the same experience as my noble friends who have already spoken so powerfully about the dangers of this Bill for Northern Ireland, but I was privileged to be a member of the Opsahl commission on the future of Northern Ireland about 20 years ago. As part of that commission we invited anyone to give evidence about anything that concerned them. We were particularly impressed by the evidence that we received from local civil society groups, especially from the women in those organisations, working within and across divided communities to help bring peace and social justice to Northern Ireland.
As it happens, 10 days ago I was in Belfast with the Associate Parliamentary Group on Women, Peace and Security, which is undertaking an inquiry into the application to Northern Ireland of UNSCR 1325 on women’s roles in post-conflict situations. To my amazement, I discovered that our Government did not accept that Northern Ireland had been in a conflict situation, although there are groups currently campaigning on the application of UNSCR 1325 to Northern Ireland. When we heard from civil society groups, one of the overwhelming messages that we received was that women in deprived communities feel that they are being silenced, partly by the men in their communities and partly because their role in achieving peace and reconciliation in Northern Ireland is simply not being recognised. My fear is that this Bill will further silence these women who are active in local community groups.
My noble friend Lord Rooker talked about equality legislation in Northern Ireland. Again, the overwhelming message we received was that Section 75 of the Northern Ireland Act 1998 is not producing gender equality in Northern Ireland; in the name of gender neutrality, women are being disadvantaged. Again, these are issues around which campaigning has taken place. As well as the implications for Northern Ireland—I hope that the Minister will take heed of my noble friend’s warnings in that regard—this issue also illustrates an important point made by the Commission on Civil Society and Democratic Engagement, which I congratulate on producing a first-class, useful report in no time at all. One of the issues to which it draws attention is the failure of the Government to provide a detailed equalities impact assessment. This is very relevant to the Northern Ireland situation where, as I say, women’s voices in particular could be silenced. The report says that the commission is not aware that any progress being made in this regard during the pause—that is, with regard to an equalities impact assessment. Therefore, I would be very grateful if, as well as referring specifically to the point about Northern Ireland, the Minister will advise your Lordships’ House whether any progress has been made on an equalities impact assessment in relation to this piece of legislation.
Lord Cormack (Con)
My Lords, like my noble friend Lord Brooke of Sutton Mandeville, I have great respect for the noble Lord, Lord Rooker, who has performed a very real service in putting down this amendment and raising this issue. I had the privilege to be the chairman of the Northern Ireland Affairs Committee in another place from 2005 to 2010 and saw at close hand the establishment of the power-sharing Executive. Two things struck me: first, it was remarkable—indeed, unique—and, secondly, it was fragile, as events of the past weeks have reminded us. We must do nothing that may, even inadvertently, damage what has been achieved—something to which successive Prime Ministers have contributed. Without Sir John Major’s trail-blazing work, I do not think that Prime Minister Blair would have been able to bring about the Good Friday agreement. I am glad to see the noble Lord, Lord Rooker, nodding in assent.
A great deal has been contributed by a great many people to establish something truly remarkable which is an example for the rest of the world. The last thing we must do—even inadvertently, as I say—is to jeopardise or threaten that. Therefore, I appeal to my noble friend the Minister to say that he recognises the importance and the sensitivities of this crucial subject, that the implications for the United Kingdom as a whole would be considerable and profound if the achievements of recent years were put at risk, and that he will ensure that, as the Bill proceeds through your Lordships’ House, the Government recognise the vital matters that the noble Lord, Lord Rooker, so rightly and judiciously mentioned.
Baroness O'Neill of Bengarve (CB)
My Lords, I agree with the points that other speakers have raised, but I support the amendment for a further reason, which is that the politics of Northern Ireland differ from those of the rest of the United Kingdom. Noble Lords may say that that reason is more apparent in Part 1 of the Bill, which deals with political parties and lobbying. However, we should remember that the parties that campaign in Northern Ireland may also receive funding from individuals and organisations in the Republic of Ireland. The Republic is reasonably generous in giving citizenship to those who are not domiciled there. That line of thought should suggest to Ministers that there are additional reasons for ensuring that the civil society organisations and charities that have made such a profound difference in Northern Ireland can continue to do their work.
Lord Horam (Con)
My Lords, I declare an interest as a member of the Electoral Commission. However, I am speaking for myself on this occasion and any further remarks I make in this debate are not from the Electoral Commission.
The burden of the point of the noble Lord, Lord Rooker, which I take very seriously, is that civic society plays a special role in Northern Ireland because of the nature of the political settlement there. The solution he proposes, which is to exempt Northern Ireland entirely from the provisions of the Bill, is only one possible solution to the problems. Another solution was put forward by the commission chaired by the noble and right reverend Lord, Lord Harries, which goes into the issue in some detail. The noble and right reverend Lord points out that if the registration levels were raised, and if the costs of security and safety were exempted from regulation, that would be another way of dealing with this issue, rather than exempting them from the Bill as a whole.
As to the other remarks made by the previous speaker, the noble Baroness was quite right to say that, in relation to donations, for example, which have played a very important part in the political tragedy, if you like, of Northern Ireland, delegated powers under another Bill allow the Secretary of State to bring in provisions as he thinks fit and as his judgment suggests is wise. That is a third alternative to exempting Northern Ireland entirely from the provisions of the Bill. It would be rather stark to do that, given that—I am sure the noble Lord, Lord Rooker, would agree—in essence we are trying to normalise the situation in Northern Ireland as we go along. Therefore, we could give it special attention by all means, but to exempt it totally from the provisions of the Bill would be too stark when there are alternative ways forward.
Lord Dubs (Lab)
My Lords, I would very much like to support my noble friend Lord Rooker in what he has said and the amendment he has put forward. I also very much welcome the comments made by my noble friend Lady Blood, particularly with reference to integrated education. I totally share her views that the integrated education movement in Northern Ireland is a vibrant force and absolutely crucial for the political future of education there. I only wish it had more money and even more clout than it has to influence the political parties in Northern Ireland.
I preceded by some years my noble friend Lord Rooker in being a junior Minister in Northern Ireland. Well, he was not a junior Minister: I was. I was so impressed by the vitality, energy, vibrancy and effectiveness of the voluntary sector. It is something that one has to experience in Northern Ireland to sense the way it is. Anything that would muzzle the voluntary sector would be a retrograde step. I have more recently, through my membership of the British-Irish Parliamentary Assembly, been involved through one of the committees in dealing with many parts of the voluntary sector. That vitality continues to make such an important contribution to democracy in Northern Ireland.
As the noble Lord, Lord Rooker, said, politics in Northern Ireland is a bit different. We have there a coalition compelled by legislation—although I am bound to say, as an aside, that it is quite to be expected that there will be arguments within the coalition in Northern Ireland through the power-sharing Executive. The coalition here is beginning to follow in the steps of the Northern Ireland Executive in that respect. Perhaps it is churlish of me to draw attention to that.
The voluntary sector has an enormous part to play in developing democracy and institutions, and in seeking to establish change in Northern Ireland. I very much hope that the effect of the Bill will not be to muzzle that effectiveness. That is why I welcome the contribution of my noble friend Lord Rooker in bringing forward this amendment.
Baroness Mallalieu (Lab)
Perhaps I might add a little to what the noble and right reverend Lord, Lord Harries, said earlier. I had the good fortune to be a member of his commission. I am bound to say that, before I started to hear the evidence from Northern Ireland, I had very little understanding or knowledge of the particular effects of the Bill, as it is currently drafted, on Northern Ireland.
The commissioner who went over on the commission’s behalf, Georgette Mulheir, is the chief executive of Lumos, a children’s charity. She came back with some truly powerful evidence from those from whom she had heard, and made more than one visit. Some of her work was done before Second Reading in this House, and some subsequently. I understand that latterly one of the Ministers—I believe it was Tom Brake, but I shall be corrected if I am wrong—went over on one occasion and took some evidence, but that was of course after the Bill had been drafted and gone right through another place, and after our Second Reading here.
If I had not had the benefit of the material that we had heard, I would have had no idea of the damage that the Bill as currently drafted could have in Northern Ireland. What came back was that non-governmental organisations’ participation in the democratic process over there is one of the key components of the peace process. The engagement of young people in campaigning, and the close co-operation with all-party groups, was viewed by virtually everyone as a way of strengthening the possibility of lasting peace in Northern Ireland and a real alternative to a return to violence—which, after all, was the way in which young people participated in politics in Northern Ireland for far too long.
The commission’s view at the end of the day related both to the limits—the registration limit and the spending limit—which in our view it would be wholly wrong to lower, and of course to the way in which coalitions work. One of the most powerful examples of how unintended consequences can occur with a Bill such as this—and I cannot believe that the Government wanted to produce this result—was the example given in the commission report about the Human Rights Consortium in Northern Ireland, a group of 180 small organisations from right across the political divide. It would be hard to think of a more disparate group. It got together to campaign for a Bill of rights. Under the Bill as currently drafted, that coalition would have fallen foul of the registration threshold, the spending limits and, in some areas, the constituency limits. It would have been wholly impossible for that group to get together, knowing that it would face the regulatory burdens of the Bill, with a criminal sanction at the end of it. I cannot believe that an organisation such as that, which was working hard and involved people who had never spoken to one another sitting down and campaigning together, is something that the Government would wish to destroy. That, in effect, would be the result of the Bill as it stands.
Whether the right course is, as my noble friend Lord Rooker suggested, to take out Northern Ireland altogether, I am not sure—because, of course, transparency should go across the board in the United Kingdom. However, unless there are changes to the thresholds, to the way in which groups can get together to work, and to the regulatory burden that is imposed, the amendment will deserve to be supported at a later stage.
I am bound to say that the commission spent a lot of time looking at many areas that we are going to come on to. This is not a Bill that can be tinkered with and cherry-picked, in the sense that the amendments put forward by the commission stand or fall together as a package. This House may have to make a decision when eventually we hear what the Government’s views are. Not a single government amendment has been put down today—because, we are told, they are listening, as I am sure they are. The question is: will they act to put the Bill right? If at the end of the day they have not done so, we would be better off with the present state of play for the next election.
Most important of all—it is one of the commission’s recommendations and makes sense from all that has been said by those noble Lords who have spoken and who know about Northern Ireland—the issue needs to be looked at in real detail, not in the rush of a couple of months or weeks. It needs people to sit down and produce a proper piece of legislation, not something cobbled together in a rush since July, as this Bill has been. If that cannot be done before the Bill leaves this House, it will have to be done after the 2015 election. If the changes are not made, I am bound to say that I hope that we will look closely at the whole of Part 2 at the end of the Bill’s passage through this House, to see if we would not be better off without any of it until after the next election, when the job can be done properly.
Baroness Royall of Blaisdon (Lab)
My Lords, I begin by thanking my noble friends Lord Rooker and Lady Blood. Using a deep understanding of Northern Ireland, they have demonstrated why this badly drafted and poorly thought-through Bill has the potential to be so damaging there. My noble friend Lady Blood has huge experience in campaigning in Northern Ireland as part of a grass-roots movement and I pay tribute to her work as chair of the integrated schools movement—a movement which I fully support, does excellent work and must never be muzzled in any shape or form. I very much hope that the Government will heed her advice.
I am sure that I will not be the last in the Chamber today to pass on my sincere thanks to the Commission on Civil Society and Democratic Engagement, specifically the noble and right reverend Lord, Lord Harries, my noble friend Lady Mallalieu and the other commissioners. By seeking evidence from across the UK and by formulating proposals and testing them against the needs of charities and NGOs, they have highlighted how remiss the Government have been in failing to do any of that. We are told that today is to be an extension of the consultation. However, our constitutional role in this House is to scrutinise the Government and revise their proposals. Committee stage should enable noble Lords to debate government proposals and then to table the necessary amendments for Report. Instead, we are being treated as a focus group for the Government to gauge how little they can get away with changing. I therefore ask the noble and learned Lord to give us a cast-iron assurance that, at the latest, we will see any government amendments which might be forthcoming after Committee by the Tuesday when the House returns following the Christmas Recess. That means that the amendments would have to be tabled on the Monday and published on the Tuesday. It is only right that noble Lords, especially those who are engaged with the commission, have an opportunity to look at the amendments properly and to table their own amendments at Report.
As the noble Lord, Lord Cormack, said, on Friday night we had a terrible reminder of how fragile the peace in Northern Ireland is: a large explosive device was left in a busy area of Belfast, at a time when many were out enjoying themselves with friends or colleagues ahead of Christmas. Despite the worrying scenes on Friday, however, a huge amount of progress has been made, and it must not be jeopardised in any way. From the beginning of the Troubles at the start of the 1960s until the Good Friday Agreement, 1,800 people lost their lives in Northern Ireland. One in five people had a family member killed or wounded in the fighting. So we must support the people who have created, and are attempting to sustain, the delicate balance there in the wake of the Good Friday Agreement and, of course, earlier agreements.
As the commission report says:
“NGOs and charities in Northern Ireland are frequently working on issues that relate to ensuring the full implementation of the Good Friday Agreement”.
I was particularly struck by the evidence relating to equality issues and was interested to hear what my noble friend Lady Lister said about women’s voices in Northern Ireland.
As my noble friend Lord Rooker said, the voluntary sector in Northern Ireland has made a huge contribution to nurturing understanding between the two communities there, especially in disadvantaged areas. In a post-conflict society, freedom of expression cannot be taken for granted. Non-governmental organisations carry out roles that do not necessarily come easily to governments in such circumstances. The evidence gathered and presented by the commission on civil society provides us with a vivid example of this in an extraordinarily wide-ranging and inclusive campaign for a Bill of Rights for Northern Ireland.
As my noble friend Lady Mallalieu mentioned, more than 180 community groups have come together as the Human Rights Consortium, including human rights organisations and disability charities. Strikingly, it also contains republican and loyalist ex-prisoners and the injured police officers’ association. The consortium’s campaign is driven by the belief that, in a society emerging from a conflict that has proved to be so scarring, a Bill of Rights can play a vital role in building confidence in a new legal framework. In its own words:
“While there are rights, the European Convention on Human Rights, this is special for our country because here we have a country where I have been brought up to be British, and that was just the way it was, and my neighbour across the street was brought up to think they belonged to another country, but using rights we can work together to form a new contract with the government of our country, which is Northern Ireland. That is why it is so important to people, particularly in working class communities, but that benefits the whole community right across unionist and nationalist and that is why it is so important”.
The consortium’s campaign shows how the Government’s insistence on bringing forward proposals which expand the definition of regulated activity and expand the definition of what has to be counted toward that expenditure while reducing the thresholds for registration, has muddied the waters.
In 2009, representatives from the consortium appeared before the Northern Ireland Affairs Committee. In that appearance, they had the opportunity to present and explain some important polling that they had carried out. It showed 75% public support for a strong and inclusive Bill of Rights. The sample for the poll was weighted so that different communities in Northern Ireland were represented, and the consortium was able to tell the committee that the breakdown of its poll showed high levels of support for a Bill of Rights across different religious communities.
As the Bill is currently drafted, this polling, designed to pressure the Government into action, appears to be a qualifying expense. The Government wish to lower the thresholds of registration in Northern Ireland to a very low level at the same time as widening those definitions. However, there is not a single reason why the thresholds as contained within the existing PPERA legislation could be said to be too high.
Noble Lords on the government Benches may have spotted that much of the campaign that the consortium ran took place under the previous Government, and they will be wondering about my enthusiasm for protecting its rights. But that is what being in government is all about. The huge majority of protest is aimed at whoever is in government, because civil society, NGOs and charities all know that if they want a change of policy they will have to convince whoever is in power. Civil society can be awkward for a Government to deal with. It needs to be, because in a democratic society its role is to scrutinise and to hold to account. It seems as though the Government have not fully understood that, and that is the central problem with the Bill.
I would be grateful if, when the Minister responds, he could outline the detailed changes that will be made to protect the rights of civil society in Northern Ireland and elsewhere in the United Kingdom. I would be particularly grateful for the Government's response to the recommendation from the commission that:
“In advance of introducing any new legislation, Government should”—
this is in relation to Northern Ireland—
“Undertake full, in-depth and considered consultation with a range of organisations in Northern Ireland and with the Stormont Parliament itself to ensure that civil society's contribution within the unique political environment of post-conflict recovery is not jeopardised. In particular, ways should be found to ensure that pre-election regulation does not inhibit progress in towards full implementation of the Good Friday Agreement”.
I trust that we will have several assurances from the Minister in response to this short debate.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, as this is the first of no doubt many occasions on which I shall speak in this debate, I should put on record that I am a member of the board of the Saint Magnus International Festival and a member of the Kirk session of St Magnus Cathedral congregation in Kirkwall, both of which are charities registered with the Office of the Scottish Charity Regulator.
I am grateful to the noble Lord, Lord Rooker, for introducing this debate and Committee sitting. With the indulgence of the House—and perhaps responding to some of the things that the noble Baroness, Lady Royall, said—perhaps I may first update the House on the consultations that the Government have had, and benefited from, over the past six weeks. I should also like to indicate how grateful we are to the many campaigning groups, charities and others—and Members of your Lordships' House—who have taken the time to discuss these matters.
My noble friend Lord Wallace of Saltaire has written twice to noble Lords offering discussions—and I thank the noble Lord, Lord Rooker, for his expression of good wishes to my noble friend Lord Wallace. I assure the noble Lord that no one wishes my noble friend a speedier recovery than I do. My noble friend texted when I was on my way down south from Scotland today to say that he was home. Somewhat alarmingly, he also said that he might be watching some of our proceedings on the parliamentary TV channel. I asked him to check his blood pressure levels before doing so.
I know that my noble friend has valued the meetings that have taken place, as have I. There have been meetings with nearly 50 organisations to discuss how the Bill might affect them, and there has been correspondence with many more. Organisations which we have spoken to reflect the diversity of civil society in the United Kingdom, including large charities, campaigning organisations, umbrella organisations and specialist organisations.
I wish particularly to express my thanks—the noble Baroness said that it would not be the last time that that would be the case in these debates—to the noble and right reverend Lord, Lord Harries of Pentregarth, the noble Baroness, Lady Mallalieu, and other members of the Commission on Civil Society and Democratic Engagement for its comprehensive second report on the Bill. Campaigning groups have made numerous suggestions about changes that might be made to the legislation, many of which are reflected in the amendments that have been tabled. We have been considering these suggestions carefully. I do not accept that this House is a focus group; it is important that this House should scrutinise government legislation. We thought it equally important, in framing the amendments we would bring forward, to have the benefit of full and thorough exchanges on the amendments that have been tabled both today and on Wednesday.
The noble Baroness has asked for a guarantee that the amendments will be available on the first sitting day after the Recess. While it is one that I would love to give, I am sure she will understand that I cannot do that with certainty, although we aspire to it. At any other time of the year it might be easier to do so, but as the Committee will be aware, quite frankly it can be difficult at this time of year to make sure that all the people concerned are in the right place. However, I take the important point that those who have taken a particular interest in this Bill are given proper notice of the amendments that the Government are to propose before the House comes to debate the Bill at Report stage.
One area where we have heard consistently that more clarity is needed is over the guidance as to which activity might or might not be caught by the electoral test, and I may be able to say something about that in the course of replying to the specific points raised by the amendment moved by the noble Lord, Lord Rooker. The Government believe that it is essential that campaigners have clarity on how they are to comply with the third-party regulatory regime. The Electoral Commission has a power to produce guidance for third parties campaigning in elections, and indeed has exercised that power in previous elections. Campaigners require clear guidance to support them and help them understand the revised regime, and I am reassured that the commission recognises this too. It makes clear in its briefing notes that it is committed to working with the United Kingdom’s charity regulators to produce clear and reliable guidance that will help charities to understand how to comply with both electoral law and charity law, and I say that without pre-empting subsequent debates that we will have on charities. Also, I would say that the sooner this guidance can be produced in draft, the better. As a Government we are open to working across the House and with the electoral and charity commissions to give campaigners the guidance they need. It may be that we will hear in these debates in Committee how best the commissions can support campaigners in a thorough and timely way.
Charities and campaigners have also expressed fears that low-level campaigning and expenditure will be regulated as a result of this Bill, and that small organisations will face a disproportionate reporting and compliance burden. Our belief is that there should be greater clarity about who is campaigning for the electoral success of parties or candidates, but we do not want small campaigners to be dissuaded from taking part by the fear of having onerous burdens placed upon them. Therefore in line with the commitment made by my noble friend Lord Wallace of Saltaire to the House on 5 November, the Government will bring forward on Report amendments to increase the registration thresholds in England, Scotland, Wales and Northern Ireland. As I have said, we will listen to the debates today, but the Government believe that the substantial increase in the threshold currently set out in the Bill is appropriate.
Finally, as a preliminary, the Government are committed to bringing more transparency to campaigning by third parties before the 2015 general election, but having listened to the views of campaigners over recent weeks, I seek to reassure noble Lords that we agree with those who think that the provisions of Part 2 should be subject to review after the 2015 UK parliamentary general election. That election will provide the earliest opportunity to understand the effectiveness of the provisions of Part 2. The Government therefore commit to laying this review before Parliament, and an amendment to this effect will be introduced at Report stage. As I have said, beyond that I do not wish to pre-empt the debates today and on Wednesday. Of course, the Government wish to hear views from across the House on the amendments which have been tabled, and I hope that these points and a short statement will assure your Lordships that while the Government are absolutely committed to the increased transparency that Part 2 will bring, we have been listening and will continue to listen to those who have strong views on this legislation.
I turn now specifically to the amendment moved by the noble Lord, Lord Rooker. As we have heard, it would exclude Northern Ireland from the provisions contained in Part 2. That exemption would stand for as long as there is a statutory Executive based on the Good Friday agreement, which is in place. I readily accept that there is a different political structure in Northern Ireland, where different parties compete for elections, than is the situation in Great Britain. It is clear that there is a particular situation in Northern Ireland and it is important that the legislation should take account of that.
I have been particularly struck by the contributions that have stressed the importance of civil society, not just across the United Kingdom but particularly in Northern Ireland, and the role of community groups in developing policies. I think the noble Lord, Lord Rooker, and the noble Baroness, Lady Blood, said that, very often, in the years when there was a lack of political leadership, community groups were very important in coming together and giving leadership on specific policy issues. We do not in any way wish to negate the impact that they have had or the work that they do. The Government recognise that and I hope that I can reassure the House by saying that we do not believe that that important work would in any way be prejudiced or jeopardised by the provisions in the Bill.
Baroness Lister of Burtersett
Can the noble and learned Lord give an answer to my question about whether any further work has been done on the equalities impact assessment? This is not relevant only to Northern Ireland but, for the reasons I gave, is particularly so there.
Lord Wallace of Tankerness
My Lords, I apologise for overlooking my scribbled note. As part of the impact assessment at the time the Bill was published, we said that 30 third parties were recognised by the Electoral Commission for the 2010 general election and that there were no robust equalities data covering these groups. However, we did not believe that these proposals would have an adverse equalities impact because of the wide range of groups that were registered. There is nothing to suggest that there was a preponderance of gender equality organisations. We therefore do not believe there is particular impact in that regard.
In the 2010 election in Northern Ireland, 10 third parties spent a total of £26,773 while £27,000 could potentially have been spent by each third party. The total for 10 third parties was, therefore, less than what one could have spent. Only two incurred expenditure above the current £5,000 registration threshold.
Lord Harries of Pentregarth
The Minister said he did not think that the Human Rights Consortium would be captured by the present legislation because it could not reasonably be interpreted as wanting,
“to promote or procure electoral success”,
of a particular party or candidate. However, does he agree in principle that in an election year, such a human rights consortium, which might be opposed by one of the parties standing for election, could actually be caught? There are some very important subsections in the Bill. Clause 26(4)(c) says that,
“though it does not involve any express mention being made of the name of any party or candidate”,
and proposed new subsection (4A) says that,
“it is immaterial that it can reasonably be regarded as intended to achieve any other purpose as well”.
Therefore, there could be a human rights consortium, which as a result of those two subsections could possibly be interpreted as supporting a particular party or candidate. Real difficulties remain, even if that particular example would not be caught.
Lord Wallace of Tankerness
My Lords, I think this is at the heart of much of this debate. As the noble Baroness, Lady Royall said, if the activity being undertaken included extensive polling, the purpose of which was to get a Government to act in a particular way, and one applied a test of,
“reasonably be regarded as intended to promote or procure electoral success”,
of a party or candidates, I do not think that it could be interpreted in that way, unless one had a very vivid imagination. It is a leap to see activity that is clearly directed towards trying to address or change government policy as being intended to procure the election of a particular candidate.
As I said in my opening remarks, there is quite an onus on the Electoral Commission and the guidance it has given. It has given guidance on this in two previous elections without any apparent problems; I think we will return to this issue more fully in the next group of amendments. It is stretching things quite some distance to think that what is actually the perfectly legitimate purpose of an organisation, to campaign on issues relating to establishing provisions to be included in a Bill of Rights, can be seen as an intent,
“to promote or procure electoral success”,
of a particular party or candidate.
Lord Rooker
My Lords, I am very grateful for the contributions. As I said, I am no expert on this but I know enough from my own experience to know that we are on thin ice.
To deal with the last point first, as the noble and right reverend Lord, Lord Harries, said, the whole point is that the parties make it a political issue, not the groups. Let us be clear about this. Having read my original ministerial briefing, I will be mindful of the language I use, but let us face it: Section 75 of the Northern Ireland Act 1998 would not have been put on the statute book by a majority Government in Northern Ireland. That is a fact. But that legislation operates the pressure on all the parties in Northern Ireland to have transparency.
I saw things in Northern Ireland that you do not see in annual reports that are published in England and Wales and Scotland, which we get from the Printed Paper Office, such as an analysis of the religious make-up of participants, because they are checking the Equality Act. The Equality Unit there takes it really seriously, but it is not that unit that makes it party political; it is open to a party to say, “Hang on a minute, we’ll show our true colours: we are not in favour of this right”. Automatically it becomes a partisan issue, and that is where the danger lies. But that point has been made.
I fully accept the point made by the noble Lord, Lord Horam: there are other ways of dealing with this. This is a black-and-white issue of taking Northern Ireland out of Part 2. There has to be another way of taking account of the situation in Northern Ireland. I genuinely think that we have to take account of a situation that is different from that in the rest of the United Kingdom.
I also want to say on the record that nothing I have said or implied is in any way a criticism of the power-sharing Executive in Northern Ireland. I think they have done a fantastic job. I once sat in the Public Gallery in Northern Ireland during my time as chair of the Food Standards Agency, because it is a UK body. I watched Question Time and almost had tears in my eyes. It was a pretty rubbishy Question Time but it was there, across the Floor of a Chamber, using words to fight each other and not weapons, and that is the way of the future. We want to make sure the fragility is strengthened, not weakened.
I fully admit I had never set foot on the island of Ireland until I went there as a Minister but the Northern Ireland Office today cannot be the same as it was before devolution. It was unique in Whitehall. The political director was one of the most senior civil servants. The last one became the Permanent Secretary. They had fingers on things that did not happen in other departments. I would like to know that the equivalent of the political director in the Northern Ireland Office today is satisfied with this process in this Bill. I am concerned that those who know about the nuances and the organisation to make these things work are comfortable with it. I would certainly like to have a note on that before Report or a Statement from Government.
Lord Hardie
Lord Hardie (CB)
My Lords, in speaking to this amendment, I will also speak to Amendments 159E, 159F, 160D, 160E and 160F. As this is the first time for me to speak about this part of the Bill, I should declare an interest as honorary president of Capability Scotland, a charity that is concerned with provision of services and support for multiple-handicapped people.
Controlled expenditure requires two elements. The first is that the activity resulting in the expenditure must be within the definition of what is controlled. Secondly, the expenditure must reasonably be regarded as intended to promote the electoral success of one or more registered parties or candidates within certain categories. Section 85 of the 2000 Act is restrictive in its scope. It confines controlled expenditure to the production or publication of election material made available to the public or sections of the public. In that situation it would be relatively easy to assess objectively whether the intention of the published material was to promote the electoral success of individuals or registered parties. However, Clause 26(2) of the Bill extends the meaning and scope of controlled expenditure by expanding the activities from the mere production and publication of election material to include the various activities listed in Part 1 of new Schedule 8A to the 2000 Act added by Clause 26(2)(a) and Schedule 3. These activities include market research, public meetings, rallies and media events.
Many organisations with a legitimate interest in the democratic process indulge in such activities at different times. For example, charities and others may be involved in campaigns throughout the year, highlighting the plight of those in our society who are poor, homeless or otherwise disadvantaged, including the disabled. These campaigns might intensify at Christmas and throughout the winter months when the consequences of having no shelter or hot food are more acute. At other times, they may concentrate on the inability of the poorer members of society to afford heat, light or other basic essentials. These activities are not associated with elections and they are not confined to the year immediately preceding an election.
A campaign to make poverty history in our society might suggest various solutions directed at unemployment, the level of wages and benefits, the price of energy or other measures. It might involve organising public rallies and media events. If such a campaign started before the commencement of the regulated period before an election, expenditure could be incurred with impunity, but one might expect such a campaign to continue during the regulated period in the lead-up to an election. If that happened, different issues would arise.
If the organisers considered that there was a risk that their activities might be interpreted as having an intention to favour a candidate or a party at the forthcoming election, they would be obliged to incur the cost of the administrative burden imposed by the Act of having systems and personnel in place to comply with the Act and make the return. If they genuinely believed that they were not covered by the Act, but ultimately found out they were wrong, as I will explain later, they would face prosecution and a criminal penalty.
Similar consequences would apply to local campaign groups concerned about a local issue, such as the threatened closure of their hospital, the route of HS2 through the constituency, fracking or the existence or otherwise of wind farms. If no party or candidate had policies about such matters, the local campaign group, or the charity, as the case may be, could spend money without fear of contravening the rules about controlled expenditure, but what if—and this is a point that was raised on the previous amendment—a candidate with such policies emerged after the start of the regulated period or an existing candidate adopted them in the course of his campaign? The intention of the campaign by the local group or charity would not have altered, but the organisers would risk prosecution if after that time they continued to incur expenditure without complying with the provisions about controlled expenditure, the reason for that risk being that it might be argued that a subsidiary intention of the campaign was to procure the electoral success of the candidate who had adopted it, even if he or she were not mentioned. While such an intention may not be the aim of the organisers of the campaign, and might not even be in their contemplation, it may be a consequence of their campaign. In that situation, if an objective evaluation of the case resulted in the conclusion that such an outcome could reasonably be regarded as a subsidiary intention of the campaign, the consequence would be a criminal conviction and a financial penalty for those responsible for the campaign.
The risk of such consequences might well induce organisers of a campaign to abandon it in the regulated period prior to an election. That cannot be desirable. We should encourage participation in the democratic process, particularly in the period immediately prior to an election. We should not threaten with prosecution campaigners who are genuinely concerned about social, local or other issues of genuine concern to the electorate.
I accept, of course, that there have to be some controls but where the scope of controlled activity is being extended as widely as in this case, the control should be proportionate and we should make some allowance for the genuine subjective intention of campaigners. We can achieve that balance by restricting controls and consequential offences to expenditure where the principal purpose of the expenditure is to achieve electoral success for candidates or parties. This is the aim of my Amendments 159A, 159E, 159F, 160E and 160F.
If the noble and learned Lord the Advocate-General does not favour this solution, perhaps a more acceptable one would be to introduce a statutory defence to any criminal offence, similar to my Amendment 160D. If that route were preferred, I accept that it would necessary to redraft the clause as it currently includes a reference to the principal amendment. Without such a defence, we risk criminalising campaigners who are genuinely concerned about issues that matter to the electorate and do not seek to promote the electoral success of a candidate or candidates or a political party or parties. I beg to move.
Lord Walton of Detchant (CB)
My Lords, this amendment and the subsequent ones, such as that carefully drafted by the noble Lord, Lord Greaves, give me the opportunity of raising an issue of concern to a number of charities. Much has been said about the role of charities in respect of lobbying activities and a number of reassuring comments have been made during early stages of this Bill. However, I am particularly concerned about the activities of all-party groups within Parliament. Many of these groups are in the medical research field and are serviced and provided with financial, secretarial and other support by charities. They are dependent on this to a considerable extent. Of course, one would say at once that if they are all-party groups and their membership includes Members of the Commons and of this House from all parties, surely they cannot be construed as lobbying in search of electoral success. That is an entirely reasonable conclusion to draw. However, there is always a possibility that a particular all-party group may be so dominated by members of one political party that its attitude to an approaching election could change quite significantly.
I want to give noble Lords an example. I speak as the life president of the Muscular Dystrophy Campaign. I served on an inquiry by the All-Party Group on Muscular Dystrophy, which conducted a lengthy inquiry over a 12-month period, rather like an inquiry by one of your Lordships’ Select Committees. It took a great deal of written evidence and held public meetings to which a number of witnesses were called. The Muscular Dystrophy Campaign covered the costs, including the expenses of those giving evidence. We discovered in that inquiry that boys with the most severe form, Duchenne muscular dystrophy, who, when I started work in that field in 1950, were dying, often grossly deformed, in their teens, were now, with greatly improved care, living into their 30s and some even into their 40s in places such as Newcastle, Oxford, Queens Square in London, Oswestry and a number of other centres, with wonderful rehabilitation and respiratory support.
However, that inquiry demonstrated that in the south-west many of them were still dying in their teens. That was also true in the north-west. When we produced this report, which went to all the major health bodies across the country, and it went to the South West Strategic Health Authority, the executive director, Sir Ian Carruthers, was so shocked that it immediately put another £1 million into care for patients with muscular dystrophy and other neuromuscular diseases in that area. Mike Farrar, then the chief executive of the North West Strategic Health Authority, said that anything Ian Carruthers could do, it could do better, so it put money into those services in that area.
That was clearly lobbying with a view to improving services and influencing the activity of health service organisations. There are a number of people working on that and many other charities to do with things like stroke, multiple sclerosis and Parkinson’s disease, and another inquiry into Parkinson’s disease has just been conducted, demonstrating a similar unevenness of standards of care across the country. The question is whether the all-party groups serviced by these charities are at risk under the Bill. It is crucial that we have an answer from the Minister about this. Many of the charities which service the all-party groups have expressed serious concern that their activities might be adversely influenced by the provisions of the Bill.
The Earl of Sandwich (CB)
My Lords, I first congratulate the noble and learned Lord, Lord Hardie, on the amendment, and my noble and right reverend friend Lord Harries for the work of his outstanding commission; I do not think that anyone has seen such a piece of work from the charity.
Having not spoken at Second Reading, I will beg for just a couple of minutes to put one point to the Minister. These are the most critical of the amendments. They convey the fundamental problem, which is that while the Bill and its predecessor are trying to regulate electioneering, they are actually hitting a whole range of legitimate charitable activities. The Government may not even guess at the damage that will be caused by this, all the way up to the review—which is of course welcome.
I have spent nearly 40 years working with aid organisations, personally assisting in the development of advocacy. It is a vital part of their work, bringing issues of poverty reduction to the attention of the public during an election campaign. Mr Brake told MPs that charities would not be caught by controlled expenditure. I am not sure that the Government yet appreciate that with national, European and local elections, and possibly referendums, all at different times, the Bill will or could hurt charities throughout the five-year period, not just leading up to the election—although we are going to discuss that period.
As the noble and learned Lord, Lord Hardie, demonstrated, there are grey areas everywhere in the Bill, even if we accept the Government’s undertakings in the Commons on definition. I have much sympathy with the Liberal Amendment 160, which is coming up and attempts to exclude charities altogether; however, it may already be too late for that, as they are already regulated under PPERA and the Charities Act. The amendment should attract the Minister, since it makes the point that if the campaign is not specifically related to a manifesto or proposed legislation, it should not be counted at all. It will be difficult enough making the calculation, but at least the Minister should see the point of the amendment. It is much narrower than subsequent amendments and should be easier for him to accept.
On smaller charities, there is a myth that Clauses 26 and 27 would not have an impact on them. As we know from coalitions, there is a close relationship between the larger charities, such as Oxfam and Christian Aid, and the many smaller ones which they themselves have sponsored. However, these may now be more independent and in some cases have grown much larger. So the smaller, specialist agencies are often concerned with single issues such as appropriate technology, fair trade, anti-slavery or other aspects of human rights in Burma, Tibet or Sudan.
Some of the issues are highly political. The noble Lord, Lord Walton, mentioned all-party groups; there are many active all-party groups on specific subjects. These might well be brought to the attention of campaigning politicians. At the same time, the size of these charities, while in some cases bringing them over the proposed threshold—I welcome the Minister’s assurances about the threshold—is not sufficient to justify the added expense and work involved in what I call selective accountability and monitoring in relation to the Bill.
The point about counting volunteers has already been made. It is often the smaller charities that depend on volunteers, especially in times of emergencies. We have also heard about coalitions. In spite of what the Minister said, I feel that they could also be caught by the Bill quite unnecessarily—as the noble and right reverend Lord, Lord Harries, pointed out. I therefore urge the Minister to consider accepting the amendment on Report.
Lord Greaves (LD)
My Lords, I think that this is the first time I have spoken in Committee, so I remind the House of my various interests with campaigning groups and charities set out in the register of interests, and also declare my lifelong activity as an election agent, which, I have no doubt, will continue.
I, too, thank the noble and right reverend Lord, Lord Harries of Pentregarth, and his commission for the outstanding body of work they carried out in a limited time and for the reports they have produced. This is only to the good as we look at the Bill in detail. I also thank the Government for the large amount of activity which has taken place. For example, my noble friend Lord Wallace of Saltaire has met something like 40 representatives of separate organisations to discuss their concerns about the Bill, and we had a letter this weekend from my noble and learned friend Lord Wallace of Tankerness making it absolutely clear that the Government are in listening mode. I hope that noble Lords will not get too tied up in whether this is consultation or not. The fact is that we are scrutinising legislation and that the Government are listening to that scrutiny. We do not always get that in Committee in the House of Lords, from different Governments, and we should make it very clear that it is welcome.
Much discussion is still taking place within coalition circles, within the Government and between the Government and other organisations, not least the noble and right reverend Lord’s commission. That discussion must continue and we must continue to do what I believe the Government, or at least substantial parts of the Government, are now doing, which is to seek a consensus on the Bill that will achieve the objectives behind it and will not have the damaging, chilling effects that are feared by so much of civil society.
We have two main slates of amendments here which come through the different groups. One slate of amendments has come from the commission of the noble and right reverend Lord, Lord Harries, and we have another which my noble friend Lord Tyler has been working on with ferocious energy over the past few weeks. Together they add up, if not to a perfect answer, at least to a very satisfactory means of scrutinising the Bill, by putting forward a number of positive suggestions. I understand that the commission has said that it would like us to take its slate as a package. In practice, as the noble Baroness said, if we come up with something successful at the end of this process, we will end up with a series of compromises, as we always do, but the Bill will not be any the worse for that. There are various other amendments in this group, including three of mine that I will speak to briefly in a minute.
It is absolutely right that the commission chaired by the noble and right reverend Lord, Lord Harries, looked at all this from the point of view of campaigning groups and charities and of civil society. That is the purpose for which the commission was set up. But I hope that it will be recognised that that made the consultation that the commission carried out, and is still carrying out, incredibly valuable as it is, one-sided in one respect—that is, that people involved in fighting the elections, candidates and political parties, were not part of the consultation. When we scrutinise this legislation, we must find the right balance between protecting the interests not just of candidates but of the democratic process itself on the one hand, and preventing damage to civil society on the other.
The dangers that this legislation rightly sets out to prevent and challenge are, first, that at national level we do not see our national politics taken over by the super-PAC-type organisations that we see in the United States, and by what has been described as “big bucks from big boys”—usually boys, but perhaps sometimes girls as well. In other words, we should not allow money to dominate. That money is inevitably from large corporate interests, most if not all of them on the right. We should not allow them to take over politics in this country as has happened to a worrying degree across the Atlantic. Furthermore, we should not allow people to buy particular constituencies simply by throwing a large amount of money at them—far more than the candidates themselves are allowed to spend under the regulations. Those are issues that we will come to later, but that is the basic aim of Part 2, as I understand it. It is very important that we balance that against all the concerns and the proposals put forward to try to address those concerns.
I have three amendments. My Amendment 159C is similar to an amendment in the name of the noble and right reverend Lord, Lord Harries: Amendment 159B. It would exempt from controlled expenditure rules a range of activities related to legislation before Parliament —before devolved Parliaments and Assemblies—and proposals being actively put forward by local government, government agencies and so on. In other words, the normal campaigning and lobbying activities of charities and campaigning organisations ought not to be prevented during the period in which the expenditure is controlled.
Amendment 159D is another probing amendment, more probing than the previous one. It would exempt from controlled expenditure rules any campaigning that was not specifically related to the functions of the bodies being elected during the regulated period. There are obviously major holes in that amendment, and concerns with it, but there is a question as to how far the expenditure controlled by third-party organisations should relate specifically to the functions of the body that is being elected during the election period, and how far it is just general political activity, even if it is totally unrelated to the functions of the Scottish Parliament or whatever it might be.
Amendment 160A would exclude from controlled-expenditure arrangements,
“expenditure”,
that,
“is minor, insignificant, inconsequential or incidental”,
or any similar words that the Minister would like to consider. The question is to what extent there will be in practice a de minimis provision within the Bill and to what extent there will be a requirement to look at whether to some extent, even if it is a very small extent, it might be intended to affect electoral support, and how far it is absolute. It is a similar question to the questions put forward by the noble and learned Lord, Lord Hardie, but on a more de minimis basis.
Lord Ramsbotham (CB)
My Lords, I am glad that the noble Lord, Lord Greaves, made the point that we are trying to make certain that the normal activities of non-party charities and NGOs are not prevented and must continue. I also want to thank and congratulate my noble and right reverend friend Lord Harries of Pentregarth on this excellent commission report. The five weeks we have had, which have not been nearly long enough, have resulted in a considerable amount of work and consultation. At the same time, I am disappointed that there is not a list of government amendments, arising out of that consultation, for us to look at as well. I hope that those will come.
The noble Baroness, Lady Mallalieu, mentioned the package. During the rest of this Committee stage, I shall be referring to this package of recommendations made in the report. However, I believe that the package goes wider than that. I think there are three parts to what we are trying to do in this House. The first is what I mentioned when asking for the pause, saying that the request was not a wrecking but a saving motion. It was saving the Government from themselves and from wrecking the voluntary sector. That is hugely important. We must make absolutely certain that the voluntary sector can continue—that is, the non-party bit—and it must be maintained. Secondly, there is the package of recommendations which I hope will be accepted. We are looking no further than the 2015 election, because the third and key part of this package would seem to be the post-election review, based on what has been learned. Bearing in mind that everyone is keen that the process should be transparent, I think that what eventually comes out should be based on careful examination of what happens during a natural event, rather than the presumption that this or that might happen, when we know that many of the measures in the Bill have nothing to do with the day-to-day activities of non-party organisations.
I am grateful to the Leader of the House for providing the time and, acknowledging that it is too short, I hope that during the remainder of this Committee stage we can be constructive and make certain that these normal activities are allowed to continue.
Lord Tyler (LD)
My Lords, I am glad to follow the noble Lord, Lord Ramsbotham, because I very much agree with the last points that he has been making. I think there is wide agreement in this House that we have to do our job to make that process to which he has referred a reality. I am grateful, too, to the noble and right reverend Lord, Lord Harries of Pentregarth, and to all his colleagues. It was a formidable task that they took on; they did not stop at the first hurdle but kept going and have produced some extremely helpful and notable recommendations.
As is recorded in the register, I am a patron of many charities and I am sure that other noble Lords are too, but I have also had experience in the past as a full-time employee of Shelter, which is exactly the sort of charity and non-party organisation that we think is so important to civil life in our country. I am extremely proud of the work that such organisations have done and are doing, and I continue to support them. So I hope that your Lordships will understand that I come to these issues with very much the same background, interests and enthusiasm as members of the noble and right reverend Lord’s commission. I recognise that the work they have done is an extremely valuable contribution to the discussion of these issues.
Before I come to Amendments 160B and 160C, in the name of myself, my noble friends and others, I wish briefly to address the stand part debate which is also in this group. At Second Reading, I said:
“You could plot on a graph transparency on the one hand and bureaucracy on the other in very many areas of life. If transparency is low, the regulatory burden tends to be low, too. If accountability is strong, it is likely that the regulatory burden will be significant. The threshold is a question of where we plot this legislation on that graph. … It will be our responsibility in your Lordships’ House to get the balance right when we come to Committee”.—[Official Report, 22/10/13; cols. 902-3.]
That, surely, is our principal occupation today—to get that balance right, which is a crucial role that we have to undertake between now and Report in January.
After meeting a very large number of charities, community groups, third-party campaigning organisations and their representatives, it is clear to me that the amendment which I and my colleagues have put forward would go some way to meet that objective. However, I am the first to admit that I am no great expert when it comes to getting the amendment absolutely right. Many others in the House are greater experts in that regard. However, I endorse the concerns expressed by the noble and learned Lord, Lord Hardie, that we must be careful about the unintended consequences that could arise if the Bill were implemented in its present form. That is why the amendments that I have tabled have had broad support from third-party organisations, which accept that there is a problem in ensuring transparency in relation to those who are campaigning.
The Bill refers to expenditure that,
“can reasonably be regarded as intended to promote or procure electoral success”,
in respect of a party or candidate. There is wide acceptance that there should be greater transparency in relation to organisations that are determined to undertake that role. Indeed, everyone to whom I have spoken is absolutely clear that an extremely important part of the role and responsibilities of your Lordships’ House is to try to avoid confusion and to deal with a lack of clarity and the excessive constraints of the 2000 Act. Indeed, that sentiment was shared by the commission of the noble and right reverend Lord, Lord Harries, and he has endorsed Amendments 160B and 160C.
Amendments 160B and 160C deal with two discrete issues that have come up time and again in my discussions with a large number of organisations, and have been a feature of our debate this afternoon. They do not attempt to rewrite the basic definition, which the Electoral Commission has advised is not susceptible to constructive alteration. The benefit of that definition, as it stands, is that it has 13 years of practical experience attached to it and it is an objective test—namely, “What would a reasonable person think someone is doing?”, not “What did that person think they were doing when they did it?”. The latter would be much more subjective. We can never be sure of someone’s intentions but we can come to some conclusions about what a reasonable person would think those intentions were. The amendments seek to make these things clearer still.
Amendment 160B sets out the principle that the endorsement of a campaign by a candidate does not imply that the campaign concerned necessarily supports the candidate. The noble and learned Lord, Lord Hardie, referred to a similar situation. This is a very worrying misconception about the Bill and is much featured in the case studies reported to us: that is, the notion that the endorsement of a campaign by a candidate can be construed as that candidate receiving support from that campaign. The more one thinks about that, the more illogical it is, but it is clearly a perception and, as is so often the case, a perception can be even more influential than reality.
I recall regularly speaking of the good work done by community groups in my former constituency. If, by so doing, I could have won the implied support of those groups, it would have been wonderful. If everything that I supported had automatically reciprocated that support, I would have got an even bigger majority than I did, but, of course, that was simply not the case. The policy objectives of non-party organisations will often receive flattering praise from a candidate, but the feeling may not be mutual. That is precisely the grey area that the noble Earl, Lord Sandwich, referred to just now. It is not absolutely clear in the Bill that it is not reciprocal. We deserve to try to make sure for everybody’s benefit that the Bill is so improved that we know precisely where we are. That needs clarity. I hope that Members of your Lordships’ House will accept that our amendment is intended to do precisely that—to clarify the situation.
Amendment 160C gives an opportunity for the Minister to address some other matters that are ambiguous under the PPERA 2000 definition of non-party campaigning; that is, the extent to which the remotest praise for a candidate by a campaign can be said to be “promoting or procuring” his or her electoral success, or that of their party. In particular, we have all seen in the past—indeed, I think I prepared them when I was not a Member of either House—the score-cards of different parties’ positioning on different policies. These assess the policies of various parties against the policies of that particular organisation. Again, it may seem to us within the political system that it is perfectly logical that it does not automatically mean that you are seeking to procure or promote the election of a candidate, but we need clarity for everyone outside that that is the case. People are not normally involved in the political process. It is not absolutely clear at present whether this activity would or would not be regarded as promoting or procuring the electoral success of the party or candidate that comes out best in that score-card assessment. Again, a little more clarity would be extremely helpful. Even if we were forced back on to the 2000 Act, rather than producing this new Bill, we would be wanting to deal with that particular problem as a matter of urgency.
A remote suggestion that a candidate has done something right by, say, an organisation congratulating that candidate at a press conference for adopting a particular policy, is a grey area in precisely the terms that have already been referred to in this afternoon’s debate. It is important that we should make sure as soon as possible that this amendment could provide an opportunity to clarify the situation once and for all. The Electoral Commission advice is that a non-party organisation could not be accused retrospectively of “promoting or procuring the electoral success” of a candidate or party, just because that party or candidate had adopted some of the positions of the organisation. The House, however, is entitled to ask the Minister this afternoon to give that position his very clear attention so that we can be sure that we are clarifying the law as it stands and as it would seem to be intended in the Bill.
Can he also shed some light on the position after a candidate or party announces its support for a policy which is supported by a non-party organisation? My understanding is that, providing there is not a massive increase in the scale of the organisation’s campaigning clearly as a result of promoting the candidate who is supporting its view, then it would not reasonably be regarded as campaigning for that candidate simply by virtue of doing what it had been doing all along. Again, however, it is a grey area. I would welcome some greater clarity.
Some clarity on these issues is just what a lot of campaigners—be they charities or not—are asking us to undertake this afternoon. That is our principal task in your Lordships’ House. We generally do it very well. I hope that we are going to do it again today. These amendments are vital tests to see whether this Bill can be made both clearer and more workable than the present law. I hope, therefore, that they will be given the very active consideration of the Minister as well as other Members of the House.
Lord Harries of Pentregarth
My Lords, I, too, should declare my interests as listed in the register; in particular the fact that I am a trustee of the Woolf Institute. I would like also to thank the noble Lord, Lord Tyler, for working so assiduously, conscientiously and sincerely to try to move this terrible Bill on from where it started off in order to achieve something that might be workable.
I should like briefly to comment on the attempt by the noble and learned Lord, Lord Hardie, to achieve a better definition of “controlled expenditure”. The commission thought very hard about that definition but, in the end, we felt that in the time available we could not come up with anything better than what we have at the moment. We reckoned that the political reality was that we had to work with what we have under the heading, “Meaning of ‘controlled expenditure’”. However, our strong recommendation is that this is one of the areas that is to be considered by the review, which the Minister has assured us will take place after the 2015 election. Certainly if the definition of the noble and learned Lord, Lord Hardie, were to be accepted, it would immediately exempt all charities from the Bill because, of course, their primary purpose cannot be to promote or procure the election of a particular party.
Baroness Mallalieu
My Lords, I support what has been said, not only by the noble and right reverend Lord, Lord Harries, but by the noble Lord, Lord Tyler. I am aware of a number of campaigning organisations that have been to see Ministers, expressed their concerns, and been told repeatedly, “You have absolutely nothing to worry about; you would not be caught by any of this”. It is a reflection of the way in which the Bill has been drafted that if those Ministers have got it wrong, they should not have been in that position in the first place because it should have been clear to them. It is still not clear whether, for example, a rally, a demonstration, a march, a rural manifesto, a score card or even a round-robin hustings with all candidates present would fall foul. All that needs to be made absolutely clear. I echo what has been said by the noble and right reverend Lord: it is no good getting a quango to do the drafting; we want Parliament to do it so that people can see what is allowed and what is not.
Perhaps I may add to what has been said about the amendment in this group that I am particularly concerned about, and on which I hope the Minister will be able to reassure us straightaway today—Amendment 159B in the name of the noble and right reverend Lord, which removes from the provision expenditure relating to campaigning on,
“legislation before Parliament during the regulated period”.
Such campaigning would relate to the success or failure of legislation that was currently before Parliament in that year, and must necessarily come to an end, one way or another, at Prorogation. It would not therefore, on the face of it, directly affect the election.
I again mention an interest here: I am a supporter of Stop HS2. What would be the position if the campaign to stop HS2 could not campaign during the next year from the time this Bill is due to become law, while the hybrid Bill is passing through this House? It is expected here in the early part of next year. What of a Bill like this one? If this Bill were to reach the statute book after Christmas and another Bill in the future were to come forward before Parliament—one which directly affects the way in which campaigns can be conducted during an election period, and perhaps with some draconian restrictions—it could not be right that campaigning against that legislation should be restricted in this way and that expenditure should be controlled if we were in a year before an election.
I will repeat the point I made earlier: an unscrupulous Government could effectively muzzle opposition for an unpopular measure and would have a positive incentive to bring forward their most unpopular measures in that last year of a fixed-term Parliament. I cannot believe that the Government would wish that to be the position and I hope the Minister will be able to make it clear that he will accept this amendment or something very much like it.
Lord Hodgson of Astley Abbotts (Con)
I too am grateful to the noble and learned Lord, Lord Hardie, for giving us a chance to discuss this very important matter this afternoon. I have not participated in the Committee stage of this Bill so far, so I need to declare an interest as a trustee of various charities, which are in the register of interests, and as the official reviewer of the Charities Act, appointed by the Government 18 months ago.
I would like to ask my noble and learned friend for some reassurance on the implications of Clause 26(2); in particular, I am following through the remarks of my noble friend Lord Tyler about unintended consequences. The noble Baroness, Lady Mallalieu, referred to round-robin meetings at general election campaigns, and I want to use that as a practical example. If a charity were to invite all parliamentary candidates in a particular constituency to one of the round-robin meetings, I presume that it would not then be caught, because it is not promoting or procuring the electoral success of one or more particular registered parties. However, suppose it was decided by the charity specifically not to invite one party: does that then mean that it is caught because—by leaving one party out—it is promoting or advocating the policies of the rest?
The particular concern that has risen in my correspondence was from black, minority and ethnic charities, which may not wish to invite—for obvious reasons—the British National Party to one of their round-robin meetings. They are concerned that, by so doing, for perfectly obvious reasons, they may inadvertently fall into the trap of, or the category caught by, the provisions of Clause 26(2). This is a narrow but important point for these quite vocal minority charities, and I hope that in due course, perhaps by writing to us, my noble and learned friend will put on record whether these people’s fears are groundless.
Lord Phillips of Sudbury
It may help my noble friend to know that, in the most recent guidance put out by the Charities Commission, entitled Charities, Elections and Referendums, there is quite a large section on public meetings and who is invited to them. It is profoundly commonsensical, so he will have some reassurance. It will not, of course, apply to non-charitable NGOs, but at least it applies to charities.
Lord Hodgson of Astley Abbotts
I am grateful to my noble friend. Of course, we are now talking about the Charity Commission: the question is, will the advice from the Charity Commission and that from the Electoral Commission be joined up? This is an issue which we shall come back to later, with amendments. I do not doubt what my noble friend has said, but the heart of the problem is the confusion about whether the thinking is joined up and what might fall through the cracks between the two sets of guidance.
Baroness Pitkeathley
My Lords, I declare my interest as patron of several charities, but particularly as vice-president of Carers UK, a campaigning charity.
I have always had a lot of bafflement about the Bill. I am baffled as to why it was introduced in the first place by a Government who have always set such store by the big society, who have repeatedly assured charities of the vital place that they occupy in public service provision and, moreover, who have set such store by putting the consumer voice at the heart of policy-making.
I am baffled, too, by how the Government have spent the pause period. It was intended to enable them to listen and think again as the result of the extraordinarily negative reaction to the Bill, especially Part 2. Clearly, the Government have neither listened nor thought again. I remind them of what consultation means: it means not only listening, but acting as a result of what you have heard. It is clear from what others have said that we still have not had enough reaction from the Government. We now hear that the Government’s reaction and the actions that they propose will not be given in time for this Committee stage and perhaps not until very near Report. The provisions of the Bill, I am afraid, remain excessively broad in scope. There is too much discretion for the Electoral Commission and far too much uncertainty remains. That, as we have heard from other noble Lords, will trip up charities and stifle their voices. Why the rush for this Bill? It is clearly not yet fit for purpose.
The commission on the other hand—I pay tribute to the noble and right reverend Lord, Lord Harries, and his commission—has used the pause very effectively indeed. The result of its work is before your Lordships in the form of the excellent report and package of proposals that have been put together, which we shall debate not only in this section but elsewhere in the Bill.
So far as controlled expenditure is concerned, I will only say that it is vital that there is clarity—indeed, not just clarity but certainty—about whether and when which activities will count towards controlled expenditure. The group of amendments, particularly those of the noble and right reverend Lord, Lord Harries, and his colleagues, will go some way to addressing that issue, and I urge the Government to accept them.
Baroness Hayter of Kentish Town (Lab)
My Lords, I also join in wishing the absent noble Lord, Lord Wallace of Saltaire, a speedy return—not that we do not feel safe in the hands of this noble and learned Lord, Lord Wallace, but it would be nice to see them both running around again. I also declare my interest as a patron of the Blenheim Trust and trustee of the Webb Memorial Trust.
I echo the concerns expressed by a number of noble Lords about the Bill and support the thrust of their amendments, which aim to make this bad Bill a little less bad. I also want to argue that Clause 26 should not stand part of the Bill. As has been said, the Government paused, but not for long enough and, more seriously, they then did nothing. There was no consultation—which as we have just heard is about more than just listening—because whatever they heard they made no changes. Even today, after all that, we have only the promise of a review about whether the Bill is fit for purpose after we have had an election with it, and the promise of a revision of the thresholds, but without the all-important figures before us. The Government’s inaction is in stark contrast to the NCVO and the Harries commission, as my noble friend Lady Pitkeathley just said.
The NCVO heard from 140 of its members and engaged with MPs, civil society and lawyers, and, as we have heard, took evidence. It talked, it thought, it listened and responded. The Government, by contrast, refused a proper committee to take evidence but then failed to use the time to produce their own amendments. They have failed to ask for written evidence and they have failed to produce a report of what they heard.
They have still failed to believe the warnings of chill, uncertainty and criminal sanctions—warnings and concerns that the Women’s Institute, Crisis and Sense About Science have repeated just this morning despite, or perhaps because of, the meetings that they have had with Ministers. The Government have failed to listen to the Royal College of Nursing, which says that the Bill will restrict the activities of organisations that seek legitimately to influence public policy in the run-up to an election. Indeed, the nurses say that if they are curtailed from raising concerns, this may pose a risk to standards of care in the NHS. Not only did the Government not heed these warnings, they have sought to dismiss them by asking others, not themselves, to change their view of the Bill. It is really no good the Minister today, or indeed Mr Brake, telling these groups that they need not worry if their own lawyers and the Electoral Commission tell them that they may well be in scope.
Lord Greaves
I have listened with great interest to the noble Baroness, but it seems that all she is doing is repeating her Second Reading speech. What we have heard about so far, and what we have down for Committee, is a whole series of amendments probing particular parts of the Bill and putting forward very constructive and, in many cases, sensible proposals to improve it. Why is the noble Baroness still making a Second Reading speech, and why has the Labour Party not put down a single constructive amendment for discussion in Committee?
Baroness Hayter of Kentish Town
We have a clause stand part debate and the point is to argue that this increase in scope does not belong in the Bill. That is the purpose of this, and the clause stand part debate is in our name. It is absolutely because we do not accept the enormous expansion that this clause brings in. We had expected, at this stage, because of the pause, that the Government would give an indication, even if not through amendments, of their response to the dissatisfaction at Second Reading. Our surprise is that we meet today, five weeks later, and there is not a single indication that the worries raised either by the two reports from the noble and right reverend Lord, Lord Harries, or at Second Reading, find themselves in any way reflected, given that no government amendments have been tabled for today.
Lord Tyler
Is the noble Baroness’s position that she wishes to leave PPERA 2000 just as it is, unamended? That is not the position of the commission of the noble and right reverend Lord, Lord Harries, or indeed of any of the organisations that I have met. It therefore seems extraordinary that she is prepared to leave that status quo in place.
Baroness Hayter of Kentish Town
I do not think that any one clause quite does that, but it is interesting if that is the noble Lord’s interpretation. Assuming that we take the Government’s intention as genuine—we can perhaps agree that this should just be about transparency—our view is that the extension of the scope has the unintended consequence of extending it from purely publications to an enormous range of other activities and things such as staff costs, transport and hire of halls. That fundamentally alters the position, which is what we are questioning. Is the effect of the Bill the same as the intent—transparency—or is the effect the chilling one that every charity and community group is telling us about? It feels like watching the Army march, with one young soldier out of line and his mother saying, “My son is marching properly but everyone else is out of step”. It seems that everyone who is commenting on the Bill has worries about the effect—except, of course, the Minister.
It was interesting and very noticeable that Lib Dem Members stood up when I used the words Sheffield Hallam. Can the Minister confirm my interpretation—it would also be interesting to hear from the noble Lord, Lord Tyler—on whether, had the Bill been an Act in 2010, so looking backwards rather than forwards, the NUS-Lib Dem antics over tuition fees would have been permissible? My reading is that they would not have been, that the NUS would have been caught had it spent too much. I have the feeling—and the NUS shares the figures on this—that, including events, press campaign tools, photographs, travel and related staff costs, the photos of those various Lib Dem candidates pledging not to increase tuition fees would have been caught by these rules, therefore requiring the NUS to register and account for all its costs. The interesting question is whether that would be the case.
Lord Wallace of Tankerness
I wonder what the noble Baroness is thinking. Activity by candidates, which is caught by other parts of the PPERA, is completely different from non-party expenditure, which is what we are debating in Part 2 of the Bill. I want to give the noble Baroness the opportunity to tell me what I may be missing, but activity by candidates seeking election is clearly political.
Baroness Hayter of Kentish Town
The NUS and other student groups have raised an interesting question about work done in the year before an election. Can the noble and learned Lord assure the student groups—and it is the Bangor student union that has been writing to noble Lords—that they can continue to campaign? The fact that student groups are concerned is another example of the uncertainty about this issue. It is not just charities: other groups would also need to be concerned that expenditure on a campaign like tuition fees—or the Stop the War coalition, which we knew rather a lot about—early on before a general election could fall within this. If a political party adopted what another group had been campaigning on and that became a big issue at an election—I recall that the Iraq war was such an issue—then the work done maybe 12 months before the election would be caught by this provision. If we understand it correctly—and this is why a stand part debate is absolutely right for this bit—this clause would have the effect of expanding the scope of the Bill to bring into account the cost, in that 12 months, of activities like rallies, marches, hire of transport, stewarding and all those sorts of things.
The other point I want to raise on this clause is the administrative burden brought in by the addition of these types of activities; they are separate from publications, which are relatively easy to account for. It is interesting that another part of the Government is doing a lot about getting rid of red tape at the moment. Last month, this House agreed a statutory instrument allowing small companies to no longer do full accounts if they do not exceed two of either: gross assets of over one-third of a million pounds, a turnover of over two-thirds of a million pounds or an average of 10 employees. That will not apply to charities, which are excluded, but it will exempt other small groups from having to do full accounts. However, those exact same groups, having been relieved by BIS from all that red tape, will, because of the extended activities related to the items included in this clause, have to go through an enormous, complicated, bureaucratic form-filling process.
This is not about taking the big money out of politics. These groups are not about getting elected. They are about giving a voice to the unrepresented and the unheard. They are a key part of our democracy and perhaps that is what the Government do not like. They have not responded to the concerns of these groups. The Electoral Commission—the Government’s own adviser—says:
“Because the Bill brings some kinds of activity into the regime for the first time, we have said to the Government that the wording that defines controlled spending needs close consideration and scrutiny … to assess the cumulative impact … on campaigners, taking into account … the scope of controlled spending … lower thresholds”,
which we will come to, “lower spending limits”, which we will come to,
“new limits on spending in constituencies”,
which we will come to, and, “concerns about administrative burdens”. We will come on to these points, but they all flow from this clause, which extends the scope. The Electoral Commission urged the Government to think very carefully about the wording. As we have heard from the noble and learned Lord, Lord Hardie, those concerns remain or he would not have moved his amendment.
I am sorry that some noble Lords seem to think that this is a Second Reading issue. To me, this is a part of Committee, a way of saying to the Government that if what they intend is transparency and this Bill fails to produce it but instead produces unintended consequences of fear, of people not campaigning when they want to, surely this is the point for us to say to the Government that the wording of this clause is not good enough. The Government should both explain why they have failed to find a solution to the concerns that were raised at Second Reading and give a reason to the House why this clause should stand part of the Bill.
Lord Wallace of Tankerness
My Lords, I thank all noble Lords who have taken part in this important debate on the core definition. In particular, I thank the noble and learned Lord, Lord Hardie, for moving his amendment, which initiated the debate. The noble Baroness, Lady Hayter, indicated correctly that the stand part debate was part of this group. Actually, the next group also includes amendments relating to Clause 26.
Clause 26 seeks to amend the definition of what is regarded as controlled expenditure for recognised third parties. I want to be clear about what we are doing and what we are not doing. Yes, we are widening the range of activities for which campaign expenditure by a recognised third party will be treated as “controlled expenditure”. Schedule 3 inserts a new Schedule 8A into the Political Parties, Elections and Referendums Act 2000. The new Schedule 8A expands the activities that will count in a way that closely reflects the scope of the rules for political parties. That change means that not only will written “election material” be regulated but so will other events such as media work associated with an election campaign by a third party. The next group of amendments goes over these changes in some detail.
What we are not doing is widening what the spending must be about. Expenditure is only controlled expenditure if it,
“can reasonably be regarded as intended to promote or procure electoral success”
of a party or candidates. I am particularly grateful to my noble friend Lord Greaves—who I hope will continue to be an election agent for many elections to come—for summing it up. He said that in seeking the objectives of greater transparency, we should not have a chilling effect. That is an objective that we share and seek to implement in this Bill. We do not want our national politics taken over by super-PACs—as he said, “big bucks from big boys”—and we do not want a situation where it is possible for a third party organisation to spend more than the candidates can legitimately spend. I agree that what we are seeking to do is a listening exercise. The noble Lord, Lord Rooker, summed it up correctly. What Governments do in Committee is listen, get the mood of the House and reflect on what has been said, and that is certainly what we intend to do.
We are aware of the concerns expressed by charities and voluntary organisations that the proposed test will impact upon their normal day-to-day activities. The Government believe that, by not changing the existing test for controlled expenditure, charities, voluntary organisations and other campaigners should be reassured that their normal engagement with public policy will not be subject to regulation as long as it cannot,
“reasonably be regarded as intended to promote or procure electoral success”
of a party or candidate.
I will pick up two specific concerns that were expressed. The noble Earl, Lord Sandwich, expressed that concern about small charities—we will come on to the thresholds later—but he also mentioned the importance of volunteers working with small charities, which I certainly recognise. I can indicate to the noble Earl and to the House that volunteer costs will not have to be included in the calculation of staff costs because volunteers are excluded from the calculation of staff costs by virtue of Section 87(2)(b) of the 2000 Act.
My noble friend Lord Hodgson asked about hustings meetings if not all candidates are invited. My noble friend Lord Phillips made reference to Charity Commission guidance on this. My understanding is that the Electoral Commission has said that it expects non-party campaigners to apply a similar approach to current hustings guidance. Subject to any change of approach in that guidance as a result of the review that is taking place, this would mean that the costs of a hustings event involving political parties will be controlled spending under the non-party campaigning rules only if all the following conditions apply.
Those conditions are: the event features party spokespeople—hustings events that feature only local candidates will be covered by the candidate spending rules, as at present; that the event is open to the public, rather than just members of the organisation that is organising the hustings; that the event features party spokespeople and not all parties contesting the election are invited to attend; and that organisers cannot provide objective reasons for their decision as to which parties to invite, such as the parties’ prominence or track record in previous elections. I recognise that this is an issue and I will certainly write to the noble Lord and ensure that that letter is available, not only, I suspect, to Members of the House but to those who have a wider interest in this matter.
The test that I am referring to has been in existence since 2000 and was in place for the 2005 and 2010 general elections. These elections did not see charities and other campaigners being prevented from engaging in and influencing public policy, although I take the point that it is “other activities” and any possible changes to the threshold that are giving rise to concern.
The amendments in the name of the noble and learned Lord, Lord Hardie, would amend Clause 26 so that only activity that can reasonably be regarded as intended for the “principal purpose” of promoting or procuring the electoral success of a party or candidate is covered. However, we believe that the introduction of a “principal purpose” test could lead to greater regulatory uncertainty, as well as an obvious avenue for avoidance, which could undermine the rules as a whole.
On the point of regulatory uncertainty, the Electoral Commission has expressed concerns that we would be retaining a familiar test but introducing a new subjective element which could lead to significant regulatory difficulty. Determining the “principal purpose” of any expenditure adds a new layer of judgment and complexity to the test and therefore could complicate rather than clarify.
The test also creates an obvious avenue for avoidance; for example, a regulation campaign presented as mainly trying to recruit members and donors could clearly also be seen to be promoting electoral success, and in these circumstances might not be covered. Under the “principal purpose” test, the fact that there was a clear intention to support a party or candidates would therefore be immaterial and not subject to regulation.
This issue was looked at by the Committee on Standards in Public Life back in 1998, which led to the establishment of the 2000 legislation. Paragraph 10.78 of the committee’s report refers to activities in the 1959 general election—I can just about remember accompanying my parents to a polling station and having the day off school. It says that,
“a privately owned steel firm, Stewarts and Lloyds, ran a series of advertisements in daily and Sunday newspapers, most of which were thought to have large Labour readerships. The advertisements were clearly intended to discourage voters from voting Labour. That is not, however, what they said. On the contrary, the Stewarts and Lloyds slogan insisted: ‘It’s not your vote we ask for, it’s your voice. Speak up against state-owned steel’. In one advertisement, published in the pro-Labour Daily Herald, the firm stated baldly: ‘This advertisement is not trying to sway votes in any political election’”.
The committee goes on to say:
“It is clear to us that advertising of this kind … has as one of its objects or one of its foreseeable effects, though not necessarily the only one, promoting the electoral prospects of one or more political parties and damaging the electoral prospects of one or more others. It is simply naive to imagine that organisations that send out explicitly political messages in the midst of election campaigns, or shortly in advance of them, are engaged innocently in generalised, nonpartisan promotional propaganda”.
That is why there is concern about introducing a subjective element.
The first recommendation of the most recent report of the Commission on Civil Society and Democratic Engagement, on the definition of regulated non-party campaigning, says:
“PPERA and the Lobbying Bill include a definition of non-party campaigning that is both ambiguous in meaning and makes too many campaigning activities subject to regulation that are not intended to promote or procure the election of a registered party and its candidates”.
If the campaigning is not intended to procure that, by this very definition it will not be regulated or controlled expenditure. The only difference is whether there is a subjective test or an objective test. For reasons of trying to minimise avoidance, the objective test is the proper one. Amendment 159B tabled by the noble and right reverend Lord, Lord Harries, amends Clause 26 so that any campaign which can reasonably be regarded as intended to promote or procure electoral success involving legislation going through Parliament during the regulated period would not count as controlled expenditure. Again, to incur controlled expenditure a third party must be carrying out an activity that it would be reasonable to regard as intended to promote or procure the electoral success of a party or candidate.
I take issue with one thing that my noble friend Lord Greaves said relating to campaigning during a Scottish parliamentary election or a European election over issues in Parliament at Westminster. He said that he thought that normal campaigning activities ought not to be prevented. I am interested in the words he used: “ought not to be prevented”. There is nothing intentional here to prevent activities. If it is an activity which would pass the threshold and be seen as intended to promote or procure an electoral advantage for a party or for a candidate, then it is for registration for regulation. The purpose is not to prevent it. I understand why he said that; it is a common slip of the tongue. Indeed, the noble Baroness, Lady Hayter, asked how many of Beatrice Webb’s campaigns would be ruled out. There is nothing here that would rule them out unless they reached the spending limit, which the Green Party did not even reach at the last general election.
However, I take on board the perfectly legitimate concern that I have heard at a number of the meetings I have had about the possibilities of a chilling effect. That is why it is important that we look at these issues and try to ensure that we have proper transparency without introducing a chilling effect. I plead guilty at some of the meetings to a slip of the tongue that this will rule out a particular sort of campaigning. It is not surprising that some charities and third-party organisations get the impression that they will not be allowed to campaign, but that is neither the purpose nor the effect of this part of the Bill. If you are going to undertake campaigning activities which would procure or promote the electoral advantage of one party or a candidate, then if you reach a particular threshold you should be registered and there will be the transparency that goes beyond that. We can debate the size of the spending limit it would be subject to, but many of the charities which have expressed concerns would come nowhere near the top spending limit that has been suggested in their normal activities.
Lord Greaves
I accept everything that my noble and learned friend said about the difficulty of getting absolutely clear in our minds what we are talking about. We are of course talking about whether expenditure comes within the regulation, not whether it is ruled out. However, let us imagine that during a UK general election the Scottish Parliament is considering a Bill that is highly controversial in Scotland and that is being promoted by the present SNP Scottish Government but opposed by everybody else. If organisations in Scotland lobby on that Bill during the regulated period running up to a UK general election, will they be caught or not? That is the question I am asking.
Lord Wallace of Tankerness
Our view is that if it could reasonably be seen that the purpose of that lobbying was to get the Scottish Government to change their mind, then no, the organisations would not be caught. However, if to further that campaign they were to say, “And by the way, in this general election don’t any of you vote SNP because that will only encourage them”, then I think that would cross the threshold. But if the focus and intention was to try to change the policies of the Scottish Government with a particular piece of legislation, it would not be a campaign that was intended to influence the outcome of the United Kingdom general election.
Lord Harries of Pentregarth
Is this not a fundamental threat to democracy? Let us take an English example. One party wants an extra runway at Heathrow. That is opposed by another party. If this is going through during an election year, surely campaigning groups should not be hindered in any way. They should have no curb on their election expenditure at all. It is a fundamental fact of democracy. They should be allowed to campaign.
Lord Wallace of Tankerness
My Lords, of course they will be allowed to campaign. I agree that it would be a travesty if they were not allowed to campaign. But if that campaign then crosses a line from campaigning on a perfectly legitimate issue to saying, “In our campaigning we advise you not to vote for A, B, C and D and to vote for F, G, H, J and K”, it is not that they are stopped from doing that; it is just that it becomes a regulated activity and they will have to account for the funds that they spend on promoting the election of particular candidates or the non-election of others—and there would be a top limit, just as political parties have limits on what they are allowed spend.
There is no question of them not being allowed to campaign. I fear that sometimes this debate has been unfortunate—as I say, we have all possibly been guilty of using loose language at times—because the impression has been given that we would not be allowed to campaign. It is not that we would not be allowed to campaign; it is just that if a campaign moves from a campaign on an issue to a campaign that seeks to promote or procure the election of a particular party or candidate, it becomes regulated expense.
Lord Harries of Pentregarth
I am sorry to delay the Minister further, but with due respect I do not think he is really facing up to the difficulty of the present definition of qualifying expenses. I agree with him that if a particular campaigning group says, “Therefore you must vote A, B or C”, of course that would need to be regulated. But it still might be liable to be regulated even if it did not do that, because the Bill is quite clear that you do not have to mention a particular party, and that it does not have to be your primary purpose. It could be reasonably interpreted that if one party is supporting an expansion at Heathrow and one is opposing it, by implication the campaigning group wants one party elected rather than another. There are fundamental difficulties here.
Lord Wallace of Tankerness
That reflects some of the amendments tabled by my noble friend Lord Tyler, to which the noble and right reverend Lord, Lord Harries, lent his support. We are grappling with real issues here as to the clarity or otherwise of when people will cross a line. I accept that there are some cases which are quite clearly on one side of the line and others that are nearer the margins. The noble Baroness, Lady Hayter, said that some people had been advised by the Electoral Commission that what they were proposing to do would be regulated. I would say to them, “Take the advice of the Electoral Commission. If it says you should be regulated, then register”. There is nothing stopping people campaigning. In fact, they might campaign with a lot more confidence if they know that they are doing the right thing because they have taken the advice of the Electoral Commission.
Baroness Hayter of Kentish Town
I dread going on to other clauses, because I am going to get told off, but this is rather important. Registration is a threat to many of these organisations. They do not have the staff to fill in the forms. Charities are worried that by being registered with the Electoral Commission rather than the Charity Commission, it will look as if they are political because of the word. The bureaucracy of it frightens them. Some organisations will be responsible for 15 or 20 local groups. They will get caught by coalition funding. The Minister says, “Let them register”. The problem is, that in itself is a threat. Maybe he has misunderstood the threat of registration to these organisations.
Lord Wallace of Tankerness
My Lords, I do not think that I have, because I indicated that one of the concerns we have is the potential chilling effect. I am trying to make it clear that the threat is not that they cannot campaign at all. I regret sometimes the language used. It may be inadvertent, but the problem is that if we as politicians dealing with the Bill say that people will not be allowed to campaign on certain issues, it will be picked up outside and people will believe that they might not be allowed to campaign on certain issues. I hear what the noble Baroness says about the threat. I do not believe that registration is necessarily a threat. It is part of trying to secure transparency, as my noble friend Lord Tyler said. It is trying to secure the right balance, because the more transparency you have, the more likely it is that you will have more regulation. We are doing an important task as a Committee, which is to put up issues to make sure that we try to achieve the right balance.
In relation to other amendments, my noble friend Lord Greaves sought to exempt activities relating to research, press conferences, meetings and the lobbying of government and other legislative bodies. Again, the same explanation applies. The day-to-day activities of third parties, including working with legislative bodies across the United Kingdom, is not, and under the Bill would not be, subject to regulation under PPERA. Only activities which a reasonable person would regard as intended to promote or procure electoral success are captured.
Amendment 159D is about the same issue: issues being debated in another legislature. In the European election, the European Parliament cannot determine whether Britain continues its membership of the European Union, but it is not impossible—it does not need too much imagination—to think that it might be what third parties might be campaigning on in the forthcoming European elections. If that is what they are campaigning on to promote one party over another, it is not unreasonable, if they meet the thresholds, to require them to register.
The noble Lord, Lord Walton, talked about the all-party groups and the important work that was done in relation to muscular dystrophy. I understood him to ask whether the charities that support those groups with staff will be covered. It is difficult to see how the work of all-party groups—he knows this, as he showed in his remarks—could be caught or how the groups could be promoting electoral success in the reports they produce. However, the difference might be if one of the charitable bodies that had been supporting the all-party group were to turn around and say, “We helped produce this report. Member X and Member Y are really good people and people should go out and support them”. I am not suggesting for one minute that they would do that, as charity law might make it very difficult for them, but that would be trying to procure an election result and so on. Simply supporting an all-party group doing the very valuable work that the all-party groups do could not be seen as promoting a particular—
Lord Walton of Detchant
If, say, an all-party group on heart surgery had decided, on excellent scientific advice, that it wished to support the continuation of paediatric cardiac surgery in one centre but not in another, which was in a different constituency, would that be regarded as being in breach of the law?
Lord Wallace of Tankerness
In all these hypotheticals, you hesitate, but I cannot see how supporting what must essentially be a medical judgment by a group to support a particular centre over another—it is not supporting a particular candidate or party over another—would constitute trying to promote a political party. It might be promoting a particular medical centre, but that is not the same as a political party.
Baroness Royall of Blaisdon
My Lords, I accept that the issue relating to APPGs is difficult, but I am sure that there is—forgive my ignorance—an anti-smoking APPG that may well be wholly in favour of standardised packaging for cigarettes. We know that we all agree on this measure, at the moment, but if, six months before the election, this had not been resolved and the APPG still seemed to support the introduction of standardised packaging on cigarettes—which is something that the coalition used to be against and we were in favour of—would that be caught by the new law?
Lord Wallace of Tankerness
I find it difficult to see how an all-party group, supported by all parties, would fall foul of something, because by its very nature that would be difficult. The noble Baroness raises a point that was at the core of the points made by my noble friend Lord Tyler about when there is a change in a particular policy. This brings us to an important issue about what should be in the Bill and what should be left to guidance. This point was also made by the noble and learned Lord, Lord Hardie, who asked about groups changing their policy position in the middle of the controlled period.
Lord Hardie
I was not speaking about a group changing its position but about a group remaining constant and a candidate then adopting the campaign. I accept that retrospectively the expenditure is protected, but what about prospectively? What about future expenditure?
Lord Wallace of Tankerness
I apologise; I misrepresented the point. What happens if the group maintains its campaign and one party suddenly comes on board and, presumably, one party breaks rank and retreats? The Electoral Commission’s guidance is clear that if a party or candidate subsequently adopts a campaigning organisation’s policy, it will not be caught unless the campaigning organisation draws attention to the fact or increases its campaigning as a result. In addition, a group must be reasonably regarded as intending to procure electoral success. If at the time a party or candidate does not have a policy on the subject of the organisation’s campaign, it is very difficult to see how it could be seen to be promoting that candidate or the party. Indeed, it would seem to be impossible to objectively argue that a policy campaign by a third party could be intended to favour a party or candidates if those parties’ or candidates’ views on the policy were unknown at the time.
A question was also asked about the scorecard count. A third party setting out a scorecard 11 months before an election could reasonably be regarded as trying to get parties to change their policy, not necessarily to promote electoral success. However, a third party publishing a scorecard a week before election day might be regarded as promoting the electoral success of a party or candidate.
The noble and right reverend Lord, Lord Harries, put his finger on it by saying that many of the groups he has talked to would rather that this was in legislation. On the scorecard issue, I sought to show that there were shades of this. It can sometimes be very difficult if you try to pin it down too much in legislation. Often when we legislate with specific examples—I have heard this on other subjects in your Lordships’ House—we can do more damage and cause more uncertainty by what is left out than by what is there. It does not allow the flexibility to take full circumstances into account.
What has been raised is a perfectly legitimate point for this Committee to express views on. We as a Government should consider whether it is better to have these things set out in statute, subject to the misgivings that I have expressed about inflexibility—once it is there, it takes primary legislation to repeal it—or whether it is better to allow that position to be determined by guidance.
The next paragraph in the report from the Committee on Standards in Public Life states:
“That said, we acknowledge, of course, that in some cases it will be hard to determine whether the advertising and other propaganda undertaken by an individual or organisation other than a political party is or is not intended to affect an election outcome. Ultimately it will be up to the courts to decide in such cases, but one role we envisage for the Electoral Commission”—
which did not exist when this was written—
“is in giving authoritative but not legally binding advice on such matters”.
It would appear that those who set all this in motion some 15 years ago saw giving guidance as a proper role for the Electoral Commission. As I indicated in my opening remarks on the previous amendment, we engage with the Electoral Commission and believe that it would be helpful to have draft guidance available. I also accept—this is something that we want to reflect on—the views that have been expressed in the House that some of this would be better put in primary legislation. That said, as I indicated, there are drawbacks with that as well.
I hope that in that spirit I can invite the noble and learned Lord, Lord Hardie, to withdraw his amendment.
Lord Hardie
I thank noble Lords on all sides of the House for participating in this full and interesting debate. It is quite clear that there is a certain consensus that it is essential we get the balance right in the Act, avoid unintended consequences and clear up grey areas. I note from the noble and learned Lord the Advocate-General that the Government will consider the extent to which the legislation should be amended. In light of that, I will reflect on everything that has been said today. In the mean time, I beg leave to withdraw the amendment.
Lord Morris of Aberavon
“(5A) Before subsection (5) insert—
“( ) Any limit applying to campaign expenditure under this Act where that expenditure is incurred by or on behalf of third parties in connection with the production or publication of election material which is made available to the public at large, or any section of the public in Wales, shall not include costs incurred by the translation of those materials from English into Welsh or from Welsh into English.””
Lord Morris of Aberavon (Lab)
My Lords, this amendment is in my name and that of my noble friend Lord Elystan-Morgan. I shall not take up too much time as I hope that the Minister will give assurances that I, and those concerned with the Welsh language, have nothing to worry about. The Welsh language is a devolved matter under Schedule 20. It is a matter for the Welsh Government. However, we must always be vigilant when Westminster legislation may affect it and might injure the proper use of the language. The foreword of the Westminster Welsh Language Act 1993, regarding the setting up of a board to promote and facilitate the use of the language, states,
“in the conduct of public business and the administration of justice in Wales the English and Welsh languages should be treated on a basis of equality”.
I can claim that, as a young Member of Parliament as far back as 1962, I was the first in a document to the Government of the day to use the expression “equal validity”. It was subsequently adopted and is now enshrined in Westminster legislation. Nothing should be done that might undermine that principle, even unwittingly. I have received representations from the Welsh Language Commissioner seeking assurances on this point.
Part 2 of the Bill regulates more closely the spending during election campaigns by those who are not standing and are not registered as a political party. It also reduces the number of spending limits by non-political parties and registered third parties. Organisations must comply with “controlled expenditure” limits for that organisation. This is defined as the expenditure associated with the production of material made available to the public at large. The Welsh Language Commissioner is concerned that the cost of translating election material falls within this definition and I tend to agree with her. The Bill makes no provision to reduce or offset the cost of such translation in relation to the Welsh language and could therefore adversely affect the present situation. Reduced expenditure as proposed in the Bill would adversely affect the provision of bilingual election material in Wales. It is possible to envisage a situation where some non-political parties and third parties chose not to issue bilingual election material for fear of reaching or exceeding the threshold. Hence, I need an assurance that the proposed spending limits should take account of the additional costs that come with providing election material in Wales. My amendment is drafted to seek to ensure that the limit in the Bill on expenditure shall not include costs incurred by the translation of those materials to Welsh or to English as the case may be. I beg to move.
Lord Harries of Pentregarth
My Lords, I will speak to Amendments 165B, 161A and 165C in my name, which I put forward on behalf of the Commission on Civil Society and Democratic Engagement. First, I pass on the apologies of the noble Lord, Lord Cormack, who has a long-standing engagement and could not be here this evening. His name is added to the commission’s amendments. He has promised to be here on Report not only to speak but to vote for any commission amendments. Many noble Lords have been kind enough to recognise the quality of the report brought forward by the commission. I ought properly to pass on the thanks to those to whom it is properly due—the team of people from charities and campaigning organisations who have been working night and day in order to produce it.
Charities and campaigning organisations accept that a wider range of activities needs to be taken into account. It is part of their wider conviction that charities should be regulated and be transparent. There is absolutely no problem about that. As Amendment 165B points out, there are real difficulties about including staff time in expenditure that counts as a qualifying expense. There is the difficulty of separating staff time used on campaigns generally from that which is directed specifically towards elections, particularly if this is to take place during a whole year—the regulatory burden on charities would be quite disproportionate. The Royal Society for the Protection of Birds says in the report:
“Widening the activities that count towards controlled expenditure would require significant new reporting procedures, including time sheets to account for staff time connected with campaigns and systems for recording spending in regional offices. This would siphon money away from conservation work and amount to an unnecessarily onerous regulatory burden: more than the £0–800 per organisation for implementation estimated in the Impact Assessment”.
It is also important to note that the Electoral Commission, though its long-term view is that staff time should be included both for third-party organisations and political parties—for which at the moment it is not included—says quite clearly in its latest briefing that such are the difficulties of including this that it should not be included before the 2015 campaign. That is a very clear and strong recommendation.
Subsection (1)(b) of the proposed new section in Amendment 165B concerns translation. We firmly support what the noble and learned Lord, Lord Morris of Aberavon, has said. The cost of translation from Welsh to English and English to Welsh should not be included. Our amendment goes slightly wider than simply translation because it would also include things such as Braille. The Electoral Commission also supports this although it says that production costs should not be included. I do not think the Commission on Civil Society and Democratic Engagement would agree with that because the production costs are also extra as a result of the translations. It is not just the job of hiring a translator but also the costs of printing the extra pages in Welsh.
Proposed new subsection (1)(c) concerns safety and security. This is obviously one of the concerns that arose from Northern Ireland. At the moment our amendment refers to safety and security for meetings. The Electoral Commission has very valuably added that “rallies” should be included here and I think the Commission on Civil Society and Democratic Engagement would certainly support that. Proposed new subsection (1)(d) refers to documents making material available for people who are either physically or in any other way disabled. That, again, is an extra expense which should not be counted as part of the qualifying expenses. I hope that the Government will also bring forward an amendment to ensure that extra expenses by disabled groups—for instance, to get them to meetings, which can amount to quite a lot—would be included in subsection (1)(c) of the proposed new clause, which obviously concerns the safety of disabled people at meetings and rallies.
Proposed new subsection (1)(e) refers to communications with supporters. A clear distinction is made in the legislation between the general public, who are brought into the regulation, and supporters. However, “supporters” is defined rather narrowly in terms of donations. Of course, the modern understanding of “supporters” over all sorts of different media is much wider than that. The commission believes that it has a way of solving that by reference to the Data Protection Act, whereby those who have given consent to be contacted by the organisation, in accordance with the Data Protection Act, should count as “supporters”. We hope very much that the Government will look sympathetically at that as a way of making a sharp distinction between those who are supporters and the general public.
Amendment 161A refers to market research. The commission does not believe that general market research should count as a qualifying expense. It should only do so for the purpose of assessing people’s polling intentions; clearly, if it is designed to find out people’s polling intentions, it should be brought within the regulatory framework.
Amendment 165C would ensure that this entire clause could only be changed by primary legislation. The commission believe that this is such a fundamental issue of democratic rights that it should not simply be amended by a government Ministry. It should only be changed as a result of primary legislation.
Finally, I have added my name in a personal capacity to Amendment 163A in the name of my noble friend Lord Best, to which I am sure he will speak. The National Council for Voluntary Organisations did research independent to that of the commission but came up with virtually identical recommendations and one or two more. This is a recommendation that the NCVO was particularly keen to see implemented, which would exclude rallies and meetings from the list of activities which are to be counted as “controlled expenditure”.
Lord Elystan-Morgan (CB)
My Lords, I support the amendment of my old friend, the noble and learned Lord, Lord Morris of Aberavon, and also support a parallel point which was advanced by the noble and right reverend Lord, Lord Harries of Pentregarth, about Braille.
I accept the arguments forcefully put by the noble and learned Lord, Lord Morris of Aberavon, but one can take the matter slightly further. The issue is whether the translation of certain documents from Welsh into English or English into Welsh should be regarded as relevant expenditure under Clause 26. The next issue is whether the position of the Welsh language is so different from all the other cases of which one can conceive in this matter as to make it unique; that is also important.
To deal with that, I ask the Committee to indulge me for a few minutes in looking at the Act of Union of 1536; I appreciate that not many of us were around at that time. However, it has cast a long shadow over the land and nation of Wales over many centuries. The opening words of that Act were:
“ALBEIT the Dominion, Principality and Country of Wales justly and righteously is, and ever hath been incorporated, annexed, united and subject to and under the Imperial Crown of this Realm”.
It then goes on to say that there is therefore no Wales and never has been any Wales at all, as a land and nation.
Lord Wigley (PC)
My Lords, I am grateful to pursue the theme that has been running for the past few minutes, and to give support to the amendment in the name of the noble and right reverend Lord, Lord Harries. As the noble Lord, Lord Elystan-Morgan, said, it is a poignant moment for the Welsh language, in that the late Lord Roberts of Conwy is no longer with us. He played a major part in the 1993 Act and many other aspects of the Welsh language gaining status. Of course, the noble and learned Lord, Lord Morris of Aberavon, and the noble Lord, Lord Elystan-Morgan, played roles as government Ministers when the 1967 Act was passed. That Act changed the status of the Welsh language fundamentally, bringing in the concept of equal validity. However, for equal validity to work, it presumed that the individual could have access to both languages. The corollary to this was the development of the availability of forms and information in Wales through the medium of Welsh as well as English in order to respond to that principle and put flesh around it.
Over the past 40 or 50 years, there has been tremendous acceptance of Wales as a bilingual community. Campaigning organisations in the voluntary as well as the governmental sector have come to recognise the need, in order to allow citizens to have their full rights with regard to the language, to pursue, as far as is practical, a bilingual policy. Official bilingualism is what makes personal and private equal validity a meaningful concept. Some organisations may feel the additional costs that inevitably go along with publishing things in two languages to be a burden. Some organisations may, frankly, be glad of an excuse not to do it. If that were the case, it would be a step backwards—a step that might start unwinding the consensus that has been achieved with considerable difficulty and after a lot of campaigning across the political sectors. I therefore urge the Minister to give serious consideration to the principles behind this amendment and to agree, if assurances regarding the fears that have been expressed cannot be given now, that at least some thought will be given between now and Report to how these can be accommodated.
The principle of access to information is equally valid for disabled people. I have campaigned very long and hard for many years to make sure that disabled people get the information that they need. Very often, that means providing an approach in individual circumstances, sometimes in group circumstances, as opposed to providing generality. One does not generally see Braille going to every household in case an individual might need it. One might argue that it should, but it is not generally the case. However, with the Welsh language, there is a general approach; both arguments are valid, but valid in slightly different ways and in slightly different circumstances. I hope that the Government will find a way to respond to these different circumstances as they consider these amendments.
Baroness Mallalieu (Lab)
My Lords, I support the amendments in my name and that of the noble and right reverend Lord, Lord Harries, to which he has spoken so fully. I have one or two points to add. First, on staff costs, I respectfully suggest that one has to remember that as the regulated activities are going to be expanded, it is inevitable that the staff costs associated with them will grow. How those activities are to be expanded is another matter, but we all agree that there are matters that should now be included that have not been up to now. The growth in staff costs is a further reason for increasing the threshold of spending, not just from the level in the Bill, but from the existing PPERA level, in order to give a fair approach.
Secondly, on translation, I slightly hesitate to raise this matter, but it is sometimes necessary to communicate with communities that do not have English as their first language. Although there has been special pleading on behalf of Wales, which I totally accept and endorse, there may well be other communities for which that may be a legitimate expense in certain circumstances. It may be necessary to communicate, perhaps in Urdu, in relation to a particular campaign. I submit that, in order to enable a campaign to communicate, translation is something that the Minister ought to have uppermost in his mind. It is also right to say that safety and security, which the commission looked at, relates not just to Northern Ireland—although particularly so there—but also to those who steward meetings and so on. That is an expense that is very often essential and ought not to be included in regulated expenditure.
It also seems wrong to proceed with part of the recommendation of the Electoral Commission about staff costs and leave the other part behind. I have in mind the review of the Electoral Commission back in June, which suggested that rules should be widened to include staff costs for political parties. The Bill, of course, does not deal with the political parties, but it seems wrong to advance one and not the other. There should be parity between non-government organisations and political parties in respect of declared expenditure. The Electoral Commission accepted that, so far as political parties were concerned, the matter would be difficult, not straightforward, and would require more consideration because it was so complex. In making the same recommendation for non-party campaigning, it again said that it was complex, potentially controversial, which it certainly is, and needed further consideration.
It seems that there is no real urgency about the question of staff costs being included for the 2015 election. I may be wrong. A spectre was raised by the noble Lord, Lord Greaves, and I have also heard it from Ministers: what about the as yet unidentified ogre who comes out of the woodwork carrying bags of money to throw into an election campaign, perhaps in a particular area, and to distort the democratic process? What about the US-style zillionaires, of which, I have to say, there is no sign in this country? This scenario seems unlikely because we have rather different rules for television advertising and so on. However, if such people really are lurking, ready to come in and try to buy the electoral process here, surely it is for the Government to produce an amendment to the Bill that deals with that situation, rather than simply taking a big stick and thrashing all around, hitting smaller charities and organisations as well. I ask the Minister to agree that, at this stage, it is not really important to include staff costs for the 2015 election, given that we are going to have a review which should take in political parties as well.
Lord Tyler (LD)
My Lords, it must be apparent to the Committee already that a number of amendments in this group have similar objectives. I am very sympathetic to those which have already been mentioned, but I want to concentrate, before my voice gives out, on Amendments 160J, 165A and 165D. These all result directly from discussions I have had with a wide range of organisations.
The group deals with Schedule 3 and how particular activities might be excluded from the list of those which come under controlled expenditure. There is a principle in current electoral law that communication with one’s own members is not “election material”, and therefore it is excluded from the sort of controls and transparency that is being looked at here. However, membership is becoming—sadly, many of us feel—an almost outmoded concept. Organisations do not need members in order to have clear, regular supporters. Many prefer to seek funding through periodic contributions rather than through the straitjacket of an annual membership subscription. The concept may well have been more appropriate, more formidable and more general at the time of the 2000 Act, but it is surely disappearing rather quickly now. It is in that context that I believe there should be some degree of flexibility in relation to Schedule 3.
It is particularly in the nature of a non-party campaign that you can be on board on one issue, but not on another. You simply lend your support as you see fit from time to time, but you are still a committed supporter of that organisation or campaign. This idea of a committed supporter is one which the Electoral Commission itself has recognised, so it seems sensible that the Bill should pick that up and define it more clearly. Our Amendment 160J does just that. It defines a committed supporter as someone who has made a donation, or who in the past 12 months has either communicated directly with the organisation or expressly consented to receive the organisation’s communications.
The noble and right reverend Lord, Lord Harries, and his colleagues, have tried to deal with that problem in their Amendment 165B—so we are on the same track. My difficulty with their amendment is that it sets a very low bar for becoming a committed supporter. Anyone who uses e-mail knows how much correspondence we all get from people to whom we have given permission under the Data Protection Act for contact to be made. It is very easy—too easy—to give that consent. So I am afraid that the Data Protection Act is, in this context, insubstantial and insufficient. Our amendment sets the bar a little higher, so that a supporter is not just the passive recipient over decades of many quickly deleted e-mails, as might be the case with that so-called protection.
Lord Horam
My Lords, I add my voice in paying tribute to the commission chaired by the noble and right reverend Lord, Lord Harries, who very generously pointed out that it was a team effort. I am sure that it was, but it is remarkable that his report has been produced in only five weeks.
In the particular area that we are discussing on these amendments, it shows how, if the Government listen to the commission’s report and take account of it, there is a way forward whereby we can achieve what we are all looking for—to protect democracy but not see it overwhelmed by outside lobbying of a particular kind, although that lobbying may be worthy in its intention. I would slightly disagree with the noble Baroness, Lady Mallalieu. I am new to this House and may be misinterpreting things, but I do not think that we should always take a package as a whole—either the Government’s or the commission’s package. I do not think that that is the spirit of this House. What we can do, in reference to her view that we should have a view about the role of civil society, is to take into account the spirit of what lies behind the views expressed in detail, point by point, in the commission’s report. The Government would be well advised to do that.
I refer, too, to remarks made by my noble friend Lord Greaves. With regard to what he said on an earlier amendment, we are in some danger in looking just at charities and non-political party campaigners and forgetting the main body of people—the PBI, or poor bloody infantry of an election, the candidates and parties who have to go through the whole wretched business of fighting elections. That is something that we should not forget in concentrating, as we obviously are today, on the problems for charities in the electoral process. Let us not forget what a general election is all about. I know it very well, having fought 10 elections myself, with varied success.
To come to the point of the amendments, there is sense in exempting directly employed staff for the 2015 general election. It is true that the Electoral Commission has said in principle that party staff who are directly employed and full time should be included in election expenses; that would be something that it would want to press. But one accepts that in the context that we are now talking about, in the short time before the next general election, sorting all this out would be very difficult and would pose huge problems for many charities, which may have very large staffs. Most associations that fight general elections have extremely small staffs—almost no full-time staff, in many cases—and exist entirely on volunteers. We tend to forget that. I am not speaking on the Electoral Commission’s behalf, as I keep stressing, but that is something that it has wisely said.
I disagree with my noble friend Lord Tyler, in that I do not think that it would help to try to differentiate between the activities undertaken by paid staff; you either exempt them as a block or you include them. In the case of the next general election, as it says in the briefing from the Electoral Commission, they should be excluded temporarily, while the whole business of whether full-time staff should be included in future could be looked at in the review that the Government have promised for after the next general election.
Lord Greaves
I am grateful to my noble friend for giving way, and for his kind words. However, would he not agree that there is a difference between somebody who works for a charity or political party taking part in an election campaign as part of their normal job and somebody who is taken on to deliver leaflets? Political parties cannot take on people to canvass, because it is illegal to pay people to canvass, but a third-party organisation could do so. So if you pay people who normally do not work for you to deliver leaflets, surely that should be included.
Lord Horam
There is clearly a difference there, and I think that it probably should be reflected in the Bill. The fact is that the two situations are quite different.
The other issue is translation. Our noble friends from Wales put it very eloquently. It is almost an abuse to call this a translation, as though Welsh were a foreign language. This applies to other languages too. Then there is the question of making documents available to those with physical or learning disabilities and, as I mentioned in my remarks on Northern Ireland, exempting costs relating to safety or security measures. This is something which the Government have already implicitly begun to accept.
Therefore, I think this is an area where, prima facie, there can be some discussion and resolution which will be helpful to the charities, and I hope that the Government will consider this.
Baroness Hollins (CB)
My Lords, I speak to Amendments 160H and 164A, in my name and in the name of my noble friend Lady Finlay, both of which are probing amendments on the subject of controlled expenditure and qualifying expenses. There may be a sense of déjà vu around some of my concerns, in the light of the debate on the previous group of amendments, so I shall try to be brief. I am grateful to the noble Lord, Lord Wallace of Saltaire, for meeting me and colleagues from the BMA to discuss these issues and I declare an interest, as past president of the British Medical Association and the current chair of the BMA’s Board of Science.
In paragraph 1 of the new schedule “Controlled expenditure: qualifying expenses”, under the heading “List of matters” sub-paragraph (1) refers to:
“The production or publication of material which is made available to the public at large or any section of the public (in whatever form and by whatever means)”.
This description is so wide that it could cover anything and everything. I would welcome clarity on whether this would include, for example, evidence-based policy reports aimed at policymakers. Many organisations have expressed worries and are unclear as to how they will be able to engage in reasonable debate on matters of public policy in the run-up to a general election. I know that some of this has already been discussed, but I have some particular points which I want to explore.
Many organisations publish reports collating evidence to highlight areas of public policy that need further development or action. The BMA’s Board of Science, which I chair, promotes the medical and allied sciences, contributes to the development of effective public health policies and supports medical research. Through the publication of policy reports, web resources, guidance documents and briefings, the BMA plays a role in contributing to wider debate and public opinion on public health issues for the benefit of doctors and patients. Aside from the public health and scientific publications from the board, the BMA also regularly publishes factual, evidence-based reports, covering a full range of issues, from health service reform to ethical issues. Examples of policy reports across these areas include publications on: child health and well-being; drugs and dependence; transport and health; a vision for general practice; and medical ethics.
While the Bill as drafted states that only publicly available,
“material which can reasonably be regarded as intended to promote or procure electoral success”,
of a political party or candidates are regulated, there is still some uncertainty as to what this means in practice. Such publications from the BMA as I have described are factual and are geared towards policymakers rather than towards the electorate, but these reports often make recommendations in areas that may be politically contentious. For example, recent reports from the BMA’s Board of Science have made recommendations for standard packaging for tobacco and for a minimum unit price for alcohol, both of which are subjects of much current public debate. I am keen to have the Government’s reassurance that publications such as policy reports would fall outside the Bill’s regulation, should they appear ahead of an election. I welcome thoughts on what would happen if the recommendations in such publications were reported in the media in a politically biased way. Would third sector organisations be at fault, even if they had been careful to present their reports neutrally?
One aspect I want to explore further through Amendment 164A is the explicit exemption of annual conferences of third sector organisations. In the “List of matters” to be counted as controlled expenditure, Schedule 3 includes:
“Public rallies or other public meetings or events”,
After earlier debate, the Government have helpfully clarified this further:
“it is public rallies and events that are being regulated; meetings or events just for an organisation’s members or supporters will not be captured by the bill. We will also provide an exemption for annual events – such as an organisation’s annual conference”.
This is reassuring, but there is still an ambiguity as to what meetings will be included.
There are two particular areas on which I should like further detail. The first is to establish whether a membership organisation which has more than one conference annually would also be exempt. There are some organisations which hold more than one annual conference and this is still part of their normal, democratic, decision-making process. It is unclear, for example, whether the BMA, which holds multiple conferences annually for its members, would fall within the annual conferences exemption. Quite apart from our annual general meeting, there are also annual conferences for all the different specialty sections, such as general practitioners, consultants, junior doctors, public health doctors, and so on. Could the Minister clarify whether expenditure associated with such conferences would count towards the relevant electoral spending cap?
Although it is reasonable to expect that this could be addressed in guidance to follow from the Electoral Commission, an assurance from the Government about their intention on the scope of the exemption would be welcome. It would be helpful to know what would occur if such an annual conference attracted a great deal of public interest. Would it then become a public meeting that should be captured under the Bill? A members-only conference with a public element could happen in a number of ways, for example by inviting comment on health issues, the attendance of observers, or providing access to the conference via a webcast or through the media. I raised this question at Second Reading and I would welcome clarification from the Minister as to the position of members-only annual conferences in this regard, too.
Lord Ramsbotham
My Lords, I rise to speak to Amendments 165B, 161A and 165C, to which I have added my name. I find it rather distressing that, here again, we have another issue where there is no evidence from the Government that the current arrangements result in undue influence of non-party campaigning in elections. Where is the justification for starting down this route?
On Amendment 165B, I declare two interests, first, as chairman of the All-Party Parliamentary Group on Speech and Language Difficulties and, secondly, as chairman of the Criminal Justice and Acquired Brain Injury Interest Group. I was concerned to read that paragraph 1(1) of the proposed new schedule to be inserted by Schedule 3 states that “Controlled expenditure: qualifying expenses” includes:
“The production or publication of material which is made available to the public at large or any section of the public (in whatever form and by whatever means)”.
Both at Second Reading and in my consideration Motion, I mentioned the problems experienced by organisations working in this area in the criminal justice system. We shall come back to them when we discuss coalitions.
One of the areas that we have been considering in Bill after Bill has been the problem of those with learning difficulties and learning disabilities who require special arrangements to enable them to understand the legal process in which they may become involved. This requires both written material and the provision of people who can explain things to them, because the police and others may not necessarily be able to do so. I am therefore asking the Minister if what we have here is a cross-counting nonsense because, in Bill after Bill, we have been trying to impose or introduce something to enable people to engage with the criminal justice system in this way. Yet, if you take what is written in this Bill, it would seem that this is now to be impossible.
I fully support Amendment 165B which has the list of those things which ought to be included in the Bill and excluded from the expenses. I am not going to discuss the staff expenses at this stage because I agree with my noble and right reverend friend Lord Harries of Pentregarth and with the noble Baroness, Lady Mallalieu.
I turn briefly to Amendment 161A. I am concerned that the word “research” might be removed. At the moment, we are conducting research into the number of prisoners with acquired brain injuries as we want to find out whether special arrangements need to be made for them. An experiment carried out in Leeds prison has discovered a large number of such prisoners and the people involved say that supporters are needed to help these people back into the community. However, such an initiative would be subject to the election provisions in the Bill. Why? It has nothing to do with elections, so why threaten such a sanction and why make the people concerned in this very important public service unnecessarily alarmed if that is not going to happen?
As regards Amendment 165C, I find it very distressing that the Bill states:
“The Secretary of State may by order make such amendments of Part 1 of this Schedule as he considers appropriate”.
Surely, such a measure ought not to be included in the Bill. It should not be up to the Secretary of State to make such amendments as he considers appropriate when so much work has gone into the Bill.
Baroness Tyler of Enfield (LD)
My Lords, I add my support to Amendment 160J, to which my name is attached. As I was heavily involved in the Care Bill and the Children and Families Bill, I was unable to speak at Second Reading of this Bill, for which I apologise to the House. I should also mention my interests as president of the National Children’s Bureau, vice-president of the charity Relate, and chair of the Making Every Adult Matter coalition of charities. I will speak about charity coalitions on later amendments.
Amendment 160J is intended to clarify exactly what is meant by “committed supporters”. The fear here, which has already been expressed, is that contacting people, charities and other campaigning organisations that bodies consider to be supportive will be classed as regulated activity and therefore come under “controlled expenditure”. I wish to make two main points. First, as my noble friend Lord Tyler said, these days, membership of charities and other campaigning organisations is generally not defined by an annual subscription. It might have much more to do with following the organisation on social media, actively agreeing to receive e-mails or some other way of actively engaging with the organisation concerned. Certainly, my experience of the organisations for which I have worked, and which I continue to support, perhaps in connection with children and families or campaigning for older people, is that you might feel very strongly indeed about a particular issue, perhaps to do with health, a specific disability or housing, and therefore lend your support to it. Indeed, you might be very actively engaged with it from time to time but do not necessarily support every activity and issue that the organisation concerned is involved in. However, you should still count as a very committed supporter of the relevant organisation.
Although there are other amendments in this group, and Amendment 165B clearly also tries to get the right definition of “committed supporters”, I support Amendment 160J as it sets the bar in the right place in terms of having to have some sort of active engagement with an organisation rather than simply being a passive recipient of e-mails, for reasons we have already heard. Amendment 160J would improve the Bill, if it were accepted.
Lord Aberdare (CB)
My Lords, I support the amendments in the name of my noble and right reverend friend Lord Harries of Pentregarth, especially Amendment 165B. I also welcome the amendment in the name of the noble and learned Lord, Lord Morris of Aberavon, which seeks to make specific provision in the Bill for the Welsh language. I want to make only one point. Even the heroic efforts of the civil society commission, which so many of your Lordships have spoken about, and which I fully endorse, could not resolve all the issues raised by the Bill. The commission has made it clear that some of its recommendations are the best that it could come up with in the time available and should apply until the next election, but then should be reviewed in detail. Therefore, my question is really one of process because it seems to me that our views on the Bill could be very different if we are looking at something that will do up until the next election. For example, I believe that in the longer term staff costs will need to be incorporated in some way because they could make a real difference in terms of promoting or procuring electoral success. However, at the same time, I would not want to see an unacceptable burden imposed on the “small platoons” who would find it very difficult to account for those costs.
If we are talking about a process whereby we come up with something that people can live with until the next election, and the Government will then review it and look at how these things work in practice and examine what the real issues are that we are trying to guard against, I would be much more comfortable about the debate we have had this afternoon, and not need to dot all the “i”s and cross all the “t”s, as my noble friend Lord Ramsbotham indicated.
Lord Morgan (Lab)
My Lords, I did not intend to speak in this debate but I wish to comment briefly in support of the amendment moved by my noble and learned friend Lord Morris of Aberavon, which was supported by the noble Lords, Lord Elystan-Morgan and Lord Wigley. It seems to me that if that amendment is not accepted, the consequence would be both unfair and illogical. It would be unfair because the Welsh language would be regarded as a burden and an additional incubus on an organisation rather than as something that ought to happen naturally, and which was sanctioned by the law in 1967 and 1993. It would also be illogical because it would run counter to what has happened over many decades in civil society in Wales and elsewhere such as local government, the social services and, in my own experience, in higher education. When I was vice-chancellor of the University of Wales, which is now almost defunct, significant procedures were in place for translating papers into Welsh and back into English and facilities for simultaneous translation. These were a natural part of our working processes in the university and, importantly, did not impose an extra charge. They did not take money away, as it were, from education, teaching or research.
This brief debate has shown that constitutional law and legal proceedings have often lagged behind what is happening in civil society or, frankly, have lagged behind common sense. I was struck by that when I listened to the comments of the noble Lord, Lord Elystan-Morgan. He referred to the Act of Union of 1536, which was an almost totalitarian measure intended to extinguish the Welsh language for public purposes. However, it was nullified by other developments in Wales at that time, not in the legal or political spheres but particularly by developments in religion. The most important phenomenon of that century was the translation of the Bible into Welsh by Bishop Morgan, although I am afraid that I cannot claim him as an ancestor. That seems to be a way in which civil society has civilised and nullified the effect of constitutional law, and I hope that it will do so again.
Baroness Lister of Burtersett
My Lords, I declare my interests at this point. They are quite wide-ranging in relation to charities and non-charitable organisations, and they are listed in the legislative scrutiny report of the Joint Committee on Human Rights.
I want to declare my support for the amendments tabled on behalf of the Commission on Civil Society and Democratic Engagement. While I take the point of the noble Lord, Lord Horam, that it is not unusual for this House to take a number of amendments together, I point out that the Electoral Commission emphasised that we have to consider the cumulative impact of a number of different parts of this legislation. This was also a point emphasised by the Joint Committee on Human Rights, so it is not inappropriate for us to consider the way these amendments hang together. I think they do hang together.
I simply want to highlight very briefly a few of the points covered by them. The first is the question of access to information for disabled people, which has already been talked about very powerfully. This is a question of equity. It costs more to provide that information and it is only equitable that that is taken into account.
The second point, which we have not talked about as much, is the question of public meetings. The NCVO in its latest briefing picked this up, referring to the report of the Joint Committee on Human Rights and our concern about the possible impact of this part of the legislation on the human right to freedom of association. That is very important. The NCVO refers to a number of organisations having flagged this up, particularly with regard to disability, welfare and social security reform issues. The concern is about the high cost associated with organising a rally of some form and the subsequent impact this would have on campaigning activity through the rest of a regulated period. I hope the Government might consider looking again at public meetings being covered by the legislation.
The final point is on the question of the definition of “supporters”. I was struck that the commission’s report pointed out that this matter was simply not considered by the House of Commons during its debates. I went to the launch of the commission’s second report, where one of its members spoke very convincingly about the importance of taking account of how membership of organisations has changed and said that the legislation has not caught up with this. The commission’s report states:
“We heard evidence about the need for a definition of supporters which reflects the contemporary way in which members of the public lend their support to organisations and campaigns including by email and social media—not just financial supporters”.
I am not sure which of the competing amendments is right, but it seems to me essential that one of these amendments should be accepted, and that we have a more up-to-date understanding of what it means to support voluntary organisations.
Lord Best (CB)
My Lords, I shall speak to Amendment 163A, another in this rather large group. I declare my interest as a member of the advisory board of the National Council of Voluntary Organisations, the NCVO, which is a key organisation in seeking amendments to the Bill and supplementing the brilliant work of the civil society commission chaired by the noble and right reverend Lord, Lord Harries of Pentregarth. I am grateful to him for his support for this amendment, and to the NCVO for its briefing on this amendment.
This amendment joins so many others in seeking to preserve the freedoms of not-for-profit organisations seeking to influence government and decision-makers. In the case of this amendment the issue is the new list of activities, the costs of which count as qualifying expenses and lead to regulation. The list now includes public rallies or other public meetings where expenses include costs in connection with the attendance of persons at the event, the hire of premises and provision of goods, services and facilities. So this is about all costs associated with freedom of association at rallies and other public meetings. A potential problem here is acknowledged by the Government’s human rights memorandum, which noted that,
“more things (such as for example, costs associated with the organisation of rallies and events) will count towards spending limits and require control. This engages Article 10 and 11”.
The Joint Committee on Human Rights has expressed concern about the possible impact of the broadened list of activities on the freedom of association. The noble Baroness, Lady Lister, has just referred to this. A number of organisations, notably those interested in disability and welfare reform issues, have flagged the concern that the high costs associated with organising a rally of some form would have a major impact on campaigning activity throughout the rest of a regulated period.
Perhaps I could share three examples of organisations and their activities that would be covered by the new rules and lead to disproportionately onerous bureaucracy and burdens, which could effectively prevent those organisations campaigning in ways that they have done in the past.
The first is the case of the Countryside Alliance’s opposition to the hunting ban in 2001 and 2005—an example that is known to a number of your Lordships. In the run-up to the 2001 and 2005 general elections, the alliance mobilised its supporters and the general public against the hunting ban—activities which in total required a pretty high level of expenditure, including demonstrations and rallies against the hunting ban, press conferences to promote the event, transport costs for those attending the events, and producing and distributing leaflets to promote the events. The Countryside Alliance is not linked to any one political party. However, because the issue of hunting can be seen as highly partisan, with the hunting ban more associated with the Labour Party, all the costs incurred in these events would have counted towards the alliance’s expenditure. Had the Political Parties, Elections and Referendums Act 2000 been amended as the Bill proposes at the time the hunting Bill made its way through Parliament, the ability of organisations such as the alliance to oppose the proposed ban and organise marches and rallies would have been severely curtailed.
Secondly, in the run up to the Copenhagen climate change summit in 2009 and the UK general election in 2010, the organisations in the Stop Climate Chaos coalition worked on a range of events, including outdoor rallies; the Wave, a march through London attended by 50,000 supporters; and schools’ conferences held with schools from across England to talk about climate change, with MPs invited to a panel debate. Under the new rules proposed by the Bill, even if lower spending limits are not pursued, it is likely that the various activities carried out by the coalition would have exceeded the maximum amount allowed, forcing the coalition to stop its campaigning.
Thirdly and finally, the Women’s Institute’s Great Food Debate involved a programme of work on food security and was launched at an event in York in December 2012 with a report on food security. The event was free, open to the public and included a panel at which the Environment Secretary, Owen Paterson MP, gave a keynote speech. Members of the WI and members of the public attended the launch and debate, with another in Cardiff the following month. The Great Food Debate is designed to explore the concept of pressure on the food system and provide an opportunity to engage with the public. The National Federation of Women’s Institutes encourages WIs all over the country to replicate its national work by hosting their own local and regional Great Food Debates. All this generated significant media coverage, including local and regional coverage. The Great Food Debate is certainly not supportive of any particular party but the media reporting of the events placed the debates and work programme in a political context, as exemplified by headlines such as the following in the Daily Mail:
“Put cooking back on the national curriculum to tackle obesity timebomb and stop pupils wasting food, urges WI”.
The Daily Telegraph read:
“TV cooks should give us recipes for leftovers to cut waste, says Minister”,
and:
“Teach all children to cook in schools, says Women’s Institute”.
In addition, the Environment Secretary used the platform as an opportunity to call for further consideration by the public of GM and agritechnology. If the Bill is passed and these events were held in the 12 months before one of the elections covered by it, the related costs would take the National Federation of Women’s Institutes over the registration threshold, with all the consequences that that would imply. All local WIs and federations would have to register as third-party campaigners with the Electoral Commission because the NFWI would have spent more than the registration threshold in creating the materials to help members hold their own debates. Federations and WIs in this scenario would then have to take on all the regulatory burdens associated with that.
It is good to hear that the Government will be bringing forward changes that will increase substantially the cash thresholds for registration. Amendment 163A helps that process by taking out one element that could disproportionately affect the total spending by voluntary bodies in this grey area of non-partisan campaigning. It diminishes the unintended chilling effect of the Bill, which otherwise seems likely directly to deter voluntary bodies from organising the free association of people at rallies and public events, and indirectly to reduce engagement of the sector in important campaigning activity.
Baroness Royall of Blaisdon
My Lords, I am grateful to noble Lords for a giving such a thorough explanation of why the Government need to take away Schedule 3 and think again. The many increases in activities that count towards qualifying expenses in this part of the Bill account for a great deal of its unworkability, and for the concerns and fears that have been raised in civil society. My noble friend Lady Lister rightly spoke of the cumulative effect of the various measures in the Bill, but I suggest that this schedule has a profound effect on people’s views of it.
The Minister, the noble and learned Lord, Lord Wallace, said that volunteers would not be covered in the Bill, but that is not enough. It is clear that the main problem with Schedule 3 is the inclusion of staff costs as a qualifying expense. Political parties are not subject to this requirement and it is therefore unclear why the Government believe that charities and NGOs should be. It is worth looking at the original document from the Electoral Commission that the Government claim as the inspiration for some of the Bill. It said, as regards counting the staff time of political parties:
“Bringing directly employed staff costs within the scope of the spending controls would have significant implications, which would need to be considered before the change could be implemented. It would impose new administrative burdens on parties, and the detail of what spending is covered would need to be carefully considered and defined”.
The report continued:
“It could take up a significant part of the larger parties’ campaign spending under the current spending limits and the spending limits would therefore need to be re-visited”.
If this is the case for political parties, the same would apply to charities and NGOs. Indeed, they have presented a great deal of evidence about the burden that would be placed on them. Amnesty International has pointed out that during an election period it produces manifestos on human rights, organises hustings, undertakes pledge-card activity and co-ordinates media activities. These activities could mean that the new spending thresholds would be met, and therefore staff time would have to meet new reporting requirements that would seriously draw on resources—a reminder that with this Bill it is often the new provisions taken together that would work to stifle democratic expression. That is what the larger organisations fear. The smaller ones, however, would struggle to an even greater extent to meet the onerous reporting requirements.
The NCVO has presented a case study that amply demonstrates this. If, for instance, a small disability charity campaigning on welfare reform employs an additional member of staff to run local campaigns in the run-up to the election, the charity must account for the person’s time and monitor which activities undertaken by local groups could amount to controlled expenditure. Even if a simple approach were taken by looking at a yearly salary, this could immediately bring the organisation over the threshold—for example, one public affairs officer on £30,000 per year. Surely the Government, who talk so often and so loudly about reducing red tape, are not prepared to place such a regulatory burden on charities. The noble and right reverend Lord, Lord Harries, cited the example of the RSPB, which contends that the impact assessment prepared for Part 2 understates the extent to which it will mean that charities and NGOs will have to spend money on administration rather than on their core work. The RSPB states:
“This would siphon money away from conservation work and amount to an unnecessarily onerous regulatory burden: more than the £0–800 per organisation for implementation estimated in the Impact Assessment”.
Lord Gardiner of Kimble (Con)
My Lords, I thank your Lordships for an extremely wide-ranging debate on qualified expenses in controlled expenditure. I will endeavour to go through all the points that were made. If there are any that I have not picked up on immediately, I will reflect on all of them—as will my noble and learned friend—because clearly there are a number of issues in this group that the Government will certainly want to bring back at Report.
Schedule 3 inserts a new Schedule 8A into the PPERA Act 2000. That new schedule expands the activities on which expenditure by a recognised third party will be controlled expenditure. Under existing legislation, only expenditure on election material made available to the public is controlled expenditure. This is retained as an activity that counts towards controlled expenditure within this Bill. However, the new schedule extends the range of activities that are qualifying expenses for the purposes of controlled expenditure. These include: market research involving the public or canvassing; public rallies and other public events, excluding annual conferences; press conferences or other organised media events; and transport.
Again—I emphasise this—the essential qualification is that these would count as controlled expenditure only if the expenditure could reasonably be regarded as being intended to promote or procure the electoral success of a party or candidate. Where the activities were unconnected—for some other charitable, campaigning or commercial purpose of an organisation, for example—they would not be included.
The list of activities in the new schedule closely aligns the activities of third parties that incur controlled expenditure with those of political parties. This was recommended by the Electoral Commission in its June 2013 report, A regulatory review of the UK’s party and election finance laws: Recommendations for change.
I now turn to Amendment 159G in the name of the noble and learned Lord, Lord Morris of Aberavon. This would amend Clause 26 so that costs incurred by third parties translating materials from English to Welsh or Welsh to English would be excluded. I am very conscious of the Welsh Language Act 1993, and, as I was reflecting on the debate today, I considered precisely what my late friend Lord Roberts of Conwy would have thought about these matters. He was such a well respected figure in this House on all sides, and I am pretty confident as to what he would be telling me now.
It is the case, interestingly, that under that Act—which places an obligation on public bodies—political parties, candidates and third parties do not fall under the definition of a public body. Therefore, there is no legal obligation to translate election materials from English to Welsh or Welsh to English. However, having said that, the Government believe that the Welsh Language Act 1993 includes an obligation to treat Welsh and English on an equal basis and that there is a strong and compelling case for translation costs to be excluded. The noble Lords, Lord Elystan-Morgan, Lord Wigley and Lord Morgan, made that very clear as well, with references to 1,500 years of language and the Act of Union, so the Government will consider how this exclusion would operate and will want to return to this important issue on Report. I hope that that will be helpful to the noble and learned Lord.
I also want to raise the issue of committed supporters. Amendment 160J, in the name of my noble friend Lord Tyler, amends Schedule 3 so that costs associated with sending material to committed supporters would be excluded from the calculation of cost-controlled expenditure. The costs of sending material to members or certain supporters are already excluded, as PPERA and the Bill make clear. The material or activity must be available or open to the public, which for these purposes would not include those members or supporters. As the existing Electoral Commission guidance makes clear, the exact nature of a committed supporter will vary between organisations, but could include regular donors by direct debit, people with an annual subscription or people who are actively involved in a third party.
However, this amendment goes very much further than that: it defines committed supporters as those who have made a donation to the recognised third party, those who have made a direct communication to the recognised third party, or those who have consented to receiving communications from it in the past 12 months. In the Government’s view, this would greatly, and unacceptably, widen the exclusion. At present, the Electoral Commission does not consider people to be committed supporters if they have simply signed up to a social networking site or tools, or to appear on mailing lists that may have been compiled for general commercial, campaigning or other purposes.
The Government believe that the Electoral Commission guidance is the correct approach to outlining a committed supporter. This was also the view the other place took when, in reverting to the existing definition of controlled expenditure, it removed the specific definition of committed supporter from the Bill as introduced. Of course, the Government also acknowledge that in discussion with third parties, from community groups to charities, the need for clear guidance is of vital importance. The Electoral Commission is aware of the important role its guidance plays and is committed to providing such guidance in good time for campaigners.
I now turn to Amendment 160H, tabled by the noble Baroness, Lady Hollins. She said it was a probing amendment, but it would remove election materials from the list of activities for which third parties would incur controlled expenditure. As I am sure noble Lords are aware, the PPERA Act 2000 stems from a report from the Committee on Standards in Public Life. Both that report and Parliament, through the passing of the 2000 Act, made clear that it was reasonable and sensible for third parties who sought to, or could reasonably be regarded as intending to, promote or procure the electoral success of a party or candidate should be subject to regulation. Under the Act, recognised third parties incur controlled expenditure only on election material that is made available to the public and that seeks to promote or procure electoral success. Election material covers items such as leaflets, unsolicited mail to electors, and manifestos. It does not include factual policy documents aimed at policymakers.
As I have three godchildren studying medicine, I am very conscious that the BMA plays a very important part not only in public life but in furnishing the debate on what we all seek to do, which is improve the nation’s health. The noble Baroness, Lady Hollins, will know very much better than I that the BMA publishes factual, evidence-based reports on a full range of issues covering ethical, scientific and public health matters and health service reform. Examples of such documents include publications on child health and well-being, drugs of dependence, transport and health, and a vision for general practice. These publications are factual and, as the noble Baroness said, geared towards policymakers. They are not aimed at the electorate with a view to procure or promote the electoral success of a party or a candidate and do not fall under the regulatory regime set out in the Bill or indeed current legislation.
Lord Gardiner of Kimble
To answer the noble Lord, Lord Rooker, this is a technique used widely in America. Although it is not prevalent here, if we leave an unregulated space for it we run the risk that we will see it here. I do not think that any of your Lordships would want something like this to take hold as it has in America. By removing market research from the list of activities which incur controlled expenditure, we believe that we open up a potential gap. Therefore, we have these concerns.
Amendment 162, which deals with media events, would amend Schedule 3 so that only press conferences organised by a recognised third party would count as controlled expenditure. Organised media events are included alongside press conferences to capture activities with the media which could be seen as promoting or procuring the electoral success of a party or candidate, but which is wider than just press conferences. We recognise that the normal meaning of “press conferences” is likely to catch most organised media events, but we do not want to leave reasons for doubt as to what may or may not be covered by that specific term. That would create unnecessary ambiguity.
The Government have therefore worked closely with the Electoral Commission and interested parties to ensure that the correct balance is struck in terms of the media activities we are seeking to bring into the regime. We do not want, nor does the Bill provide for, ad hoc dealings with the media to be regarded as controlled expenditure. However, where a third party organises a press conference or other media event which could reasonably be regarded as promoting or procuring the electoral success of a candidate or party, that is activity that should be regarded as controlled expenditure and accounted for by means of transparency accordingly. By removing other media events from the list of activities that count as controlled expenditure, we open up a potential ambiguity and a potential gap in the regulatory regime.
Turning to the amendments dealing with transport, Amendment 163 would amend Schedule 3 so that controlled expenditure would not be incurred in respect of transporting people to a place or places with a view to obtaining publicity. The Government acknowledge the particular issues that this may raise for campaigners or for those working with people with disabilities, and that costs associated with the transport of people with a disability may need to be excluded from controlled expenditure. The Government wish to consider this issue carefully and will revisit this subject on Report.
A number of amendments deal with public rallies and conferences. They would extend the exclusion of conferences to all conferences, not just those held annually, and confirm that costs associated with persons attending a public rally or other public event would not be included as controlled expenditure. The amendments would remove public rallies from the list of activities.
This is so important so I repeat that only public rallies or public events that promote or procure the electoral success of a party or candidates would count as controlled expenditure. The Government listened to the concerns of charities and trade unions and brought forward an amendment in the other place to exclude annual conferences. That is the same exclusion applicable to political parties.
I wanted to say to the noble Baroness, Lady Hollins, that I am assured that all annual conferences of the BMA would be excluded, as would those of any other organisation that had more than one annual conference. Additionally, if a recognised third party were to hire a conference centre and invite only its members or committed supporters, that would not count as controlled expenditure.
However, if a third party were to hold a rally or meeting in a public park or hold a protest in Whitehall seeking to promote or procure the electoral success of a party or candidates, the Government believe that this activity should count as controlled expenditure. I emphasise that the Bill does not prevent such activities taking place, just that such activity is properly accounted for.
I want to refer to the Countryside Alliance, as I spent 15 years of my existence supporting that excellent organisation. I was on the barricades many times with the noble Baroness, Lady Mallalieu, and I think that we had right on our side. But we were punctilious about not promoting or procuring the electoral advantage of a party or candidate. I am conscious that the noble Baroness sits on the opposite Bench from me; in fact the person who chairs the organisation sits in the other place as a Labour Member of Parliament. We were punctilious about these matters.
The noble Lord, Lord Best, spoke about Great Food Debate events. I simply cannot see how they would promote the electoral success of parties or candidates. In other words, I do not see that a reasonable person would suggest that a Great Food Debate was about promoting parties or candidates. They are about engaging in the political process; certainly not about promoting electoral success.
The Government are keen to strike the correct balance because we want to ensure that where there is promotion and procurement of electoral success, there is transparency, it is understood and is open to the public. However, we are very conscious that we need to preserve the freedom to speak out on issues that we expect and want civil society in this country to enjoy. It is part of the essence of our democracy that civil society should not feel that this is a Bill which presents them with these difficulties.
The Government acknowledge, for instance, that there is a case for excluding the costs associated with security and safety around a public rally. A number of noble Lords have mentioned Northern Ireland in this respect, and it comes very much as part of the recommendations made by the Commission on Civil Society and Democratic Engagement. The noble and right reverend Lord, Lord Harries of Pentregarth, raised Northern Ireland in particular, so the Government will consider this issue carefully and return to the matter on Report.
Further amendments have been tabled on staff, translation, accessibility, and security and safety costs. My noble friend Lord Tyler, speaking to his Amendment 165A, talked about whether the costs associated with staff directly employed by the third party would be excluded from the calculation of costs for controlled expenditure on transport, press conferences, organised media events, and public rallies and events. Staff costs would be included for electoral materials, canvassing and market research.
A further amendment from the noble and right reverend Lord, Lord Harries, concerns the costs associated with staffing for the provision of materials in translation or in an accessible form for those with physical or learning disabilities, safety and security measures, and communications with third parties, with committed supporters being excluded. The PPERA Act 2000 has always required third parties to account for staff costs, a point made specifically by my noble friend Lord Tyler. The Bill, while extending the range of activities that may incur controlled expenditure, retains the need for staff costs to be excluded. I know that concern has been expressed by third parties regarding staff costs and by your Lordships today: first, that third parties have to account for these costs while political parties do not; and, secondly, to the difficulties for third parties in calculating staff time. On the issue of third parties having to account for these costs while political parties do not, noble Lords will be aware that when Parliament passed the PPERA Act, it was felt to be transparent and proportionate for a third party to account for staff time. This was on the basis that a third party undertakes activities rather than political campaigning where the third party enters into political campaigning to procure the success of a candidate or party. There was a feeling then that spending on these purposes should be transparent.
All of that said, the Government acknowledge that there are genuine concerns regarding the issue of the calculation of staff costs. It is important that a balance is struck between transparency and proportionate reporting requirements. In terms of excluding the costs associated with translating materials, making materials more accessible to those with physical or learning difficulties—the noble Lord, Lord Ramsbotham, and the noble Baroness, Lady Hollins, specifically raised this issue, and rightly so—the Commission on Civil Society and Democratic Engagement covered these points in an extremely valid way. The Government support ensuring that materials are accessible to all electors and they have received representations related to translating materials. We have heard from campaigners, and some very important points have been made about Northern Ireland, particularly by the noble Baroness, Lady Mallalieu. I want to confirm again that the Government will be considering these issues carefully in the light of today’s debate and we will return to them on Report.
The Government also acknowledge that in discussion with third parties from community groups to charities, there is a need for clear guidance; that is of vital importance. The Electoral Commission is aware of the important role its guidance plays and it is committed to providing such guidance in good time for campaigners.
I turn now to the order-making powers and a number of amendments which have been tabled in this regard. The Electoral Commission’s regulatory review, published in June 2013, made it clear that the PPERA Act does not provide the flexibility to update the rules on non-party campaigning through secondary legislation. This is in contrast with the list of items defined as controlled expenditure for political parties, which can be amended through secondary legislation. The Government support the recommendation of the Electoral Commission, and provision has been provided in the Bill. The order-making power, as with other similar powers in PPERA, will apply either after consultation with the Electoral Commission or to give effect to a recommendation of the commission. Parliament will be able to scrutinise and debate any order that is put forward in the usual way. The order-making power is subject to the affirmative resolution procedure. Such a power allows the regulatory framework to respond to changes in campaign activities and methods of campaigning. This flexibility would be greatly reduced and the regulatory regime could be undermined if such changes could be made only through primary legislation.
Lord Rooker
I would like to ask the Minister a question. When this was raised by a colleague—I do not know who it was—it related to Schedule 3 which, on page 58 in paragraph 3 of new Schedule 8A, sets out the power to amend Part 1. Is there a connection between sub-paragraphs (1) and (2)? Sub-paragraph (1) reads as:
“The Secretary of State may by order make such amendments of Part 1 of this Schedule as he considers appropriate”.
That stands on its own, but sub-paragraph (2) states that he,
“may make such an order”,
after he has received a recommendation from the commission. Surely it should read that he may make an order “only” after he has a recommendation from the commission. Is sub-paragraph (1) dependent on sub-paragraph (2)? The Minister may not answer me now, but I hope that he will do so at some point because it looks like a real Henry VIII power and it is not explained properly. There is no connection between sub-paragraphs (1) and (2), but I think there should be.
Lord Gardiner of Kimble
I suspect that I may want to avail myself of the noble Lord’s very kind suggestion. In order to get the intricacies of this right, I probably need to look at it. It is important that we get this right throughout the process.
Perhaps I should say to the noble Lord, Lord Aberdare, that I think that my noble and learned friend has made it clear that the Government fully intend there to be a review as part of the amendments that will come through on Report. There will be a review after the general election in 2015.
This group of amendments reflects the fact that the Government want to get this absolutely right. Points have been made on all sides of the Committee which the Government will return to on Report. Given the hour, I hope that noble Lords will forgive me that if there are any outstanding points I find in Hansard, I will respond to them.
Baroness Royall of Blaisdon
My Lords, perhaps I may ask for a point of clarification. In responding to the questions about the Countryside Alliance and the hunting Bill, I think the noble Lord talked about being very careful not to promote the electoral prospects of a party. However, Clause 26 talks about “prejudicing” the electoral prospects of other parties or candidates. That relates to the Countryside Alliance and the ban on hunting, but I would also cite the example of the demonstrations held against the Iraq war. They could have been seen to be prejudicial to the electoral prospects of a certain party, in that case my own. I would be grateful if the noble Lord could clarify that either this evening or on a future occasion, because it is a terribly important point.
Lord Gardiner of Kimble
I will want to reflect precisely on that but will just reaffirm that the Countryside Alliance was punctilious because it was an apolitical organisation. The person who chairs it is the Member of Parliament for Vauxhall, and I very much doubt that there was any suggestion at all that she was in any way going to be subject, shall we say, to an attack for an anti-Labour stance. I will reflect on the two points that the noble Baroness has made.
In conclusion, I will respond to any outstanding points, but at this juncture, I wonder whether the noble and learned Lord might consider—
Lord Harries of Pentregarth
Before the Minister sits down I express my appreciation of the fact that he has obviously given very detailed attention to a lot of very specific points and has indicated he will be responsive to them. I would just urge him on one thing. A particular concern for charities and campaigners, which he perhaps did not emphasise much, was this overall question of staff costs. They believe that it either is unworkable or would impose a huge regulatory burden. Will he take seriously the recommendation of the Electoral Commission that, for the 2015 election at any rate, they are excluded altogether?
Lord Gardiner of Kimble
I will want to reflect on that particular point. I am not in a position to say how the staff costs issue will be dealt with but I reassure the noble and right reverend Lord that it is part of the considerations. Perhaps I might ask the noble and learned Lord again whether he might feel in a position to withdraw his amendment.
Lord Morris of Aberavon
My Lords, I welcome the Minister’s very careful reply and thank him for it. I will withdraw my amendment, but take the opportunity, since Wyn Roberts was mentioned, to say that he was a great and distinguished Member of this House and a friend to many noble Lords, in my case long before he became a Member of Parliament. His long tenure in the Welsh Office is reflected in part—and only in part—by the 1993 Act, to which I have referred and which will always be his memorial in Wales. However, my case of course goes further back than that, to the 1967 Act on the Welsh language, introduced by Cledwyn Hughes. Furthermore, even the 1942 Act, referred to by my noble friend Lord Elystan-Morgan, dealt specifically with the issue of costs in the courts.
The Minister has told us that there is a strong and compelling case for costs to be considered and that the Government will want to return to that point. I listened to that and am grateful for it. I am surprised that the Welsh language issue was not taken into account in the preparation for this Bill. That perhaps shows that the Bill, as we go on to debate various amendments in Committee, may become more and more unworkable. However, on that basis, I beg leave to withdraw my amendment and thank the Minister for his careful consideration.
Financial Services (Banking Reform) Bill
(11 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Deighton
That this House do not insist on its Amendment 41, to which the Commons have disagreed for their Reason 41A.
“PART 4
CONDUCT OF PERSONS WORKING IN FINANCIAL SERVICES SECTOR
Amendments of FSMA 2000
Professional standards After section 65 of FSMA 2000 insert—
“65A Professional standards
(1) The regulator will raise standards of professionalism in financial services by mandating a licensing regime based on training and competence.
(2) This licensing regime must—
(a) apply to all approved persons exercising controlled functions, regardless of financial sector;
(b) specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct and revised Banking Standards Rules;
(c) make provisions in connection with—
(i) the granting of a licence;
(ii) the refusal of a licence;
(iii) the withdrawal of a licence; and
(iv) the revalidation of a licensed person of a prescribed description whenever the appropriate regulator sees fit, either as a condition of the person continuing to hold a licence or of the person’s licence being restored;
(d) be evidenced by individuals holding an annual validation of competence;
(e) include specific provision for a Senior Persons Regime in relation to activities involving the exercise of a significant influence over a controlled function under section 59 of the Act.
(3) In section 59, for “authorised” substitute “licensed” throughout the section.””
Commons Disagreement and Reason
The Commons disagree to Lords Amendment No. 41 for the following reason—
41A Because Lords Amendments Nos. 42 to 57 make more appropriate provision about the standards of those working in the financial services sector, and Lords Amendment No. 41 is incompatible with the provision made by those Lords Amendments.
The Commercial Secretary to the Treasury (Lord Deighton) (Con)
My Lords, I am recommending that your Lordships do not insist on this amendment and I of course support the reason the other place has put forward. I hope that I will be able to convince your Lordships, and especially the noble Lord, Lord Tunnicliffe, that the amendments the Government put forward in this House address the concerns of the noble Lord and the Official Opposition.
In essence, the Opposition are seeking to bring in a regime of annual licensing for bankers operated by the regulators, which would be supported by requirements about professional qualifications and minimum levels of competence. They also seek a code of conduct for bankers. I am grateful to the noble Lord for his constructive and thoughtful contribution to the debate on these professional training standards. First, I will set out how the amendments tabled by the Government, following the PCBS recommendations, already deliver the improved professionalism and higher standards of conduct that Amendment 41 seeks. Then I will explain the ways in which Amendment 41 is incompatible with the PCBS proposals, which had at their heart the need for banks to take responsibility for standards in their organisations, which is essential if the culture of banking is to improve.
First, on the code of conduct, Lords Amendment 54, tabled in Committee, already provides for the regulators to make rules of conduct for all bank staff. The regulators will be able to create a set of banking standards rules for people working in banks, just as the PCBS recommended. These banking standards rules will be able to do everything that a code of conduct would do.
Secondly, on ensuring a minimum standard of professionalism and qualifications, Lords Amendment 45 provides for banks and PRA-regulated investment firms to check that candidates for regulatory pre-approval to perform a specified function are fit and proper before they submit an application to the regulator for that approval. As part of this process, they will have to have regard to whether the candidate has obtained a qualification, has been trained or is undergoing training, or possesses a level of competence set out in the regulator’s rules. The regulator will of course have to confirm that those candidates are fit and proper, including by virtue of having the appropriate qualifications, before approving candidates to specified functions.
Thirdly, Lords Amendment 53, which provides for the new certification regime recommended by the parliamentary commission, requires banks and PRA-regulated investment firms to certify that candidates for significant-harm functions are fit and proper, including by having regard to whether the employee has obtained the qualifications, training or competence set out in a regulator’s rules. This certification will have to happen each year, so there will be an ongoing requirement to consider the training and competence of their staff.
In sum, the government amendments provide for a code of conduct, emphasis on ensuring that candidates for working in functions that could significantly harm the bank have minimum qualifications and annual certification. Those are the three central elements of Lords Amendment 41.
I will explain briefly why Amendment 41 is incompatible with, not complementary to, the PCBS proposals. Lords Amendment 41 would impose the requirement for annual validation and checking on the regulator, not the banks. The whole thrust of the PCBS recommendations was that primary responsibility for maintaining standards should reside with the banks themselves. The PCBS said:
“Banks should not be able to offload their duties and responsibilities for monitoring and enforcing individual behaviour on to the regulator or on to professional bodies. The tools at their disposal have the potential to be much more usable, effective and proportionate for the majority of cases than external enforcement”.
Lord Tunnicliffe
As an amendment to Motion A, leave out from “House” to end and insert “do insist on its Amendment 41”.
Lord Tunnicliffe (Lab)
My Lords, I speak on behalf of my noble friend Lord Eatwell. We are in but, we hope, moving towards the end of the worst financial crisis in most of our lifetimes. We will not agree on the reasons for this crisis, as we have proved when we have touched on it over the past several months. However, I think all noble Lords agree that some part of it related to the regulation and structure of the banking sector. We have had several White Papers on this subject and the Vickers report. We have had two financial Bills, of which this is the second. Half way through this process, there was a discontinuity when the LIBOR scandal changed the mood and grounds of the debate. We all hoped it was a one-off, just as we hoped RBS and Northern Rock were one-offs, but from that scandal onwards unease about the sector has continued to grow. Other banks—HSBC and the Co-op—were involved in mis-selling, but what really hit me was the latest report on the Lloyds Bank issue, which brought out how deep mis-selling has gone in these organisations. The FCA press release states:
“For a Lloyds TSB adviser on a mid-level salary, not hitting 90% of their target over a period of 9 months could see their base annual salary drop from £33,706 to £25,927; and if they were demoted by two levels their base pay would drop to £18,189—almost a 50% salary cut. In the worst example that the FCA saw, an adviser sold protection products to himself, his wife and a colleague in order to hit his target and prevent himself from being demoted”.
This final debate is about the whole issue of standards and culture. As a result of the LIBOR scandal, Parliament decided to set up the Parliamentary Commission on Banking Standards. As Mr Tyrie said in the other place today, its role was to,
“consider and report on professional standards and culture of the UK banking sector”.
We hope to tease out this issue by insisting on this amendment.
We are not happy—nobody can be happy—with the way this Bill has progressed. It started in your Lordships’ House 35 pages long and it was more than 200 pages long when it left. In the other place, it had a two-hour debate. The Minister had barely got to Amendment 41 in his winding-up before the debate was terminated by the guillotine. This is unsatisfactory. Other elements of the Bill have, in many ways, been a model of good practice which I hope will be taken up in future. My parliamentary experience is not long enough to be sure, but I think the Parliamentary Commission on Banking Standards is an innovation. It has been a good one, roundly approved by all sides of the House and I thank its members, two of whom are in their place tonight.
I also commend the Government for the graceful way they have bowed to the wisdom of the commission and the size of our voting power. The combination of the two has been, in most places, most satisfactory. What is now left between the Official Opposition and the Government? One thing that is not left is the duty of care. We wish we had carried that amendment, which could have made a big impact on standards and culture in the future. Unfortunately, we were unable to persuade the House. We are left with professional standards and it is on these that we want to emphasise our differences. I wish the process had not ended up with 150-plus pages of the Bill being discussed in two hours in the other place. More extensive and thoughtful work on this area might have achieved the level of consensus that the Minister hopes for.
I wish to make four points about the amendment which are subtly, but importantly, different. The first relates to the term “licensing”: the amendment calls for a licensing regime. For 10 years, I carried in my pocket—actually it was a little too bulky for that, so I carried it in my briefcase—a licence to fly an aircraft and carry passengers. At one point in my career I was privileged to carry up to 400 passengers, so society imposed on me the requirement to have a licence. We were very serious about that licence, the validity of which cost three days a year to maintain. You had a simple, clear concept of what a licence was. It is therefore important that the word “licence” should be used. In the rest of industry, such as the railway industry, from which I come, the concept of licensing is growing in strength. It is a good idea and we should call this a licensing regime.
Secondly, the amendment requires that we,
“specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development”.
The Government’s amendment does not set out that these areas must be specified in the regime. This is a modest, but important, difference.
Thirdly, our amendment sets out that there should be a set of “Banking Standards Rules”. These were referred to by the commission, in paragraph 107 of its summary of conclusions and recommendations, paragraph 634 of the total document. Paragraph 2.18 of the Government’s response states:
“The Government will also take forward the Commission’s recommendation to replace the existing statements of principle (and codes of practice) for Approved Persons with banking standards rules”.
We believe it is important that banking standards rules should be set out, with the implication that this is a universal document for all parts of the industry to know of and take account of.
Finally, our amendment calls for,
“an annual validation of competence”.
I am happy to be corrected on this, but the tone of the government amendment suggests that in the previous 12 months the individual has not been found out—been found to be incompetent—because it talks about issues, errors or problems being recorded and being passed on to other employers. We want this to be a positive thing. Just as it was in my day, when I had to prove my right to hold a licence, we want bankers to go through a similar process, which looks positively over the previous 12 months at the continuing professional development and professionalism of the individual, and validates that annually. For those reasons, I beg to move.
Lord Turnbull (CB)
My Lords, perhaps I might go back over the history a little. The banking commission found that the approved persons regime had proved pretty toothless and that virtually no senior figures had suffered any serious sanction, and recommended a two-tier system: the most senior tier would require prior registration, and the second tier would require the banks to attest that the people working for them were fit and proper.
Both the Opposition and the PCBS found that the original government proposals were unsatisfactory, and each put down their own amendments. The one put forward by the Government, which was supported by the PCBS, was passed—but so, too, was the Opposition’s Amendment 41. They are different in some significant ways, but they do not differ in their attempt to define the standards that this generality of employees in trading or serving the public should be asked to reach.
The Opposition’s amendment refers to,
“minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct”.
The Government’s Amendment 53 contains something that is more or less identical. It refers to a “fit and proper” person who has,
“obtained a qualification … undergone, or is undergoing, training … possesses a level of competence, or … has the personal characteristics”.
On that there really is no difference at all between us. The difference is the mechanism by which this is achieved.
The noble Lord, Lord Tunnicliffe, prefers the word “licensing”. I cannot really tell the difference between that and “certification”. On the question of defining minimum standards, I have just explained that those are true of both these proposals. On the question of annual approval, in the Government’s case all these characteristics are,
“required by general rules made by the appropriate regulator in relation to employees performing functions of that kind”,
and the certificate issued is valid for 12 months—so, again, we do not really have any difference between us; or at least the differences are tiny.
As has been pointed out by the Minister, the one important difference is that in one case the enforcement goes directly from the regulator to the regulated person, and in the government amendment, which follows the PCBS’s approach, it is the bank—paradoxically called an approved person—that has to identify those people who are capable of causing harm to the bank, its customers or its regulation, and to ensure that they meet the right standards. You have to make a choice about which you think is the better system.
The Opposition’s amendment would involve the direct regulation of tens of thousands of people, and in the alternative system it would be the bank that is, in a sense, the first line of regulation, but according to standards that the regulator has set. I think that that is a superior approach, and therefore I will certainly support the retention of Amendment 53 rather than voting to allow Amendment 41 to prevail.
Lord Flight (Con)
My Lords, following on from what the noble Lord has just said, I would have thought that recent history suggested that regulators were not particularly good at being the bodies finding out the bad eggs in banking institutions. Most of the staff of the PRA have come from the FSA. They were the regulators for the period during which the banking system in this country took on board the awful problem of a lack of integrity.
There is agreement across the House and the country that the question is: how do we get integrity back into our banking system? I do not see that rules are going to do it. We should have focused more on the role of the shareholders of banks in making sure that their boards and executives are proper people, and on the role of the auditors in this area, but I do not see any sound basis for being of the opinion that the regulators are going to be much good at it.
I broadly support the concept of licensing, although I agree with the point: what is in a word? It seems to me that you can license people in regard to their academic qualifications and job experience but not for integrity. People have either got integrity or they have not. We want to get to a situation where the managers of our banks have got integrity and give key effort to making sure that their banks are run with integrity.
That leads me to the next big area. My view over 40 years in the City has been that the main cause of this trouble has been that an oligopoly was allowed to develop. If one looks at economic history, wherever there have been cartels and oligopolies, there has always been bad practice. One reason that the oligopoly got worse is that there was a mistaken view back in the 1980s after the failure of Johnson Matthey that led to the doctrine that the lender of last resort only stood behind banks that were too big to fail. That led to a shrinkage of the number of banks. Many, because they were not deemed to be covered by the lender-of-last-resort doctrine, were closed down.
I remember having extensive discussions and correspondence with the late Sir Eddie George on just that issue back in the early 1990s. What was allowed to happen was a moral hazard. The oligopoly was there with its ticket that it had lender-of-last-resort support and it took the view, “Make money in any way you like and pay the fines”—they were a natural cost of business if you were in breach. That led to a complete deterioration of the standards of integrity in the banking system. That is the truth of what I observed.
I repeat, I personally do not see the regulator as being a huge force in turning round integrity. Punishing those that basically act immorally is quite an important ingredient, but above all we need to get sound management into banks. Maybe the regulator has some role in helping that process, but bank managers must run their banks on the basis of integrity. How far down does the regulator go if he is responsible for ensuring that staff have integrity? It seems to me that this would not work.
Lord Tunnicliffe
I commend the noble Lord, Lord Flight, on his ongoing campaign for small banks and more diversity—not that I dissent from it, but it is consistent. What I have more trouble with is the concept of competence and integrity in the banking system, and the idea that somehow we should more readily trust the banks than the regulator. The banks have not got much of a record over the past three or four years in terms of either competence or, frankly, integrity. There is virtually no major bank that has not shown some errors in terms of integrity or shown some failure in competence or ripped off customers through mis-selling. The poor FSA might not have done brilliantly, but it did investigate these areas and produce perfectly sensible reports. As far as one can see, the FCA has got off to a good start. It is producing good and competent reports. I want to express my belief that the regulator is doing, and will continue to do, a good job.
The amendment is quite rightly interpreted as saying, “The regulator shall do”. If our amendment were to succeed, I could readily see some drawing back from that. My own experience in the airline industry is that the regulator creates the framework and checks the checkers—in other words, checks the senior management—but that the spreading of annual testing and so on goes into the companies in a trusting framework. There are ways of doing it without having thousands of inspectors around. Our general thrust is in the right direction. However, I get a sense from what is happening in the House tonight that the chances of me persuading people on this point are slim, so I will not press this to a Division. I beg leave to withdraw the Motion.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
(11 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Phillips of Sudbury
“( ) In subsection (8)(a) after “body” insert “(except a body which is a charity)”.”
Lord Phillips of Sudbury (LD)
My Lords, Amendment 160 is very short and innocuous, but it is of significance in terms of its impact on the Bill in that it would remove charities from the scope of the Bill and the 2000 Act. Like everybody else, I must declare interests, which are largely to be found in the register, but I should add that I have been for 40 years a charity lawyer—if that does not sound a contradiction in terms—and have great sympathy with all those trying to get their head around the relationship here between charity law and electoral law because it is far from simple.
Thanks to the work of the Library staff, I got an insight into the debates when the 2000 Act was legislated. It is fair to say that charities got short shrift. In fact, during the passage of the 2000 Act, the awareness in the Chamber was pretty extraordinary and at no point did a clear statement on the impact on charities find its way into print. I am sure your Lordships will also have noticed that the vast majority of charities are as amazed as anyone that they have ever been part of the 2000 Act. Most of them went through the previous election in complete ignorance of that fact.
I fear that the misunderstandings that attend this Bill are not inconsiderable. I am afraid that that misunderstanding finds its way even into the Harries report, if I can so call it. I, like everybody else, greatly admire the energy and astuteness that has been put into this report and I agree with the vast bulk of it. I happen not to agree with recommendation 11, which is that charities should not be exempt from regulation. To make my point and because it is germane: recommendation 11 is preceded by three statements. The first—in favour of my amendment, so to speak—is that the commission heard evidence from charities of the “disproportionate regulatory burden” on them registering as third parties. That burden is at the heart of my wish to see charities removed from this Bill and the 2000 Act.
There are two reasons given for the recommendation about not exempting charities. Incidentally, it is fair to say that the commission itself was made up of representatives of the charities sector and the non-charity NGO sector. The first reason is that,
“the regulatory system should not be structured such that the status of being registered as a charity could be a mechanism for avoidance”.
That is a little gnomic, perhaps, but were we to agree to take charities out of the Act and this Bill, the authors of the Harries commission report decided that this would represent a mechanism for avoidance. I beg to differ. Charity law and electoral law are in all essentials the same. Being bound by charity law rather than electoral law is not a soft touch. Indeed, some charities have made the point that they are afraid of not being part of the Bill—and therefore under the aegis of the Electoral Commission—because they fear that if left to the devices of the Charity Commission alone things might get rather more brutal than they already are.
The second reason given for that recommendation is that,
“campaigning with non-charities is so central to many charities’ activities”.
That is as if to say that if charities were not part of the Bill, they would not be able as they currently are to campaign with non-charities. Again, that is completely misconceived. The position of charities vis-à-vis joint campaigning—coalition campaigning, if you want to call it that—will not be affected significantly; in fact, I could not put my finger on any single difference between being outside and inside the Bill. I repeat: charity law on its own is very severe and, as I shall explain, very similar to electoral law on this point.
Lord Hardie (CB)
My Lords, I seek clarification from the noble Lord, who is recognised as an expert in the field of charitable law. One concern that has been expressed to me is that, if charities are exempt from these provisions, there may be a means for others to use charities to avoid the measures. Could the noble Lord address that concern, which others may have? If people could be reassured on that matter, we would be with the noble Lord.
Lord Phillips of Sudbury
I am grateful to the noble and learned Lord, Lord Hardie, for raising that issue. It is one of two issues used by the Harries commission to justify its recommendation to keep charities in the net. But it simply does not stack up in any way. Would the noble and learned Lord give an example of where he thinks the problem that he has enunciated would be found?
Lord Hardie
Simply, a concern has been expressed. As the noble Lord has observed, it is referred to in the report. The noble Lord may wish to have time to reflect on the matter and come back. To my mind, if that concern could be answered, I would be reassured.
Lord Phillips of Sudbury
I think that the concern may relate to a misnomer, which is that a non-charitable NGO that wants to escape the limitations of the Bill could simply form a charity which, if charities are taken out of the Bill, would be able to do all sorts of things that it could not do as a non-charity within the Bill. There is a very simple answer to that. A charity may be the brainchild of, and have come into existence through the efforts of, a non-charitable NGO—and there are a number of non-charitable NGOs, such as Amnesty International, which have brought into being a charitable arm that does things that can properly be done by a charity and which is therefore more tax efficient to have done through a charity, because of the tax provisions attaching to charities. A number of non-charitable NGOs have a related charity—perhaps even the Countryside Commission has. Many of them do it. But the misunderstanding comes in this element. Some people think that because Amnesty and the Countryside Commission took the initiative in creating a charity, they can control it and tell the trustees to do their bidding, what to do and when to do it. But they cannot. It is a fierce rule of charity trusteeship that the trustees of any charity do not and cannot take their orders from any outside body, even one that is in that sort of relationship.
To take another example, where I, as an individual, set up a charity with funds that I provide, unless there is some express power which I retain to require the trustees to make charitable gifts as I indicate, I cannot tell them what to do. The trustees must act independently. It is a fierce and fundamental provision of charity law, precisely to protect it from prostitution by the means that I think was behind the noble and learned Lord’s question.
Baroness Mallalieu (Lab)
My Lords, I take issue with one or two of the matters that the noble Lord, Lord Phillips, has just raised. The commission came to the view that there should be no exemption for charities and that was based squarely on the evidence that we heard. As everyone else is doing so, perhaps I should make a full declaration of my involvement with various campaigning organisations. I am president of the Countryside Alliance and president of the Horse Trust; one is a charity and one is not. I am a member of the National Trust, the RSPCA and the Humane Slaughter Association and I am a supporter—whatever that may mean at the end of this Bill’s progress—of the Stop HS2 campaign. There may be others, but I cannot, at the moment, remember them.
Lord Phillips of Sudbury
I am so sorry to interrupt the noble Baroness so early in her speech, but it is directly germane to her first point. I think she said that the Charity Commission came to the conclusion that charities should not be exempt.
Baroness Mallalieu
I was not referring to the Charity Commission; I was referring to commission of the noble and right reverend Lord, Lord Harries. I am afraid this had led to some confusion. I noticed someone else fell into the same error. If I did, I apologise. Except for those who have put their names to the amendment on the Marshalled List—and no doubt there will be others who will speak—I am not aware of anyone among those to whom we have already spoken, who shares the view of the noble Lord, Lord Phillips. Not one of the charities which came and gave evidence before us asked for there to be an exemption. Nor, as far as I am aware, does the Electoral Commission suggest that it is a good idea. I am not certain about the view of the Charity Commission, but my understanding is that it does not seek it either. As I understand it, this is because it is generally felt that transparency in the way people campaign during elections should run right across the board, for charitable and non-charitable campaigners. The spending limits, which are a key difference, should be the same across the board. No charity asked to be exempt, but we did hear evidence from some which felt that, if they were exempted, some charities would bring others into disrepute, and that it was a possible route for avoidance.
The argument of the noble Lord, Lord Phillips, is predicated, I think, on a belief that the guidance given by the Charity Commission at present works well—and he knows a great deal more about charity law than I do. That was not entirely my understanding of the evidence that we heard, and there has been concern that it has not always been rigorously enforced in this area. It is, perhaps, not surprising, given the number of registered charities. I think there are something like 130,000; he will know the figure better than I do. Indeed, there have been a number of public complaints about charities and how they have campaigned recently. It was for that reason particularly that I drew attention to my involvement with the Countryside Alliance.
It seems to me that there must be equality across the board, not only with obvious transparency, but with the way in which people are permitted to campaign. If the situation were—as the noble Lord, Lord Phillips, would wish it—that non-charities continued to be regulated under the Bill as amended and charities were removed, there could be two organisations campaigning on precisely the same issue, but bound in different ways by different forms of regulation. There could be an argument during an election period, for example on hunting, which has already raised its head a number of times in this debate. This would have the Countryside Alliance as a non-charity, restricted in a variety of ways, required probably to register as a result of whatever the new limits might be, to observe strict spending limits, and with no regulatory burden. Whereas the League Against Cruel Sports, which is a charity, would have no spending limits and would not have to put in the sort of rather onerous reports that are required otherwise. This is a cross-party issue which is seen by some as being politicised. There may well be complaints about it.
My noble friend Lord Gardiner—I call him my noble friend even though he sits opposite because he is from the “barricades” days—has tried to reassure us that the Countryside Alliance would not be caught by this measure. However, I am not so sure. We wait for that matter to be tested or, I hope, clarified as the Bill progresses. The noble Lord, Lord Phillips, says that it is wrong for one body to be doubly regulated, but he is overlooking the fact that charities are in a privileged position in many ways. They have a great many advantages and it is right that they should be regulated not just during election periods but all the time so that they do not infringe the rules. As I say, whether that is enforced is a matter of considerable controversy. Surely the Bill is about the transparency of those engaged in campaigning at election times. It is not a Bill about charities—that is something quite separate. There should be a level playing field and the public should be entitled to know what is being spent and by whom, whether the body in question is a charity or not. Therefore, although I have enormous sympathy with what the noble Lord says, and I share his concern that charities are very worried about the Bill, so are NGOs, and for precisely the same reasons.
Lord Phillips of Sudbury
The noble Baroness refers to a level playing field between charities and non-charity NGOs. However, there is no level playing field because non-charity NGOs can politick any way they like until the cows come home, whereas charities cannot.
Baroness Mallalieu
The noble Lord is correct on the face of it but, in reality, when one looks at some of the forms of campaigning that have taken place in recent years, it is very difficult to discern a difference between the two. The two organisations to which I referred earlier are a case in point. If the charity guidance—CC9—and the appendix to which the noble Lord referred were enforced rigorously, and the Charity Commission had the means to do that, perhaps I would take a different view. However, given that the Charity Commission cannot possibly have a handle on 130,000 charities during an election period, it seems to me important that there should be one rule that applies to all.
Baroness Williams of Crosby (LD)
My Lords, my name is also added to this amendment. I should like to say a few words not as a lawyer but as a politician. In my rather long political life, I have fought at least 11 general elections and two by-elections, and have lost some and won some. It is worth commenting as a politician in this very good debate, which has been rather dominated by lawyers, if noble Lords will forgive my saying so.
I think that a very simple message is coming out of this discussion. I thank the Government for permitting a consultation period. I quite agree that it is not as long as it should be, but it is worth recognising that this is a very useful innovation in this House, and one that I think will be helpful to us as we work our way through increasingly complex legislation, given that that is the nature of so much legislation nowadays.
Unfortunately, the Bill is largely concerned with amending the 2000 Act, which means that it is incredibly complicated. It keeps referring back to earlier legislation when it might have been better to make a clean break and have a completely new Bill. That is by the way and we have what we have, but I think it is one of the reasons why two issues have emerged very clearly in this debate—I speak as I see. First, virtually every amendment—amendment after amendment—has sought to exempt various bodies from the controls on the amount of expenditure that is incurred. Virtually every one of the many amendments that we have discussed has sought to eliminate or take out something or other. They have all been negative amendments and have attempted to detract from the Bill’s impact on charities. That is not a desirable way of looking at a Bill. What it adds up to is that this is a Bill which has overwhelmingly caused such concern, worry and anxiety that it cannot stand as it is without huge amendment, or possibly a complete rewriting of Part 2. I favour the second.
The other thing that emerges very clearly from this is that the Ministers—I greatly respect their patience and their attempts to deal with the issues—have turned effectively into a sort of CAB. Everybody who gets up says, “Does this apply to me, or to this, or to the other thing?”. That is not a very happy way of demonstrating how clear and transparent the Bill is. It is a very happy way of demonstrating that it is neither clear nor transparent. This again means that there has to be a major look at how to reconstruct this part of the Bill.
I add one other thing. I say this in some criticism of the commission, which has been so widely praised, quite rightly, in this House. The commission has not taken sufficient cognisance of—I refer back to the brief speech made by my noble friend Lord Greaves—the impact of certain kinds of expenditure on campaigning, not least major expenditure on campaigning, on the whole issue of the cleanliness and transparency of politics itself.
We have blissfully walked past substantial evidence to show that, without some form of serious regulation of charities, but also of NGOs, there is a tendency for politics to become increasingly corrupted by the flow of money. The noble Baroness, Lady Mallalieu, for whose intelligence I have the greatest respect, unwisely referred to the likelihood of some monster coming out of the jungle who would be a billionaire. There are many monsters who are billionaires coming out of the jungle. I know that because I taught the subject of elective politics for 10 years at Harvard.
The United States has effectively been taken over at the federal level by more and more major expenditure. For example, expenditure on congressional elections in real terms has gone up two and a half times since 1998. In the latest election cycle, in 2012, no less than $3.5 billion was spent on electing Congressmen and Senators to their elective seats. To take another example; it costs today, on the latest explanation we have, $1.5 million to elect a Congressman. Congressional districts are of course larger than parliamentary constituencies—let us say three or four times larger. However, when you compare the £12,000, which is still the British limit that can be spent within a constituency once an election has been declared, with $1.5 million, even if you take real values and all the rest of it into account, you are looking at a vast increase in the expenditure on how you can get legislation through Congress. A great deal of it is quite directly and precisely related to politics in its most raw sense, including the money that comes out of the so-called 501(c)4 regulations of the Internal Revenue Service—the tax system—which now allows specifically non-profit third parties to put money into election support and political payments. Let us not forget that the legislation picks out non-profit, picks out non-party and picks out bodies with claims that they are pushing a charitable end, or in some cases a public service end. The outcome is quite simply that this particular element in public expenditure in the United States has risen from $9 million two years ago in 2010 to $457 million in 2012. That is an increase of the order of something like 45 times. Why? The regulations that applied to restriction on public expenditure of this kind by non-profit organisations were effectively allowed to lapse with the result of the so-called Citizens United Supreme Court decision of 2010, whereby corporations and unions were both allowed to come into that structure and give whatever they liked with no limit for political campaigns.
What I see in the United States at the federal level is effectively the breakdown of democracy. It is not surprising that more than half of Senators are millionaires or richer because, effectively, the ordinary man and woman have been driven out of politics at a federal level and it is too expensive for them to stand because the money that they have to raise to stand any chance of getting elected is now so extreme. I will not go on but the figures are terrifying. The estimated spending for the next presidential election in 2016 is around $6 billion at the federal level only. What one is seeing is a great democracy gradually turning into a plutocracy, and that is extremely dangerous.
Lord Hodgson of Astley Abbotts (Con)
My Lords, the noble Baroness has given us a sobering picture of the future of US political funding. Before that, we heard from my noble friend Lord Phillips, who, as ever, is a passionate advocate and has a lifetime of experience in charity law. He and I have had many debates on this issue. One therefore has to listen with care to his explanation and how he places his case, particularly when it is supported by some experienced and heavyweight voices from the Liberal Democrat Benches.
However, I hope that he will forgive me if I say that I am not convinced—at least, not yet convinced—that charities should be exempted from the Bill. I accept the seductive simplicity of his argument, but I think that it is based on an ideal world that I fear no longer exists, if it ever did. In part, the noble Baroness, Lady Mallalieu, put her finger on it when she said that charities have a special status in the eyes of the public. They get it not just because of tax but because the charity number is seen to be something that carries with it a stamp of quality, and therefore charities have something that is not granted to people who do not go through the Charity Commission hoop.
I see two major challenges to what the noble Lord proposed. One is the role of the Charity Commission itself, first of all at an operational level. We have said that there are 160,000 registered charities and there are probably another 160,000 unregistered charities: that is a third of a million charities. The noble Lord made reference to this in his opening remarks. The commission therefore faces a huge operational challenge just to deal with basic charity law, and to hold charities to account in the most basic way. When he says that the Charity Commission has very rarely asked trustees to put their hands in their pockets, I accept that. Is that because nothing is going wrong or because the commission does not know what is going wrong? That is one of the issues we have to address; so there is an operational problem.
Then there is a strategic challenge to the commission. The commission is an organisation that is under a huge strain. Some noble Lords will have seen the National Audit Office’s report, which had some disobliging things to say about the way the Charity Commission operated. It faces considerable problems in respect of the public benefit test, the aftermath of the independent schools test and the Plymouth Brethren case, which is now before it. It has had problems with links to Her Majesty’s Revenue and Customs, the Cup Trust and other tax-avoidance measures. It has also had a 40% cut in its budget. I ask my noble friend whether it is a practical proposition to ask the commission to take on another huge area and start to drill down on 335,000 charities to find out whether they are complying in a way that is, as the noble Baroness said, fair across the piece.
The noble Lord might say to me, “Of course it should have additional resources”. If it were an ideal world, that might be possible, but it is hard to argue that the Government should devote additional resources to providing the Charity Commission with the ability to enforce electoral law when the Electoral Commission already specialises in it and is up to date with all the arrangements of the way that matters are proceeding—as opposed to the Charity Commission, for which it would be one of about 10 major tasks it would have to carry out. That is my concern about the way the structure would work in real life.
My second concern is really the point made by the noble and learned Lord, Lord Hardie: the nitty-gritty point of the loophole. I fear that it will attract those who wish to push the envelope. The noble Baroness, Lady Williams of Crosby, said that she thought the envelope was being pushed—and I am sure it is. In my review of charities, Members of the other place said to me, “Some charities are really getting into what we are doing as Members of Parliament”. There is a sort of concern that charities are doing things that get very close to the role of a Member of Parliament in representing his or her constituents. This amendment will open the way to the more adventurous and to the outliers who choose to become charities, because it will be seen as a way to minimise the regulatory burden and to evade some of the issues that we have just been discussing as part of this Bill.
It is the outliers who will most likely damage the sector’s reputation. The sector has historically had a very high reputation with the public, but this reputation is not immutable. We think now of the Cup Trust, as I mentioned. That has undoubtedly made members of the public consider charities and their role. We subsequently had a very public row about the payment of chief executives and senior staff of charities, and how that is commensurate with charitable status. I am not making any comment upon it; I am saying that the charitable sector has considerable challenges to answer if it is not to see some leeching away of the enormously strong public reputation it has historically enjoyed.
If we were to accept the noble Lord’s amendment—seductively simple and attractive though it is—we would run the risk of putting a burden on the Charity Commission that it will not be able to fulfil, and giving it tasks that it will find very difficult. The result could be that we will have difficulties, problems and issues with the public that, after the next general elections and elections thereafter, will be seen to rebound on the charity sector. We need to make sure that does not happen, because, as the noble Lord said, it is such a precious jewel in our crown. It provides a way for so many of our fellow citizens to put something back, to create something and to connect with their fellow members of society. It would be a tragedy to lose that. That is why I fear I cannot support the noble Lord’s amendment tonight.
Lord Harries of Pentregarth (CB)
The commission did not support taking charities out, for the reasons put so fluently and eloquently by the noble Baroness, Lady Mallalieu. I will not add to what she said, but I want to respond briefly to points made by the noble Baroness, Lady Williams, and the noble Lord, Lord Phillips.
We are debating constituency limits in a separate set of amendments, so I will respond to that issue then. The noble Baroness has unrivalled experience and knowledge of the American system and the British system, and I do not doubt for a moment what is happening in America. But we have not yet been presented with any real evidence that it is happening in England. The precautionary principle is quite right: we have to beware what might happen. But we also have to make sure that our reaction is not disproportionate.
Baroness Williams of Crosby
There is already some evidence that American Crossroads, which is Karl Rove’s non-profit organisation—non-profit and non-political—has among other things financed young Britons to come to Republican gatherings where they are given instruction in the kinds of things that the Republicans and the Tea Party believe, at those organisations’ expense.
Lord Harries of Pentregarth
I absolutely agree that it is right to take precautionary steps, but I am sure that the noble Baroness would also agree that we must ensure that they are not disproportionate. The main complaint at the moment by charities and other campaigning groups is that this legislation is grossly disproportionate in the way that it bears upon them—I see the noble Baroness nodding her head.
I also have the utmost respect for the noble Lord, Lord Phillips, who is the leading charity lawyer in the country. But I have to agree with the points made by the noble Lord, Lord Hodgson. Perhaps I can approach the argument from another way. I carefully read CC9, which is the Charity Commission guidance. I also read the additional guidance that it provides for election campaigns. It makes it quite clear that charities are allowed to politically campaign. That is absolutely crystal clear. But as the noble Lord made abundantly clear, it is not always easy to draw a distinction between political campaigning in general and political campaigning that might be interpreted as supporting a particular party.
The noble Lord drew his hand across and said that there was a kind of hazy line. Does that not lead to the conclusion that the noble Lord, Lord Hodgson, made: namely, that if charities were taken out, they would have to have their own separate regime, employ extra staff, and keep in day-by-day contact with the Electoral Commission to make sure that their guidance agreed with the guidance of the commission? Would that not be a waste of resources? If charities are in fact in the same position as other groups, would it not be better for them all to be under the same regime?
I absolutely agree that there is a major difference and that charities cannot have political campaigning as their prime purpose. That is absolutely right. If the suggestion of the noble and learned Lord, Lord Hardie, about the definition of political expenses were accepted, of course charities could come out—but as long as they are allowed to politically campaign, that campaigning could be interpreted as supporting a political party or candidate.
Lord Phillips of Sudbury
Does the noble and right reverend Lord not agree that it is one thing politically to campaign—which is what charities can do—but another to do that in a partisan way? They cannot do that. That is a huge and fundamental difference between them and non-charitable NGOs.
Lord Harries of Pentregarth
I could not agree more, but as the noble Lord made clear, the difference between the two is sometimes a bit hazy and judgments have to be made as to when a particular charity has gone over the line.
Baroness Lister of Burtersett (Lab)
My Lords, like the noble Baroness, Lady Williams, I speak as a non-lawyer. Indeed, my background was originally in the charitable sector; I was the director of the Child Poverty Action Group and worked there for eight years, and now I am its honorary president. I also have links with non-charitable NGOs.
The noble Baroness talked about the political and legal aspects of this. While I am sure that the noble Lord, Lord Phillips, has tabled this amendment from the very best of motives, there is a danger of it being seen as the politics of divide and rule. The two things that strike me are, first, that charities themselves are not asking to be exempted. Surely that must count for something. The noble Lord said that charities are worried. Yes, they are worried, but they do not want to be exempt.
Lord Phillips of Sudbury
My Lords, I am most grateful to the noble Baroness and I am sorry to interrupt so often, but I am being challenged. The noble Baroness, Lady Mallalieu, said that the charities she has talked to do not want to be exempted. All I can say is that the overwhelming majority of those I have been speaking to, and indeed know of because perforce I know a vast number of charities, want exemption. Perhaps I can take as examples the Charities Aid Foundation which only has charities as members or the Directory of Social Change which only has charities as members as compared with, say, the NCVO, which has both. The organisations I have mentioned are keen for charities to be exempt for all the reasons I have tried to explain. The impression must not be left tonight that charities somehow want to be kept in this Bill. My experience is quite the reverse.
Baroness Lister of Burtersett
I do not have that evidence and no charity has written to me asking to be exempt, but there may be other noble Lords who can act as the referee in this dispute.
A point which has not been made yet is that the Electoral Commission has said explicitly that it does not support this amendment, and surely that must count for something. The noble Lord, Lord Hodgson, talked about what have been very seductive arguments, but I say to the Minister that I hope he will not listen to the siren voices of his noble friends.
Baroness Pitkeathley (Lab)
My Lords, I am a fan of the noble Lord, Lord Phillips. I have every reason to be grateful to him from when I was running a charity myself, but I cannot support his amendment. I, too, have had words with a great many charities and have been surprised by how many of them are opposed to this amendment and have not taken any comfort from his faith in the Charity Commission doing the excellent job that he appears to think it would do in this regard.
Some of the charities I have spoken to have been opposed to the idea of exemption for personal reasons. For example, the Save Lewisham Hospital Campaign would not have wanted to go through the process of registering as a charity to gain exemption. Those involved were too busy with their campaign. I have spoken to other charities which point out that coalitions are often formed across sectors so that they make up coalitions not only of charities but of social enterprises and, indeed, of commercial organisations. I certainly have had experience of that in my campaigning background. What we have to remember is that the NGO sector, whatever it is, is increasingly diverse. We are constantly coming across different forms of NGO-type organisations. There is a great potential for confusion among the public and supporters. We should focus on the activity being undertaken, not on the type of organisation undertaking it. I understand that some legal opinions have suggested that going for exemption may be a legally unviable option and much too open to challenge. There is also a widely held view that it is unfair to make non-charitable organisations subject to tighter regulation, thus making it more difficult for them to highlight the problems which this legislation is increasingly going to bring about.
We come back to the point that this legislation is being introduced without proper evidence and without proper consultation. As I said at Second Reading, it is very much a sledgehammer Bill to crack what was, at best, a small nut of misbehaviour by some non-charitable lobbying organisations. The noble Lord, Lord Phillips, himself said that it is complex, there is a great deal of bureaucracy and there will be a diversion of philanthropic effort. It puts a disproportionate burden on organisations and is wholly unnecessary. This does not seem to be an argument for exempting charities but for amending the Bill in the way your Lordships are trying to do.
Lord Low of Dalston (CB)
My Lords, I did not speak at Second Reading for the same sort of reasons as the noble Baroness, Lady Tyler, but I will just make three points in support of the amendment. In passing, I have to say that I have the impression that the charity sector does not speak with one voice on this and does not have a monolithic view. Some charities want an exemption while some do not. In those circumstances, I take the view that it is incumbent on one to support what seems the most rational course, which is what I propose to do. I declare up front my interest as a vice-president of the RNIB. I will make my three points quite briefly.
First, as the noble Lord, Lord Phillips, has made clear, charities are already regulated up to the hilt as regards political campaigning and not engaging in it. The noble Lord, Lord Hodgson, has suggested that, because of their special status, which gives them a peculiar responsibility to be beyond reproach, charities should be subject to the regulation which this legislation proposes. However, it seems to me that the validation kitemark, as you might call it, which charity regulation provides is precisely the reason not to load charities with additional regulatory burdens. What would be the point of conferring this special status on charities and then saying that it does not actually count for anything?
Secondly, along with everyone else, I pay my tribute to my noble and right reverend friend Lord Harries and to his Commission on Civil Society and Democratic Engagement, which, as everybody has said, has done such sterling work on the Bill, which will be of great assistance to the House. However, I was not entirely convinced by its argument for not exempting charities. The argument seemed to be that charities should not have an exemption because other people should have one as well—but in that case, it would not be an exemption. The case for charities having an exemption is that they are in a class of their own. As I say, if everybody is to have the exemption, it ceases to be an exemption; if others feel they should have the benefit of charitable exemption, the answer is surely for them to seek to register as a charity. Concerns have apparently also been expressed that an exemption for charities could increase the prospects of a successful challenge to the PPERA rules on freedom of expression grounds, since it will make it more difficult to argue that the restrictions imposed on others by the rules are necessary and proportionate. If that is the case, so be it, and a good thing too. In saying that I am in favour of the charities having exemption, I am in no sense against the others.
The commission chaired by the noble and right reverend Lord, Lord Harries, is concerned about the impact of the Bill on the reputation of and trust in charities and the extra regulatory costs they will face in order to campaign for their charitable objectives, but it does not recommend an exemption. I am afraid that I draw the opposite conclusion. The noble and learned Lord, Lord Hardie, and the noble Baroness, Lady Mallalieu, raised the point that non-charitable campaigners might seek to set up charitable vehicles as a means of avoidance. However, that is surely not a genuine concern because if they set up a charity they would immediately become subject to the controls imposed by charity law. They would not be able to smuggle through, under cover of a charity, things they would not be permitted to do under charity law. There would be no point in setting up a charitable vehicle to get round the Act. Given the strictness of charity law and regulation, it would be completely self-defeating.
Thirdly, the best way I can contribute to this debate is from my experience when I was more active within RNIB than I am now. I was chairman for nine years and in various senior trustee capacities before that, so I have a good deal of experience with a leading campaigning charity. This experience tells me that the desire to impose stricter controls on charities to restrict the scope of party political campaigning is completely misconceived. At election time, we are concerned to promote our views to the parties, not to promote the views of the parties to anyone else. As often as not, we are simply asking the parties about their views, not promoting those views. If I have understood him correctly, the noble and learned Lord, Lord Wallace, said in an earlier debate that this kind of activity would not be caught by the legislation. However, proving that their activities were exempt would tie the charities up in bureaucracy. The noble Lord, Lord Tyler, has shown us this with his graph showing the correlation between bureaucracy and transparency. The noble Lord, Lord Phillips, also made this clear when he described the increased regulatory burden to which charities would become subject as a result of the Bill.
The simplest thing would be to exempt the charities from the legislation.
Lord Tyler
My Lords, I am very glad that I held back and listened to another contribution from the noble Lord, Lord Low of Dalston, who said many of the things that I would like to have been able to say but could not have done with the same level of experience. There are two points which I would like to add or underline.
First, there seems to be a view in the House this evening, expressed by the noble Baroness, Lady Pitkeathley, that it would, somehow or other, be unfair to exempt the charities because the other organisations would then be more carefully controlled than the charities. That is the whole point: the charities are already very, very carefully controlled in what they can and cannot do in the public space before, during and at election time. As the noble Lord, Lord Low, has said, it may be that CC9 and the further additional requirements of the Charity Commission are not totally adequate but they are certainly very much more so than they were previously. They are certainly more adequate than the guidance that was given to the charities at the time of the passage of PPERA. I am very sorry to see that the noble Lord, Lord Bassam, has left his place, because he was the main author, I think he would probably claim, of that Act. Therefore, its inadequacies, which have been drawn to our attention throughout today—and, I have to say, have been drawn to my attention in the large number of meetings I have held—relate very much to the inadequacy of the treatment of charities, which are already so firmly circumscribed in what they can and cannot do.
Lord Hodgson of Astley Abbotts
I am very grateful to the noble Lord. I just wanted to ask him how he thinks matters will develop if, at a future general election, the Electoral Commission determines, on a complaint to it from a non-charity, that a charity has done something that is outside the electoral law but may be inside the charity law. Which will be pre-eminent? How will be that determined? Does the noble Lord, Lord Phillips, think that, whatever happens, charity law will come out on top, and therefore are we going to allow that there will be an unlevel playing field because the Electoral Commission’s views will be seen to be subordinate to those of the Charity Commission?
Lord Tyler
I admit that hypothetical examples of that nature at this time of night rather baffle me. I am not a lawyer either. But I think that the subsequent amendments that the noble Lord is suggesting, which should in any case mean that there is a coming together of the guidance from the two commissions, should be adequate to this task.
I just want to pick up a point the noble Lord made earlier. He has huge knowledge of the charitable world. He has given a lot of time, energy and specialist attention to the charities, but he seemed to suggest earlier that somehow or other the Charity Commission was not up to the job: it was not in a position, not able, not capable and it did not have the resources to police CC9 and the subsequent advice. That is a very serious charge. If it is his view that the Charity Commission simply is not capable of doing this job, then I admit that the case put by my noble friend Lord Phillips of Sudbury may be rather weaker than I anticipated. I do not think the noble Lord was saying that, but perhaps he would like to clarify that point. If he was saying that, I understand that there is a real doubt about whether the commission is up to the task it has set itself. In my experience of charities and of the previous advice that was given to charities, I thought it was well up to the task and there have been comparatively few cases where the rules have been infringed.
Lord Hodgson of Astley Abbotts
Again, I am very grateful to my noble friend. I simply invite him to go to the Printed Paper Office and get a copy of the National Audit Office’s report on the Charity Commission, published two weeks ago. That is its view after six or eight months’ investigation. He can see it all laid out, warts and all—some good, some bad—but the NAO has some pretty disobliging things to say about the position of the Charity Commission.
Lord Tyler
My Lords, it is late at night to have to introduce a new element into the debate, but the natural conclusion is that the Charity Commission should withdraw completely from this role of policing what should and should not happen in terms of public policy and elections. But CC9 is there and the Charity Commission is now developing more advice on this point. Either we trust the commission to do the job or we do not. I fear that what my noble friend Lord Hodgson has just said does not increase my trust.
In those circumstances, we are still faced with a genuine dilemma. As the noble Lord, Lord Low of Dalston, said, as things stand at the moment many charities, large and small, feel that they are going to be subjected to two quite separate sets of regulations in this regard and they feel that is unfair. That seems to be a very critical issue, and I hope that in due course this House will be able to address it.
Baroness Hayter of Kentish Town
My Lords, I apologise to the noble Lord, Lord Low. It was not that he was slow on his feet; I was just a bit too fast on mine.
I return to the work of Beatrice Webb as she battled against the causes and impact of poverty. She was not running a charity, so she would have been caught by the myriad new requirements that this Bill sets out. She could then have set up a charity. I have set up a large number myself. It is not very difficult. Then she could have campaigned in the same way with no restrictions on the amount of money spent, on the market research done, on meetings, on press work or on the number of staff employed. She could even have concentrated her arguments in a number of key constituencies so long as she did not talk about voting this way or that way.
We have to think about whether we want the Stop the War coalition, pro-HS2, anti-HS2, pro-fracking, anti-fracking, pro-runways, anti-runways, pro-free schools, anti-free schools and other hard-working, well motivated groups to feel the need to register as charities so that they can campaign freely—free not just from double-regulation but from any regulation, because they would be caught only by existing electoral and charity law and not by the new restrictions imposed by this Bill.
I can see the advantages of that. Alcohol Concern, which I established 30 years ago, is a charity which campaigns against the current Government’s policies—not against the governing party—because the Government will not bring in minimum unit pricing or reduce drink-drive levels. This is completely within our charitable objectives. We could even campaign as a charity and put all our money in certain constituencies. As long as we do not say that this means voting this way or that way, it would be completely in line with our charitable objectives.
The Federation of Licensed Victuallers Associations, which is not a charity, would be very worried about the effect of lower drink-drive limits on its trade, but it would not be able to campaign against changing the drink-drive limit without being caught by the necessities of the Bill. That is similar to the discussion we heard earlier about hunting and the Countryside Alliance and the League Against Cruel Sports. While both are campaigning on a policy issue, one would be subject to all the regulations and the other would not because it is a charity—as long as it keeps to charity law.
The Electoral Commission has pointed out that exempting charities from the PPERA would mean there would be no restrictions on what they could spend in the run-up to the election, provided that they act within their charitable objectives, but that all organisations would be subject to the new Bill and the tighter restrictions on campaigning. The Electoral Commission thinks this could undermine confidence in PPERA while creating an incentive for campaigners to campaign via charitable channels.
In answer to the noble and learned Lord, Lord Hardie, I can think of a number of organisations that I have been involved with which use the most appropriate vehicle, shall we say, at different times. That is the reason, as we know, that the Electoral Commission does not support exempting charities. Interestingly, we have not heard from the Charity Commission.
The supporters of the amendment say that charities should not need dual regulation. I have received only two letters from charities even vaguely in favour of this amendment—one has already been referred to: the Directory of Social Change—not because they want special treatment but because they are against duplicated regulation. They were not against being covered by the Bill but felt that they should not be regulated by a separate organisation. In other words, regulation could be by the Charity Commission; the argument is not for special treatment but against duplicate registration.
That is one of the arguments put forward in favour of the amendment, but there would be still other organisations covered by it. We heard earlier from a noble Baroness, who is not in her place, who is very involved with the BMA. It is regulated as a trade union, so it would be dual-regulated because it would continue to be regulated by the certification officer and also by the Electoral Commission. If it is simply about having dual regulation, surely we must deal with the plethora of people who would be doubly regulated.
The Directory of Social Change, despite not wanting to have two regulators, supports this amendment and also shares the concerns about the negative effects on broader civic engagement and the right to campaign. If I have read its letter correctly, I think its call would be for other parts of the Bill to be amended. The only other charity that has written specifically on this is the Royal Society for the Protection of Birds, which would support Amendment 160, but only as a fallback, because it is seriously concerned about the implications for wider civil society beyond charities. It supports the NCVO and others who want the Bill amended, as we do.
Charities are not calling for this, although they are undoubtedly calling for change. We will clearly be interested in what the Minister says on this. In the mean time, I shall ask Peers on the Liberal Democrat Benches whose amendment this is why they appear so little concerned with the other groups. The noble Lord, Lord Phillips, said that there is no evidence that charities did anything wrong in the previous election, and there is no evidence of these other groups being a problem. The noble Baroness, Lady Williams, who is not in her place at the moment, made it very clear that she does not like a whole chunk, if not most, of Part 2. If other noble Lords on those Benches really dislike like this Bill and all its bureaucracy so much, would it not be better for them to use their considerable muscle and voting strength in this House to amend the Bill for all civil society groups, rather than leaving just some of them exposed to the nasty bits of red tape, bureaucracy, demoralisation and complications that were mentioned by the noble Lord, Lord Phillips? Their voting strength in this House would be able to get rid of them for all groups. If this part of the Bill is bad for charities, it is bad for similar groups that do not happen to be charities, and we should see them all as one.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, I thank my noble friend Lord Phillips of Sudbury for introducing this debate, which has been very interesting. Different views have been expressed. The noble Lord, Lord Low, said that charities do not speak with one voice on this matter, and that confirms my experience from having engaged with charities, admittedly not as extensively as my noble friend Lord Wallace of Saltaire. I have heard different views expressed about whether there should be an exemption for charities. Therefore, it is important that the arguments that have been put forward on both sides are given proper examination. My noble friend’s amendment would amend Clause 26 so that charities were excluded from the regulatory regime governing controlled expenditure for third parties. At present, under charity law, charities are organisations which must be established for charitable purposes only and which are for the public benefit. An organisation will not be charitable if—as my noble friend pointed out—it engages in partisan political activity.
Campaigning and political activity can be legitimate and valuable activities for charities to undertake. However, they must be undertaken by a charity only in the context of supporting the delivery of its charitable purposes. As we have heard, the Charity Commission produces comprehensive guidance—CC9—for charities on campaigning and political activity. However, the Charity Commission also acknowledges that there may be circumstances in which charities may legitimately operate within the regulatory regime established by PPERA 2000, even if their campaigns remain within the rules on party political activities by charities.
When the Bill was in the other place, the Electoral Commission highlighted a situation in its briefing. If a charity distributes material to the public that highlights the views of candidates from different parties on issues related to the charity’s objectives, this may in some circumstances reasonably be regarded as intended to promote the election of those candidates and, as such, would require compliance with the rules in PPERA. That echoes our earlier debate about when what would not be registrable becomes registrable. In such cases, Parliament decided through the passing of the 2000 Act that such activity should be regulated as it could potentially influence electors during an election. Indeed, Parliament chose then—as indeed we replicate in this Bill after amendment in the other place—to go down the road of an objective test. It may well be that it is not a subjective thing by the charity but seen objectively it could fall within the provisions set out in the Bill.
I find some of the arguments against difficult. The noble Baroness, Lady Pitkeathley—who is now in the Chair, so am I allowed to say this?—in a point picked up by my noble friend Lord Tyler, seemed to suggest that the limits on charities would be much more flexible. They would not be as tight as they would be on non-charity third party participants. Indeed, I think that was reflected in the opening comments made by the noble Baroness, Lady Hayter, when she seemed to suggest all the things that Beatrice Webb could have done if she had registered herself as a charity and that none of these things would have been available had she not been a charity.
As my noble friend Lord Phillips said, charities are not allowed to engage in partisan politics and charity law is pretty strict. Trustees of charities are only too well aware of the limitations. Sometimes I got the impression during the debate that we were comparing a free for all—if you registered as a charity—with the registration and regulation of controlled expenditure that would apply to third parties that are not charities under the provisions of this Bill. I do not think that is a proper comparison. That is why I think there is a genuine dilemma, as my noble friend said.
The Electoral Commission is clear that charities should not be exempt from the PPERA regime. That point was made clear by the noble and right reverend Lord, Lord Harries. The position has been endorsed by the Commission on Civil Society and Democratic Engagement which states in its report that,
“it is the Commission’s view that it is right that charities are not excluded from within this legislation, and we believe the Government’s approach to distinguish by activity rather than by type of organisations is correct”.
The Government have taken the view that the nature of the PPERA test and the constraints of charity law will inevitably mean that the circumstances in which charities are caught by the PPERA rules will be rare.
There have been some important points made that I want to reflect on as I do not think it is as quite clear cut. There are clear views on why Parliament did what it did in 2000, and why that has been endorsed by the Electoral Commission and by the commission chaired by the noble and right reverend Lord, Lord Harries. The Government should be cautious about taking as significant a step as exempting charities from the regulatory regime. We would want to see more evidence and would pray for reassurance that this would not create a loophole. There are issues about—and this is an unfortunate expression that has been used in some discussions I have had—a “sliver” of activity, which could take charities which are abiding by charity law into an area which would nevertheless be regulated under the PPERA regime. I would want to be satisfied that it would not lead to avoidance, although I certainly hear the strong arguments asking whether there is any point in setting up a charitable arm which is going to be restricted by charity law. However, it is clearly an issue. It was raised by the Electoral Commission, the Commission on Civil Society and others, and was queried by the noble and learned Lord, Lord Hardie.
The noble Baroness, Lady Mallalieu, raised a point that was mentioned when I talked to people involved in the charitable sector in Scotland at the end of last week. Although charities could have their activities restricted because of charity law if they engaged in any activities which could otherwise have taken them into PPERA regulation, what we do not have is transparency. Transparency is an important issue, which I would ask my noble friend to reflect upon. I am more than happy to have these discussions.
The points made by my noble friend Lord Hodgson on important operational issues are why I would not rush forward to say that we will accept an exemption. However, there are concerns about double-regulation which have been expressed to me, and many will sympathise with those who have the potential to be regulated by both the Electoral Commission and the Charity Commission.
I thank my noble friend for raising this issue. The position which has been taken up until now, as endorsed by the Electoral Commission, has commended itself to the Government. However, some important challenges to that position have been raised and I would therefore not wish to shut the door on further consideration of it. I would be happy to engage not only with my noble friend in picking up some of these points, but also with others who clearly take a strong view that charities should be in the same position as non-charitable organisations in respect of the application of this part of the Bill.
Finally—I know that my noble friend will make the point in his wind-up if I do not respond to it in advance—he said, and I know from previous conversations, that the Charity Commission should perhaps be given more money and resources. This is not the debate, nor am I the Minister with any responsibility, to commit more funds to do that. I hope that I am not misrepresenting my noble friend Lord Hodgson, who I think was making the point that if more resources were going, there were perhaps greater priorities than undertaking a task on electoral regulation which is already done by the Electoral Commission. That is a point, and one I am sure that my noble friend Lord Phillips will articulate when he comes to wind up. In the mean time, I ask him to withdraw his amendment.
Lord Phillips of Sudbury
My Lords, I thank everybody who has taken part in this debate. It has swayed to and fro in the best traditions and everybody has made useful points. I have not the time to cover all the offerings, and your Lordships would not want me to at 10.23 pm. However, one or two things I must just say.
The first is to take up the point my noble friend made at the end of his speech, concerning the role of the Charity Commission. My noble friend Lord Hodgson spoke very forcibly about the disparity between the theory of charity law and the actuality of oversight. I accept that, and there is no shadow of doubt in my mind but that if my amendment is accepted on Report, it must and can only be on the basis that the Charity Commission will do a more thorough job than it currently does. I fully accept that, but I am hopeful that that is something which would be very much in the Government’s mind, because if we take a third of a million charities out of the regulatory oversight of the Electoral Commission, we can make major savings, part of which can be deployed in beefing up the Charity Commission’s efforts.
Having said that—forgive me if I bang home the point that I have lived in this sector, so to speak, for 40 years—in my experience there is astonishingly little abuse of charity law. There is an astonishingly high level of public trust as well, and there is a deep revulsion in the sector of trying to play games with it, let alone corrupting it. I emphasise, however, that that does not take away from the point I started by making: there needs to be better enforcement.
The noble Baroness, Lady Hayter, gave an example whereby, I think she said, you could have a biased charity that concentrated its efforts in certain constituencies in order to achieve a certain outcome. That would not be allowed under charity law. It is not that daft. It looks at the whole picture and the substance of what a charity does and if a charity pretended not to be engaged in partisan pursuits but actually was—by, for example, putting its effort only into constituencies where the candidate that it wanted to win was holding a view that it was pushing—that would be wrong and illegal. I am not saying that it would always be picked up by the Charity Commission, but people are on the qui vive these days. I think noble Lords will agree that complaints to the Charity Commission are made regularly and without inhibition.
Baroness Hayter of Kentish Town
The point is not to support the candidate in order to get that candidate elected but to put pressure, usually, on a Minister to have those views heard, be it about drink-driving or something else. That is why, believe me, we do not do this stuff without the Charity Commission okaying it, because it is not to influence how people vote but to use the fact that the Minister is in that particular constituency to go there. It is not to get people to vote, so it is acceptable.
Lord Phillips of Sudbury
I am sorry if I misunderstood. Perhaps we can talk about this outside the Chamber, because this is not the place or the time to go into it in any more detail. All I am saying, and I will assert it without equivocation, is that the law is clear. I say that it is clear, but the law is there and it is well used and old and practical. The Charity Commission needs more resources but the amount of abuse is minuscule in relation to the size of the sector and I remain utterly opposed to lumbering this sector, of all sectors, with double regulation.
The non-charitable NGO sector includes some wonderful organisations but also some very shady ones. There are, I am afraid, a number of non-charitable NGOs that are used for violent political purposes. Money is poured into them, either for commercial or extreme political purposes, and there is nothing to stop them, as things stand. We have quite different categories to deal with and that is why it is entirely right, sensible and practical to have separate categories in terms of regulation. To lumber the charity sector with double regulation should be the last of our intentions. That is my fundamental point and on that note I beg leave to withdraw the amendment.