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Oral Answers to Questions
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Henry Bellingham (North West Norfolk) (Con)
1. What recent representations he has received about UK withdrawal from the European Court of Human Rights; and if he will make a statement.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
The coalition agreement commits the Government to the European convention on human rights and the Strasbourg Court. However, the differences between the two parties’ views on this subject are well known, so there will be no major changes before the next election, although, of course, it is my party’s intention that there should be afterwards.
Mr Bellingham
Does the Lord Chancellor agree with me that it is quite outrageous that the European Court of Human Rights has deemed whole-life sentences to be in breach of human rights laws? Is he aware that I used to be a strong supporter of the Court, but that I now feel strongly that the time has come when it is in our national interest to come out of it?
Chris Grayling
My hon. Friend echoes the view of many people in this country that the whole-life tariff ruling is entirely inappropriate. The Government are considering how best to respond to the ruling, but it is an example of why, in my view, the Court’s reputation in this country has fallen dramatically in recent times, and of why change is now so urgently necessary.
Jeremy Corbyn (Islington North) (Lab)
Will the Secretary of State think more carefully about this issue? Were Britain to withdraw from the European convention on human rights, and consequently, from the European Court, where would our moral stature be in condemning human rights abuses in any other European country, and what would be the future for human rights in this country? Does he not think that, instead, he should be more positive and proactive about the necessity of human rights legislation to protect us all?
Chris Grayling
Let us be absolutely clear: human rights are important and remain a central part of what this Government, and any Government in this country, do to promote good practice around the world. That does not necessarily mean, however, that we all have to endorse the working of a Court that, in my view, has lost its way.
Mr Christopher Chope (Christchurch) (Con)
It is five months since the decision of the European Court of Human Rights in the whole-life tariff case, so why are the Government still vacillating over what to do about it? Does my right hon. Friend agree that the problem is that the European Court of Human Rights is seeking to legislate rather than to interpret the law, because the whole-life tariff was a substitute for capital punishment?
Chris Grayling
My view is that it is not appropriate for the Court to seek to make law for this country in such an area, which should be a matter for Parliament. My hon. Friend will understand, particularly given the realities of coalition politics, the care we are taking with our response, but he should be in no doubt that both I and the Prime Minister believe that the ruling takes us into a place where we should not be.
Andrew Gwynne (Denton and Reddish) (Lab)
Notwithstanding the difference between the two coalition parties in government, does the Secretary of State not believe that there are no examples of the Strasbourg Court defending our rights where domestic courts have failed?
Chris Grayling
That is an interesting point. Although we understand and respect the differences between the coalition parties on this matter, the Labour party is dancing on a pin. One week, it says that it opposes votes for prisoners; the next week, it supports the rulings of the European Court. As our party sets out its proposals over the next 18 months, it will be fascinating to see exactly where Labour stands.
Dr Julian Huppert (Cambridge) (LD)
Can the Secretary of State list the European countries that are not part of the European convention on human rights? Does he really think that Britain’s international standing would be enhanced by joining the club with Belarus?
Chris Grayling
It is important to say that my concern has always been about the Court, not the convention. As I have said to my hon. Friend in the past, anyone who reads the terms of the convention would find it to be a document that we would all agree with. The problem is the way in which it is being interpreted, which, in my view, has moved a long way away from the intentions of the people who drafted it in the first place.
Huw Irranca-Davies (Ogmore) (Lab)
This Government’s position on, and attitude to, Strasbourg was recently cited in Ukraine as a reason in defence of opposing one of the recommendations of the Court. Does the Secretary of State recognise that withdrawal from the Court would have implications for millions of people beyond our boundaries and beyond our nation?
Chris Grayling
The key point that the hon. Gentleman must understand is that we can be, and will continue to be, a beacon of propriety as regards human rights in the world, but that that does not mean that we have to continue to accept a jurisprudence that is treading on territory that rightly belongs to this Parliament. In my view, this Parliament needs to address that issue.
Mr David Nuttall (Bury North) (Con)
Does my right hon. Friend agree that there is no point in this country withdrawing from the European Court of Human Rights if we remain bound by the European Union and its charter of fundamental rights, because we will finish up being told what to do by the European Court of Justice?
Chris Grayling
As we renegotiate our membership of the European Union—as I hope and believe we will when we win the next election—it is important that we also address the legal position of the charter, which is not only an issue for this country, but conflicts directly, in a number of key areas, with the wording of the convention.
Nic Dakin (Scunthorpe) (Lab)
2. What reports he has received on the progress of investigations of the alleged misuse of public money by private providers that hold contracts with his Department.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
The Serious Fraud Office has launched a criminal investigation of issues that have been uncovered in relation to the electronic monitoring contracts that my Department holds with G4S and Serco. As that criminal investigation is taking place, I cannot comment further at this stage, but I will make a statement as soon as it is appropriate for me to do so.
Nic Dakin
Today we learnt that Professor Harrington had warned the Secretary of State against rolling out fitness-for-work tests as long ago as 2010. Also today, many experts, including the chief inspectors of prisons and probation, have advised against the privatisation of the probation service. Why is the Secretary of State a serial offender when it comes to ignoring expert advice?
Chris Grayling
Let us be clear about the matter that has been raised today. Civil service records show no such warning having been made, and no such warning was included in the reports that were produced at the time.
Andrew Bridgen (North West Leicestershire) (Con)
Can my right hon. Friend assure us that there will be a full review, across Government, of all contracts held by G4S and Serco, so that Ministers will be able to manage such contracts better in future?
Chris Grayling
I can certainly give my hon. Friend that assurance. We are looking carefully at our own contract management approach and at the contracts that we hold. It is worth reminding the House, however, that the issues that are being referred to, and the contracts that we are looking at, date back to the time of the last Government.
Sheila Gilmore (Edinburgh East) (Lab)
We have several years of experience of multi-purpose companies that appear to bid for anything and everything, regardless of whether they have any particular expertise, and that is happening again with the roll-out of the personal independence payment. Promises that were made about the service that would be delivered are simply not being fulfilled. Is it not time for a complete review of contracting of this kind?
Chris Grayling
I am very much in favour of a broader supplier base and the arrival of new organisations to work with the Government. I think it important for us to work with third parties, as, indeed, the last Government did. I believe that when, in the near future, we publish the list of organisations that have passed the pre-qualification questionnaire stage in respect of the reforms of the probation service, every Member in the House will be encouraged by the mix of organisations that have put their names forward.
Jenny Chapman (Darlington) (Lab)
I have never before raised an individual case with the Secretary of State, but every now and again something happens that I think is worthy of being raised in the House.
The Secretary of State will be aware that last week, in court, it was reported that a woman had miscarried in her cell during her first night in a prison run by Sodexo, She informed health care workers, but was made to clean up on her own, and received no assistance for three days and no pain relief. Sodexo’s own inquiry into the matter is not sufficient. The Secretary of State should commit himself to some kind of inquiry, investigation or review to ensure that no other woman in a private or a public sector prison has to experience that level of neglect.
Chris Grayling
Let me make it absolutely clear that if what has been described is true, it is wholly unacceptable. My team will of course follow it up with Sodexo, and Sodexo itself will want to address it, because no one would seek to defend it. Things go wrong in public prisons and in private prisons, and whenever they do go wrong and what happens is unacceptable, it should be addressed.
Jessica Morden (Newport East) (Lab)
3. What assessment he has made of the effects of reductions in funding for civil legal aid.
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
The Ministry of Justice and the Legal Aid Agency keep the legal aid scheme under constant review, in terms of both expenditure and the impact of reforms. The Government will undertake a post-implementation review of the legal aid provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 within the next three to five years.
Jessica Morden
Since the Government’s legal aid cuts, more of my constituents have had to represent themselves in family courts against former partners who can afford a solicitor, and local cases are being deferred by judges because they do not feel that the litigant in person is sufficiently prepared. Does the Minister agree that it is time to be transparent and produce figures showing the number of litigants who have appeared in person and the number of deferred cases that have taken place since the changes, so that we can judge the impact on our courts for ourselves?
Valerie Vaz (Walsall South) (Lab)
4. What recent assessment he has made of family mediation services.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
The Ministry of Justice does not regulate family mediation services, but it does award contracts for the provision of family mediation funded through legal aid to standards set by the Legal Aid Agency. We are aware that there has been a drop in referrals to mediation following changes to legal aid in April 2013, although there has been no drop in the number of mediations taking place. My Department is undertaking a range of activities to address this important issue.
Valerie Vaz
The Minister indicates that there has been a drop of 47%, causing some mediation services to close. That was a foreseeable consequence of cuts in legal aid to family lawyers, so will he please change the policy now?
Chris Grayling
We are working extremely hard to address the issue. One change that will come through when the Children and Families Bill becomes law relates to making it a requirement in a family process that the mediation referral takes place. However, as I say, the actual issue is about referrals, rather than about the number of mediations, which has not changed. We are working very hard with those in the mediation world to address that and ensure that the right referrals are made.
Mr Jonathan Djanogly (Huntingdon) (Con)
I would say the opposite to what the hon. Member for Walsall South (Valerie Vaz) said: I am surprised that the number has fallen, because when the change to the regulations was made the Department gave full funding for all mediation to those in receipt of legal aid. Has the Minister thought, therefore, of encouraging more mediation by approaching lawyers and other venues to increase it?
Chris Grayling
We are following a number of different paths, including an increased promotion of mediation services and making some mediation compulsory as a result of the provisions in the Children and Families Bill. We are also looking for other measures to help ensure that mediation takes place. It is much better if these issues can be dealt with through a mediation service, rather than through the cost and difficulty of a full legal process.
Ian Lucas (Wrexham) (Lab)
But is the Secretary of State not aware that in the delicate environment of the beginning of a divorce case, specialist advice from legal practitioners leading to mediation is essential? That is why this Government’s policy has such a negative impact. Will he please look at it again?
Chris Grayling
I am not sure whether that is an attempted spending commitment from the hon. Gentleman. The reality is that we have had to take difficult decisions about the availability of legal aid in order to deal with the financial challenge we inherited. The issue is about trying to ensure that we make the best use of the network of mediators we have in this country. As I say, the number of actual mediations has not fallen, but we are not getting enough people into mediation in the first place. That is why we are changing the law, we are introducing better targeting of the routes into mediation and we are working with mediation organisations to help them get more people referred to them.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Does my right hon. Friend agree that there seems to be a lack of clarity in this area? For example, it would not be appropriate to refer to family mediation a case in which a woman on low income, who could not pay for legal advice, wants to protect her child from going into custody. Such a case should still be legally aided, rather than being addressed through mediation.
Chris Grayling
Cases involving children being taken into care would, of course, remain funded through legal aid, and they continue to be carried out through the courts in the way they always have been—that remains important.
John Healey (Wentworth and Dearne) (Lab)
5. What his policy is on probation trusts tendering for probation services.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
The “Transforming Rehabilitation” competition process has been designed to allow, as far as possible, a range of different entities to bid to deliver services. But such entities need to be capable of bearing financial risk, because under our reforms we will pay providers in full only if they are successful in reducing reoffending.
John Healey
The Justice Secretary is almost entirely without allies and without evidence for these privatisation plans. The Minister has confirmed that he is denying the experts in some truly excellent probation trusts, such as South Yorkshire’s, the chance to tender for these contracts. If South Yorkshire’s four local authorities combine to back the trust and take out the financial risks he talks about, will he think again?
Jeremy Wright
I would say two things to the right hon. Gentleman. First, he understands, I think, that one advantage of what we are proposing is that we move risk away from the taxpayer, so that those prepared to take on these contracts on a payment-by-results basis put their own money at risk, not the taxpayer’s. In the scenario he is outlining, it is difficult to see how we avoid the taxpayer continuing to take that risk. Secondly, as he may also know, many of the talented individuals who work for probation trusts at the moment are exploring the possibility of setting themselves up as mutuals so that they can continue to do this work, and there is considerable support for that from our colleagues at the Cabinet Office—they are providing money and support to enable them to do that.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
What makes the Minister confident that the structure he has described can overcome the dysfunctionality in offender management described by the chief inspectors of probation and prisons in a report today?
Jeremy Wright
My right hon. Friend refers to the report that has been produced today. As he knows, a significant point in it is that there is not currently sufficiently good connection between offender management that takes place inside custody and that that takes place outside. As he will also recognise, our transforming rehabilitation proposals intend to close that gap, so that offender management involves the same provider from the closing months of someone’s custodial sentence, through the gate and out into the community. Transforming rehabilitation will start to address exactly the points that this report raises.
Natascha Engel (North East Derbyshire) (Lab)
Thirteen police and crime commissioners, including Alan Charles in Derbyshire, have expressed grave concerns at the plans for the probation service because they could put public safety at risk. What has the Minister said to them to address their fears?
Jeremy Wright
The first thing the House should know is that all 13 are Labour police and crime commissioners. Whatever party they come from, it is very important that we work with police and crime commissioners and that all providers who will be doing this work do so too. For that reason, we will ensure that police and crime plans from every area of the country will be clearly available to providers, and we will expect them to co-operate not just with police and crime commissioners but with a whole range of other local partners too.
Gareth Johnson (Dartford) (Con)
Does the Minister agree that the supervision of short-term prisoners by the probation service within existing budgets is simply unaffordable and that the tendering process is needed to provide extra supervision for short-term prisoners?
Jeremy Wright
I agree with my hon. Friend. He does not need to take my word for it as the previous Government tried to do that as part and parcel of the public sector budgets and failed to do so because they determined that it was unaffordable.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
A few days ago, the Minister and the Secretary of State appeared before the Justice Committee, during which the Secretary of State said that his door is always open to meet the leaders of the National Association of Probation Officers. When will that meeting take place?
Jeremy Wright
I cannot give a date to the right hon. Gentleman. Both my right hon. Friend and I have met NAPO leaders before and are happy to do so again. What we will not do is pause the process in which we are engaged because the members of those trade unions would like some certainty over their own futures, and we think that is important, which is why we must get on with this process.
Robert Flello (Stoke-on-Trent South) (Lab)
6. What steps he plans to take to enforce the code of practice for victims of crime.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
We are working with all service providers who have duties under the victims code to ensure that their operational systems, guidance and training are updated to deliver their new responsibilities to victims of crime. We will continue to work with our criminal justice partners to ensure there is appropriate oversight of the new code at a local and national level.
Robert Flello
I am immensely grateful for that.
“There is more to be done to ensure agencies are made accountable under the code…this needs to be backed up by statutory powers.”
Those are not my words but the words of the Victims’ Commissioner herself. At every turn, the Government have paid lip service to victims and then acted against them. They have made the Victims’ Commissioner job part-time and then savaged the criminal injuries scheme. Will the Minister now give the victims code some real teeth, and not just warm words?
Damian Green
I am afraid the hon. Gentleman is massively out of touch with the sector that deals with victims if he expresses those views. When we launched the victims code, it was welcomed by a wide range of our partners in the voluntary sectors, including Victim Support and the National Society for the Prevention of Cruelty to Children. The victims code is a significant step forward from the old impenetrable code that the previous Government put forward, and it has been welcomed by those who know most about the sector.
Simon Hughes (Bermondsey and Old Southwark) (LD)
The one thing victims want most is to know that the perpetrators of the crime are brought to justice. Can the Minister assure us that we are doing enough to ensure that associates of the offender, or people who saw something, have the ability to report what they saw without fear of recrimination? If necessary, they can do it confidentially to start with.
Damian Green
That would be good police practice. One thing we are doing with the code is ensuring that the guidance that goes out to the police from the College of Policing will be improved to fit with the victims code. In other parts of the criminal justice system, both with the Crown Prosecution Service and the courts themselves, the code will make a difference in all instances and will enable victims to feel more confident.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Secretary of State is planning to cut funding for Victim Support in London at a greater rate than anywhere else in the country. Will the Minister listen to his friend the Mayor of London and ensure that victims in London get the support they deserve?
Damian Green
I am happy to assure the hon. Lady and everyone else in London that the amount of money going to Victim Support in London is going up, not down, as it is in every other region of the country. More money will go to victims’ services under this Government than under the previous arrangements.
Sadiq Khan (Tooting) (Lab)
The right hon. Gentleman is usually a thoughtful and intelligent Minister and he will be aware that we already have a variety of codes of practice and charters for victims scattered across different Government agencies. Like him, I meet victims of crime all the time and they complain that the codes are toothless and offer no means of redress if their entitlements are breached. How will the new code differ and how will he measure success?
Damian Green
It will differ in a number of ways. First, the new code is written so that victims will be able to understand it—I am sure that the right hon. Gentleman will agree that the previous code was not written in that way, as it was written by and for professionals. Secondly, there are specific rights in the code that were not in the previous code, such as the very important right for a victim to be able to make their personal statement in court after the sentence. Many victims have said that that is a significant step forward in enabling them to feel that they are being taken more seriously than they have been before.
Annette Brooke (Mid Dorset and North Poole) (LD)
7. What plans he has to review sentencing for causing death by dangerous driving.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
Causing death by dangerous driving is punishable by up to 14 years’ imprisonment. I have asked the Sentencing Council to look at its guidelines on causing death by driving to ensure that the sentences imposed reflect the seriousness of the offending. We are also considering whether further changes might be necessary to strengthen the law.
Annette Brooke
I thank the Secretary of State for his answer. Constituents who have lost a close relative in a driving incident, perhaps a young son or daughter, face the stress of a court case along with a feeling that the sentences for serious driving offences are inadequate. Does he agree that the outcome of the review and the various issues he is considering must make a difference to irresponsible driving and the subsequent loss of lives?
Chris Grayling
I very much agree with my hon. Friend. I feel strongly that we must take a tough approach to someone’s causing death and serious injury while disqualified from driving. Too often, it turns out that the people who commit such an offence have been disqualified again and again and do not have a licence when it happens. That is an area that I am keen to address.
Steve McCabe (Birmingham, Selly Oak) (Lab)
The Secretary of State’s colleague at the Home Office, the hon. Member for Lewes (Norman Baker), announced in Cambridge on 28 August that he had asked the Sentencing Council to review this very offence. Is this another request today? When exactly will the Sentencing Council review the offence and make a decision?
Chris Grayling
I put in the original request to the Sentencing Council some months ago. It intends to put this into its work stream for next year and will make recommendations. Separately, I am also looking at the current law. I feel that there is still scope for tightening and I will bring forward my thoughts in due course.
Mr Philip Hollobone (Kettering) (Con)
My constituents Mark and Sue Donnelly lost their 26-year-old son Stephen in a road incident on the A14 to a driver who was twice over the limit. He was sentenced to eight years in prison, which they do not think is long enough, and nor do I, but he was also given a 10-year concurrent driving ban, which they felt was particularly insulting since for most of that time he would be in prison and unable to drive. Will the Secretary of State consider concurrent driving bans to see whether they are appropriate?
Chris Grayling
I am rather sympathetic to what my hon. Friend says and I suggest that he and I have a longer conversation about it.
Mr David Hanson (Delyn) (Lab)
8. What his strategy is for supporting victims of crime.
Mr David Burrowes (Enfield, Southgate) (Con)
16. What recent steps he has taken to support victims of crime.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
This Government are committed to putting victims first and we will give victims a voice at every stage of the criminal justice system. It is crucial that victims receive the support and help they need to cope and, where possible, to recover. We are aiming to make up to £100 million available to support victims to recover, testing pre-trial cross-examination, considering how we might reduce the distress caused to victims by cross-examination in court and implementing the new victims code.
Damian Green
The Victims’ Commissioner is doing admirable work. She is supporting the Government and she is capable of doing the work very well. I am already enjoying working with her to ensure that she continues to represent the interests of victims very well.
Mr Burrowes
Can the Minister give me an update on the progress in providing funds for victims from prisoner earnings, which not only fulfilled an important manifesto commitment, but upheld the principle that criminals should pay victims for their crimes, not least when as prisoners they are earning?
Damian Green
My hon. Friend raises an important point. Part of the extra money that is going to support victims in London and elsewhere comes from the proceeds of the Prisoners’ Earnings Act 1996. I am happy to tell him that whereas in 2011-12 some £332,000 went to Victim Support from this source, in 2013-14 the sum will be £825,000—more than two and a half times as much.
Dan Jarvis (Barnsley Central) (Lab)
Victims of domestic abuse are placed at risk when forced to give their safe address in open court in unrelated proceedings. That not only places the individual at risk from the abuser, but deters the thousands of victims who suffer from domestic violence from reporting this horrendous crime. Does the Minister support Eve’s law, which seeks to address that anomaly, and will he work with the campaign to ensure its implementation in law?
Damian Green
I will happily consider that. The hon. Gentleman makes a reasonable point. It is for the judge to decide in each individual case, and it is not for Ministers at the Dispatch Box to decide what judges do in each individual case. We are already taking a range of steps to protect people who may be victims of domestic violence, and I am always happy to look at others.
Andrew George (St Ives) (LD)
On a similar point, the families of victims of capital crimes, as well as coping with bereavement, will usually be unaware of their rights and the responsibilities of authorities to assist them in protecting the memory, reputation, estate and so on of the deceased. What assessment has my right hon. Friend made of the support available to victims’ families in such circumstances?
Damian Green
I think I know the case to which my hon. Friend is referring, as he and I have discussed it in Westminster Hall. He will be aware that I wrote to him on 4 December on the detailed issue. Victims of all kinds require support and are getting better support. As he knows, the specific issues related to cases such as he describes are being considered at present.
David Mowat (Warrington South) (Con)
9. What assessment he has made of the potential for further savings to the public purse from the justice system.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
Across the spending review period starting in 2010 and running up to March 2015 the Ministry of Justice will have delivered annual savings of well over £2.5 billion. Building on successful delivery of these savings, the Ministry is developing reform plans to transform the way we deal with offenders and make courts, prisons and probation more efficient.
David Mowat
A unique feature of the legal aid system in the UK is that we pay a subset of practitioners several multiples of what we pay our Prime Minister. Can the Secretary of State give us some assurance that his changes and amendments to the legal aid system will bear down on those very high salaries, while protecting the majority of barristers who do such good work?
Chris Grayling
We have tried very hard in difficult decisions to make sure that we focus as much as possible of the impact of necessary changes to legal aid on the higher end of the income scale. Our changes to very high cost case fees and the approach that we are taking to Crown court fees are designed to ensure that, so far as possible, the impact of our changes is much less on those people at the bottom end of the income scale than it is at the top.
Mr Frank Field (Birkenhead) (Lab)
10. How many young people currently in young offenders institutions and specialist children’s homes are being held on human trafficking offences.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
From 2008 to 2012, no children and young people were sentenced to custody for human trafficking as the principal offence. This Government are committed to combating human trafficking. On Monday we published the draft Modern Slavery Bill to strengthen our response and to underpin the work of law enforcement agencies.
Mr Field
As the Lord Chief Justice has ruled that victims of slavery should not be prosecuted for crimes they undertake under the direction of their slave owners, will the Minister undertake an audit of young people in offender institutions to establish how many are there, even if they have been charged under a lesser crime, in order to see whether their cases should be reviewed?
Damian Green
Yes, as part of the extra work we are doing under the aegis of the draft Modern Slavery Bill, to which the right hon. Gentleman has contributed significantly, we are obviously looking at the individual effects on those who might have been victims of trafficking and enslavement. He makes a perfectly valid point.
Fiona Bruce (Congleton) (Con)
11. How his Department’s funding for restorative justice is being disbursed.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
We recently announced funding of £29 million over three years for restorative justice, at least £22 million of which is going to police and crime commissioners for victim-initiated and pre-sentence restorative justice services. The remainder is being used to boost capacity so that good-quality restorative justice is available at all stages in the criminal justice system.
Fiona Bruce
I thank the Minister for that reply. Will he join me in affirming the excellent work of the Prison Fellowship’s restorative justice programme, known as the Sycamore Tree project, and will he be good enough to meet me and Prison Fellowship representatives to discuss how the project can be extended beyond the third of prisons in which it currently works to prisons across the country?
Jeremy Wright
As my hon. Friend says, the Sycamore Tree project is already available in some 75 prisons. I certainly support what my hon. Friend says about the good work it does, as was showcased at the excellent event she hosted last week, which I had the pleasure of attending. I will certainly meet her to discuss it further.
Henry Smith (Crawley) (Con)
12. What professional development support his Department plans to put in place for those supervising offenders in the community.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
The national probation service will continue to use the probation qualifications framework to ensure the competence of its staff. For the new community rehabilitation companies there will be a contractual requirement to have and to maintain a work force who have appropriate levels of training and competence. On 3 December we announced that we will be setting up a new probation institute that will promote the sharing of good practice to those working across the probation profession.
Henry Smith
I am grateful to my hon. Friend for that answer. How much investment are the Government making in the new national probation institute?
Jeremy Wright
We are contributing some £90,000 towards the cost of setting up the probation institute. The remainder will come from the Probation Association and the Probation Chiefs Association. I am grateful to them and to the probation trade unions for working together so successfully to bring forward the proposal, which we entirely support and which will help to underline the professionalism and continuing professional development of those who work in rehabilitation.
Mr Gerry Sutcliffe (Bradford South) (Lab)
13. What steps he plans to take to ensure access to justice regardless of ability to pay.
Paul Blomfield (Sheffield Central) (Lab)
14. What steps he plans to take to ensure access to justice regardless of ability to pay.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
The fee remissions scheme was updated on 7 October this year. It provides for court and tribunal fees to be waived in whole or in part based on an assessment of the user’s disposable capital and gross monthly income. The scheme ensures that access to justice is protected for those who cannot afford to pay court or tribunal fees. Legal aid also remains available in many cases, and those granted legal aid will have their court fees paid.
Mr Sutcliffe
I am interested in that answer. Why is it, then, that the legal profession in Bradford is telling me that, as a result of the Government’s introduction of charges for industrial tribunals—£1,500 before taking a case—and reduced support for legal advice workers, people will be denied reasonable access to justice?
Chris Grayling
The system is very clear. When someone needs to go to court but does not have the income to pay any court fees incurred, there is a system of fee remissions that ensures that they do not have to contribute.
Paul Blomfield
The Secretary of State’s justification for the legal aid residence test is contribution, particularly through tax. Can he therefore explain his decision to exempt only certain categories of children from the test? If he fails to broaden the exemption, is he not in danger of falling into the trap that the Joint Committee on Human Rights described last week as
“knowing the price of everything but the value of nothing”?
Chris Grayling
I might be a bit old-fashioned, but I do not think that we should give civil legal aid to people who have just arrived in the country. However, I recognise some of the issues raised in the consultation and I have listened. The change with regard to very young children under 12 months old was specifically requested by people in the judiciary. I listened and I introduced it.
Mr Andy Slaughter (Hammersmith) (Lab)
One group particularly badly hit by the Government’s restrictions on access to justice are mesothelioma sufferers. The Secretary of State has not carried out the review that he promised in order to get the Legal Aid, Sentencing and Punishment of Offenders Act 2012 through. He continues to confuse funding for mesothelioma with the Mesothelioma Bill, even though there is no connection. He has not even answered the question that my hon. Friend the Member for Stretford and Urmston (Kate Green) asked at the previous Justice questions, which he promised to do. Why is he making people who suffer from that terrible disease pay 25% of their compensation in lawyers’ fees and then telling them to shop around? When will he give justice to mesothelioma sufferers?
Chris Grayling
Of course this is not a new problem, and in many areas we are picking up on things that were not done by the previous Government. We will bring forward a further consultation on these issues shortly.
Graeme Morrice (Livingston) (Lab)
15. What steps he is taking to support victims of domestic violence.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
Domestic violence is a dreadful form of abuse and is not acceptable within our society. The Government are committed to providing greater protection to victims of all forms of violence, and their approach to domestic violence and abuse is set out in the violence against women and girls action plan, updated in 2013.
Graeme Morrice
Last week’s report by the Joint Committee on Human Rights on the Government’s legal aid cuts said:
“We are particularly worried about the impact of the residence test on vulnerable groups such as children or victims of domestic violence.”
Will the Minister tell the House exactly how much will be saved by taking away legal aid from sufferers of domestic violence affected by the residence test, and explain what victims are expected to do if these plans strip them of the option of legal aid?
Damian Green
The Government have left in place all the exemptions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 to ensure that the most vulnerable continue to receive legal aid. Beyond that, we have ring-fenced nearly £40 million for specialist local domestic and sexual violence support services. That, together with specialist domestic violence courts, provides a better specialist way of dealing with this terrible abuse.
Andrew Jones (Harrogate and Knaresborough) (Con)
17. What steps he is taking to tackle rogue payment protection insurance claim companies and nuisance calling by those companies.
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
Our priority is to protect the public by rooting out and punishing bad practices by claims companies. The claims management regulator is expanding its resources and consulting on a new set of toughened rules to crackdown on abuses, and later next year claims companies will face fines for rule breaches.
Andrew Jones
I thank the Minister for that reply. Given that so many rogue companies have been plaguing constituents, what effect have the Government’s actions had on the number of claims firms?
Mr Vara
I am happy to say that there has been a positive impact on the numbers. Between January and November 2013, the total number of authorised claims management companies decreased by 718; the total number of personal injury claims management companies fell by 917; and the total number of PPI claims management companies fell by 85. That is clear evidence that the Government’s tough measures are having an impact.
Jason McCartney (Colne Valley) (Con)
23. I serve on the Transport Committee, and we have just completed an inquiry into the effect of fraudulent whiplash claims on the cost of motor insurance. Will the Minister update the House on what steps the Government are taking to stop bogus claims by rogue firms driving up the cost of insurance premiums for drivers?
Mr Vara
The Government have introduced various measures, one of which, on whiplash, is to have an accredited panel of medical experts. We want to make sure that there are proper experts who deal with this issue. The AA has reported that, as of October this year, the average comprehensive insurance for motor vehicles has gone down by £80.
Sir Tony Baldry (Banbury) (Con)
18. What steps he is taking to reduce the use of cautions for repeat offences.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
Cautioning for repeat offenders is unacceptable and does not deliver justice for victims. That is why we have acted to ensure that criminals should no longer receive a second caution for the same, or a similar, offence committed in a two-year period.
Sir Tony Baldry
I thank my right hon. Friend for that answer. In addition to stopping the use of repeat cautions, does he agree that there are some offences for which, in any event, the use of a caution is simply not appropriate?
Damian Green
I do agree; my right hon. Friend makes an extremely important and valid point. That is why we concluded after the simple cautions review that cautions should not be used for any offence that can be tried only in the Crown court. Indeed, going further than that, certain offences that can be tried either in the Crown court or in a magistrates court are also not suitable for cautions, including, in particular, possession of a knife.
Andrew Selous (South West Bedfordshire) (Con)
19. What steps he is taking to ensure that no prisoner leaves prison unable to read.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
When a literacy need is identified on arrival in prison, prisoners are offered teaching and support as a matter of priority. In 2014 we are introducing increased assessment for prisoners, including reading skills, to ensure that we maximise the benefits of the literacy support that is available.
Andrew Selous
The Secretary of State has spoken of his vision of custody as “education with detention”. If serious efforts are made in prison to deal with illiteracy, will probation officers absolutely ensure that that continues on release?
Jeremy Wright
I think my hon. Friend refers to a quote that is specifically about the youth estate, but he is absolutely right that education is just as important in the adult estate. Too many prisoners cannot read and write properly, which means that their chances of securing employment on release are much reduced. Under our reforms of rehabilitation, we will expect providers to ensure that someone is supported not only through the gate, but in the community for at least 12 months. One of the best ways of supporting them to stay free of crime is to make sure that they get employment, so I would absolutely expect them to be interested in literacy as well as many other things.
Mr Speaker
The right hon. Member for Hazel Grove (Sir Andrew Stunell) was already looking excited, but I imagine his excitement will now be boundless.
Sir Andrew Stunell (Hazel Grove) (LD)
20. What steps he plans to take to ensure that the voluntary sector is able to compete for rehabilitation contracts.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
I am not sure I can live up to the expectations, Mr Speaker.
We have run a registration process for smaller providers to maximise the opportunities for them to be involved in the competition, and we awarded £150,000 to the Association of Chief Executives of Voluntary Organisations to help the voluntary sector and mutuals to compete for contracts. We will embed good market stewardship principles in the system so that there is fair, reasonable and transparent treatment of all those involved in the direct and indirect provision of services.
Sir Andrew Stunell
I thank the Minister for that reply, but does he agree that in many previous exercises by other Government Departments, inappropriate scale of projects and burdensome bureaucratic detail have meant that small, voluntary local organisations have been ruled out? Will he undertake to ensure that high-quality, small-scale providers will be able to access these contracts?
Jeremy Wright
I understand the point my right hon. Friend makes: it is very important that we reduce bureaucracy wherever we can. I know he has experience of this from his time in government. It is also important that we support those small, voluntary organisations when they show an interest and then support them through the contract-bidding process and contract management. My right hon. Friend will be reassured to learn that there is already considerable interest in the voluntary sector: some 550 voluntary organisations have already expressed their interest in participating.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
My hon. Friend and I had the honour and pleasure of visiting Stafford prison last week. I pay tribute to the skills of the team working there. It has a strong and valuable future in our prison system.
Jeremy Lefroy
I am very grateful to my right hon. Friend for visiting last week. He will have seen the emphasis that Governor Oakes-Richards places on prisoners being in work, education and other purposeful activity. Will my right hon. Friend indicate what support the Ministry of Justice is giving to Stafford and other prisons to help them prepare prisoners for the world of work?
Chris Grayling
If you were to visit Stafford prison, Mr Speaker, you could not help being impressed by the work being done by the team on the ground, bringing valuable contracts and work experience into the prison. Of course, our central team that looks for opportunities to bring work into prisons will work with Stafford and other prisons to ensure that we do as much as we can to keep prisoners active.
Mr Speaker
I must tell the Secretary of State that I have visited the prison myself, but sadly it was 13 years ago. I am sure it is even better now than it was then. [Interruption.] No, I did so in my capacity as a shadow Minister. [Laughter.]
The Minister for Policing, Criminal Justice and Victims (Damian Green)
The whole House is relieved to hear that, Mr Speaker!
John Pugh (Southport) (LD)
22. What assessment he has made of trends in the number of cracked trials.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
The number and proportion of trials which crack and the reasons for this is reported by the Ministry of Justice in quarterly court statistics. As part of the Government’s criminal justice strategy and action plan, Her Majesty’s Courts and Tribunals Service is working with the Crown Prosecution Service and the judiciary to improve performance in the summary justice system, including reducing the volume of cracked trials.
Damian Green
No. The cracked trial rate in magistrates courts has remained fairly stable—between 43% and 45%—since 2006. I am happy to report that the rate in the Crown court has been falling steadily—from 43% in the third quarter of 2010 to 36% in the second quarter of 2013—so progress is being made.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
Given the interest in victims’ matters today, I will briefly update the House on the new victims code, which came into effect last week. It is the culmination of a year’s work to make sure that victims are given back their voice, and it has been widely welcomed by victims’ groups. Crucially, it includes a new entitlement for victims to read out their personal statement in court, which means that offenders and the court will be left in no doubt about the full impact of the crime. Children and young people will get the enhanced levels of support that they deserve all the way through the criminal justice process. The new impact statement for business will make sure that when hard-working people and their businesses suffer from the effects of crime, the court can hear directly about its impact on their livelihood and on jobs. I want to make sure that all victims’ voices are heard, and this Government are working to ensure that they are.
Tom Blenkinsop
Since May 2010, 47 courts closed by this Government have remained unsold. The cost to maintain those buildings is £2.2 million. Is that a good use of taxpayers’ money?
Chris Grayling
Clearly, we want to sell an unused property as soon as we can, and we are working to do so, but we of course need to have a buyer before we can sell it, and we are constantly looking for buyers.
Priti Patel (Witham) (Con)
T3. Will the Secretary of State provide the House with an update on when he intends to stop child sex offenders and terrorists being automatically released from prison early?
Chris Grayling
This is an extremely important area. A change is long overdue, and we will proceed with it in the next few weeks.
Sadiq Khan (Tooting) (Lab)
You will be aware, Mr Speaker, that the Justice Secretary is unwilling to publish the MOJ’s assessment of the risks attached to his plans to privatise probation. Will the Secretary of State tell the House whether his plans will see the risk to public safety higher, lower or the same as it is now?
Chris Grayling
I owe the right hon. Gentleman an apology from last time, when I implied that his campaign to be Mayor of London had him trailing in third place. I have now discovered that that is not the case, and I wish him well. I have watched his progress carefully.
On the risk registers, I would say to the right hon. Gentleman that he never published them because they are a working tool for the civil service. This Government will not do anything that leads to a greater risk to public safety. Bringing supervision to under-12-month groups will make the public safer, rather than more at risk, through a system that he and his Government admitted was wrong but never did anything about.
Sadiq Khan
The Secretary of State’s response is even more surprising, bearing in mind the very damning joint report from the chief inspectors of prisons and of probation, which is published today. They believe that the scale of the problems they have identified means that
“the entire thrust of the Government’s rehabilitation plans”
is undermined. We know that he ignored their last report in 2012, but bearing in mind the seriousness of the issue, will he meet the inspectors as a matter of urgency to hear their concerns that his plans could in fact make matters worse rather than better?
Chris Grayling
I hate to disappoint the right hon. Gentleman, but I last met the probation inspector about three days ago. I meet both inspectors regularly, and I take their views immensely seriously. That is one reason why we have put in place radical changes that will create a through the gate rehabilitation service to deal with many of the issues that they have highlighted. Unfortunately for the right hon. Gentleman, their report is not about our plans, but about the system we are trying to change, and that is why we are trying to change it.
Mr David Burrowes (Enfield, Southgate) (Con)
T4. The Secretary of State will be aware that, following a spate of knife attacks in Enfield, my hon. Friend the Member for Enfield North (Nick de Bois) and I led a successful campaign to toughen up the knife laws. After the killing in my constituency of Joshua Folkes just two weeks ago from a knife attack, will the Secretary of State ensure that the law shows greater intolerance of those carrying a knife?
The Minister for Policing, Criminal Justice and Victims (Damian Green)
The whole House will share my hon. Friend’s horror at the death of his constituent in a knife crime, and I pay tribute to my hon. Friend for his dedication to tackling that particular social scourge. He will know that the Government have recently created a mandatory prison sentence for threatening someone with a knife, and as I have just said to my right hon. Friend the Member for Banbury (Sir Tony Baldry), we are ending the use of cautioning for possession of a knife. Knife crime is falling, but we will of course consider any further changes that will continue that welcome fall.
Kerry McCarthy (Bristol East) (Lab)
T2. Bristol city council and Barnardo’s have just launched a charter for the children of prisoners, which is intended to prevent young people in such a situation from enduring their own hidden sentence and to reduce the impact of a parent’s imprisonment on their educational attainment, emotional development and behaviour. What support is the Justice Secretary giving to such initiatives, and will he review how his Department can help the 1,300 children in Bristol and the close to 200,000 children in England and Wales in such a situation?
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
What the hon. Lady says is very interesting and we will look at the details. She is of course right that it has a huge impact on young people when one of their parents serves time in custody. There is a knock-on effect on the likelihood of those young people going on to commit crimes themselves. Shockingly, something like 60% of young men who have had a parent in custody go on to commit crimes themselves. She is right to make that link and we will look at what she has said.
Andrew George (St Ives) (LD)
T5. The forfeiture rule precludes a person who has been convicted of unlawfully killing another person from acquiring benefit in consequence of the killing. However, if the deceased person is a close family friend, a spouse or a close family member, their killer can use and abuse the estate until they are convicted. Will the Government consider addressing that issue? Will the Minister meet me to explore whether the rule can be improved in that respect?
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
My hon. Friend raises an interesting point. I would be more than happy to meet him to discuss the matter further.
Jeremy Corbyn (Islington North) (Lab)
T7. Will the Secretary of State confirm that neither G4S nor Serco will be considered for any further contracts with the Ministry of Justice while the fraud inquiries are continuing?
Chris Grayling
Mr Speaker, you will understand that, for legal reasons, I cannot discuss the outcome of a tendering process before the appropriate time. I will make the appropriate statements when the right moment arises.
Sir Edward Leigh (Gainsborough) (Con)
T6. Further to the Secretary of State’s earlier reply, will he confirm that this country is a proud signatory of the original European convention on human rights and a founder member of the Council of Europe? Indeed, for its first five decades, the convention was hardly a controversial issue. The problem is that the Human Rights Act 1998 has been used by the European Court of Human Rights in a proactive way to deal not with gross abuses of human rights like those that we saw in fascist Europe, but with the decisions of a democratically elected Parliament. Why do we not simply remain a member of the Council of Europe, keep the convention, repeal the 1998 Act and create our own Bill of Rights?
Chris Grayling
My hon. Friend makes a valid point. A leading official from the Court came to this House a few weeks ago and described this country as “best in class”. If a country that is best in class on human rights has reached a point where it has lost confidence in the Court, it is clear that something needs to be done. Under a Conservative Government, something will be done.
Natascha Engel (North East Derbyshire) (Lab)
T9. As well as the 13 wise Labour police and crime commissioners who have raised concerns about the Justice Secretary’s plans for probation, probation staff themselves have raised concerns and the internal risk assessment raises serious concerns about the dangerous and reckless plans. Given that, why is he signing contracts with private companies for up to 10 years, which will bind future Parliaments to pursue this privatisation whether it is successful or goes very badly wrong?
Chris Grayling
Let me remind the House what the Labour party opposes. It opposes extending supervision to under 12-month prisoners. It opposes a through the gate service. It opposes a system that will provide mentoring and support to people for 12 months after they leave prison. That is what the Opposition keep criticising. They could not do it because they could not find a way. We have found a way and we are going to do it.
Mr David Ward (Bradford East) (LD)
T8. I listened with interest to the question that the hon. Member for Colne Valley (Jason McCartney) asked about PPI claims. It is excellent news that the Competition Commission is taking action to address market failure in the car insurance industry. The Department for Business, Innovation and Skills, the Department for Transport and the Home Office are all making a contribution. Is there anything more that the Ministry of Justice can do?
Andy McDonald (Middlesbrough) (Lab)
T10. Given that new entrants will potentially be coming into an immature private probation market, will the Secretary of State guarantee that low and medium- risk prisoners will be managed correctly when their risk level increases so that public safety is not compromised?
Chris Grayling
A crucial part of the reform plan and the contracts that we are putting together will be to require an element of co-location between the members of the national probation service who carry out risk assessments and the teams in the new providers to ensure that there is a simple process that happens in the same office so that risky offenders can be transferred to multi-agency supervision as quickly as necessary when the circumstance arises.
Philip Davies (Shipley) (Con)
According to Ministry of Justice figures, for every single category of offence, men are more likely than women to be sent to prison. Does the Secretary of State accept his own Department’s figures, or does he think they are wrong?
Jeremy Wright
I always try to accept my own Department’s figures, but I think my hon. Friend will accept that it is always in the minds of sentencers to try to avoid sentencing female offenders, in particular, to custody. As he will agree, however, that is sometimes unavoidable, which is why we need to provide the necessary places in the female custodial estate.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
A few weeks ago I attended a public forum on domestic violence, where I was told that specialist domestic violence courts were being closed and that support for domestic violence victims to bring their case to court was being restricted. Why do the Government find it acceptable to deny the most vulnerable access to justice?
Damian Green
This Government have done more than any previous Government to give victims of domestic violence access to justice, and we are continuing to improve how such people, normally women, are treated in the operations of both the courts system and the police. As I said earlier, we have backed up that commitment with £40 million of ring-fenced money.
Jackie Doyle-Price (Thurrock) (Con)
Theft and vandalism against small businesses costs jobs. Will my right hon. Friend confirm that his changes to the victims code will mean that courts can take into account the economic consequence of crime from now on?
Chris Grayling
I can confirm exactly that, and I pay tribute to my hon. Friend and her constituents. Her work in this area is clear evidence that a Back Bencher bringing a genuine constituency case to the Government can make a real difference. She did that, she has made a difference and the world has now changed for such businesses, so the impact will be known.
Paul Goggins (Wythenshawe and Sale East) (Lab)
The Secretary of State indicated earlier that he was planning a consultation on mesothelioma victims. Does he accept that the review that his Department recently carried out simply did not fulfil the requirements of section 48 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012?
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Will the Minister confirm that if an alternative location can be found for the Felmores approved premises in Basildon, his Department is still willing to relocate it?
Jeremy Wright
We will certainly look at that. May I say that it has been particularly helpful to receive submissions on the matter from my hon. Friend, who has been closely engaged in arguing on behalf of his constituents? Of course, if a suitable alternative venue can be found, we will co-operate with that.
Huw Irranca-Davies (Ogmore) (Lab)
Will the Secretary of State confirm that last Friday the prison capacity was running at 99.2%? Will he further confirm that over Christmas and into the new year, no police cells or custodial cells in courts will be used to supply the overfill?
Chris Grayling
The Opposition are desperate to find a crisis in our prisons. I can absolutely confirm that we are nowhere near the situation that they were in when they were in office, when they had to use police cells. We have plenty of capacity in our prison system and plenty of reserves that we can draw upon, and last week the prison population came down.
Dr Matthew Offord (Hendon) (Con)
Does the Secretary of State share my concern about the case of Beth Schlesinger and the unusual decision by an Austrian court to deprive her of custody of her two young children? Will he undertake to make representations to the Austrian Government on what many people consider a serious miscarriage of justice?
Chris Grayling
I am happy to discuss the case with my hon. Friend. I suspect that he, as constituency MP, may be better placed to make representations, but I am happy to discuss it with him.
Robert Flello (Stoke-on-Trent South) (Lab)
May I take the Secretary of State’s mind back to the war memorial at the former Fenton magistrates court? There seems to be a bit of confusion among some of my constituents who are fighting for it about the difference between a covenant and a clause in a sale contract. Will he put on record whether there will be a permanent covenant or a temporary contract clause?
Mr Philip Hollobone (Kettering) (Con)
How many foreign national offenders are there in our prisons, and what steps are being taken to send them back to secure detention in their own countries?
Jeremy Wright
Well, this question is familiar to me. The answer is 10,789—I think that figure is heading in the right direction although there is a lot more to do. My hon. Friend is right to say that the Government’s clear intention is to return all the foreign national offenders we can back to custody in their own countries. That requires compulsory prisoner transfer agreements of the kind that we are negotiating and that Labour failed to negotiate.
Mr Speaker
I would not want the hon. Member for Cambridge (Dr Huppert) to feel either forgotten or ignored. We must hear the hon. Gentleman, with brevity.
Dr Huppert
For many years there has been an increase in private companies doing public sector work. Does the Secretary of State agree that that must be done in a transparent and accountable way, and will he extend the Freedom of Information Act to cover it?
Chris Grayling
I am very much of the view that the Freedom of Information Act should be extended to cover some of those provisions, and I am also in favour of an open-book arrangement with our contractors. I hope that when the hon. Gentleman looks at the list of organisations that have put their name forward for probation, which will be published shortly, he will see some powerful partnerships between the private and voluntary sector of the kind we all hope to see.
Petition
Nic Dakin (Scunthorpe) (Lab)
I would like to pay tribute to the hard work that Councillors Sandra Bainbridge and Tony Ellerby have done in leading this petition to defend an asset in their ward.
The petition states:
The Petition of residents of Scunthorpe,
Declares that the Petitioners are very disappointed by the ruling of the Conservative group of North Lincolnshire Council that they intend to close The Lilacs care home despite it being a manifesto promise of theirs to not do so.
The Petitioners therefore request that the House of Commons requests the Government to urge North Lincolnshire Council to rethink their decision and consider the impact that this closure will have on local residents.
And the Petitioners remain, etc.
[P001314]
Transport Infrastructure
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Transport (Mr Patrick McLoughlin)
With permission, Mr Speaker, I would like to make a statement about the work of the Airports Commission. I will also give brief details of my written ministerial statement from this morning on Network Rail’s reclassification.
In September last year, Sir Howard Davies agreed to chair an independent Airports Commission. That commission was asked to examine how the UK’s status as a leading global aviation hub can be maintained, and this morning it published its interim report. I have deposited copies of that report in the Library, and it is available on the Airports Commission’s website. I know this issue is central not only to our nation’s economic future but to those who use or work in airports, or who are affected by the impact of airports on their lives.
The UK is a leader in aviation, with the third largest aviation network in the world. The sector contributes £18 billion per year to our economy, and employs around 220,000 workers directly and many more indirectly. We need airports that put our country at the front of global competition and allow people to get to where they want to go. We also want airports that are quieter and meet our carbon commitments. Today’s report is an important step towards both goals.
Many Members of the House and their constituents hold strong views about the right outcome, and it is right that we respect that. I will be writing to invite Members to a briefing session early in the new year, when Sir Howard will explain the contents of the commission’s report in more detail. I take this opportunity to thank Sir Howard and his fellow commissioners—Sir John Armitt, Professor Ricky Burdett, Vivienne Cox and Dame Julia King, and Geoff Muirhead who stood down in September—for the care they have taken. Their interim report is a detailed and professional piece of work based on careful research, and it merits the fullest consideration.
It may be helpful if I provide a brief overview of the key issues that have been addressed. First, the interim report provides the commission’s advice on the level of future airport capacity this country will require, which is based on new evidence about a rapidly changing industry. The commission has also consulted a wide range of people and organisations, and as a result it offers a clear recommendation that there is need for new runway capacity in the medium term to support continued competitiveness and prosperity. We will, of course, be looking carefully at that recommendation and at how best we can take decisions that are in the long-term economic interest of the country, while respecting the environment and quality of life. Sir Howard is also clear in his report that there is no crisis of capacity now. He does, however, conclude that we will need one additional runway in the south-east by 2030, and in all likelihood a second by 2050. The commission is clear that those recommendations can be consistent with the UK’s climate change obligations.
Secondly, the commission has announced which long-term options it intends to take forward in the second phase of its work. The first option is Gatwick Airport. The commission will consider a new runway spaced sufficiently south of the existing runway to permit fully independent operation. The second and third options are for Heathrow Airport. The Commission will consider, first, a new full-length runway to the north west of the existing airport, as proposed by Heathrow Airport Ltd, spaced sufficiently to permit fully independent operation; and secondly, an extension of the existing northern runway to the west, as proposed by Heathrow Hub Ltd, which would allow it to be operated as two separate runways, one for departures and one for arrivals.
Options for the construction of a new airport in the Thames estuary have not been shortlisted by the commission at this stage. However, the commission intends to carry out further analysis of the feasibility and impacts of a new airport on the Isle of Grain and aims to reach a decision in the second half of 2014 on whether this constitutes a credible option for further development and detailed study. If this option is then added to the shortlist, it will be subject to a process of appraisal and consultation similar to that proposed for other shortlisted options. In phase two of its work, the commission will undertake detailed analysis and consultation on each of these locations, in partnership with promoters. It will also, of course, work with local communities and listen to their views.
On the third key issue, the commission also recommends action to make better use of our existing aviation infrastructure, particularly over the next five years. I welcome this fresh thinking, much of which is aimed at industry as much as the Government, about how we can make improvements to our already strong aviation sector. The commission has produced some interesting ideas including: the better use of airspace to improve resilience at London airports; trials at Heathrow airport to smooth the early-morning arrival schedule to minimise stacking and delays and to provide more predictable respite for local communities; and an independent aviation noise authority to improve decision making on noise issues. These are important recommendations that merit a response in advance of decisions on longer-term capacity. The Government will consider the short-term recommendations in detail and respond to them by the spring of next year. Finally, the commission proposes improvements to surface access to airports. The Government set out their initial response to these recommendations in their national infrastructure plan, published earlier this month.
I would also like to set out how we intend to address the concerns of people who live around sites subject to further consideration by the commission. Now that the commission’s report has been published, we will be working closely with promoters to consider the form and scale of any appropriate relief that might be put in place, and we will set out our thinking on this important issue in our response to the interim report.
I know that colleagues on both sides of the House will have their views on the content of the commission’s interim report, and in particular on the choices made in shortlisting those options. My principal concern as Secretary of State for Transport is to protect the integrity and independence of the commission process through to the final report, which we expect to be delivered by summer 2015. The Government will not therefore be commenting, either today or in responding to the interim report, on the respective merits of the options that have and have not been shortlisted. Given the vital importance of aviation to our nation, I urge colleagues to engage positively with the work of the commission as it moves into the next, equally important phase of its work. The variety of views in the House and beyond about the right way forward is proof that an independent commission, rather than ill thought out actions that might suggest other alternatives, is the right way forward. The commission process offers us the best chance we have to get this decision right.
I turn briefly to a second issue. Hon. Members will also be aware that today the Office for National Statistics announced that from 1 September 2014 Network Rail will be reclassified and appear on the Government’s balance sheet. As the Treasury and the Office for Budget Responsibility noted when my right hon. Friend the Chancellor made his autumn statement, this includes the company’s net debt of some £30 billion. I laid a written ministerial statement this morning, and I published a memorandum of understanding with Network Rail on my Department’s website and placed copies in the Libraries of both Houses. The MOU shows how my Department will work with Network Rail until its reclassification in September 2014. This independent, statistical decision will not affect Network Rail’s investment programmes, plans for High Speed 2 or the franchising programme.
The Government will continue to deliver vital improvements to all modes of transport so that transport can remain the engine for economic growth that it is. I commend this statement to the House.
Mary Creagh (Wakefield) (Lab)
I thank the Secretary of State for giving me notice and advance sight of his statement. I welcome the interim report from Sir Howard Davies. This is important work, and we will scrutinise it closely. It is vital that we take decisions about our airport capacity, including in the south-east, as it is important for Britain’s jobs, growth and competitiveness. Britain’s status as a global centre of aviation should be maintained.
It is good to see that the original Heathrow proposal for a third runway to the north of the current airport, which we were sceptical about, has been taken off the table. We also welcome the fact that this work takes into account our climate change obligations. As the commission now looks at specific proposals in more detail, we urge it to take into account the need to minimise the impact of increased capacity on local people and the environment. We are glad that the Government accepted our proposal to establish the commission, and we will look carefully at the report. The commission must be allowed to get on and complete its work on the long-term future of UK aviation.
Will the Secretary of State explain the exact status of the plans for an airport in the Thames estuary? I also want to ask him about the commission’s short-term recommendations. Will he introduce legislation in the Queen’s Speech in May to set up an independent aviation noise authority? If so, which Bill will contain the proposals? Can he say more about the optimisation strategy to improve the efficiency of UK airports in the short term? Communities that are currently affected by aviation noise want to know the Secretary of State’s position on additional night flights and on compensation for communities. Will he draw up plans to ensure that EU limits on air pollutants from existing aviation are met, as recommended by the Transport Select Committee?
On the reclassification of Network Rail, given that the Government already guarantee Network Rail’s debt, will its cost of borrowing now fall as a result of today’s announcement? Will the Government’s fiscal rules be changed to take account of the changes to debt and borrowing? Will today’s change affect the deficit? Will the Government and the Office for Budget Responsibility continue to publish borrowing and debt figures excluding these changes, as they have done with the transfer of the Royal Mail pension scheme, so that the underlying changes in borrowing and debt are transparent? Will the Government be taking any additional powers to direct Network Rail’s borrowing now that it will be on the Government’s books, or will the reclassification mean that Network Rail’s borrowing and debt have to be offset by further cuts and tax rises elsewhere? Could the change mean less money being available to invest in the railways? Can the Secretary of State guarantee that passengers will not face higher fares to pay for the debt reclassification? Does he anticipate any structural changes to Network Rail that would take the debt off balance sheet in the future?
The Secretary of State’s memorandum of understanding announced the appointment of an accounting officer to satisfy Parliament’s accounting and budgeting process. When will that person be in post? What will the audit arrangements be? When can we expect decisions from the Secretary of State on whether to appoint a special director to Network Rail, and on whether he will change the framework for Network Rail executives’ pay and bonuses? How many of them are currently paid more than the Prime Minister? Will he now personally sign off on their pay and bonuses? Can we expect greater transparency in the way in which Network rail operates? Who will be accountable for Network Rail’s performance? Will he tell us who is now responsible for safety on the railways? Is it Network Rail executives, Network Rail members, the permanent secretary or the Secretary of State himself?
Mr McLoughlin
I thank the hon. Lady for her—I am not quite sure how many—questions. A number were on Network Rail, on which I may respond a little later. It is always amazing to hear the way in which the hon. Lady tries to rewrite history. I notice today that she has said in a press release that it is good to see that the original Heathrow proposals for a third runway
“of which we were sceptical”
have been taken off the table. I cannot help but go back to the manifesto on which the hon. Lady fought the last general election; a manifesto written, I think, by the current Leader of the Opposition. The manifesto says:
“We support a third runway at Heathrow, subject to strict conditions on environmental impact and flight numbers”.
Something about which they are now sceptical was actually a core part of their transport manifesto at the last general election. I know that there is a rewriting of history going on but when something appears in the manifesto, it is usual to try to stick to it.
On the welcome for the setting up of Sir Howard Davies’ commission, I do not remember the calls for it initially; I think that the idea was put in place by my predecessor and was announced by me when I became Secretary of State for Transport. I am glad that the hon. Lady welcomes the report because this is a big infrastructure issue that takes time to develop. It takes time to work through all the proposals and it is right that we try, if possible, to get as much consensus as we can across parties. One of the commissioners did a report for Labour on infrastructure spending that was published not so long ago. I welcome the hon. Lady’s points on that.
On the Thames estuary proposals—the Isle of Grain— Sir Howard has said this morning in interviews and in the report that he would hope to have a view on that by the middle of next year and we will then know on which route we are going.
With the Leader of the House and the Chief Whip here, I am not at this stage able to announce what may or may not be in a future Queen’s speech. I did say that I will respond by the spring to some of the points that Sir Howard has made in the report and I shall stick by that commitment.
The hon. Lady asked me a number of questions about Network Rail. There will be more time for us to debate this issue as the change comes into operation from September 2014. But as I am here today making the statement, and as I have made a statement on the Office for National Statistics recommendations, which came through only this morning, I will be happy to deal in more detail with specific points that she raised on a number of issues.
One of the things that the Government and I are keen on is that over the next four years in the CP5 phase of Network Rail’s expenditure, it will invest £38 billion in the railways, far more than it has been investing for some years. That certainly is under no threat whatsoever. We will still see record levels of investment taking place. Some of the other questions the hon. Lady asked are on issues that the hon. Lady I am considering.
Mr Simon Burns (Chelmsford) (Con)
Will my right hon. Friend accept that too many Governments of all political parties have fiddled around on the question of airport capacity for too long, which is why the commission is to be welcomed so much? But does he agree that when the final recommendation is made, we need to seek political consensus across the chamber to be able to move forward as quickly as possible? How does he think that consensus can be achieved?
Mr McLoughlin
There may be a consensus, but there will always be a certain number of people who are against a consensus. I am not necessarily sure that one gets total consensus on any infrastructure project. It often depends on how it impacts on individual constituents, which is something we have to take into account. We should not run away from that. I hope that, as a result of the detailed work that is being done by the commission and the fact that it is being as open as possible in its dealings with everybody, it will be seen that it is doing a proper and constructive job and will enjoy widespread confidence. Today has been a good example of that, in the way that the shadow Secretary of State has welcomed the initial findings of the report.
John McDonnell (Hayes and Harlington) (Lab)
At a minimum, according to the report, 2,000 of my constituents will lose their homes, which will be demolished. That could rise to perhaps 10,000 because of homes being rendered unliveable by noise and air pollution. Two primary schools will be demolished, with perhaps two more being rendered unfit to teach in. The threat returns that we may have to dig up our relatives buried in the local cemetery. Where will my constituents find a home? Where will my constituents send their children to school? Where will we bury our dead? Does he appreciate the sense of betrayal that is felt in my community?
Mr McLoughlin
I know that the hon. Gentleman has spoken very sincerely about this on behalf of his constituents. However, he is prejudging the outcome of the report. The report has not said which option it has gone for. It has come forward with three shortlisted options and another option that will be looked at in the longer term. This is not a fait accompli. The commission’s work will continue over the next 18 months.
Sir Alan Haselhurst (Saffron Walden) (Con)
Bearing in mind that the recommendations of the Roskill commission on airport capacity were rejected by successive Governments, does my right hon. Friend accept that until the first concrete, and lots of it, is poured, uncertainty will not be removed from many of the locations that are mentioned by Sir Howard Davies today? To echo the sentiment of my right hon. Friend the Member for Chelmsford (Mr Burns), will my right hon. Friend work extremely hard to get bipartisan acceptance of the final recommendations?
Mr McLoughlin
Not only will I try to get bipartisan agreement, I will try to get tripartisan agreement. I shall not just look at any two parties. I hope that that is the way in which we can move forward. My right hon. Friend has huge experience of this issue and has often made the case for protecting Stansted airport.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
The Davies commission report includes a shortlist that has on it the recommendation of the Transport Committee for expanding Heathrow, and confirms the importance of connecting the economy of this country with the emerging economies in India, Brazil and China. Does the Secretary of State agree that taking no action means that this country continues to lose out? When does he think the decision should be made?
Mr McLoughlin
I am sorry; I missed the last bit of the hon. Lady’s question. [Hon. Members: “When do you think the decision should be made?”] I know that the Transport Committee will be seeing Sir Howard at one of its meetings in the early part of January. I agree with the hon. Lady; we will be responding early next year to the recommendations on which Sir Howard has asked us to come to a view.
Dr Julian Huppert (Cambridge) (LD)
The Government was absolutely right to scrap Labour’s plans for a third runway at Heathrow. I very much welcomed the Prime Minister’s statement:
“No ifs. No buts. No third runway”.
I assume the Prime Minister meant it. What assurance can the Secretary of State provide that nothing will be done to breach the Committee on Climate Change recommendations?
Mr McLoughlin
It is important that everything that Sir Howard is looking at is contained within our climate change obligations. Aircraft are changing; their emissions are changing. What is very unenvironmentally friendly is stacking aircraft above London that are pumping out emissions into the atmosphere.
Mr Alistair Darling (Edinburgh South West) (Lab)
The Commission appears to be recommending another runway at Heathrow, which is exactly where we were 10 years ago. The proposal on Gatwick appears to be “in addition to” rather than “instead of” the proposal at Heathrow. I notice that the Secretary of State studiously avoided expressing an opinion and I understand that he wants to await the outcome of the commission. However, could he tell us whether or not the Government think that the commission is on the right track? Clearly if it is not, it would be better to tell it now, rather than wait until 2015. I join everyone in this House who believes that, 50 years after the Government first looked at what should happen to London airport, we need to make a decision, and we should do so as soon as possible. If we do not, we will fall behind the rest of the world.
Mr McLoughlin
I am always slightly cautious in the answers I give to the right hon. Gentleman, who has the distinguished record of being one of the longest-serving Transport Secretaries of recent times. I would point out, however, that when he was Secretary of State and the 2003 White Paper was published, there was only one mention of Dubai. Things have changed hugely in aviation over the last few years, which is why it was right to set up this commission. The right hon. Gentleman was wrong on his original assumption: Gatwick is an alternative—it is not necessarily a case of Heathrow and nothing else—as is the Thames estuary.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
The commission report places great importance on the success of all the options it is still looking at through effective and integrated surface transport links. So much so that the commission, which I understand is carrying out, in the Secretary of State’s own words, work that merits the fullest consideration, now intends to examine the HS2 line and the possible HS2 spur to Heathrow. Surely the Government should now wait until this work is completed and the final decision on airport capacity is made before pressing ahead with a high-risk £50 billion project that might end up being built in quite the wrong place.
Mr McLoughlin
I refer my right hon. Friend to page 202 of the report. I thought that she would raise this issue, so I refer her to paragraph 6.94:
“A high speed rail spur from the main HS2 line to the airport is not included in the cost estimate, but the Commission will consider the case for this as part of its review of surface access options. It will not, however, consider the case for any re-routing of the main HS2 line.”
I believe that it is a vital part of the national infrastructure of the United Kingdom.
Caroline Lucas (Brighton, Pavilion) (Green)
Is the Secretary of State aware that some of the UK’s leading companies have cut their flights by an average of 38% over the past three years, and does he not recognise that his reckless enthusiasm for new runways will not only cause huge harm for the local communities involved, but shows this Government lagging far behind progressive companies that understand the urgency of climate change and are reducing their number of flights on economic as well as environmental grounds?
Mr McLoughlin
The hon. Lady needs to look at the passenger numbers through the terminals. At Heathrow in 1992, for example, there were 45 million in comparison with 70 million in 2012. At Gatwick in 1992, passenger numbers were 19.9 million, but 34.2 million in 2012. People still want to travel. I am sure that the hon. Lady has holidays only in the United Kingdom and never travels abroad, but a lot of people like the option to go abroad.
Sir Roger Gale (North Thanet) (Con)
Sir Howard reminds us that Heathrow is 100% full and Gatwick is 85% full. A new build of any kind anywhere is going to take an absolute minimum of 10 years and probably longer. We are losing business to Schiphol, Charles de Gaulle and Dubai now. We have to get to chapter five, paragraph 5.91 on page 163 before we find a paragraph that mentions other airports, and it is dismissive. Manston airport in Kent has the capacity—now, as we speak—to take business from Gatwick and Heathrow to release the capacity we need and to build in the time we need for the right decisions to be taken in the longer term. Will my right hon. Friend please look at it seriously?
Mr McLoughlin
The commission has looked at a number of options. I draw my hon. Friend’s attention to the conclusions on page 102, where it is made clear that the UK does not face an immediate capacity crisis. Sir Howard and the whole commission are clear that we need to take this decision so that we have the option of a new runway by 2030. That is exactly what we will be doing.
Mr Andy Slaughter (Hammersmith) (Lab)
For my constituents, today’s report is proof that the Heathrow lobby’s hold over the Conservative party never went away. The hands of the Prime Minister and the Chancellor are all over this report. One third of those seriously affected by airport noise in Europe live around Heathrow. What is the Secretary of State offering to the 2 million people in west London other than a continued deterioration in their quality of life by the expansion of Heathrow.
Mr McLoughlin
I remind the hon. Gentleman that he fought the election on the basis of a manifesto saying that there would be a third runway at Heathrow airport. Before he gets on his high horse about what I am doing, perhaps he should consider what that manifesto said. As I have said, the simple fact is that we need to do everything we can to alleviate noise problems; we need to look carefully at the eventual recommendations of the final report. We do not yet have the final recommendations; the time to conduct this type of debate is when we get them.
Angie Bray (Ealing Central and Acton) (Con)
My first impression is “so far, so depressing”. I know that this is only an interim report, but my constituents will note that Heathrow is yet again emerging as the favoured option. I should also say that the two options for Heathrow that are flagged up in the report will both be particularly bad news for my constituents in Ealing, Chiswick and Acton. Let me ask my right hon. Friend: what on earth more do my constituents have to do to get their message across that any expansion of the noise, pollution and congestion that goes with Heathrow and blights the whole of west London would simply be intolerable?
Mr McLoughlin
I am grateful to my hon. Friend, and I understand the passion that she and other Members feel about this issue. It is right for us to try to look at and address these issues. We have to see what is happening with aviation noise and how it should be judged. That is why I am very interested in some of the commission’s interim proposals. It will take longer to take a view on that, but I hope to be able to come back in the spring to announce the way forward. This is a very difficult job because these issues have been around for some time. It is right to conduct a proper investigation and, I hope, come up with the right alternative at the end of the day.
Graham Stringer (Blackley and Broughton) (Lab)
As Government after Government have ducked this issue, our main European competitors have built many runways, while our new competitors in the middle east have built even more of them. Does the Secretary of State agree that the only way to break this logjam is for both the major political parties represented in this Chamber to give a commitment to accept the conclusions of the Davies report?
Mr McLoughlin
I agree with the hon. Gentleman, who served for a long time on the Transport Select Committee. I certainly agree with him that it would be good if we could reach a consensus on this matter. Whatever option we come up with will impact on people’s lives and communities. We need to try to do everything we can to address and relieve it, but we also need to look at the options for the longer-term future offered by quieter aeroplanes, for example. An overall consensus would indeed be the best way to move forward on big infrastructure projects.
Mr Crispin Blunt (Reigate) (Con)
My right hon. Friend has repeatedly used the phrase “longer term” both in his statement and in replying to questions. The exam question to the commission was how the UK’s status as a leading global aviation hub could be maintained. By any standards on a long-term basis, the commission has failed. Its principal options simply cannot sustain the UK’s position as a long-term hub. The only hope remains the Isle of Grain option. When it comes to consideration of Gatwick, for example, someone will need to explain that doing up Gatwick station will not deal with the capacity issue on the Brighton main line or with the road issues. Someone will also have to explain where a town the size of Crawley is going to be placed.
Mr McLoughlin
My hon. Friend has just dismissed two options, but no doubt other hon. Members who may be called to speak a little later will dismiss the third option, which my hon. Friend refers to as the “only” option available. That is why we set up a commission—so that we could base our final decisions on proper researched evidence.
Jack Dromey (Birmingham, Erdington) (Lab)
The chief executive of Birmingham airport, Paul Kehoe, has described the Davies report today as focusing disproportionately on the south-east and entrenching the dominance of the south-east economy to the detriment of growth in the rest of the UK. The Birmingham chamber of commerce has said the same thing. Does the Secretary of State recognise that, in circumstances where Birmingham wants the expansion of its airport, which will be key to economic growth in the midlands, Britain simply cannot succeed through London and the south-east alone?
Mr McLoughlin
I am a passionate believer in the role of airports outside London. The first time I appeared before the Select Committee, I said that we should stop describing airports such as Birmingham and Manchester as regional airports, because they are major international airports in their own right. I want to see those airports—along with East Midlands airport—serving their local communities. On page 195 of its report, the commission says that it does not see
“a strong case for expansion at Birmingham”
at the moment, but that may well change by 2050. Moreover, being served directly by HS2 will give the airport a great opportunity for the future.
Annette Brooke (Mid Dorset and North Poole) (LD)
Will there be an independent assessment of the impact of any proposals on the carbon emission targets of the Committee on Climate Change?
Mr McLoughlin
The commission is taking all our carbon reduction obligations into account, as I would expect.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
At the last general election, both coalition parties opposed an increase in runway capacity in the south-east. I think it is clear that the Conservatives have now realised that that was the wrong decision and have changed their minds, but the Liberal Democrats are still in denial. Most of us want the Davies commission to report earlier than the summer of 2015. Who set the deadline—the Secretary of State, Sir Howard, or the Liberal Democrats?
Mr McLoughlin
I note that the hon. Gentleman is now speaking from the Back Benches about a subject on which he used to speak from the Front Bench. When he was on the Front Bench, I challenged him to tell us, if his was such an easy solution, what proposals he would support. He was unable to answer that question from the Front Bench, but perhaps he will be able to do so from his more privileged position on the Back Benches.
Zac Goldsmith (Richmond Park) (Con)
I note the answer that the Secretary of State has just given, but does he not accept that no serious political party can go into the next general election without a clear opinion on an issue that matters to so many people and so many businesses in this country? That is simply not a credible position for any party to have.
Mr McLoughlin
I know my hon. Friend’s views on this matter, and I know that he fights passionately on behalf of his constituents. However, I think it right for us to try to obtain an answer that is, as far as possible, based on good evidence and good research. That is what the commission is doing, and it will report by the summer of 2015.
Phil Wilson (Sedgefield) (Lab)
According to the Davies report, London continues to accommodate the largest overseas destination market in the world. What more can be done to enable regional airports such as Durham Tees Valley airport, which is in my constituency, to have access to that market by ensuring that it is given Heathrow slots sooner rather than later? May I also ask the Secretary of State to discuss with his colleagues in the Treasury the possibility of varying the levels of air passenger duty around the country, which would help all United Kingdom airports?
Mr McLoughlin
I think that the biggest increases in APD occurred under the last Government rather than this one. At a time when we are trying to reduce the deficit, it is always easy to find ways of making cuts, but we must then find a replacement for that certain income. As for the hon. Gentleman’s question about regional airports, I remind him of what I said a few moments ago about their importance to local communities.
Jason McCartney (Colne Valley) (Con)
Does my right hon. Friend agree that the provision of more long-haul services from, for instance, Manchester airport, and Leeds Bradford International airport—which my constituents use—to China, India and the other emerging markets would help to ease all the congestion at London’s airports? Could that not be part of the solution?
Mr McLoughlin
It might play a role in easing some of the congestion, but the overall evidence shows that there is continuing growth in aviation traffic, and the commission is giving that careful consideration.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
Will the Secretary of State consider seriously the issue of connectivity throughout the United Kingdom, particularly in relation to Scotland? Connections to the south-east are extremely important, and if we do not get a move on, we shall be in danger of strangling growth throughout the UK.
Mr McLoughlin
I understand exactly where the hon. Lady is coming from. Concern has been expressed in a number of regions about the accessibility of London. However, people could consider using other airports, such as Luton and Stansted.
Sir Edward Leigh (Gainsborough) (Con)
Do the Government accept the commission’s contention that a new runway needs to be built in the south-east before, or by, 2030?
Mr McLoughlin
I believe that what the commission has said is important, but we must await its final proposals and establish whether we can work to that deadline.
Jim Shannon (Strangford) (DUP)
Let me first thank the Secretary of State for his statement. He described the United Kingdom as an international aviation hub. What discussions has he had with representatives of Belfast City, Belfast International and City of Derry airports in Northern Ireland to ensure that the viable transport links to which he referred can be solidified and all regions can benefit from them?
Mr McLoughlin
Having responded to questions from the Northern Ireland Affairs Committee, I am well aware of the importance to Northern Ireland of its connections with London. I have had no direct conversations with the Northern Ireland Assembly, but I have of course listened to what colleagues in the House of Commons have had to say.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I commend the Howard Davies commission for recognising that the Isle of Grain cannot be lightly dismissed and merits further consideration. However, he said this morning, when comparing it with the other proposals, that the Thames estuary proposal was
“a much more extensive proposition for shifting the economic geography of the south-east of England by creating a new pole of economic development.”
Is that within the remit of the commission?
Mr McLoughlin
I should make it clear that by “he said”, my hon. Friend meant what Sir Howard Davies had said, rather than any words that I might have said.
The commission must look at the whole proposal, and it has said that it will do so, because it is completely different from the proposals that certain airports have been making themselves. The matter will be addressed in the report which Sir Howard has said he hopes to produce by next summer.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I am not sure that I derive much comfort from the information that the expansion of Birmingham airport may be decided in 2050, by which time I shall be 95 years old. May I suggest something that the Secretary of State could do now? He could compel Network Rail to come up with a strategy to improve surface access to airports, so that those such as Birmingham which have spare capacity can be properly connected?
Mr McLoughlin
I am not sure that I wish to comment on the first part of the hon. Lady’s question—it might not be the thing to do from the Dispatch Box—but I will say that I know Birmingham airport very well, having used it on a number of occasions. It is not badly connected at present, but there is room for improvements, and I naturally want to think about ways of making those improvements. I believe that the direct connection between HS2 and Birmingham airport will give it the potential to develop in that way.
Mr Speaker
Order. The Chair must be very careful when it comes to these matters, but I must say that I found the age-related facet of the hon. Lady’s question utterly implausible.
Andrew Bridgen (North West Leicestershire) (Con)
A suppressed Cabinet Office report on HS2 raises major concerns about its risky construction timetable, its poor management and the insufficient work done on costs, and also questions the capability of those involved in the delivery of the project. Will my right hon. Friend tell us whether the Government are prepared to publish the report by the Major Projects Authority?
Mr McLoughlin
I do not think that there is any shortage of reports on HS2, be they from the National Audit Office, from the Transport Committee, or in the form of evidence given to the Treasury Committee. There is a huge number of such reports that people can consult rather than consulting a report that is more than two years old.
Ian Austin (Dudley North) (Lab)
Birmingham airport is right in the middle of the country and right next to the major motorways of the United Kingdom, and, with HS2, it will be within easy reach of the vast majority of the people who live in Britain. People living in the west midlands will be utterly staggered to learn that they must wait until 2050 for any consideration to be given to its expansion.
Mr McLoughlin
It is not a case of waiting until 2050 for any consideration of that airport’s expansion; what I said, and what the report said, is that there will be a need for a new runway in the south-east by 2030 and then probably for another runway in 2050, and at that stage that airport could be one of the considerations. But a huge amount is still going on at Birmingham airport. I am not going to talk that airport down now, and I do not want anyone else to do so. It has extended its runway and has a lot more availability, and I want it to be able to prosper, along the lines that other airports, such as Manchester, have done.
Michael Fabricant (Lichfield) (Con)
I very much agree with the comments made by the Chairman of the Transport Committee that the current situation is an option that cannot go on for much longer, but I also agree with comments made by Opposition Members about the connectivity with Birmingham. Given that senior engineers in HS2 doubt the efficiency, cost and environmental suitability of the route, would it not make sense to link HS2 directly not only from Birmingham to central London, but to whichever airport is chosen to have that third runway?
Mr McLoughlin
I am not sure which people in HS2 my hon. Friend is referring to when he says that they are opposed to the current route. We are committed to that route and have deposited the Bill before the House.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
There is a widespread feeling that the airports issue is symptomatic of this country’s poor approach to long-term infrastructure planning. Clearly there will be winners and losers whichever decision is made, but the truth is that a decision will still need to be made. If we need two runways by 2050, will the Government make a provisional decision on both, thus finally bringing some long-term certainty to this issue?
Mr McLoughlin
I am not sure that we will make a decision on both of them in one go. As I say, the report is very clear: we will need an additional runway by 2030 and, in all likelihood, another by 2050. A number of things will have changed by then, so it would be wrong at this stage to start saying exactly what the runway beyond the next runway will be, because the infrastructure I have talked about, such as HS2, will be in place and other airports will come much more into play.
Karen Lumley (Redditch) (Con)
The Government are determined to build HS2, rebalance our economy and make Birmingham airport 38 minutes from London Euston. Does the Secretary of State share my concern and disappointment today that Birmingham airport was not included in the initial recommendations?
Mr McLoughlin
What I am seeing, and what I see nearly everywhere I go, is a strong lobbying exercise, or representation exercise, on behalf of Birmingham airport, and rightly so because it is a very good airport—I like it and use it regularly. What Birmingham has already done, through its expansion and extending the runway, means that it will be able to offer lots more services to the people of the west midlands, and I very much hope to take advantage of that.
Chris Bryant (Rhondda) (Lab)
Will most ordinary people listening to this debate not conclude that a politician who cannot make a decision is no more use than a chocolate teapot? If we are going to keep on procrastinating and if the Government cannot even decide that Boris island is not going to float, they have run out of steam.
Mr McLoughlin
Coming from somebody who was 13 years in a Government who refused to make—[Interruption.] The hon. Gentleman was 13 years in Parliament supporting a Government—avidly, on every occasion—who continually failed to take any decisions about major infrastructure projects, yet he now complains that this Government, who have made more progress on the railways and on aviation, are somehow slacking in making their decision.
Mr Rob Wilson (Reading East) (Con)
Heathrow is crucial to the continued economic vibrancy of towns such as Reading and to foreign inward investment into the Thames Valley region. Airport capacity does need to expand, but so, too, does surface access to Heathrow. Will my right hon. Friend ensure that the Heathrow rail link to Reading and from the west is immediately brought forward from the 2021 timeline currently in progress?
Mr McLoughlin
My hon. Friend is a very big advocate of more infrastructure investment in Reading, where we are currently spending some £880 million on a major refurbishment of Reading station, which will greatly enhance the capabilities for surface access to Reading. However, I note his early applications for even more investment in his area.
Paul Goggins (Wythenshawe and Sale East) (Lab)
One issue that merits greater consideration than the half page given by the commission is the proposal for a temporary exemption from air passenger duty for new long-haul routes from airports outside London. Such an exemption would help airports such as Manchester to develop new routes to China. Will the Secretary of State make sure that this idea stays on the table?
Mr McLoughlin
The right hon. Gentleman, by his mentioning the proposal, has just done exactly that.
Mrs Caroline Spelman (Meriden) (Con)
The Davies report states that expansion at Birmingham airport would have a “relatively high” noise impact compared with the alternatives, but ironically a second runway would have taken the noise further way from areas of habitation. Will the Secretary of State look also at the road surface access to the existing extended runway, as that can currently be a source of gridlock at a very important transport node?
Mr McLoughlin
I will of course look at that important issue, as my right hon. Friend asks. Her constituency is very much affected by the entire road network around that area, and by the rail and airport expansion, so I will look seriously at the point she raises.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
On the Network Rail statement, given the way in which responsibilities for rail services in Scotland are divided between the Scottish and UK Governments, how will responsibility for the net debt of £30 billion or its servicing be divided between those Governments?
Sir John Randall (Uxbridge and South Ruislip) (Con)
I congratulate my right hon. Friend on coming to the House to make a statement on an interim report. I am delighted to hear him confirm that the Government have no set position on this matter, but I am sure he will be reassured to know that people in Hillingdon, including my honourable comrade, the hon. Member for Hayes and Harlington (John McDonnell), will be dusting off the campaign material and once again proving that any expansion at Heathrow is politically and environmentally undeliverable.
Mr McLoughlin
My right hon. Friend and the hon. Gentleman will be a formidable team in their campaigning approach to this matter. I know they will do so, but I also urge them to submit their views to the commission as it moves to its next phase in preparing its final report.
Ian Lucas (Wrexham) (Lab)
The Aerospace Growth Partnership, with strong environmental safeguards, is supported by all three main parties—even the Liberal Democrats have signed up. My hon. Friend the Member for Blackley and Broughton (Graham Stringer) made the good suggestion that all three parties should commit to the outcome reached by the Davies inquiry. Will the Secretary of State explore that with all main parties?
Lorely Burt (Solihull) (LD)
I thought that Sir Howard’s remit was to examine the need for aviation provision for the whole UK economy, so does my right hon. Friend share my disappointment that he seems focused on the self-fulfilling prophecy that growth feeds further demand in the south-east? Does my right hon. Friend share my wish for further consideration to be given to growth in resurgent economies, and, thus, to Birmingham international airport, for the midlands, and to other regional airports and economies?
Mr McLoughlin
The commission has had to work on the basis of what is actually happening in aviation: Heathrow has 99% usage and Gatwick is also filling up, but other airports in London are not as busy at the moment. So it is right that the commission has done the overall work and the proper work, and has made an interim suggestion. The Davies commission does also talk about the importance of regional airports, and nobody is denying that; I would much prefer more services to be available for people so that they would not necessarily have to travel into London to use an airport of demand. However, the availability of services does attract a lot of passengers to airports in the south-east.
Andrew Gwynne (Denton and Reddish) (Lab)
New airport capacity must go hand in hand with our efforts to reduce CO2 omissions from aviation, as the Secretary of State mentioned in his statement. Given that his Government abandoned the UK’s target to be at or below 2005 levels by 2050, what guarantees can he give to the House to ensure that those considerations are included in the final plans?
Mr McLoughlin
If the hon. Gentleman takes time to reflect and to look at the various appointments to the commission, he will see that we have taken incredibly seriously the environment and our environmental commitments.
Martin Vickers (Cleethorpes) (Con)
I invite my right hon. Friend to expand a little on the role of regional airports. Will he give an assurance that the Government will recognise the important role that smaller regional airports can play, not just in easing the burden on traffic to the south-east but in providing economic growth to areas such as the Humber region?
Mr McLoughlin
I cannot add very much to what I have said already. I agree with my hon. Friend, but it is difficult for some regional airports to attract new services. That is one of the big changes that we have seen as far as the aviation industry is concerned, and I am keen to do anything I can to encourage those regional airports to be able to provide more services.
Steve McCabe (Birmingham, Selly Oak) (Lab)
In that regard, Birmingham could cater for two thirds of the projected passenger increase from building a new runway at Heathrow at less than 2% of the £6 billion cost, without the need to demolish schools, villages or homes. Why are those considerations not worthy to be looked at now?
Mr McLoughlin
Those considerations were looked at by the commission, and there is someone on the commission who works in Birmingham.
Mr Speaker
The time has come to call a patient dame. Dame Angela Watkinson.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
Does my right hon. Friend agree that increased airport capacity and quieter aircraft will not just benefit the UK economy but improve the quality of life of my constituents in Hornchurch and Upminster and those in the rest of Greater London by reducing stacking of aircraft, which currently have nowhere to land?
Mr McLoughlin
My hon. Friend is absolutely right. One thing that causes too much pollution is stacking aircraft. Through better traffic management and longer traffic management of aircraft, a lot has been done to improve the flows into airports so that there is orderly access and entry into Heathrow, but more work can be done on that. That is one of the interim recommendations of the commission.
Huw Irranca-Davies (Ogmore) (Lab)
In his statement, the Secretary of State rightly described the increase in airport capacity in the south-east as the “engine for growth”. The same applies in south Wales. Will he directly engage with the Welsh Government on how Cardiff airport can develop its services so that it can play its part in both UK and regional growth?
Mr McLoughlin
That matter is now in the domain of the Welsh Assembly. I am due to meet its Transport Minister, who will no doubt want to discuss the issue, some time in the new year.
Mark Reckless (Rochester and Strood) (Con)
Can the Mayor of London expect any Government money to promote his imaginative proposal, and if so, could we also have some in Medway? Given that the page numbers in the Secretary of State’s report are different from those I got from the commission, can he shed any light on the late change in the report to include a Grain option and tell us whether meetings with the Prime Minister and the Chancellor last week played any part in that?
Mr McLoughlin
It is true that my report did not come off a PDF document, but I am not sure whether the page numbers differ from those in the report received by my hon. Friend. How the Mayor of London spends the considerable amounts of money that he has at his disposal is a matter for him.
Jessica Lee (Erewash) (Con)
Does my right hon. Friend agree that within these important considerations about aviation expansion fits the complementary issue of supporting nationwide infrastructure? With that in mind, will he assure the House that Ilkeston train station is on target for opening at the end of 2014? Such news will perhaps bring a bit of extra festive cheer to the good people of Erewash.
Mr McLoughlin
I assure my hon. Friend that everything I have said about Network Rail and its reclassification will have no impact on the courageous campaign that she has mounted to get a railway station open in Ilkeston by next December. When I was in Ilkeston recently, it was suggested to me that it should be called not Ilkeston station but Jessica’s junction.
James Morris (Halesowen and Rowley Regis) (Con)
I welcome the recommendation in the Davies commission on the use of existing airport capacity, particularly the reiteration of the support for Birmingham gateway. Does the Secretary of State share my disappointment that the commission has not been bolder in looking at Birmingham airport as a long-term solution? If we are considering options in London and the south-east, would it not have made more sense to have a credible option outside the area, because it could have a transformative effect on the west midlands economy?
Mr McLoughlin
I am pleased to see the Birmingham lobbying exercise spread across the whole of the west midlands. There is clearly a united front on the matter. I know that Sir Howard will look at the exchanges today, but there is nothing to stop Birmingham airport expanding; indeed, I encourage that. At the moment, the airport is not utilised to its full capabilities. Many more services can be provided from Birmingham now that the extension of the airport has been completed.
Stuart Andrew (Pudsey) (Con)
The aviation White Paper in 2003 stated that expansion of Leeds Bradford airport would need surface access improvements, yet we have seen very few. In this report, chapter 5 makes specific reference to surface access to other airports and recommends that the Government work with local authorities to ensure that such improvements take place. Will the Secretary of State make sure that Leeds Bradford airport will be looked at, because my constituents have to suffer many people going past their homes on very overcrowded roads?
Mr McLoughlin
Following my hon. Friend’s representations, I am delighted to give him the assurances that he requires. I will also come to his constituency and look at the situation there.
Jackie Doyle-Price (Thurrock) (Con)
The Mayor of London claims that Heathrow is a planning error. It is not; it is our hub airport. As my right hon. Friend is well aware, the Thames estuary is home to some significant ports infrastructure. Is it not to be hoped that the Davies commission rules out, once and for all, a Thames estuary airport, particularly as we already have an excellent airport at Southend?
Mr McLoughlin
As I have said to various colleagues, everyone will have an opinion if they have something in their own localities. I will await the outcome of the commission’s report, but I take what my hon. Friend has said seriously.
Mr David Nuttall (Bury North) (Con)
Let us forget Birmingham and Leeds Bradford and get back to Manchester. Given that Heathrow is already operating at full capacity and it is likely to be years before any option being considered by the Davies commission is built, may I ask my right hon. Friend what steps he is taking to encourage greater use of these regional airports—or major international airports as he calls them? May I suggest that a useful and popular first step would be to reduce airport passenger duty for new long-haul flights from regional airports, which would not cost the Treasury anything because they do not exist at the moment?
Mr McLoughlin
I am always keen to hear about schemes that cost no money whatever. Colleagues often convince me of a scheme but, unfortunately, when I go to the Treasury the idea is usually dismissed in fairly short terms. None the less, I understand my hon. Friend’s point. The truth is that Manchester has expanded and is, without any doubt, now a major international airport. I am just sorry that no one has mentioned East Midlands airport, which is also owned by Manchester airport.
Neil Carmichael (Stroud) (Con)
Forty years ago, a Labour Government cancelled the Maplin airport project, thus creating the situation we now have with under-capacity. Now that we have a second chance to get this right, does the Secretary of State agree that any report from Sir Howard’s commission should include a proper analysis of the advantages of a new airport east of London?
Mr McLoughlin
As I have said and as Sir Howard has been at pains to say in his statements today, if this was an easy decision it would have been taken some time ago. It is not an easy decision to take. It is right that we should consider all the facts and our environmental commitments, too, and that is the work that the commission has embarked on.
Robert Halfon (Harlow) (Con)
Will my right hon. Friend commend the Manchester Airports Group for its new stewardship of Stansted airport? Although I note that the report suggests that an extra runway is environmentally unsustainable and economically unviable, it also considers the expansion of the existing runway. If that happens, will my right hon. Friend ensure that the Government invest in the infrastructure on the M11 and the railways and ensure that local people are employed to help with the extra expansion?
Mr McLoughlin
I certainly commend Manchester Airports Group for how they have taken over Stansted and I hope that they will continue the public engagement with people from around the area. At the moment, it is estimated that there is room for growth at Stansted without any extra runway capacity. My hon. Friend makes the point about how important airports are for jobs and for giving people opportunities.
Mr Philip Hollobone (Kettering) (Con)
Given the crucial role that Network Rail plays in the provision of Britain’s transport infrastructure, not least at the moment through the necessary but highly disruptive work in Kettering in preparation for the welcome electrification of the midland main line, does my right hon. Friend think that it is as efficient as it might be in providing Britain’s railway infrastructure and does he regard its extraordinary and expensive corporate structure as fit for purpose?
Mr McLoughlin
As I announced in my statement, Network Rail has been reclassified and is charged with some important projects. My hon. Friend refers to the electrification of the line that serves both his constituency and mine, but I would also point out the big infrastructure jobs that Network Rail has undertaken, such as the closure for six weeks in the summer of Nottingham station and the complete resignalling in that area. That project came in under budget. The projects are very big and, obviously, certain consequences will flow from the changes. It is vital that there is no question but that the huge investment we have committed to Network Rail will be delivered over the next five years.
Rehman Chishti (Gillingham and Rainham) (Con)
The Secretary of State will be aware of the comments made by Sir Howard Davies, who said that the estuary airport would cost about £80 billion to £110 billion and would cause massive disruption. Do the Government have that amount of money to spend when there are other, better, environmentally friendly options? Those views are shared by my constituents in Gillingham and Rainham and the local authority, Medway council. They are bitterly opposed to that bizarre idea on those grounds and many others.
Mr McLoughlin
One thing that will have to be considered if such proposals are made is how they will be paid for. I am, however, aware that figures for transport infrastructure projects sometimes get greatly inflated. This one started off at about £75 billion, it has grown to £100 billion, my hon. Friend says that it is £110 billion and I have no doubt that by next week it will be around the £150 billion mark.
Mark Garnier (Wyre Forest) (Con)
In his statement, my right hon. Friend said that he is seeking political consensus on both sides of the House. By now, he will no doubt have gathered that there is practically political unanimity behind Birmingham airport. Is not the important point that rebalancing the economy of the UK is about not just regions but sectors? Significant expansion at Birmingham would rebalance the economy not just out of the south-east but away from the service sector, supporting our industrial heartlands in the midlands.
Mr McLoughlin
My hon. Friend makes yet another representation from the Birmingham grouping—[Interruption.] The Birmingham mafia, as Members say. As he knows, there is nothing to stop Birmingham airport expanding significantly. There is spare capacity there at the moment and it has to attract carriers in to the airport. I am keen to see it do that and for that to become available to the whole of the west midlands.
Mr Marcus Jones (Nuneaton) (Con)
The west midlands is one of the only regions to have a positive balance of trade. The Government want to build on that rebalancing by investing in HS2. To properly integrate our transport infrastructure, does my right hon. Friend not agree that the future development of Birmingham international airport should feature far more heavily in the final Davies report than it does in the interim one?
Mr McLoughlin
I do not know whether I have been kiboshed as far as Birmingham is concerned, but my hon. Friends on both sides of the House have made clear to me how important they consider the airport to be. There is nothing to stop the expansion of Birmingham airport. It has done a lot to increase capacity and I hope that more services can be attracted to Birmingham.
Points of Order
Michael Fabricant (Lichfield) (Con)
On a point of order, Mr Speaker. I cannot think of anyone less like a chocolate teapot than my right hon. Friend the Secretary of State for Transport. May I invite you to prepare a booklet of various examples of intemperate language, such as “chocolate teapot”, that you think might be inappropriate in this House?
Mr Speaker
The truth of the matter is that it is all about the context in which remarks are made. The hon. Gentleman, who is a keen student of parliamentary history—although I do not think he has written a book on the subject, so in that sense he would not compete with the hon. Member for Rhondda (Chris Bryant)—will be aware that there was at one time a list of proscribed words, but the list was discontinued, partly, I think, on the grounds that it was so extensive as to become unmanageable. It was judged instead that it was for the Chair to make a judgment about the manner in which something is said and the context in which words are used. I hope that the insatiable curiosity of the hon. Member for Lichfield (Michael Fabricant) has now been satisfied, for today at any rate.
Chris Bryant (Rhondda) (Lab)
Further to that point of order, Mr Speaker. I think that I am right to say that on one occasion the hon. Member for Lichfield (Michael Fabricant) accused me of being a teapot. He seems to think that what is right for a teapot is not right for a chocolate teapot.
Mr Speaker
I fear that this exchange will descend. Colleagues will be aware that the hon. Member for Lichfield previously served in the Whips Office with considerable dedication and loyalty under the leadership of the man who now serves as the Secretary of State for Transport. Whether that explains the differential treatment, I do not know, but I hope that we will leave the matter of teapots and other items there for today.
Mental Health Outcomes (Measurement)
Mr Robert Buckland (South Swindon) (Con)
I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to record certain statistics relating to people receiving treatments for mental health conditions; and for connected purposes.
The Bill is not about a headlong drive towards box-ticking and bureaucracy in our NHS, but about finding the most effective way of achieving true parity of esteem between physical and mental health. Parity of esteem, or equal priority for mental health and physical health, has been enshrined in statute by the Health and Social Care Act 2012—a very welcome measure.
A year ago, the Department of Health published the NHS mandate, in which it identified a number of areas in which it expects particular progress to be made. One of those priorities is to deliver
“a service that values mental and physical health equally.”
Amen to that. How will that be achieved? The Government state in the mandate that they expect NHS England to be able comprehensively to identify levels of access to, and waiting times for, mental health services in the community. Again, that is welcome, but let us take a moment to look at the current ways in which performance in mental health services is measured. The NHS outcomes framework is the mechanism, and it is working well to cover physical health outcomes. When it comes to mental outcomes, however, the picture remains incomplete.
What I am seeking is an improvement in the range and depth of information. I am after quality, not quantity. Why? It is because I want to see developing in our local communities mental health services that genuinely reflect local need. I welcome the publication this month by the Minister, who is in his place, of the mental health dashboard, which brings together existing information about mental health provision. I note that in that document there is an acceptance that the range and type of information available will have to develop, but there is a concern that consistency and stability in what the dashboard measures are maintained. My proposals today will, I believe, deepen the quality evidence while maintaining that stability.
I further welcome the creation of the mental health intelligence network by NHS England and Public Health England. It sounds a bit James Bond, but it is a practical means which will be launched next year to devise more effective ways in which quality information can be gathered. However, unless more work is done to fill in the gaps in relation to mental health outcomes, I fear that important opportunities will be missed.
What measurements do we have so far? We have mortality rates of adults under 75 with severe mental health conditions. That information is being collected and it is relevant to the first part of the NHS outcomes framework. Those statistics reveal that life expectancy is 15 to 20 years shorter than the average in England; they also reveal the extent of co-morbid physical conditions. Already, we can see how such information is crucial to making the right interventions and tackling those appalling statistics. There are also measurements related to improving access to psychological services, which have helped to drive the commissioning of more and more services at a local level. I warmly welcome that. However, like the proverbial Swiss cheese, gaps both in the range and quality of measurement remain. I believe that mortality data should be broken down further to clinical commissioning group level, which would help to identify particular local needs—not just mental health needs, but physical needs.
Part 3 of the NHS outcomes framework aims to measure how well NHS services help people to recover from illness or injury. A useful measurement of recovery is the number of people who have or have had mental health conditions who are able to gain employment. There are national measurements, but they are not reflected in local indicators. If we are to drive more locally based employment support services, that needs to change. The outcomes framework is very much focused on acute services, so measurement of their use by mental health patients, broken down locally, would be very useful in helping to determine the extent of our community services or where, to put it bluntly, firefighting is taking place, as opposed to interventions in the community.
Part 4 of the outcomes framework deals with how well health services provide a positive experience of care, so measures of psychiatric in-patient or secure services have to be made. In-patients at acute hospitals undergoing treatment for physical conditions are rightly asked for a lot of information, all designed to make services more attuned to aspects such as age and gender, for example. We owe this to mental health patients using acute services too. They are among the most vulnerable people in our society and a service that is better attuned to their individual needs will yield better results. At present there is no collection of information about the duration of untreated psychosis—in other words, the length of time it takes between someone presenting with a psychosis and their treatment. How will we comprehensively identify problems with delays in referral and treatment if this is not done?
In relation to people detained under the Mental Health Act, let us not forget that we still have far too many people, including children, being detained in police cells, rather than in an appropriate place of safety. The number of incidences is recorded, but not the outcome. That is another example of how a lack of quality information prevents this issue from being properly prioritised and prevents local analysis of need.
One in four of us will experience some form of mental health condition in the year ahead, and 10% of children in the United Kingdom have a mental health condition. Many children and adults will have co-morbid physical and mental health problems. The division between physical and mental health is an artificial one which must be removed. They need—we need—commissioned services that are truly responsive to our demands. Parity of esteem must become a reality. I commend my Bill as a means of achieving that.
Question put and agreed to.
Ordered,
That Mr Robert Buckland, supported by Caroline Nokes, Annette Brooke, Mike Freer, Yasmin Qureshi, Mrs Madeleine Moon, James Morris, Mike Thornton, Caroline Lucas, Grahame M. Morris, Oliver Colvile and John Hemming present the Bill.
Mr Robert Buckland accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 28 February 2014, and to be printed (Bill 147).
Local Audit and Accountability Bill [Lords]
16:25 - The House divided: - Ayes: 226 / Noes: 287 - Question accordingly negatived.
17:00 - The House divided: - Ayes: 222 / Noes: 284 - Question accordingly negatived.
Andy Sawford (Corby) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
New clause 2—Transparency of audit—
‘(1) A local auditor has a right of access at all reasonable times to audit documents from private companies to whom the local authority has contracted significant services during the last financial year.
(2) Local auditors only have a right of access to audit documents from private companies, under subsection (1), that relate to the service provided to the local authority by that company.
(3) A local auditor must make available on request any audit documents, obtained under subsection (1), subject to the provisions of the Freedom of Information Act 2000.
(4) In this section “private company” shall be interpreted to mean any legal entity, including joint ventures, not-for-profit organisations, mutually-held organisations and charities.
(5) Five years after the coming into force of this section, the Secretary of State must commission and publish a review of the effectiveness of subsections (1) to (3) and of the costs to local auditors, private companies and local authorities arising from it.
(6) The meaning of “significant” and “terms of qualification” shall be set out by regulations.’.
New clause 4—Scrutiny—
‘Before section 1 of this Act is brought into force, the Secretary of State shall prepare and lay before each House of Parliament a report on the effectiveness, efficiency and economy of the structures and procedures put in place by relevant local authorities, under section 21 of the Local Government Act 2000 (Overview and scrutiny committees), to review the decisions made, or other action taken, by the executives of such local authorities.’.
New clause 5—Fraud investigation—
‘Before section 1 of this Act is brought into force, the Secretary of State shall prepare and lay before each House of Parliament a report on the adequacy of the resources, staffing, structures and procedures put in place by authorities to detect and investigate fraud within the authority effectively.’.
New clause 6—Compromise agreements—
‘Before section 1 of this Act is brought into force, the Secretary of State shall prepare and lay before each House of Parliament a report into the extent and appropriateness of the use of compromise agreements, incorporating confidentiality clauses, as provided for by section 203 of the Employment Rights Act 1996, to effect the exit of members of staff from employment by local authorities.’.
Government amendment 1.
Amendment 13, in clause 20, page 15, line 24, at end insert—
‘(7) A person providing commercial or consultancy services to an authority may not audit those services.
(8) The audit of any commercial or consultancy services provided by a person appointed as a local auditor must be subcontracted to a different local auditor.’.
Government amendments 2 and 3.
Amendment 12, in schedule 2, page 43, line 8, at end insert—
30 A Local Enterprise Partnership.’.
Government amendments 4 and 5.
Andy Sawford
I shall speak to new clauses 1 and 2.
This is a better Bill for the scrutiny that it has received as a result of the work of the draft Bill Committee, the Communities and Local Government Committee and the House of Lords, and in Committee in this House, where I was pleased to receive substantial reassurances from the Minister, clarifications and explanations on many points. Some welcome concessions have been made, both during the Committee stage and in some of the amendments before us today.
Three years ago in a press release the Government announced the abolition of the Audit Commission, without thinking it through. There has been considerable criticism of the fact that there was no real consultation with local government, and when the announcement was made prematurely, the audit world was not consulted on how the new arrangements might evolve. That has led to a range of problems in the Bill. It is very much a backward-looking piece of legislation that seeks to post-rationalise a premature announcement that took most people by surprise.
The Audit Commission was abolished without proper consideration of how to maintain some of its more valuable functions, such as enabling local authorities to make comparisons and to use benchmarking tools to see whether they are spending the public pound as well as possible, and acting as an independent auditor, to bring transparency and public confidence to public audit. The Government had not thought through crucial issues such as how to maintain independence of audit, which we will come to later, without amendments to increase transparency, particularly new clause 2.
The Government had overestimated and double-counted the savings that may accrue. They had failed properly to address concerns that the audit market for local government is too limited. However, there is a bright spot. The Government’s reluctant U-turn on joint procurement is very much to be welcomed. It follows submissions from my noble Friends in the House of Lords and from the Local Government Association, the National Association of Local Councils and many other bodies. We tabled amendments in Committee to allow local authorities to form a joint procurement body, and we were pleased when, towards the end of the Committee stage, the Government introduced, albeit through gritted teeth, a new clause to do just that. The Government have not been clear about who will lead the development of that joint procurement body, but I urge them to work closely with the Local Government Association, the principal representative body for local government.
New clause 1 seeks to enable auditors to follow the public pound through the system. It would require the Secretary of State to make arrangements for integrated audit so that auditors can work across local authorities, and other relevant authorities at a local level, and with the National Audit Office where national and local funding is being used jointly. The problem that the new clause aims to solve is that the audit arrangements set out in the Bill are too narrowly focused on the relevant authority as a self-contained unit.
The Government have therefore failed to provide for the changing world of public services. Shared services, community budgets, which both they and the Opposition strongly support and which local authorities across the country—notably, many Labour councils—are taking forward, and combined authorities are all part of a shift towards much stronger partnership working by local authorities. There is also a specific point about local enterprise partnerships that I will come to later.
The previous Labour Government introduced the Total Place initiative in their last years in office. By enabling authorities to join together for some parts of their audit, we hope that we can see the value for money of the Total Place approach and that that will be a spur to further joining up. By bringing the National Audit Office into that approach to integrated joint audit, we can follow the public pound up and down the system for local and national spend.
The new clause is about future-proofing the Bill. In Committee the Government resisted all attempts to reference integrated audit or community budgeting approaches. In that sense, I think that the Bill will lead to an atomised approach to auditing, rather than a connected view. It has completely failed to make provision for the new world of public service delivery being built before our eyes, and not just the changes in local authorities that I have identified, but wider changes such as the troubled families programme and welfare changes, particularly the introduction of universal credit. They are all looking at connecting spending across the country. It is astonishing that the world of audit envisaged by the Bill takes no account of that at all.
We now have city deals, which should be properly audited. Indeed, we explored in Committee how they and other bodies, particularly those focused on enterprise partnerships and working with business, might be audited when it is not possible to bring together different auditors. As community budgets develop, different auditors will examine the use of the local government pound while the National Audit Office examines the use of the Whitehall pound, although they are actually being spent together. If a service is shared and common, surely it makes sense that the audit should be, too.
Another example is health and social care—the subject of the legislation we debated only yesterday. We need to see the future of the health service as one in which we meet the challenges of a rising elderly population, with people living longer and more independently. Local authorities, through their social care role, and health bodies will work jointly. Indeed, there are significant moves in that direction through local health and wellbeing boards. It would make sense for audit to be able to follow that pattern of more joint services.
Parliament has a strong interest in seeing that public money is spent well, whether nationally or locally. That was the drive behind Lord Heseltine’s introduction of the Audit Commission all those years ago. Parliament previously drew some assurance from the Audit Commission’s national work on value for money, but that work is winding down and the value for money assurances offered in the Bill are very limited. Indeed, we sought clarification on those points in Committee, and we had some reassurances from the Minister, but they were not sufficient for us to believe that that work will be carried out in the way it ought to be.
That point becomes increasingly relevant as Government policy cuts across departmental silos as fresh patterns of local delivery develop and local authorities commission services from, and develop partnerships with, an ever wider range of providers. The ad hoc Bill Committee that scrutinised the draft Local Audit Bill was absolutely right to state that the Bill should provide an unambiguous basis for insight into spend across central and local government, but as it stands it does not. Would it not be sensible—I ask this again in the hope that the Minister will change his mind at the eleventh hour—in the management of audit contracts if two authorities working together substantially and significantly could appoint a lead audit for a particular set of services, rather than having two separate auditors crawling over the same books and duplicating how they look at the same services, perhaps even reaching different conclusions?
We would rather have auditors work together to reach a shared view on whether services represent value for money and whether public money is being spent effectively, so an audit presented to a relevant authority might contain sections that had been prepared jointly and appropriately with other auditors of local spend, perhaps those from other relevant authorities or the National Audit Office. That audit would then be much more valuable, and not only to the council, but to the public and Parliament, in showing whether money was being spent well. For example, in my area there is an arrangement for shared services between Northamptonshire and Cambridgeshire county councils. There are questions about whether that genuinely delivers value for money. I am concerned that an audit in which they are each treated entirely separately and reported on separately will not give us a real sense of whether the partnership is delivering the value for money that I and my constituents want to see.
I therefore appeal to the Minister to have a change of heart. He is a former council leader. He might well return to local government after the next election or at some future time, when I am sure he would be very grateful that the Government had created audit arrangements fit for the new world of local government, not the old one.
This might be the most appropriate time to refer to amendment 12, which seeks to add local enterprise partnerships to the list of relevant authorities set out in schedule 2. LEPs have a growing role in the local public sector and partnership landscape. They are charged with driving local economic growth. From next year their role will increase, as they will be tasked with developing investment strategies for European structural funds; looking after skills for employment; leading on community-led local development; taking on board economic and social inclusion; looking at environment and climate change issues in local communities; taking forward social innovation, ICT and digital inclusion; and tackling youth unemployment. Indeed, the Government seem to view LEPs as a panacea for how many areas of local public service reform, enterprise and regeneration will be taken forward.
However, since the establishment of LEPs three years ago, and particularly following the publication of Lord Heseltine’s report “No Stone Unturned”, while their remit has expanded dramatically and the roles and responsibilities of their boards have changed, there has not been a commensurate consideration by the Government of how to address the governance, capacity, audit and probity of LEPs.
From next year, LEPs will receive central Government money, including a share of the £6 billion from the European regional development fund, a share of the £24 million growth money from the Department for Business, Innovation and Skills, a share of the £2 billion from the 2015 Treasury allocation for which LEPs can bid, and a share of the £400 million top-slicing of the new homes bonus, which is very controversial with local authorities, which are concerned about the implications of that top-slicing. As LEPs take responsibility for funding streams from several Departments and agencies, it is clear that there will be no effective audit trail to account for how the money will be spent. The truth is that LEPs are not really accountable to anyone.
In Committee my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) asked the Minister to set out how he envisages LEPs being audited in future. Given that they are responsible for such significant amounts of public money, and given the pace of change in LEPs across the country, the Minister’s response was simply inadequate. He could make a simple amendment to schedule 2 that would allow us to treat LEPs as a relevant local authority so that not only can we look at the local spend, but we can consider how the national spend will be accounted for as it goes into those LEPs in a way that does not mean having to look at the separate audits of a whole range of different Departments and agencies. If the Minister is not minded to accept our amendment to schedule 2, that could be addressed by simply accepting new clause 1, which would allow integrated audit, because LEPs are precisely the kind of area where integrated audit is much needed. Whether he chooses to accept new clause 1 or the amendment to allow a change to schedule 2—we hope he will accept one of them—we hope that we see a significant change in the confidence that we and the public have in how LEPs work.
LEPs are a mixture of the public and private sectors, so they are a different kind of organisation. Many public sector bodies are involved in them. For example, there are two LEPs operating across the area I represent, with different types of authorities in a two-tier area, so they are quite complex. Just saying, as the Minister did in Committee, that auditing the money for which LEPs are responsible will be done by that disparate set of audits by component bodies is just not good enough. I strongly urge him to rethink that.
Annette Brooke (Mid Dorset and North Poole) (LD)
I appreciate the general points that the hon. Gentleman is making, but does he agree that the democratic accountability of LEPs needs to be considered at some stage, because in many cases we have one-party representation on the political side?
Andy Sawford
The hon. Lady makes an interesting and important point. I should perhaps declare an interest as an officer of the all-party group on local growth, local enterprise partnerships and enterprise zones. I think the Minister can also claim to have held that auspicious role in the past. The group has been concerned about how we can make sure that LEPs are as effective as possible, principally in regenerating areas and communities and ensuring local growth, but also as regards democracy. LEPs must be accountable to communities, particularly given that they have mixed boards taken from the public and private sectors. In my area—I am not sure about the hon. Lady’s—there are two different types of authorities, and district councils around the country, in particular, have been very concerned about whether they have a powerful enough voice in the governance of LEPs.
The hon. Lady mentioned political representation on LEPs and their political leanings. A modest change to this Bill would address some of the issues about how LEPs are growing and developing to suggest that they should be audited in an integrated and proper way. That could enable elected local councillors to ask questions of and examine the performance of their LEP so as to enhance the local accountability and democracy that she and I want to see around the country in relation to the growing role of LEPs.
New clause 2 is about transparency. The independence and transparency of audit is not sufficiently safeguarded by the Bill. We recognise that the Bill has been improved during its passage through Parliament, and that the Government have sought to put in place ways to ensure an element of independence—for example, of local auditors. We had substantial discussion about how we would ensure the independence of members of the audit panels that recommend the appointment of auditors. However, there are significant issues in relation to how local authorities are finding new ways of working, particularly with private sector companies and other suppliers. We want to bring greater transparency to the relationship between local authorities and the private contractors to whom, increasingly, large amounts of public services are being contracted out.
The new clause is partly inspired by the strong points made by my hon. Friend the Member for Hayes and Harlington (John McDonnell) on Second Reading, when he encouraged us to look at the work of Transparency International. I assure him that I read its report on corruption, as did my hon. Friend the Member for Derby North (Chris Williamson), and used it to raise some important questions in Committee. Indeed, the Minister met representatives of Transparency International, so interested had he become in the strength of its recommendations and the issues that it was throwing up. Transparency International says:
“Private companies, when operating services in the public interest, should be required to comply with the Freedom of Information Act with regard to those services. Specifically, audit reports from local authorities should be covered under the Freedom of Information Act or published directly as public documents.”
I agree.
Our new clause draws on amendments that have been tabled at every stage in the Lords and in Committee. I pay tribute to the work of Lord Wills in this regard. At each stage, the Government have warmed a little more to the arguments that have been made. The Liberal Democrats have been encouraging, too. Lord Tope and Lord Wallace of Saltaire spoke in the Lords in favour of greater transparency. Lord Tope said:
“My Lords, Liberal Democrats campaigned hard for freedom of information long before the Act was passed and have since been consistent and enthusiastic supporters of its provisions. It follows therefore that we start with considerable sympathy for the issue that the noble Lord, Lord Wills, is pursuing…I am grateful to him for pursuing the issue at all stages of the Bill.”
I hope that he noticed that we took these matters forward in Committee. Lord Wallace of Saltaire said:
“I encourage the noble Lord to pursue this issue further. I will repeat what I said on Report: both Parliament and the Government need to look at this issue in general.”—[Official Report, House of Lords, 24 July 2013; Vol. 747, c. 1319-24.]
They are both right.
The Government’s main counter is that transparency increases costs and is not necessary because councils can already be subject to the Freedom of Information Act 2000. However, that is not sufficient given the travel towards ever greater outsourcing of services. Local government controls about a quarter of all public spending and contracts out an increasing amount of services to private providers. It is responsible for making decisions about a number of matters where the interests of private companies are often in tension with the wishes of the electorate. For all those reasons, local government is inherently exposed to corruption risks. On the whole, it navigates and mitigates those risks admirably, and we should recognise that and keep in proportion the level of concern. However, the public will want to know that we in this place have done our very best to ensure that there is transparency in how local authorities mitigate the risks and manage contracts.
John McDonnell (Hayes and Harlington) (Lab)
I wish to speak to new clauses 4 to 6, which stand in my name, and, without wanting to stray from the procedural rules of the House, I may refer to new clause 3, which has not been selected, but I assure you, Mr Deputy Speaker, that it will be a fleeting reference.
As has been said, on Second Reading I referred to the Transparency International report on the potential for corruption in local government. I circulated the report to all Members in advance of this debate and I am grateful that the Minister took up my suggestion to meet Transparency International and that the report became a subject of debate in Committee.
I tabled these new clauses to draw attention to some of the issues raised by the Transparency International report and to seek at least an element of forward momentum with regard to addressing these issues in future. It is critical that we maintain the confidence of the general public in the administration of local government. I think that Transparency International has helped us greatly, although its report says that it is very difficult to identify evidence other than anecdotal evidence about the level of corruption that may exist in UK local government. I believe we all share the view that the vast majority of councillors and council officials do an excellent job to a very high standard of probity and efficiency. Nevertheless, we are plagued with anecdotal information about elements of local government and with doubts about corruption.
Given the lack of data on corruption in local government collected at national level or any other level, Transparency International looks at the systems implemented to make sure that corruption does not take place. Its report says:
“Here, a disturbing picture emerges, and one on which experts and interviewees”
in the study
“were agreed. On the one hand, the conditions are present in which corruption is likely to thrive—low levels of transparency, poor external scrutiny, networks of cronyism, reluctance or lack of resource to investigate, outsourcing of public services, significant sums of money at play and perhaps a denial that corruption is an issue at all.”
My new clauses address those key elements. First, lack of transparency relates to new clause 3, which has not been selected, so I will not dwell on it. On Second Reading, I gave the example of my own local authority—this may happen elsewhere, so I would welcome the views of other Members—regularly putting items in part 2 of its agenda on the basis of spurious commercial confidentiality. When the find of prehistoric flints on one of my sites was reported in part 2 of the agenda, I joked in a previous debate that commercial confidentiality might have been important 3,000 years ago, but it is not now. It is, however, becoming a regular way of stifling debate and of preventing issues from being reported in the local media.
I believe—this is why I tabled new clause 3—that we need to address that. Central Government need to be clear about how often it is happening in local government and about the scale of its use and whether it is being used appropriately. They also need to address whether they have a role to play in providing further and better guidelines on how part 2 items should be addressed and on how items should be deemed to be commercially confidential or otherwise for the purposes of part 2 of the cabinet system.
That relates to the overall system. Under the previous Government’s local government reforms, which I opposed, we now have quite a centralised local council system whereby the leader is elected and then appoints the cabinet. They are all on a relatively high income these days. I do not begrudge anyone being paid the rate for the job, but the leader of the council in my area is on £65,000 a year and is appointing other members of the cabinet on salaries of between £45,000 and £55,000 a year. That gives the leader extremely wide-ranging powers of patronage and it is the leader who decides which items go into the confidential part of the cabinet agenda. They do so after being given some advice, about which I also have concerns, which I will come to.
That centralisation of decision making is dangerous and has the potential to result in not just poor decision making and lack of transparency, but corrupt decision making. That level of centralised control is part of the problem we now have. One of the issues thrown up by Transparency International’s report is that, structurally, we have opened ourselves up to decisions being made by a very limited number of councillors, with limited scrutiny by others. Whatever people thought of the old committee system—to be frank, it might well have been relatively slow at times—it was more open, democratic and transparent.
Alex Cunningham (Stockton North) (Lab)
I am pleased to have the opportunity to speak in support of new clause 2, which would add a considerable dose of fairness to the Bill. I will concentrate on the need to extend the use of the Freedom of Information Act.
As we all know, private companies that deliver public services are exempt from the requirements of the Freedom of Information Act. The Information Commissioner has no power to investigate private contractors. He cannot serve information notices to require a contractor to supply information for an investigation, nor can he take enforcement action if a contractor fails to comply with his contractual obligations. Put bluntly, that renders it nigh on impossible for us to get our hands on the details of much of what private companies get up to with public money.
New clause 2 seeks to correct that oversight, at least in relation to services that are provided to local authorities and health bodies. I hope that, in time, such provisions will be extended to all significant public sector contracts that are placed with organisations outside the public sector, whether they are charities, not-for-profit companies, mutuals or those that make vast profits for their shareholders at the expense of the taxpayer.
I have been hugely concerned for many years—not just under this Government, but under the previous Government and others before them—that there is a tremendous lack of transparency in the use of public money when it is handed to private companies and other organisations for the delivery of goods and services. Further billions of pounds of public money have been distributed from the public sector into the private sector in every year since the coalition Government came to power, so my anxieties have increased considerably.
There are good grounds for that anxiety, because many of the vital services on which we daily rely have been contracted out to private sector and other providers. The list seems endless, but until now we appear to have been largely content to see taxpayers’ money handed over to private companies for the delivery of services ranging from waste management and highway repair to schools, hospitals, the justice system, early years care and, as we were reminded yesterday, the care of elderly people.
No public service appears to be safe from the zeal for outsourcing that has been demonstrated by this Government, regardless of whether evidence exists to support such a model of provision. Should Ministers be allowed to further their ambitions to privatise even more services, without the providers being subject to proper scrutiny? I do not think so. If taxpayers’ money is involved, any citizen or Member of Parliament should be able to see the detail of where and how it is being spent. Applying the provisions of the Freedom of Information Act to such circumstances would enable that to happen.
We must make the best use of taxpayers’ money. I often hear Members from all parts of the House talk about the need to innovate in delivering services and to share best practice so that people across the country can reap the benefits. Without the transparency that would be provided by new clause 2, through the Freedom of Information Act, we are destined to see service providers keep their cards close to their chests, protecting their information at the expense of better services across the country. That transparency would also provide us with data on organisations that are prepared to run services at a loss for a period to drive competitors out of the market and then make a killing in the long term when there is no one for them to compete against.
Although I am the first to acknowledge that the requirements of the Freedom of Information Act can, at times, be cumbersome, I am in no doubt about the greater good that they serve. It is those requirements that allow those who are on the outside looking in—who, let us not forget, consist largely of the taxpayers who fund service provision—to delve into the details and scrutinise the outputs to ensure that they are getting value for money through providers that are fit for purpose. It is also those requirements that allow politicians, the media and other organisations to scrutinise what companies are up to.
I spoke recently on the Offender Rehabilitation Public Bill Committee about the need for the extension of the Freedom of Information Act to services that are provided to the Ministry of Justice, including the probation services that are on the verge of being privatised. I said that I was offering Government Members an opportunity for the future. Just as they had the right to scrutinise the public sector by pressing for information under the Act after Labour brought it in, they could have any number of fruitful days examining the contracts that are let by the future Labour Government if the provisions are extended to the private sector, as outlined in new clause 2.
Perhaps I will not convince the Conservatives, who will doubtless plead that commercial confidentiality must be retained in contracts, but the Lib Dems would surely love to have the chance to exploit this new transparency. They will know that, with £100 billion of taxpayers’ money being spent each year on the provision of public services by private and voluntary sector companies, it is essential that such expenditure is evaluated properly and that service providers are held fully to account for their actions. It is a core tenet of our democracy that taxpayers are able to access the information that is necessary to do that thoroughly and vigorously.
James Morris (Halesowen and Rowley Regis) (Con)
The hon. Gentleman seems to be talking about large private companies. Subsection (4) of new clause 2, to which he is speaking, includes in the definition of a private company
“joint ventures, not-for-profit organisations, mutually-held organisations and charities.”
Is he not concerned that the new clause would place large costs on smaller organisations that might not be able to handle the kind of requests he is talking about?
Alex Cunningham
No, I am not. As my hon. Friend the Member for Corby (Andy Sawford) said in opening the debate, this proposal relates to substantial contracts. It does not include the smallest organisations and we must ensure that they are protected. However, I would say that such organisations have a responsibility to be accountable for anything that they do when spending public money.
In the new world, public and private providers will ultimately be responsible for delivering equivalent services, but they will be governed by different rules. If a public partnership wins a contract to deliver refuse services, it will be subject to the freedom of information provisions, but its private sector rivals for future contracts would not be. Why should that be so? Private contractors that provide services should undoubtedly be held to the same standards of responsibility as state providers. I do not believe that anyone can argue to the contrary. It is therefore logical that the right to information about their regimes and establishments should also be equivalent.
So that there is no mistake, I remind Members that in announcing measures in 2011 to allow the publication of further spending and performance data on public services, the Prime Minister spoke of the “power of transparency”. Indeed, he went on to assert that, “Information is power.” He even suggested that
“we need more of it.”
I know that this is unusual, but I agree with the Prime Minister that we need more of it.
To put it simply, many non-public sector providers shelter themselves from open scrutiny and operate behind a screen of secrecy that simply is not compatible with the principles of public service provision. Such stealth and secrecy cannot be allowed to continue. It is only right that as more and more public services that were once the sole preserve of local and national Government are contracted out beyond the public sector, steps are taken to ensure that the same access arrangements are required of private and voluntary sector providers. To do otherwise is unfairly to insulate the Government, the Department and favoured contractors from adequate scrutiny and accountability.
One of the major risk factors that flow from a position of secrecy is the potential for fraud and corruption. Other Members have addressed that point in more detail. In public service provision, that is a crime against each and every taxpayer, and the public should be granted protection against such transgressions by all providers of public services being made subject to the requirements of the Freedom of Information Act. We have already seen the failures of some companies that were happy to take the taxpayers’ billions, and some people may face legal action as a result. For such reasons, we cannot afford to overlook the importance of new clause 2. Its additional safeguards are particularly important given the Government’s recent poor track record on commissioning services.
I know that the Government will bang on about commercial sensitivity, but that is nonsense. This is about fairness, open government and, above all, trust. For those reasons, I fully support new clause 2.
Chris Williamson (Derby North) (Lab)
I rise to support the shadow Minister, my hon. Friend the Member for Corby (Andy Sawford), on new clauses 1 and 2. To some extent, we rehearsed the arguments in Committee, when the matter was considered in some detail. The Minister and his colleagues were singularly unconvincing in their opposition to our proposals, but I hope that, having had time to reflect on those discussions and the contributions of my hon. Friends today, the Minister will accept our reasonable new clauses.
On new clause 1, considerable amounts of local and national funding are now used jointly. It therefore seems appropriate that they are subject to proper scrutiny and auditing arrangements. To argue against that is unacceptable. It is incumbent on the Government to ensure that funding is subject to proper scrutiny after deployment, particularly at a time when significant austerity and swingeing funding cuts have been imposed on public services, especially local government. They must ensure that we get the maximum benefit for the public pound in communities up and down the country. I hope the Minister will concede that the arguments that have been made are persuasive, and I hope that the Government will respond accordingly.
On new clause 2, it seems appropriate that proper measures are put in place to ensure that we do not end up with a cosy relationship between auditors and local authorities. There is a real danger of that, particularly as the Audit Commission is to be abolished. There could be significantly increased opportunities for corruption and the misuse of public funds. We could find situations such as the infamous “homes for votes” scandal involving Westminster council and Shirley Porter—or maybe we would not find out about them. Without new clause 2, they would be more difficult to uncover, so there might be more such examples around the country, which would be extremely regrettable.
In the case of that Conservative-controlled council in Westminster, we saw more than just the “homes for votes” scandal. We know from the records of officers who were employed there at the time that the council leader, Shirley Porter, bullied officers, and that anybody who had the temerity to question her direction of travel was slapped down in no uncertain terms. They were told, “You’re not one of us”, or “You are a negative officer and you need to decide which side you are on.” That was totally unacceptable behaviour by the leader of a council, and I fear that such behaviour is likely to increase if new clause 2 is not accepted.
As I said, it was not just the “homes for votes” scandal. Shirley Porter rose to notoriety when she sold three cemeteries in London for redevelopment for 5p each—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. As interesting as this may be, we are discussing audit. I know that the subject of Dame Shirley Porter may create some interest, but we have to try to stick to the new clauses and amendments. We are drifting a little wide of them. I am sure the hon. Gentleman is desperate to get back on track.
Chris Williamson
Indeed I am, Mr Deputy Speaker, and I am grateful for your guidance. I was just about to conclude my remarks about Shirley Porter by saying that she privatised at will, as well.
In Committee, we heard a lot from the Minister about his commitment to transparency. His Back-Bench colleagues reinforced that point. However, the Bill will make transparency considerably more difficult, because arrangements within local authorities will be considerably more opaque. Transparency International, which my hon. Friend the Member for Hayes and Harlington (John McDonnell) quoted, was scathing about the Bill, stating:
“The range of measures outlined in this Bill, combined with recent legislative reforms under the Localism Act 2011, remove key institutional defences against corruption, replacing them with arrangements that are likely to be inadequate to protect the public interest and the public purse.”
We hear a lot from the Government about their concerns for the public purse and the need to ensure that the taxpayer gets value for money, yet it seems that, unless they accept our new clauses, they are being cavalier with the public purse in this case.
I hope that the Minister will reflect on what has been said today. Unless the new auditing arrangements are subject to freedom of information provisions, their opacity will grow. I do not want to strain your patience too much, Mr Deputy Speaker, but circumstances such as the Shirley Porter case will not be uncovered. It is essential that new clause 2, tabled by my hon. Friends the Members for Corby and for Stockton North (Alex Cunningham), is accepted; otherwise private sector audit companies will not be subject to the scrutiny that was previously available under the Audit Commission arrangements. Even when there were external auditors, the information that they held was deemed to be held by the Audit Commission and was therefore subject to scrutiny by the general public. My hon. Friends and I say that it is important that proper scrutiny is still available under the new arrangements. As we heard from my hon. Friend the Member for Corby, local enterprise partnerships are now also spending considerable sums of money.
James Morris
Will the hon. Gentleman clarify the meaning of proposed subsection (1) of new clause 2? It states:
“A local auditor has a right of access at all reasonable times to audit documents from private companies to whom the local authority has contracted significant services during the last financial year.”
Does that mean that a local auditor should have the right to access any and all documents within such companies irrespective of whether they are relevant to the relationship with the local authority? That would give the local auditor carte blanche to access any document at all in those organisations.
Chris Williamson
It means documents relating to the contracts under which companies are working for the local authority. Clearly, it would be overly burdensome and inappropriate for all their documentation to be subject to the Freedom of Information Act, but it is perfectly reasonable in respect of work they are doing on behalf of a local authority, as is made clear later in the new clause. The hon. Gentleman’s concerns are misplaced, and the new clause is entirely reasonable.
Andy Sawford
My hon. Friend is right in his interpretation of the new clause. Clause 26 on the inspection of documents sets out the documents that would reasonably be made available for inspection in public bodies. We would extend that to private sector contractors.
Chris Williamson
I am grateful to my hon. Friend for that clarification. I hope that provides the reassurance Government Members were seeking.
In conclusion, we are moving to a new era in which the Audit Commission will be abolished and more private sector auditors will get involved in the market. It is important that those are subject to appropriate scrutiny, and we must therefore ensure that instruments are available to enable such scrutiny to take place. According to the Chief Secretary to the Treasury, up to £20 billion will be spent by local enterprise partnerships, and proper scrutiny and auditing arrangements must be in place to ensure that that money is expended properly. The public demand nothing less, and if the Government do not support this measure, it is incumbent on them to explain how that scrutiny will take place. If scandals are uncovered in the future because of a lackadaisical approach adopted by the Government, they will not be able to say they were not warned. I hope the Minister will sleep easy in his bed if he rejects these reasonable measures, because I believe that would put taxpayers’ money at risk of being misused. He needs to reassure the House and—more importantly—the wider public.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I will respond first to the new clauses tabled by the hon. Member for Corby (Andy Sawford) before addressing those tabled by the hon. Member for Hayes and Harlington (John McDonnell). I will then consider the Government amendments in this group.
New clauses 1 and 2 and amendments 13 and 12 cover familiar ground which, as the hon. Member for Corby noted, we debated at some length in Committee. New clause 1 returns to the issue of integrated audit and seeks to enable auditors to work across local authorities with the National Audit Office. I support the principle of audits being undertaken efficiently and effectively, but I do not consider that the new clauses are the right approach, or that they are necessary to support bodies in working jointly or sharing services or budgets.
The public audit framework is designed to provide assurance about how each public body has used its resources. Individual public bodies are separately accountable, and because each is accountable for its decisions and expenditure, every one is required to produce a set of accounts and have an independent audit. I do not believe that the current accountability structure prevents local auditors from auditing relevant authorities cost effectively, or that it prevents authorities from working together to share services or budgets. The requirement to have a separate audit has not been highlighted as a problem in the four areas with which the Government have been working to explore service transformation and joint working via a community budget. Neither did the Public Accounts Committee raise external audit as a barrier in its report on integrated working by Government Departments and via community budgets.
Auditors are already required by the code of audit practice to have regard to partnership working that local government and health service bodies operate, to share information and co-operate with other auditors, and to minimise the burden of regulation on audited bodies. The Financial Reporting Council’s auditing standards also state that auditors should rely on the work of other auditors where appropriate, and guidance is available to support auditors making that judgment.
The National Audit Office supports Parliament to hold Government Departments to account. It does not have a role in auditing expenditure by local public bodies, and it does not wish to have one. The NAO already carries out a number of national value-for-money examinations under existing legislation, and the Bill broadens its powers to enable it to examine all or groups of relevant authorities. That will enable a more end-to-end view on the use of public money. It will not enable the NAO to undertake examinations of individual authorities, but it will be able to look at any thematic or systemic issues across a number of relevant authorities. For those reasons, we consider that the new clause is not needed.
There has been a lot of discussion about provisions in new clause 2, both in the other place and in Committee. As I said in Committee, we believe the new clause is not necessary to enable auditors to access all the information they need because the Bill already does that. Clause 22 mirrors the provision in the Audit Commission Act 1998, and enables auditors to access every document they need in order to undertake their statutory functions. That includes all documents held by local authority contractors which the auditor considers necessary to undertake an audit.
The Government also believe that it is not necessary to apply the Freedom of Information Act to documents an auditor has obtained from a contractor. Rather than extending that Act to documents an auditor has obtained from a contractor, the Government’s preferred approach is through the transparency agenda, existing rights of local people, and our planned revision to the freedom of information code of guidance. Local people can already access information about contracts. The Bill maintains local people’s current extensive rights to inspect detailed accounts, accounting records and audit information, and to ask the auditor questions and raise objections. Those rights enable local people to access more information than the proposed new clause would.
Chris Williamson
Does the Minister agree that perception is important, and that by not subjecting private sector auditors to the Freedom of Information Act, the wider general public could feel that they will not be able to access information that was previously available under the Audit Commission? Does the Minister believe he has an obligation to be seen to be doing the right thing, as well as giving those assurances at the Dispatch Box?
Brandon Lewis
What is important—I think this is what the hon. Gentleman was trying to say in a roundabout way—is to do the right thing, not what might look like the right thing but may not be. Local authorities are subject to the Freedom of Information Act, but I will continue my remarks so that he fully understands the point about how people can get to information.
It is absolutely right that the Government are driving forward the transparency agenda so that auditors have access to the information they want. That is why it is important that if people ask questions, the auditor may gather even more documentation to investigate the issues. That goes further than the Freedom of Information Act, which would require the auditor to provide information it holds but not lead it to seek additional material.
Last week, the Government published their response to the consultation on the transparency code. It set out their intention to make regulations requiring local authorities to publish specified pieces of information, including contract details exceeding £5,000. Local authorities also monitor the delivery of their contracts and are subject to the Freedom of Information Act 2000. The Government consider that a better approach would be for contracts to include provisions that require contractors to assist local authorities in meeting their Freedom of Information Act obligations—thereby satisfying the point raised by the hon. Gentleman. That decision was taken following the Justice Committee’s post-legislative scrutiny of the Freedom of Information Act, which recommended that greater transparency through contracts would provide a more practical approach than extending that Act to companies directly.
Mr Clive Betts (Sheffield South East) (Lab)
I have heard what the Minister has said about transparency of contracts, but is he saying that if a local authority goes about formulating a contract in the right way, the public—it is they who are important—could be entitled to as much information about the spending of their money through a contracting process as they would be if the service was delivered by a local authority directly?
Brandon Lewis
It is not for me to prejudge a contract that a local authority might agree to, but it is true that people can access the Freedom of Information Act through the local authority, and the auditor can go further in its inquiries to ensure it has all the documents it needs.
Mr Betts
That has not answered my question—I was not asking what local authorities should do. If a local authority went about this correctly and formulated a contract correctly, could the public have as much information on the spending of their money through a contracting process as they could if the service were delivered directly by the local authority?
Brandon Lewis
In principle, yes, but it is not for me to prejudge how a local authority would contract. If it chose to contract in that way, of course that would be a matter for it. It would be entirely possible.
Chris Williamson
That response is instructive. I think the Minister is saying that in certain circumstances that information will not be available in the way it is currently available. It seems it will be down to the local authority. He said he met with Transparency International. I wonder if he would comment on its key recommendation:
“Amendment should be made to the Bill to ensure that the work conducted by auditors will be subject to the Freedom of Information Act, and that auditors will be allowed to access documents from significant private contractors that a local authority has used.”
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Interventions need to be shorter, but I certainly do not need instruction from Back Benchers.
Brandon Lewis
As I said, the Freedom of Information Act applies to local authorities, but we are not extending it to cover private companies. I am happy categorically to make the point, as I did in Committee, as the hon. Gentleman will see if he looks in Hansard, that we are not going to extend the provision to private companies; it is the local authority that will be accountable. He will have to take that as outlined.
We will issue a revised code of practice encouraging public authorities to include and enforce provisions in contracts to ensure that openness and accountability are maintained by encouraging the release of a wider range of information about contract delivery. This approach will be monitored by the Government and the Information Commissioner. If contractors or public authorities do not comply with this guidance, the Government will consider what other mechanisms might be necessary, including the possible extension of the Freedom of Information Act to service providers.
Brandon Lewis
I will not prejudge the guidance before we publish it, but I am sure that the hon. Gentleman, if he is not happy with what we do, will want to raise it with me at Question Time or through the Select Committee.
Following our debate on amendment 13 in Committee, I wrote to the hon. Member for Corby providing further details. I can assure the House that this amendment is not necessary, as sufficient safeguards are already, and will continue to be, in place to ensure the independence of the auditor. First, the Financial Reporting Council’s ethical standards require audit firms to establish policies and procedures to ensure that auditors act with integrity, objectivity and independence. There are specific limitations on audit firms providing non-audit services.
The ethical standards require the lead auditor to assess any threats to the auditor’s objectivity. Before accepting an engagement to provide non-audit services, it must consider whether doing so could threaten the firm’s actual or perceived objectivity or independence. The ethical standards do not prohibit audit firms from undertaking non-audit work, but they do require them to introduce safeguards that would eliminate these threats or reduce them to an acceptable level. This is where a reasonable and informed third party would probably not conclude that an auditor’s objectivity was or could be impaired. If the firm cannot introduce sufficient safeguards to reduce the threats to an acceptable level, it must not accept the non-audit engagement or it must withdraw from the audit.
Secondly, auditors must comply with international standards setting out the ethical requirements for financial statements audits and requiring lead auditors to report on compliance with independence requirements and audit firms to ensure that their quality control systems comply with professional standards and regulatory and ethical requirements. The international standards also require firms to put in place procedures for the acceptance and continuance of specific engagements, including whether compliance with ethical requirements can be achieved.
Thirdly, recognised supervisory bodies will have rules to ensure that local auditors conduct work properly and with integrity and that they do not accept appointments where a conflict of interest would prevent that. They must record threats to independence and the steps taken to safeguard independence and ensure that remuneration is not influenced by the local auditor providing other services. That is consistent with the established framework in the companies sector. In addition, we expect the independent auditor panels to advise the authority on the adoption and content of a policy on awarding non-audit work to the auditor. A note to the annual accounts is required if the audit firm undertakes non-audit work.
Those safeguards will protect the actual and perceived independence and integrity of the auditor. If objectivity is prejudiced, the firm must withdraw from either the audit or the non-audit work. We consider this approach preferable to the amendment tabled, which would not remove the potential conflict of interest. If the audit firm were required to subcontract to another firm, it would still be accountable for the audit opinion and any other work undertaken by the subcontractors.
John McDonnell
I am grateful to the Minister for that information and for his offer of co-operation. Does he have figures for the number of staff employed to investigate fraud in local government in, say, 2007-08 compared with the number employed in that area during the past year?
Brandon Lewis
I cannot give the hon. Gentleman those figures off the top of my head, but I will come back to him on that if he will bear with me.
New clause 6 would require the Secretary of State to report to Parliament on the use by local authorities of compromise agreements that involve confidentiality clauses in relation to staff exiting their organisation. I know that the hon. Gentleman feels strongly about this issue and that he raised it on Second Reading. During that debate, he expressed concern that, if used inappropriately, confidentiality clauses could unreasonably restrict officers’ ability to provide full and frank advice to local members and to protect the public interest. Officers, including those exiting an organisation, must have proper opportunities to provide such advice and to raise concerns. The Secretary of State has made clear his view that so-called gagging clauses should not be used to undermine that principle, and I am happy to reiterate that view today.
The use of compromise agreements in the public sector was recently the subject of a report by the National Audit Office and was also scrutinised by the Public Accounts Committee. Further to this, the Government agreed that there should be greater transparency and accountability on the use of compromise agreements across the whole of the public sector, including local authorities. Importantly, the law is quite clear that compromise agreements—in which an agreement is reached to contract out of statutory employment rights—can be made only when the employee has had access to independent advice on the terms and effect of the proposed agreement.
Furthermore, confidentiality clauses cannot be used to prevent a protected disclosure under the Public Interest Disclosure Act 1998. The Government have recently undertaken a call for evidence to look at whistleblowing, and specifically at whether there is enough support for people who wish to report wrongdoing. The Government will respond to the call for evidence early in the new year. I hope that I have been able to reassure the House that the Government take this matter seriously and are taking action on it.
John McDonnell
I am grateful for that information, but may I suggest that that review of whistleblowing should pay specific attention to the use of compromise agreements, particularly within local government? I do not think that that has been explored or taken into account sufficiently so far.
Brandon Lewis
The hon. Gentleman makes a fair point, and he will appreciate that it is now noted and on record. I hope that I have been able to provide sufficient assurances to persuade him not to press his new clauses and amendments to a vote.
I shall not detain the House for long on Government amendments 1 to 5. Amendment 1 would require an authority to include the period of the auditor’s appointment in the public notice confirming the appointment of the auditor. Clause 8 requires authorities to publish such a notice within 28 days of making the appointment. The hon. Member for Corby will recall that he tabled a similar amendment in Committee and suggested that it would be helpful for the public to know the term of the auditor’s appointment. It was also suggested that knowing when the existing contract would end would be useful to potential bidders for any new appointment.
There was a similar discussion in the other place, where Lord McKenzie tabled an amendment to require that information on the term of appointment should be included in the published notice. At the time, the Government expressed sympathy with the intentions of the amendment, but questioned whether such a requirement needed to be set out in legislation, because it could simply be a matter of good practice and guidance. However, having considered the case further, and in the light of the points made by the hon. Member for Corby in Committee, the Government accept that it might be useful to put the matter beyond doubt through this amendment.
Amendment 2 is a minor and technical amendment to ensure that references throughout the Bill cover subordinate legislation made under part 42 of the Companies Act 2006, as applied by schedule 5 to the Bill. It will make it clear that provisions on eligibility and regulation apply to the whole local audit regime.
Amendment 3 removes from schedule 2 internal drainage boards that are partly in England and partly in Wales. There are two such boards: Powysland and Lower Wye. Both are mainly in Wales but currently fall under the Audit Commission regime. The local audit provisions in the Bill will therefore not apply to those cross-border internal drainage boards after the Audit Commission is abolished. The Welsh Government intend to transfer the functions of the two cross-border IDBs, along with the functions of one IDB that is wholly in Wales, to a single body, Natural Resources Wales, and to bring them under the Welsh audit system. They intend to do this by the time the Audit Commission is abolished—by April 2015. Both bodies will continue to fall under the Audit Commission regime until then.
The Welsh Government supported a legislative consent motion to make audit arrangements for the two bodies under the Bill as a stopgap measure until the new governance arrangements are in place. However, the legislative consent motion was not passed by the National Assembly for Wales. As a result, in line with the devolution settlement, the amendment removes these two bodies from schedule 2. Welsh Ministers have agreed that we should retain the power in clause 2 as a backstop power to add cross-border bodies back into schedule 2 by regulations at a later date, should the transfer of functions take longer than expected. Regulations made under this power will be subject to consultation and the affirmative procedure, and would require consent from the National Assembly for Wales.
Amendment 4 is a minor amendment to clarify that paragraph 6(1) of schedule 4 does not apply in the case of health bodies. The paragraph currently provides that, when an authority uses an existing committee as its auditor panel, wider enactments that usually apply to committees of a local authority do not apply. A corresponding power in paragraph 5 then allows such enactments to be positively applied to the panel, to ensure that arrangements remain proportionate, given the panel’s limited role.
In the case of health bodies, however, their audit committees are covered by a specific existing framework, which is different from that applied to local authority committees. That framework reflects the different governance framework for health bodies such as clinical commissioning groups, and will need to continue to apply in full, even when the committee is acting as the panel. As drafted, paragraph 6 of schedule 4 could have the unintended consequence of disapplying that existing framework for audit committees within health bodies when they are acting as the auditor panel. The amendment therefore excludes health bodies from this provision.
Amendment 5 further modifies schedule 10 to the Companies Act 2006, as applied by schedule 5, in respect of auditors qualified in other European economic area countries. It has two main effects in respect of those individuals. First, it will enable the recognised supervisory bodies for local audit to recognise the qualifications of those auditors who hold the equivalent of a UK local audit qualification obtained elsewhere in the EEA. This is necessary to comply with the requirements of the recognition of professional qualifications directive, 2005/36/EC.
Secondly, the amendment specifies that recognised supervisory bodies can require an EEA statutory auditor to pass an aptitude test only if the auditor is seeking to become established as a local auditor in the UK on a permanent basis. The audit directive, which makes provision for an aptitude test, applies only to statutory audit. Unlike the audit directive, however, the recognition of professional qualifications directive does not permit the imposition of an aptitude test if an individual is seeking to provide services on a temporary and occasional basis. The amendment therefore seeks to align the regulatory frameworks for statutory and local auditors, as far as is permitted.
The amendment will also ensure that any indirect discrimination against EEA auditors is avoided and that the requirements for EEA local auditors and EEA statutory auditors are as consistent as possible. It will also ensure that a firm is qualified if it is eligible for appointment as a local or statutory auditor or is eligible for a corresponding appointment. I urge the House to support the Government’s amendments.
Andy Sawford
Thank you, Madam Deputy Speaker, for allowing me a moment to reply.
The amendments, particularly new clause 2, have had strong support from my hon. Friends and I am grateful to them for putting their views on record. I welcome the Minister’s statement that the Government will publish guidance to private sector contractors. He went further, saying that if that is not effective, the Government will consider extending freedom of information contracts to private suppliers. I consider that to be a significant move forward, certainly from where we were in Committee. It is a win for my hon. Friend the Member for Derby North (Chris Williamson) and others who have championed this. We very much look forward to seeing that guidance, but we also commit to taking the issue forward ourselves.
Andy Sawford
I beg to move amendment 14, page 26, line 11, leave out
‘one or more specified local authorities’
and insert ‘a local authority’.
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss the following:
Amendment 15, page 26, line 25, leave out subsection (4) and insert—
‘(4) A direction can only be made by the Secretary of State if—
(a) evidence of a breach of a code has been published by the Secretary of State to the local authority;
(b) a local authority, on receipt of a letter from the Secretary of State notifying them of evidence which purports to demonstrate a breach of the code has made a response to the Secretary of State within 28 days; and
(c) upon receiving any response the Secretary of State has published a report detailing his conclusions.’.
Amendment 16, page 27, leave out lines 1 to 29.
Andy Sawford
Clause 39, to which the three amendments relate, includes provisions on local authority publicity that the Opposition strongly believe, and have consistently argued, are unnecessary, undemocratic and wholly disproportionate. The amendment, and the clause itself, covers all council publicity from newspapers to posters and even social media. We are gravely concerned that the Secretary of State is, in effect, through clause 39 making himself the censor-in-chief of local government communications.
Much attention has been paid to the Government’s gagging law, which attempts to silence civil society. It is less widely known that, through clause 39, the Government are trying to silence elected local councils. These new powers make the Secretary of State censor-in-chief of local government at the same time as evidence is emerging that his Department is encouraging councils to print pro-Government propaganda through the circulation of the very loaded pro-Government suggestive press releases that we have seen appear around the country.
Clause 39 will give the Secretary of State the power to dictate when and how councils can publish communications to local citizens. Of even more concern to us is the fact that the Secretary of State is taking a power of censorship to direct what issues and information councils can talk about and even what language and phraseology they can use. Ministers have made it clear that their intention is to prevent councils from sharing information or commenting on the impact of Government policy if they disapprove of the message.
In Committee, the examples given by the Minister and his Back Benchers included not allowing elected leaders of a local authority to publish a comment on the effect of central Government funding changes—so furious are the Government that councils are letting their residents know the scale of the cuts they are facing. Under these new powers, the Secretary of State could force councils to use pro-government terminology such as the benign-sounding “spare room subsidy” rather than the “bedroom tax”, which betrays how unpopular and unfair the policy is to many of the poorest and most vulnerable people—including many disabled people—in our communities. Legal advice to the Local Government Association says that these censorship laws would prevent councils from publishing information on issues such as HS2 or health service reconfigurations.
The Government argue that the power is needed because local authorities are breaching the current voluntary code on local authority publicity. Yet they have managed to find only one example of a breach; Tower Hamlets’ publication “East End Life”, which seems to the Opposition clearly to flout the code. It is absolutely shocking that the Government have failed to take any action, using the powers they already have, in more than three years since they became aware of the level of concern, including that reported by Labour councillors in Tower Hamlets. We agree with the Secretary of State that that publication is a problem, but we ask again why the Government have taken no action—no action at all. In fact, the Minister attempted to explain to me in an answer to a parliamentary question that it is because the Secretary of State has not done anything that he now believes that he needs to give himself these dictatorial powers. It is so extraordinary that one might assume that if councils knew the full extent of these plans, they would resist them.
Through several freedom of information requests, I discovered that the Department has not communicated with local authorities about the plans since May 2010. No councils have answered letters or e-mails in respect of their local publications on this subject. This is all being done behind local authorities’ backs.
At the same time as the Secretary of State is censoring councils and preventing them from saying things he does not like, he is seeking to use them as a propaganda arm of the central state. I have discovered that, through these press releases, the Government are seeking to trumpet their policies when it suits them to use councils in that way at the same time as they seek to silence them when council communications are inconvenient. The Secretary of State preaches localism rhetoric, but the truth is—we know this, and local government knows it, too—that he does not really like local democracy. Starved of funds and subject to diktats even on issues like when to collect the bins, local authorities are now subject to censorship. It is clear that the Secretary of State’s warnings of cigar-chomping commies looking to take over government were remarkably prescient.
The hon. Member for Mid Dorset and North Poole (Annette Brooke), who I see in her place, described these censorship laws as
“a sledgehammer to crack a nut”.—[Official Report, 28 October 2013; Vol. 569, c. 704.]
Liberal Democrat-run Cambridge city council says that the clause is “disproportionate and unnecessary”. It says it is
“quite at odds with the principles of localism”.
I asked the Secretary of State in a parliamentary question of 16 December to publish or place in the Library all the responses his Department received to the consultation it ran on local media. The Minister replied:
“I have placed in the Library of the House, a copy of the Government’s response to the consultation on ‘Protecting the Independent Press…’ which outlines the divergent views of councils and representatives of independent newspapers.”—[Official Report, 16 December 2013; Vol. 572, c. 444W.]
Because the Minister would not provide the information, I took the trouble of making a freedom of information request to local authorities themselves about their responses to the consultation on the publicity code. I then discovered that it was not only Cambridge city council that said it disagreed with the clause. Watford borough council, led by the widely respected elected local mayor, Dorothy Thornhill—she is not of my party, but she is someone I have worked with who has a good reputation around local government—says:
“These changes are a threat to local democracy. They could inhibit local elected members from representing their residents. Placing the ultimate decision-making powers in the hands of a Secretary of State is contrary to the localist agenda of the Government, and it is heavy-handed.”
It is not just Liberal Democrat councils either, because Conservative councils, too, are opposed. North Yorkshire county council says in its response:
“The proposed legislation is disproportionate”.
Tory-run North Somerset says:
“With regard to the proposed restrictions on the publication of council newspapers, we object strongly.”
Baroness Eaton said in the other place:
“This clause is unnecessary as there is no evidence that council publications are competing unfairly with local newspapers…the proposed measures in the Bill centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at local level”.
Lord Tope, commenting on the lack of evidence to support the proposals on local authority publicity, said:
“All we have had from the Government is rather silly and misleading statements from the Secretary of State about ‘town hall Pravdas’”.—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 898-902.]
The Local Government Association, a cross-party but Conservative-led body, says:
“The powers are too wide ranging and do not allow councils any local discretion about how to engage with their residents. This is unnecessary and could allow the Secretary of State to interfere with the work of an elected council.”
The National Association of Local Councils, which has no political axe to grind, says these powers are “anti-localist”, fly in the face of localism and are
“a threat to local democratic accountability”.
Finally, let me cite the very considered words of the right hon. Member for Hazel Grove (Sir Andrew Stunell), the former Local Government Minister in the coalition Government. In Committee he said:
“Every Bill has high spots and not-so-high spots, and Clause 39 is one of those not-so-high spots.”––[Official Report, Local Audit and Accountability Public Bill Committee, 19 November 2013; c. 301.]
I have had the pleasure of working with the right hon. Gentleman in a previous role so I know that that is a typically understated remark from him. He then went on to challenge the Minister for assurances about the proportionality of any intervention, and the ability of councils to make representations with regard to how they are exercising discretion. However, far from giving reassurances, the Minister—and many of his hon. Friends, some of whom I see in the Chamber today—made us more rather than less concerned. Their political motivation was absolutely clear: they were frankly shameless about revealing that clause 39 was about silencing councils if they communicated with citizens about anything that the Government did not like.
The Secretary of State claims that the clause is needed to protect the press from unfair competition from advertising, but the recommended code of practice for local authority publicity contains no provisions relating to advertising. It is clear that the Secretary of State’s argument is a diversion from the real aim of censoring councils and their locally elected councillors. The National Union of Journalists disagrees with the Government’s contention that local authority publications are damaging to the press. Its general secretary has said that there is “no case at all” for the current Secretary of State
“and future Secretaries of State to be given extra statutory powers to decide when”
and how local authorities can communicate, adding:
“We do not believe that this element of guidance reflects the needs of many communities”.
The Minister will no doubt tell us that the Government ran a consultation in April 2013. That consultation was a classic example of things that cause the public at times to be very sceptical abut public sector consultations. It was, in fact, very much a “nonsultation”. Its outcome was so evidently predetermined, even by the loaded title “Protecting the independent press from unfair competition” and by the way in which it was launched. The Government, as if to confirm that impression—as if they had no regard to whether the public, or indeed local authorities, would consider that they had given any proper thought to the consultation—published their response within two days of the end of the consultation.
We have challenged the Government to give practical examples. As I have said, we acknowledged the issue about Tower Hamlets, on which they should have acted. Baroness Hannam said in the House of Lords that she had evidence involving other local authorities, yet she said—extraordinarily—that it would not be “helpful” to identity them. Asked to give examples, she said:
“I shall not say which local authorities…are breaching the code. I have them. I could do it, but I think it is…not helpful.”—[Official Report, House of Lords, 15 July 2013; Vol. 747, c. 604.]
In Committee, the Minister said:
“the fact is that there are examples out there.”––[Official Report, Local Audit and Accountability Public Bill Committee, 19 November 2013; c. 304.]
He then vaguely referred to four councils—Plymouth, Lambeth, High Peak and Nottingham, all of them Labour-run—which had had the temerity to inform the public of the unfair scale of the cuts imposed on them by central Government. Can Ministers not see that the kind of censorship that they are seeking to impose through clause 39 is not democratic, not British, and not worthy of the values that our Parliament should uphold? The motivation is petty, but the consequences will be very serious indeed.
Let me tell the House about the effect in my area. The Minister has suggested that a council publication in my constituency, the Nene Valley News, is competing unfairly with local papers. His ill-informed statements show why we should not trust the Government with these powers. The truth is that there is no newspaper for the Nene Valley News to compete with across much of east Northamptonshire—and now the only communications lifeline on which many people in the small towns and villages of my constituency can rely is being cut off. Those are people in areas with poor broadband access, and the demographic is such that, proportionally, there are fewer people in those areas than in some of the larger towns in the county who use social media widely, or even have access to the internet.
Mr Betts
Three years ago, the Select Committee conducted an inquiry into the whole issue of local authority publications, and found absolutely no evidence of any impact on commercial newspapers. Indeed, one of our findings was that many local authority publications were published on the presses of commercial papers, thus providing them with important additional income.
Andy Sawford
My hon. Friend, who chairs the Select Committee, is right. I think that there is often a complementarity between the newspapers, news sheets and magazines published by councils and other local papers. There is often a considerable spin-off in the form of the relationship between the communications that councils promote through their papers about local events and community organisations, and how vibrant local newspapers are able to become in terms of, for example, the advertising revenue that they can create in relation to such community events and activities.
The Minister has claimed that the advertising in the Nene Valley News is the problem. First, it is not included in the code; secondly, I would gladly facilitate a meeting between the Minister and the local small businesses and traders who use the low-cost space in the Nene Valley News, and who are now extremely worried about how they will get business. I quoted one individual at length in Committee, but for brevity I shall merely say now that he concluded his remarks to me on this matter by saying, “Aren’t the Tories supposed to be a party that likes business?” He is very sceptical about the motivation for, and is concerned about the effect of, this crass, uninformed and undemocratic clause.
Andrew Griffiths (Burton) (Con)
I listened to much of what the hon. Gentleman said in Committee and followed his train of argument. Will he clarify whether he opposes the code itself or just its enforcement?
Andy Sawford
I am surprised that the hon. Gentleman did not pick this up during our three Committee sittings on this clause, as we made it clear that we support the voluntary code. We have been able to agree on one example where there is clearly a question as to whether the code is being flouted, and it is a great shame that the Government have not seen fit to take any action in three years to enforce the code.
Andy Sawford
I am going to make some progress, because the hon. Gentleman spoke extensively on these provisions in Committee and made us more, not less, concerned.
Amendment 15 seeks to delete the astonishing new subsection I mentioned, to extend the time that the authority has to respond to evidence of a breach of the code to 28 days from 14, and, crucially, to require the Secretary of State to publish a report detailing his conclusions, having considered the response from the authority. That seems to us to be a very reasonable amendment that enshrines an evidential basis for taking any action in relation to the code. Amendment 16 seeks to delete the whole of proposed new section 4B, as we feel it is overly proactive meddling from the Secretary of State. We will seek to press amendment 15 to a vote. I hope that hon. Members on both sides of the House will consider it reasonable that if the Government must press ahead with these powers, there is at least a requirement for the process to be evidence-led, for councils to have the right to make representations and for the Secretary of State to publish his findings before any action is taken.
I end by asking the Minister, one more time, to try to persuade us that this approach is necessary by saying how he thinks that the Opposition, the cross-party, Conservative-led Local Government Association, Liberal Democrat-run and Tory-run councils all around the country, the National Association of Local Councils, the National Union of Journalists and my constituents in east Northamptonshire, who are so upset about the end of the Nene Valley News, are all wrong and he is right. Even if he still thinks he is right, can he explain, as someone who purports to be a localist, why it is right to impose central Government’s will? This clause is worthy of a crackpot dictatorship.
John McDonnell
This is barmy. It is absolutely crackers that we are spending parliamentary time on this matter. I receive Hillingdon People from my Conservative-controlled local authority. On virtually every page, there is a picture of a smiling Conservative councillor pointing at something, standing on something or expressing some view. Interspersed with the smiling photographs is genuine information about what is happening in the local community. People tell me that the newspaper is an ideal size for lining a hamster cage, so it serves some useful purpose in the local area.
Today, the Government have announced the commission report on the expansion of aviation, which includes the threat to my constituency from the third runway. I have been assured that there will be cross-party opposition on my council to the Government’s proposals. We will use Hillingdon People to explain the proposals that have been introduced. We have used it in the past to explain the proposals of all political parties. Undoubtedly, views will be expressed by councillors on a cross-party basis condemning the commission’s proposals and, almost certainly, the Government’s approach. Does that mean that we will then be hauled before the Secretary of State to be advised on the words that we can use about this matter and on the way in which Hillingdon People will be used?
The one good thing about local newspapers is that they reflect local opinion. There might be an overbalance of photographs of a certain party, but for all that they are a useful tool in mobilising local opinion around a local issue, and they are campaigning tools for a local authority in genuinely reflecting the views of the local populace who elected them.
My local council has certainly consulted local people and supported local meetings to ensure that people can express their views on the extension of Heathrow. It has then reflected those views in Hillingdon People, and launched campaigns on the basis of what local people have said. At my last public meeting on this matter, a campaign called “Back Heathrow” was spuriously launched by the aviation industry to support Heathrow airport expansion. It was completely funded by Heathrow airport and run by its public relations agency. People then said to me that Hillingdon People should be used to put out accurate information, rather than the spurious propaganda that the airport was putting out. I am anxious that my local authority, which will go on the stump on this issue, may be debarred from using Hillingdon People to explain what its views are and to campaign against the expansion of Heathrow airport.
I would be grateful to the Minister if we heard his views. By the looks of it, he will now be the editor-in-chief of Hillingdon People, so I would welcome his views now before we put a foot wrong. Is it in order, under this Bill, for Hillingdon council to use Hillingdon People to campaign against Heathrow expansion and to disseminate information that will be opposed to the commission’s views and what seems to be the emerging view about a third runway at Heathrow?
Chris Williamson
I rise to speak against this Orwellian clause and in favour of the amendment tabled by my hon. Friend the Member for Corby (Andy Sawford). He is absolutely right to say that the Government are seeking to put the Secretary of State in the position of censor-in-chief. We live in the United Kingdom. I thought that the Government believed in freedom of speech and the free press, but it turns out that that is not the case when it comes to publications produced by local authorities. It is clear that the Secretary of State is setting himself up as some sort of Orwellian big brother figure. If the clause goes through, the Department for Communities and Local Government should be renamed the ministry of truth. It is all right for the DCLG to issue draft press releases praising the Government. As my hon. Friend the Member for Corby said, as long as local government is praising the policies of central Government that is okay, but if it has the temerity to point out that in some way what the Government are doing might have a negative impact on the communities that they represent, then woe betide them; that is not acceptable. When the Secretary of State seeks to take that kind of power to himself, we have to ask what kind of country we want to live in. This is completely wrong. Just look at the document—it could be a Tory hand-out. It has even suggested the headline that the local authorities might like to put on their press releases. It reads, “Pickles praises troubled families programme”—so, big up the Secretary of State, but, whatever you do, do not say anything that could be interpreted as negative.
My hon. Friend the Member for Corby pointed out that there is absolutely no evidence suggesting widespread abuse of the voluntary code. Indeed, we would be hard-pressed to find any example, let alone widespread examples, so this provision is completely over the top. We have talked about using a sledgehammer to crack a nut, but it is more like using a pile-driver to crack a minuscule nut. There is no example of any abuse. It is clear, therefore, that the Secretary of State is seeking to set himself up as the censor-in-chief.
In Committee, I challenged Government Members to come up with some examples of the abuses that merit this heavy-handed legislative response. The first out of the traps was the hon. Member for High Peak (Andrew Bingham), who came up with the ludicrous assertion that legislation is merited to stop a photograph of the Labour leader of his local borough council appearing in the council newspaper with a Labour party pen. A pen with the Labour logo on it was an abuse that merited legislation—talk about crackers, as my hon. Friend the Member for Hayes and Harlington (John McDonnell) said. It is unbelievable. We are talking about legislation to stop local authorities publishing their council newspapers, giving information to the local community about matters affecting them, and it is suggested that the Secretary of State should be put in charge because a Labour leader appeared in a council newspaper holding a pen with a Labour logo on it.
The hon. Member for High Peak must have scrutinised that photograph with a magnifying glass to be able to see the logo, let alone to suggest that it would influence people. He dug himself an even bigger hole by comparing it with product placement, which is banned on the television. He said that we do not see packets of cornflakes on the table in “EastEnders”. Crackers really does not cover it.
Chris Heaton-Harris (Daventry) (Con)
The hon. Gentleman is making some cogent points. If that photograph had appeared on a Member of Parliament’s website paid for by IPSA, IPSA would have banned it. I am not sure whether that helps or hinders his argument, but someone else would want to ban that logo placement.
Chris Williamson
With the greatest of respect, I think the hon. Gentleman is talking through his hat. I am not sure that IPSA would ban it. Is he telling me in all seriousness that that would happen if a Labour politician appeared on their website and happened to be holding a pen with a Labour logo on it? People would not be able to see it; it is ridiculous. In the Committee sitting, I had a pen with “League Against Cruel Sports” emblazoned on it. I held it up and challenged the hon. Member for High Peak to read what it said on the pen, because the scale would have been about the same as in the photograph in the borough newspaper. He could not see it; of course he could not. The hon. Member for Daventry (Chris Heaton-Harris) mentions IPSA, but that compounds the ludicrousness of the Government’s case. When the hon. Member for High Peak made the point, he was unable to read the logo on my “League Against Cruel Sports” pen and, in the same way, without a magnifying glass he would not have been able to see that the Labour leader had the temerity to hold a pen with the Labour logo on it.
The next out of the traps was the Minister, who referred to a poster. A poster in Lambeth was a bit critical of the Government—we can’t be having posters. The poster was, I think, on a bus stop—so far, therefore, a pen and a bus stop merit legislation.
The final Government Member out of the traps, as I recall, was the hon. Member for Burton (Andrew Griffiths), who quoted Councillor Western, the Labour leader of Derbyshire county council. She had the temerity to point out that the cuts being imposed by central Government would have “a devastating impact” on our communities. Well, that is a statement of fact. It seems that Members on the Government Benches do not want statements of fact if they are in any way, shape or form marginally critical of what the Government are doing, even though they are accurate. This really is Orwellian and merits references to the ministry of truth. I sincerely hope that any Government Member who believes in fairness, free speech and the freedom of the press will support my hon. Friend’s amendment.
John McDonnell
I am the secretary of the National Union of Journalists group in Parliament. There needs to be a discussion between Departments. We are working with the Department for Culture, Media and Sport and will hold a seminar in the new year to discuss how we ensure that all Government Departments can assist in the development and support of the local press. A Member on the Government Benches suggested publishing local material in the local media or on a wrap-around basis, which would support the print industry and the local press.
Chris Williamson
Indeed. There is a happy partnership between many local authorities and the newspaper in their local area. It is a significant overstatement of the truth to suggest that local authorities producing their newspaper are in any way responsible for the decline in the local newspaper industry. Many other factors, not least access to online information, are responsible for the decline. What the Government seek to do will not arrest that decline and might make matters worse. The truth is that, where there is a partnership with the local newspaper serving the local authority area, limiting the number of times the council can produce information through its newsletters will diminish the local newspaper’s income stream. Far from assisting local newspapers, the Government will add to their decline. I hope the Minister will reflect on that.
My hon. Friend the Member for Hayes and Harlington referred to his connection with the NUJ. Let me quote the National Union of Journalists’ response to what the Government propose. As my hon. Friend the Member for Corby said, in many areas where there is no local newspaper, local people rely on the council publication for useful information and would regret the Government decision to limit the council’s ability to produce that for them. The NUJ says:
“In areas where there are no, or limited local newspapers, then sharing planning details, service changes and details of consultations on a quarterly basis is insufficient”.
It is clear that there is no evidence to support what the Government want to do. The amendment—this is pretty unprecedented, in my experience—is supported by the Local Government Association, a Conservative-led body. It is very rare for the LGA to come out and support an Opposition amendment. It is also supported by the National Association of Local Councils, the National Union of Journalists and members of the general public. It is hard to find anybody who has a good word to say about this Orwellian clause, save for a handful of hard-line Conservatives on the Government Benches.
I implore the Minister, if he has any semblance of concern for the feelings of the public or the wishes of the Tory-led Local Government Association, and if indeed he genuinely believes in a free press and freedom of speech, to support amendment 14, because that would be in the interests of freedom of speech and of the general public, ensuring that they have the information they need about services and other activities in their local area provided by the council. I hope that he will reflect on that and support the amendment.
Alex Cunningham
I rise to support amendments 14 to 16. Nothing is more likely to get the blood rising in the body of a journalist, even one who has not worked in mainstream journalism for half a lifetime, than the idea that someone wants to interfere in the message they are trying to deliver to their readers. That was my reaction when I first heard about the Secretary of State’s ambition to become editor-in-chief of all council publications, from city authority newspapers to parish council newsletters.
I spent many a happy year working as a journalist in the local and regional media and then in the communications industry for a blue-chip company. I never experienced any real interference, and certainly nothing like the level that the Secretary of State wants. Likewise, in my 20 years as a councillor, first for Cleveland county council and then for Stockton-on-Tees borough council, I never saw the abuse of power through publications of which the Secretary of State appears to be so terrified. It will therefore come as no surprise that, as a former journalist and councillor, I have particular concerns about clause 39, which gives the Secretary of State the power to direct local authorities to comply with a specific code of conduct relating to their publicity materials.
If the Bill passes in its current form, as other Members have said, the Secretary of State will be appointing himself editor-in-chief of Local Government Inc. and assigning himself carte blanche to intervene, irrespective of whether he believes a local authority is complying with the code of practice. So that we are clear about the extent and reach of the proposed powers, I will explain that clause 39 would apply to all local authority publicity material, including newspapers, such as the quarterly Stockton News in my constituency which is delivered to so many residents across the borough to keep them informed about services and what is going on in the local authority area. It would apply to posters advertising the many events, schemes and projects that local authorities promote for the benefit of their citizens. It would also apply to the social media updates that local authorities provide to ensure that residents have up-to-date information.
As an aside, I would be fascinated to know how the Secretary of State plans to monitor the thousands of communications emanating from councils across the country every day. Does he have plans for an army of Twitter monitors, Facebook spies and online assessors to ensure that there can be no challenge to his authority? Of course not, so perhaps the Minister can explain just how that brave new world will be policed.
The powers proposed in clause 39 are entirely disproportionate and represent a stubbornly heavy-handed response, as the Government have identified only one example of a local authority apparently abusing its position. Even in that instance, as other Members have said, the local authority involved has denied the accusation of contravening the Government’s current code of recommended practice. I agree that any political bias would be unacceptable in local authority publicity, and the code of conduct requires objectivity, even-handedness and appropriateness. That much is beyond contention. It was with that in mind that we encouraged the Government to take action in cases where possible breaches are identified in order to ensure neutrality and fairness. However, as my hon. Friend the Member for Corby (Andy Sawford) has said, the Government have not even written to the local authority in question about the publication. I must therefore question whether the Secretary of State truly believes that a breach has been committed.
It is also worth repeating that, as my hon. Friend the Member for Corby said, through a series of freedom of information requests it has been established that, since coming to power in May 2010, the Government have not contacted a single local authority to express concern about potential breaches of the code. Perhaps they can tell us how many they expect to contact in the future under the new proposals. Assuming that the Government are implementing the current code of practice in full, we must take it from that that few councils, if any, are breaking existing recommendations. All of that prompts the following question: why fix something that is not broken?
When we bear these factors in mind, the context of the Secretary of State’s attempted power-grab politics becomes abundantly clear. With the lobbying Bill currently seeking to limit the campaigning that third sector and voluntary organisations are able to undertake, it appears that the unpopularity of the Government’s policies has begun to sink in. Is the Secretary of State really heading up a damage-limitation mission to control how local authorities communicate the politically toxic effects of the Government’s policies to their local communities merely by explaining the changes and cuts that they need to make?
We know from copies of the template press releases that the Department has issued to local authorities’ press teams that they encourage bias as they frame Government policy in what could only be described as positive terms. Does this mean that the Secretary of State will have to punish one of his own Conservative-led councils for being politically biased for printing material from his own Department? This illustrates the absurdity of his proposals and reveals an outrageous double standard, if ever there was one.
Clause 39 not only grants to the Secretary of State the ability to determine when and how local authorities can publish communications to local residents but assigns to him the ability to dictate the issues and information that they can communicate as well—perhaps an ideal set of circumstances that would put him on a par with the Rupert Murdochs of this world. Why does he not just ban all the newspapers, ban all the publicity and ban all the posters? It would have the same effect. If that were not extreme enough, he is similarly assigned the ability to control the language and phraseology that local authorities will be permitted to use. Perhaps the Government will manage to rid the public of the bedroom tax after all, but changing the words will not change the devastating effects that his policies are having on some of our most needy people.
I am sure that the significance of this move, coming as it does so soon after the intense debates that have been had on the topic of press regulation and the need to remove the risk of political interference and maintain the sanctity of free speech, will not be wasted on Members on both sides of the House. I am minded to ask the Secretary of State whether, were he to assume these new powers, his reformulated role would be compliant with the spirit of the royal charter in providing the public with better protection from press abuses while upholding the freedom of expression that is so central to our democracy. Surely those provisions should apply to him as well. A new term has been coined for him this afternoon—the censor-in-chief—which is certainly what he will be with these powers.
In short, such wide-ranging powers will disfranchise local authorities, removing any semblance of their discretion over communications with residents. Let us not forget that local authorities have a responsibility to represent those residents and to provide services for them, and that transparency and accountability are fundamental cornerstones of that duty. Were an authority unable to protect the interests of its residents, it would unquestionably be failing in its duties.
Given the Government’s agenda for the national planning policy framework, the plans before us appear to undermine their express goal of empowerment for local residents and fly in the face of their professed localism agenda. Members need not just take my word for it. Baroness Eaton, the former Conservative leader of Bradford council, has described as “regrettable” the proposal in the Bill that will
“centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at a local level.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 902.]
Ministers have already made clear their intention to prevent local authorities from sharing information or commenting on the impact of Government policy if they disapprove of the message. That would inevitably have the effect of gagging local authorities in contentious policy areas. To give an illustrative example, a piece in Stockton News entitled “Challenging Times”, published earlier this year to inform residents of upcoming service changes, would be unlikely to make it past the Secretary of State’s red pen unscathed, referring as it does to
“a time of unprecedented reductions in Government funding to the Borough as a result of the Government’s austerity measures.”
The Secretary of State might not like the fact that Stockton borough council’s funding will have fallen by 40% between 2010 and 2016, but that is precisely what it is—a fact. We are talking about facts—political, maybe, but not politicised. That is crucial to the argument for upholding the freedom of speech. I should also make the point that, as far as Stockton News is concerned, no politicians, with the exception of the civic mayor, ever write or comment in it. The publication does not even quote them or publish pictures of them.
Local authorities often work with residents, community groups and MPs to promote the best interests of residents in matters such as the siting of local health provisions and national infrastructure developments. If the Government’s proposals pass, the Secretary of State could use clause 39 to block such collaboration, ultimately to the detriment of residents.
Brandon Lewis
First, let me be clear that good communication between a local authority and the public is important. Let me also be clear that what clause 39 delivers is a manifesto pledge by both coalition parties. Local authority publicity can be expensive and it can be controversial, so it is important that local authorities get it right.
In Committee I outlined our intentions and explained exactly what the clause seeks to achieve. We should be conscious of the fact that localism is about empowering local people to be able to challenge and see, transparently, what their local authority is doing. This is about true localism and making sure that we are also able to do our bit to defend the independent local press.
The code of recommended practice on local authority publicity ensures that publicity is, among other things, cost-effective, objective, even-handed and appropriate, and Labour Members have agreed in principle with the voluntary code. It ensures that taxpayers’ money is not wasted on issuing inappropriate publicity or publicity that political parties themselves should be issuing, rather than a local council using taxpayers’ money to do it. The code has been in place since 2011. It was debated and approved by both Houses of Parliament.
Andy Sawford
The Minister is right to say that the code seeks to prevent money being used on things that are politicised, but does he not see that his argument is not consistent with a Department that is sending out puff pieces about its Secretary of State for local authorities to issue?
Brandon Lewis
I suspect that deep down inside, the hon. Gentleman—we almost became hon. Friends in Committee—probably realises that there is a world of difference between a template press release sent to independent local journalists and a municipal taxpayer-funded newspaper that takes away the competition of a local independent press. None of the provisions in the Bill makes any changes to the publicity code.
Let me give a very clear example of how the process might work for a local authority publishing a weekly newspaper—such as Nene Valley News, which was mentioned by the hon. Gentleman—in direct competition to the local independent press that is so important in holding councils to account. Under the provisions, the Secretary of State, after advising the local authority that he intends to do so and giving it time to make any representations it wishes—such as that there is no other local paper—may, if he thinks fit, issue a direction requiring that the local authority comply with some or all of the code, but particularly, let us say, the part advising local authorities that council newsletters should be issued no more than quarterly. If the Secretary of State considers that a group of local authorities, or even all local authorities in England, should be required to follow the guidance in the code, he must of course make an order, which would need to be debated and agreed by both Houses of Parliament.
Alex Cunningham
Will the Minister tell us the name of one newspaper group that has approached the Department to claim that local authority publications are undermining and threatening its business?
Brandon Lewis
I suggest that the hon. Gentleman looks at Hansard for the reports of our proceedings in Committee, where we outlined the evidence—including from the Newspaper Society, which complained about exactly that issue—particularly, as was noted, in relation to Tower Hamlets.
Amendment 14 confuses the very clear and necessary provision that the Secretary of State may direct a local authority to comply with some or all of the publicity code. The amendment would achieve little in practice, as the Secretary of State may of course issue more than one individual direction. Amendment 15 would also be far from beneficial. It would add layers of complexity and bureaucracy to what should be a straightforward procedure to allow the Secretary of State rapidly to address incidences of the guidance in the code not being observed.
Brandon Lewis
No, I shall make a little progress. The hon. Gentleman was keen to make progress during his speech.
Any local authority that already—rightly—complies with the guidance in the code would be wholly unaffected by a direction. Amendment 15 would remove sensible, proportionate measures and put in place a gold-plated bureaucratic process that requires the publication of not one, but two reports by the Secretary of State, all while taxpayers’ money might continue to be wasted.
Amendment 16 seeks to remove the provisions to ensure that a group of local authorities, or all local authorities in England, comply with the guidance in the code. We have sensibly decided to make provision for the Secretary of State to require compliance with the code not only by an individual local authority, but by a number of them or even, if necessary, by all local authorities in England.
The Secretary of State can issue an individual direction to an authority, but to require a group of local authorities or even all local authorities in England to comply with the code, the Secretary of State must make an order subject to the agreement of both Houses of Parliament. That was a recommendation of the Delegated Powers and Regulatory Reform Committee, and we were happy to amend the Bill to give effect to it. Amendment 16 would quite wrongly undo the power and the recommendation, leaving a ridiculous situation in which if the Secretary of State wanted to act to address widespread non-compliance by a group of councils, he might have to issue hundreds of individual directions. The amendment would also remove parliamentary scrutiny of the process.
We are obliged to make the provisions because although the vast majority of local authorities comply with the code, a very few do not; we accept that there are very few. It is to address that abuse of council resource and waste of taxpayers’ money that we have rightly decided to act. The provisions are important, proportionate and necessary.
Alex Cunningham
The Minister is making some sweeping comments. I would be interested to know whether he can tell us of one local authority that the Secretary of State has found it necessary to take action against under the existing code, which is adequate for the purpose that he is outlining? I think we already know the answer.
Brandon Lewis
I am sure that the hon. Gentleman will have done his homework and will realise that for the Government to take action under the voluntary code, there would have to be a long and expensive judicial review.
The provisions are the right way in which to move forward so that we can enforce the code effectively, efficiently and swiftly. It is slightly baffling that the Opposition claim that they have no problem with the voluntary code agreed by Parliament and support it, but do not want it to be enforced. That just does not make sense, has no credibility and does not add up. The provisions ensure that we can protect the good, local independent press, and that taxpayers’ money is used efficiently and effectively, and not wasted on town hall Pravdas. I encourage hon. Members to resist the amendments.
Andy Sawford
What a shocking response. We will not press amendments 14 and 16, but we will press amendment 15 to the vote.
Amendment 15 would place a very simple expectation on the Secretary of State: that he would act on the receipt of evidence, that he would share that evidence with the local authority and that he would ask it to comment. As the Minister says, these matters should be subject to local discretion as well as to national direction. The Secretary of State would simply have to say, in taking enforcement action against a local authority, that he had found a breach of the code. It would be incredibly simple, straightforward and right to make that amendment if the Secretary of State feels that it is necessary to take these extraordinary powers, even though we do not.
The Minister’s response, as at each stage of the passage of the Bill, has made us far more concerned, not less, about the intention behind this very worrying and deeply anti-democratic clause.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 15, page 26, line 25, leave out subsection (4) and insert—
‘(4) A direction can only be made by the Secretary of State if—
(a) evidence of a breach of a code has been published by the Secretary of State to the local authority;
(b) a local authority, on receipt of a letter from the Secretary of State notifying them of evidence which purports to demonstrate a breach of the code has made a response to the Secretary of State within 28 days; and
(c) upon receiving any response the Secretary of State has published a report detailing his conclusions.’.—(Andy Sawford.)
Question put, That the amendment be made.
Madam Deputy Speaker (Dawn Primarolo)
We now come to the next group of amendments. The hon. Member for North East Cambridgeshire (Stephen Barclay) is not here to move lead amendment 17. I call the Minister to move amendment 6.
Clause 41
Council tax referendums
Brandon Lewis
I beg to move amendment 6, page 30, line 32, at end insert—
‘(13A) Subsections (14) to (16) apply (and subsections (18) to (20) do not apply) if, in accordance with section 49(2A), this section comes into force on the day on which this Act is passed.’.
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss the following:
Government amendments 7 and 8.
Amendment 18, page 31, line 2, at end insert—
‘(17) The Secretary of State may, by Order, exempt from the calculation of an authority’s basic amount of council tax any levies agreed as part of a City Deal signed prior to this Act receiving Royal Assent.’.
Government amendments 9 to 11.
Brandon Lewis
Our amendments are precautionary measures to remove the risk of local authority budgeting being adversely impacted in the event of a delay to the Bill taking effect. Clause 41 currently provides that the council tax referendum calculations will take account of levies from 1 April 2014. The referendum principles, which we intend to publish in draft very shortly, will be put to this House for approval in February as normal. Those principles will take account of levies, but will be subject to the will of Parliament and the Bill, which will have come into force by then.
The amendments have a relatively simple effect. Together, amendments 6, 9, 10 and 11 provide that if the Bill is passed by 5 February—the likely date by which the referendum principles must be laid before Parliament—the provisions in clause 41 will take effect immediately and the changes to the referendum provisions will take effect for the 2014-15 financial year. Otherwise, the changes will take effect by order from 2015-16. There is no reason to believe that the provisions will not be in force before the referendum principles are approved, but we are tabling this group of amendments to give local authorities advance certainty over timings so that they can be confident that any delay in Parliament would not impact on their budget-setting timetable.
Amendment 7 is a minor amendment clarifying that the clause does not alter the existing discretion of the Secretary of State when determining categories of authority for 2014-15. Amendment 8 addresses the ability of the Secretary of State to determine categories of local authorities on the basis of whether their 2013-14 council tax increase would have been excessive had levies been taken into account. The clause puts this existing ability beyond question and does not extend it further. Similarly, the amendment does not extend that existing ability, but updates the references to increases in 2013-14 to include references to increases in 2014-15, should the provisions take effect from 2015-16. The current transitional provisions in subsections (14) to (16) ensure that council tax comparisons between 2013-14 and 2014-15 are made on a like-for-like basis. An amendment must be made to ensure that this protection for authorities still exists if levies are to be included from 2015-16. Subsections (18) to (20) in amendment 8 provide that protection.
In summary, these amendments are precautionary measures only and, apart from clarifications and restatements of existing legislation, have one purpose: to ensure that in the event of any unpredicted delay, local authorities will continue to be treated consistently and to benefit from the transitional protections already in the clause.
Andy Sawford
Our amendment 18 would give the Secretary of State some discretion to prevent any unintended consequences arising out of the levy changes from affecting city deals. The amendment states:
“The Secretary of State may, by Order, exempt from the calculation of an authority’s basic amount of council tax any levies agreed as part of a City Deal signed prior to this Act receiving Royal Assent.”
We are concerned that the provisions to include levying bodies could affect those city deals that have been agreed around the country.
Huw Irranca-Davies (Ogmore) (Lab)
It strikes me that the same argument could apply, in principle and in practice, to the internal drainage boards, which work in partnership with the Environment Agency. They are worried that being included in the referendum provision could lead to their being unable to do the essential drain clearing that helps with flood alleviation. My hon. Friend is making his point well. Does he agree that this could also apply to the internal drainage boards?
Andy Sawford
My hon. Friend is absolutely right. This group of amendments on levies would have significant implications for internal drainage boards. There was a specific amendment on them, but it has now been withdrawn. However, the other amendments will affect the boards just as they will affect other bodies that apply levies. I know that my hon. Friend considers this to be an important matter; he is an expert on matters affecting our rural communities and, in particular, on flooding. If a local authority felt the need to take urgent action—or, indeed, long-term action—on flood defences, I think we would all be concerned if that ability were to be undermined by the provisions in the Bill. I will return to that issue in more detail later.
Leeds city region has written a letter to the Deputy Prime Minister to raise concerns about the clause, and it gives us a new insight that we did not have in Committee. The city region is concerned that including levies within the ambit of a calculation to hold a referendum on annual increases in council tax could result in it having to hold
“up to 60 referendums, with the Combined Authority not being in a position to know whether its investment programme was affordable until all referendums had been passed.”
Is the Minister aware of that concern, and does he recognise those possible implications? A critical element of the Leeds city deal is the local contribution fund. The Leeds city region believes that the Bill, as it stands, will make the fund “impossible to deliver”, because it could trigger up to 60 referendums a year and the authority might have to conduct such referendums over a period of five years.
In Committee, the Minister said that the figures provided thus far did not make a compelling argument for treating city deals differently. Does he agree, however, that these new figures from Leeds city region should make us think again and support a clause that does not require the Secretary of State to make exemptions but, rather, merely permits him to do so?
The Minister might well be proved right; this might not become an issue. Leeds city region clearly believes that it will, however. If that were to happen, would it not be in everyone’s interests if the Secretary of State could make a judgment to exempt the levies? It would be in the Government’s interest, in terms of their good faith in negotiating the city deal. It would also be in the interests of the city regions around the country, particularly Leeds city region, which has expressed so much concern.
If a council tax referendum were lost and the levying body refused to reduce its levy, what would the Minister expect a local authority to do? Under the Bill as it stands, a levying body would not have to abide by the result of a referendum, should one be triggered and subsequently lost. In effect, therefore, the financial risk would be on the local authority regardless of whether the increase in council tax was a direct result of its financial decisions. That cannot be fair.
The provisions are retrospective. The Minister told us on Second Reading and in Committee—his noble friend Baroness Hanham told their lordships—that the provisions are not retrospective. They clearly are. The Local Government Association is absolutely clear in its analysis of the effect, as are Labour Members. Clause 41(15) allows the Secretary of State to apply changes retrospectively. He will be able to impose a different referendum limit on authorities where their council tax increase for 2014-15 would have been excessive under the new definition, but not under the current definition. This is not fair on those authorities that have taken decisions in good faith based on the legislation in place at the time. There is no difference in principle between Labour Members and the Government on the intention to protect citizens and residents of our local councils from excessive council tax increases. Indeed, councils such as Hackney have been freezing their council tax for many years and setting an example, as other Labour councils have done, but we would not want to see an unfair retrospective provision that undermines the plans that local authorities have put in place.
There is clearly a risk of perverse outcomes that will put growth-generating investment at risk. Levying bodies are, by statute or local agreement, able to recover some or all of their costs by charging local authorities a fee for infrastructure or services. Local government in England is subject to a variety of different levying arrangements covering significant and regionally important issues such as transport, drainage—the point my hon. Friend the Member for Ogmore (Huw Irranca-Davies) made—and a wide range of other local issues. There is enormous scope for perverse outcomes in our communities from these provisions.
There are a number of examples where the extension of council tax referendums will cause instability and uncertainty—not just the Leeds example, but many other areas around the country where plans have been made on a different basis from the legislation that is now being proposed. On integrated transport, the implications in west Yorkshire, for example, are that if the referendums were lost, it would put at risk £750 million of investment and 20,000 new jobs; these are very significant consequences.
Under the Bill’s provisions, an internal drainage board that needed to take emergency action to manage flood risk may be denied the capacity to do so by the outcome of a referendum. These boards may also be unable to support wider central Government objectives because the changes might limit their ability to levy funding to invest in flood defences. Participants in the work that Sir Michael Pitt did a few years ago in response to some of the most severe flooding we have seen in this country were left scratching their heads as to how, at a time of public sector financial constraint, we would meet the challenge of ensuring that there are effective flood defences. We know that some of the poorest and most vulnerable people are the most exposed to flood risk around the country. There are issues with insurance, for example. One of the sensible ways in which we were able to take this forward was through the drainage boards and the work they were able to do. That could now be undermined.
Huw Irranca-Davies
My hon. Friend illustrates the point very well. It is only a couple of years ago that we had extensive flooding in the south-west of England. One of the consequences of that was the need to do emergency work very rapidly on the drainage channels there. The levies paid through IDBs are very well supported by those communities that need them for flood alleviation.
Andy Sawford
My hon. Friend has considerable expertise in this and he is right. If a drainage board needed to take emergency action, clearly it would not be in the interests of communities—the very people who, during a cost of living crisis caused by the Government, we agree we want to protect from excessive council taxes—to leave them exposed to flood risk if we know that we can take emergency action to address that.
There are issues with pension authorities, particularly in some metropolitan counties and in London, which operates the legacy pension schemes of the Greater London Council. As with the rest of the local government pension scheme, there is little control over the costs of these, which are increasing with each successive valuation. Indeed, more levying bodies may be created in the future as a consequence of the pension governance reforms that the Department is considering.
In short, these proposals have not been thought through. We do not disagree with the fundamental intention behind them—to keep council tax down—but we do disagree about how they are being introduced, without further thought or consultation, and particularly about some of the issues that arise from retrospection as it affects drainage boards and city deals. We would urge the Government to go back to the drawing board. With the leave of the House, we will seek to press amendment 18 to a vote.
Brandon Lewis
Before dealing with amendment 18, let me touch on the issue of internal drainage boards, which some hon. Members have raised. IDB levels are not being singled out. This Bill will ensure consistent and fair treatment between all local authorities.
I shall now turn directly to amendment 18, which relates to local authorities that have collectively entered into “city deals”—agreements with the Government on additional freedoms and financial certainties in order to promote local growth and skills—before the Bill’s commencement. This area was touched upon on Second Reading and debated in more depth in Committee, where the hon. Member for Corby (Andy Sawford)was content to take away and consider the clarifications and assurances I gave in response to a similar amendment.
Since this amendment has been tabled, I am happy to repeat some of the points discussed in Committee and to provide hon. Members more widely with any further expansion I can give. Although the amendment would have a wider effect, I understand that its intent is to address a single specific case—that of the Leeds city region deal— where there are plans to create a transport investment fund that would allow about £1 billion to be raised from grants, contributions from stakeholders and borrowing. Repayment of that borrowing will be met by the constituent authorities via modest increases in the transport levy over the next decade. This arrangement is novel. It will provide much-needed investment in the region and remains an arrangement that the Government are committed to and happy to support. However, the figures generated by Leeds and the other authorities taking part show that if those levy increases were passed straight on to local taxpayers in the form of higher bills, it would be affordable without the need for a referendum. It would amount to an increase of between 0.2% to 0.9% per year.
Andy Sawford
I understand the Minister’s point, which he made in Committee. It is a fair point, but does he accept that the consequence would be to restrict the ability of local authorities across that area, in a way that they never imagined, to raise council tax in a way that local authorities outside the city deal could? The amount that would trigger the referendum would mean that they were limited?
Brandon Lewis
I will come on to that very point in a few seconds.
I have to say that there is no basis for suggesting that these levies would result in authorities being forced to hold referendums. Given the relatively small increases involved, I would urge those authorities to freeze their council tax instead and take advantage of the grants we are making available to support them in doing so, thus holding down council tax for hard-working people.
Let me gently suggest to Labour Members that this is an area where the facts do not support the claims being made. It is right for the Opposition to test and challenge the statements of the Government of the day, but where there is shown to be no basis for criticism, we should move on and focus our attention elsewhere. In this case, we are proceeding over ground already debated several times here and in the other place, and the figures involved are not disputed by the Opposition or the authorities themselves. However, in the same manner as for any other authority, if Leeds, Bradford or any other council wishes to make representations about how the proposed referendum principles will apply to their particular circumstances, the Secretary of State would take them into account when asking the House to approve the final principles in 2014.
Huw Irranca-Davies
I am listening carefully to the Minister and I am genuinely probing because this is a matter of concern. Can he give a categorical assurance that where emergency funding is needed for an area, as advised by an IDB, it would trigger the referendum and would not delay the essential work being done? Can he give that categorical assurance and, if so, how?
Brandon Lewis
The hon. Gentleman makes a cogent point. My constituency of Great Yarmouth has been heavily affected by the east coast weather, with 9,000 evacuations and some homes lost in Hemsby, where the community is working phenomenally well together. What happens in the event of floods or other major disruptive events is that the Government look to support authorities facing major unexpected problems in the usual ways—through the building scheme, for example, or other appropriate bespoke approaches. Inclusion of levies in council tax legislation will have no effect on those procedures.
Brandon Lewis
I want to make some progress, but I am happy to talk to the hon. Gentleman further about Bellwin.
The other claim made in Committee and on Second Reading was that the Government were reneging on their agreements with authorities and that they gave their approval for large council tax increases as part of the Leeds city deal. That is not correct. The Leeds city deal was not agreed on the basis that it meant large council tax increases for local people or on the basis of denying them their say if Leeds or other authorities wished further to increase council tax—for instance, to increase investment and go beyond what is set out in the deal itself. That could happen only so long as local taxpayers, who will have to bear the burden, are willing to accept it. It is a matter for them. With those reassurances, I hope that the hon. Member for Corby will not press his amendment to the vote. If he does, I encourage Members to resist it.
Amendment 6 agreed to.
Amendments made: 7, page 30, line 37, after ‘may’, insert ‘, in particular,’.
Amendment 8, page 31, line 2, at end insert—
‘(17) Subsections (18) to (20) apply (and subsections (14) to (16) do not apply) if this section comes into force on a day appointed by the Secretary of State by order under section 49(2A).
(18) Section 52ZC of the Local Government Finance Act 1992 applies with the following modifications to the determination of a set of principles for the financial year beginning with 1 April 2015.
(19) The Secretary of State may, in particular, determine categories of authority for that financial year—
(a) on the basis of whether an authority’s relevant basic amount of council tax for the financial year beginning with 1 April 2013 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under section 52ZX of the Local Government Finance Act 1992 as amended by this section,
(b) on the basis of whether an authority’s relevant basic amount of council tax for the financial year beginning with 1 April 2014 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under that section as so amended, or
(c) on the basis set out in paragraph (a) and on the basis set out in paragraph (b).
(20) In subsection (3)(b) of section 52ZC the reference to an authority’s relevant basic amount of council tax for the financial year immediately preceding the year under consideration is to the amount that would have been calculated by the authority for that year under section 52ZX of the Local Government Finance Act 1992 if the amendments made to it by this section had been in force for that year.’.—(Brandon Lewis.)
Amendment proposed: 18, page 31, line 2, at end insert—
‘(17) The Secretary of State may, by Order, exempt from the calculation of an authority’s basic amount of council tax any levies agreed as part of a City Deal signed prior to this Act receiving Royal Assent.’.—(Andy Sawford.)
Question put, That the amendment be made.
Brandon Lewis
I beg to move, That the Bill be now read the Third time.
Let me begin by thanking the members of the Public Bill Committee, who did such an excellent job in ensuring that the Bill was subjected to thorough scrutiny. We benefited from the wide range of experience that a number of colleagues from all parties had of working in and being part of local government and I thank them for committing their expertise to the Bill.
In particular, I should like to thank the hon. Member for Corby (Andy Sawford), who fulfilled his commitment to give the Bill robust but fair scrutiny. In the other place, Lord McKenzie commented that audit is sometimes considered “boring but important”. I would say that the often passionate critique put forward by the Opposition in the course of this Bill’s passage certainly proves the latter while arguably testing the former assertion. I am particularly grateful to the hon. Gentleman and his Opposition colleagues for their support in helping us to introduce new measures into the Bill in Committee.
The new provisions to modernise parish polls respond to amendments from the Earl of Lytton, who, in his role as president of the National Association of Local Councils, highlighted the urgent need to reform that outdated legislation. The measures to open up local council meetings will break down the doors of town halls and increase the transparency of local decision making. I am pleased that we have achieved consensus on that as it shows that in this digital age, as the way the public consumes information changes, it is no longer right that decisions should be made out of the sight of local taxpayers. We will, of course, work closely with interested parties to ensure that, as we agreed in Committee, we strike the right balance in the regulations between allowing members of the public to film council meetings and minimising disruption.
The Bill is the culmination of a great deal of work with a number of third parties, particularly the Audit Commission, which I would also like to thank for its support and healthy challenge throughout this process. During the Bill’s passage through the House, we have made, as has been noted, a number of amendments to strengthen it. In addition to the two new measures we have added, we have also made amendments to enable the sector to set up collective procurement arrangements, through which relevant authorities can choose to have an auditor appointed on their behalf. That has been welcomed by the Local Government Association and we will continue to work with it in developing the regulations that will set out the approach in more detail.
Also prompted by debates in the other place, we have amended the Bill to extend the purposes for which data-matching exercises may be used. That will enable the future owner of the national fraud initiative to continue to undertake data-matching exercises on the detection of errors and inaccuracies, as the Audit Commission can under its existing powers.
In addition, we have made a number of other technical and clarifying amendments to several of the local audit provisions, which will ensure the smooth and effective operation of the new audit regime after the Audit Commission’s demise. In addition to the amendment we have made today to support the transparency of the auditor appointment process, we have also clarified how the provisions apply to parish meetings, the qualifications and eligibility criteria for local auditors and how local auditors will recover costs for undertaking all their statutory functions.
We have had a lengthy debate about the local government publicity code. I think it is safe to say that we are all agreed on the content of the code, but that there is a difference of opinion about how that code should be enforced. I say again that it is right that action should be taken when authorities are failing to comply with the code. By ensuring compliance, the Bill will support local accountability by protecting the local free press from unfair competition and preventing taxpayers’ hard-earned money from being squandered on propaganda and competing with the local independent press.
The Bill further protects the taxpayers’ pound by ensuring that levies will be included within the council tax referendum principles. No longer will a local authority be able to raise council tax through back door levy increases, making taxpayers pay more for services that councils down the road do in-house and within the referendum principles. That levels the playing field for local authorities and the amendment we have made today will provide certainty for those authorities.
In conclusion, the Bill is another important step in delivering the Government’s localist agenda. It deals with some of the fundamental principles of good governance and good government, it promotes responsible and robust public accounting, it drives decision making down to the local level and it protects local taxpayers and defends local democracy. To return to my opening remarks, it is an important—and I would say interesting—Bill and I commend it to the House.
Hilary Benn (Leeds Central) (Lab)
The Bill certainly has generated a great deal of debate—more, I suspect, than either the Minister or others who thought it was just about audit might have anticipated. That is in no small measure, as the Minister has just acknowledged, due to the skill and forensic arguments put forward by my hon. Friend the Member for Corby (Andy Sawford), who did sterling work in Committee, as he has done today, ably assisted by my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) and also my hon. Friend the Member for Derby North (Chris Williamson), from whom we heard today.
I join the Minister in expressing thanks to all Members who served on the Bill Committee, all those who gave evidence to the ad hoc Joint Committee, and my colleagues the noble Lords McKenzie and Beecham for the work they did in scrutinising the Bill in another place.
As we know, this is a Bill that arises from a very early decision that the Secretary of State took, which was to abolish the Audit Commission. When we heard from him on Second Reading, he was convinced that it was the right thing to do. We all recognise that the commission is going, but only time will tell whether it was right for the Secretary of State not to take the advice of the noble Lord Heseltine, who originally introduced the Audit Commission because he thought it was wrong for local government to appoint the people who audit it.
What is striking about the Bill, however, is that the quality of some of the content we have debated at length has not benefited from the length of time it has taken the Government to bring it forward, in part because of the complexity of what has been removed and therefore the need to construct arrangements to replace it. I acknowledge that the Government moved on the issue of joint procurement, and I am grateful to the Minister for listening to the arguments made by local government and by my hon. Friend the Member for Corby, but I am genuinely sorry that the Minister either has not wanted to get the arguments that we made or has not properly understood the consequences of the Bill failing to anticipate the new world in which local authorities have to work. That is particularly surprising, given that Ministers often lecture local government about the need to make changes.
On access to information, the amendments that we argued for were all about the public’s right to know. As we are aware, the Audit Commission is covered by the Freedom of Information Act; private auditors in general are not. As councils change the way in which they work, it is very important that the public have the right to understand what is happening and have access to information. Listening to the Minister this afternoon, the more he protested that our amendment was not necessary, the more puzzled I became. Then there was a moment of what I hope was conversion. I am delighted by what he had to say when pressed by my hon. Friends. We will hold him to what he said about ensuring that the public has exactly the same right as it currently has using the Freedom of Information Act to get access to information that auditors and private companies have about contracts that they are undertaking on behalf of local authorities.
I am very sorry that the Government have not made provision for auditing that will be fit for purpose for the years ahead. The Minister did not do justice to the argument that we advanced. We did not suggest that the Bill prevents local authorities from working together with each other or with central Government—for example, through the troubled families initiative. That is not our argument. Our argument is that when the Whitehall and the local pound are brought together to provide services at a local level, there will continue to be different audit arrangements.
I say to the Minister, and I hope he will reflect on it even when the Bill has become an Act, that that does not make sense. An audit, especially when the Bill gives us a chance to set it on a new footing, must take account of the changing way in which public money is spent, particularly as community budgets develop. It does not make sense if there is a community budget for different bodies, with the NAO trying to chase the Whitehall pound down the road and the local authority auditor looking at the local pound.
One clause that was dissected and then comprehensively savaged by my hon. Friend the Member for Corby, both in Committee and earlier today, is clause 39, which deals with the code of practice for local authority publicity. I was interested to hear that the Liberal Democrats apparently could not bring themselves to vote for it in Committee, because they were absent when it was discussed. I do not blame them, because they are right to be embarrassed by what is a most illiberal piece of legislation.
The hon. Member for Mid Dorset and North Poole (Annette Brooke) described that provision as a sledgehammer. If I may coin a new phrase, I think that it is a sledgehammer of a blunderbuss, and it has been constructed on the back of a lot of ministerial complaining about Pravda-like publications. I have not read quite so many local authority publications since Second Reading, but I have still found no figures on tractor production, which I continue to be disappointed about.
Basically, no evidence has been advanced on local authority publications. It is no good the Minister in the other place saying, “I could give you the names of 12 authorities, but I don’t think that would be helpful.” We have heard the Minister give one example, that of “East End Life”. The really damning revelation is that for all the complaints, concerns and denunciations of breaches of the code, he tries to suggest that what the Bill offers is true localism, and in three years the Government have not even contacted a single local authority, which is astounding. They could not be bothered to write a letter to a single authority, but they could be bothered to draft a shoddy clause that will give the Secretary of State the right to control every single local council publication, every website, leaflet and bit of content—the lot.
The Secretary of State, if he takes offence, will be able to tell councils, “You’re not allowed to refer to the bedroom tax as the bedroom tax. You have to call it something else.” If he feels like it, he will be able to stop councils commenting on spending cuts and the way they affect the local authority area. He could stop them commenting on airports, HS2 or NHS changes. He can even tell local parish councils that they cannot produce 12 double-sided A4 sheets a year. He will be able to do anything he wants. Censors the world over might think that is a jolly good clause, but the House was unconvinced.
Brandon Lewis
I appreciate the right hon. Gentleman giving way at this stage, when I would not normally seek to intervene, but I just want to point out gently that parish councils can still produce 12 such publications a year—one a month.
Hilary Benn
Absolutely, but the problem with the clause is that they cannot publish any more than that. If they want to bring out a special edition on their Christmas celebrations, for example, having had their 12, that would not be allowed, because the Secretary of State is taking the power to prevent that.
The clause states that the Secretary of State can exercise all those powers regardless of whether he thinks that the local authority is complying with the code of conduct, which is extraordinary. I read with great care the arguments that the Minister tried to advance in Committee, but I am afraid that I found none that justified that. The truth is that Ministers ought to be really careful with the great big blue pencil they are about to get hold of.
On referendums and levying bodies, I must say that I was unconvinced by the Minister’s arguments in relation to the Leeds city region deal, described by his ministerial colleagues as a watershed moment, which was signed before the new policy was announced. The Minister has still not answered the question I asked the Secretary of State on Second Reading, and which was asked again today by my hon. Friend the Member for Corby, so I will put it slightly differently.
The city deal was signed towards the end of the year and the announcement of the new policy on referendums and levying bodies was announced at the beginning of the new year. Knowing how long it takes to decide on these things in government, I think that it is inconceivable that Ministers were not privately discussing changing the rules at the very moment when they were discussing the Leeds city region deal. If that is the case—I will give way to the Minister on this point—why did he not tell the people they were negotiating with? He does not want to intervene, so for the third time we have had no answer to the question, and some people will draw the conclusion that they do not want to answer it.
The Minister will have seen the letter mentioned by my hon. Friend the Member for Corby that the Leeds city region sent to the Deputy Prime Minister on 6 December asking the Government to solve the problem they created by changing the rules after the agreement was signed. The Minister knows very well how important the transport infrastructure fund is to the Leeds city region deal; indeed, it is the main thing that the city region got out of city deals, which, as he knows, I support. The letter is signed not only by the chair of the combined city region which is to become an authority—the leader of Leeds city council—but by the chair of the local LEP. They are not persuaded by the Minister’s arguments, because they say:
“As it stands, the Local Audit and Accountability Bill makes the Fund impossible to deliver.”
I listened carefully to what the Minister said, and I do not know whether there is a chink of light there, but he has a responsibility to sort this out.
Apart from doing justice to the Leeds city region, there is another argument for why the Minister has a responsibility to deal with this. If the Government go back on a done deal, which is what has happened in this case, they undermine confidence in the city deal process, undermine the certainty on which financial planning has to be based, and undermine the confidence of those who will negotiate with them in future, who will ask themselves, “Hey, look what happened to the Leeds city region—how do we know they aren’t going to change the rules for us after we’ve signed our names in ink on a piece of paper?” It needs to be sorted out.
As the Minister knows, we support the other changes that were made in this House on parish polls and councils allowing recording and videoing of council and committee meetings. In this day and age, with the very big changes in technology that enable every citizen to become a reporter, all of us in this House, whichever side we sit on, want more people to take an interest in what our local authorities are doing, by going to meetings and reporting them to spread the news and make sure that more people can see what is going on.
We will not oppose the Bill given that provision has to be made for a replacement for the Audit Commission, which is on its way out, but in some respects it is a lost opportunity. For all the words that the Secretary of State, in particular, is fond of saying about localism, once again this Bill proves that the longer he is in office the more he cannot resist using legislation to tell local councils what to do.
Annette Brooke (Mid Dorset and North Poole) (LD)
I thank my right hon. Friend the Member for Hazel Grove (Sir Andrew Stunell) and my hon. Friend the Member for Chippenham (Duncan Hames) for serving on the Committee. The thoroughness of the scrutiny by the hon. Member for Corby (Andy Sawford) has been very apparent. It would be remiss of me if I did not mention my noble Friend Lord Tope, as have many others, and thank him and Lord Shipley for their contributions in the other place. I also thank the Minister for his great courtesy throughout.
This Bill has pluses. It was right to abolish the Audit Commission. Having gone through the whole passage of the Bill, we have got to a pretty good place as regards auditing. I feel reassured by the Minister on the remaining issues. I am particularly pleased that he will continue to work on regulations with the Local Government Association. I applaud the modernisation of parish polls, which I am sure will be a great relief to parishes in my constituency. I welcome more openness in the recording and publication of council meetings, as that can only be a plus for local government.
We have discussed the publicity code at much length today. Clearly, there is agreement on the code itself across the House, but following its implementation and impact will possibly be an interesting experience. I can see the point of including levies in the referendum principles, thereby preventing unaccountable levying authorities from exerting pressure on council tax, but there is more talking to do about the potential unintended consequences. The Minister indicated that he would continue to listen to people’s concerns.
Finally, the Bill does not repeal the duty on local authorities to publish statutory notices in their local newspapers. I accept that the Government feel that this is not the right time to do that, but I urge them to keep looking at the issue. It is a burden on local government, given the tightness of its finances, and it is also the most ineffective way to communicate very important information to local residents.
Neil Carmichael (Stroud) (Con)
I served on the Bill Committee and thoroughly enjoyed it. I thank everyone else who served on the Committee for making it such an enjoyable process. As has been recognised, we scrutinised the Bill extraordinarily well.
I want to talk briefly about internal drainage boards, which are important. In my constituency, the IDB is essential in maintaining flood defences and as part of the process of ensuring that houses are protected. The accountability of our IDBs is relevant to the Bill, so I want to underline their importance to local communities. I also note that councillors are, of course, on the boards and should be applying influence as appropriate. The precept issue should not disguise the fact that IDBs play an important part in land drainage, certainly in areas of my constituency.
Question put and agreed to.
Bill accordingly read the Third time and passed, with amendments.
Business without Debate
Delegated Legislation
Mr Speaker
With the leave of the House, we shall take motions 5 to 7 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Representation of the People
That the draft Electoral Registration and Administration Act 2013 (Transitional Provisions) Order 2013, which was laid before this House on 17 July, be approved.
That the draft Representation of the People (England and Wales) (Description of Electoral Registers and Amendment) Regulations 2013, which were laid before this House on 23 October, be approved.
That the draft Representation of the People (Provision of Information Regarding Proxies) Regulations 2013, which were laid before this House on 23 October, be approved.—(Mr Gyimah.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Representation of the People, Scotland
That the draft Representation of the People (Scotland) (Description of Electoral Registers and Amendment) Regulations 2013, which were laid before this House on 30 October, be approved.—(Mr Gyimah.)
Question agreed to.
European Union Documents
The Lilacs Care Home, North Lincolnshire
Nic Dakin (Scunthorpe) (Lab)
I would like to pay tribute to the hard work that Councillors Sandra Bainbridge and Tony Ellerby have done in leading this petition to defend an asset in their ward.
The petition states:
The Petition of residents of Scunthorpe,
Declares that the Petitioners are very disappointed by the ruling of the Conservative group of North Lincolnshire Council that they intend to close The Lilacs care home despite it being a manifesto promise of theirs to not do so.
The Petitioners therefore request that the House of Commons requests the Government to urge North Lincolnshire Council to rethink their decision and consider the impact that this closure will have on local residents.
And the Petitioners remain, etc.
[P001314]
Dalgety Bay
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Gordon Brown (Kirkcaldy and Cowdenbeath) (Lab)
I am grateful to you, Mr Speaker, for agreeing to this debate, but I regret having to come back to the House and subject it to a fourth debate in less than three years about a single issue in one constituency—radiation contamination in the Dalgety Bay area of Fife.
It is now more than half a century since contaminated materials containing radium-226 were dumped on the Dalgety Bay foreshore by people on behalf of the Ministry of Defence. It is now just under a quarter of a century since the Ministry accepted that the contamination existed and posed a potential safety risk. It is now three years since the discovery of large amounts of contaminated particles that, as a result of coastal erosion, had risen to the surface, with some particles having a level of radiation that is judged to be a risk to health and thus completely unacceptable. It is now nearly two years since the Ministry of Defence committed itself to a plan that required the polluter to clean up the area. It is now six months since the Committee on Medical Aspects of Radiation in the Environment and Public Health England, the relevant health body advising the Ministry, called for the clean-up to be agreed and to happen as soon as possible.
Despite more than 50 years of contamination, nearly 25 years of the Ministry of Defence knowing about the risks, two years of knowing the seriousness of the risk and the likely escalation of such risks, and two years in February since a plan was agreed with the Scottish Environment Protection Agency, there has been no clean-up, no agreement to fund a clean-up, no agreement on a plan for a clean-up, no agreement even on the options for such a plan and, as yet, no presentation of the options for a clean-up plan or the promised consultation on those options. Indeed, the Ministry of Defence has yet to agree to what it promised in February 2012 to do by May this year—publication of the options for remedial action, acceptance of responsibility by the polluter for the pollution and a plan to fund the clean-up.
It is sad to report that despite all the evidence proving the Ministry of Defence’s responsibility and all the evidence of its admission of responsibility as long ago as 1990, the Ministry is even now—months after a report this spring named it as the polluter—refusing to accept that it has responsibility in this area. That is despite the clear promise made in a letter from Mark Hill of the Defence Infrastructure Organisation, dated 21 December 2012, which stated:
“In the event that MOD is found to be an Appropriate Person in accordance with the statutory regime for contaminated land”—
the MOD was of course named as the appropriate person a few months ago—
“the Department will fulfil its legal obligation to meet its portion of the liability and carry out voluntary action including remediation where appropriate.”
All this is yet to happen.
There has therefore been a failure to make progress on three important issues—publication of the options for the clean-up, agreement on the funding of the clean-up, and acceptance of responsibility as the polluter. Those issues of deep concern locally have brought me back to the House today to ask the Minister—I know that he has visited the area and, as he will reply to me for a second time in the House, he is fully aware of the issues or, at least, he should be—to use his influence to end the delays, to end the failure of the Ministry of Defence to accept responsibility and to end what I am afraid to say is a lack of consideration for the people of Dalgety Bay that is now strongly felt in the local community.
The issue of the contamination and its significance cannot be wished away. Dalgety Bay is already the first and only area of the United Kingdom where a radiation risk assessment has had to be done to measure the extent of the contamination. It is also the first and only area of the country to be the subject of what is called an appropriate person report—a report under the legislation dealing with radiation contamination—which has been produced through very detailed research by the Scottish Environment Protection Agency. It has concluded that, without any doubt in the matter, the polluter of the area is indeed the Ministry of Defence.
Dalgety Bay is therefore not only the first area subject to such a risk assessment and to the naming of a polluter, but it is still at risk of being named by the Scottish Environment Protection Agency as the only radiation contaminated area in the United Kingdom, which has never happened to areas where there are nuclear weapons, nuclear power stations or nuclear waste storage. If it had to be imposed on the area, which is a scenic part of the Fife coastal walk, such a decision would blight the foreshore, harm the environment and cause difficulties for the town that would last well into the future or, at least, for as long as we can see ahead.
We therefore cannot gloss over this matter. For 13 years, starting in 1946, decommissioned military aircraft were scrapped and then incinerated. The resulting ash, which included radiated particles, was dumped in the area of Dalgety Bay.
To give an understanding of the scale of the pollution, I want to draw the House’s attention to a memo of 14 December 1990, which was sent by Her Majesty’s inspectorate of pollution to the then Minister at the Scotland Office. The official’s report stated:
“I attended a meeting with the MOD to discuss the possible origins of the contaminated material and to consider how best to proceed. MOD confirmed that some 800 aircraft were scrapped during 1946 at the nearby…HMS Merlin and that the aircraft would have contained instruments and equipment luminised with radium.
There is evidence that the debris from demolition work at the…station was used for infilling purposes between 1946 and 1959.
This information, together with the nature of the contained debris which has been found leaves little doubt as to the origins of the contaminated debris which has been found…and is likely that there is more material buried in the area inland from the beach.”
He said:
“I am glad to report that”
the MOD
“seem willing to help both with further monitoring and with any remedial action which might be necessary.”
In the last debate on this matter, the Minister told me:
“We have found no evidence to corroborate claims that 800 aircraft were destroyed in 1946 through burning, and the resultant waste material—including ash—deposited on the beach or within the headland prior to 1959.”—[Official Report, 9 July 2013; Vol. 566, c. 335.]
I take that one contestation of the report to mean that everything else was correct: that the dumping did take place, that it was authorised by the Ministry of Defence, that the waste is a potential risk, and that the Ministry of Defence does and should take responsibility. It is only the precise number of aircraft that he cannot confirm, but he cannot deny the figure either.
In 1992, there was a report in which the Ministry of Defence accepted that Dalgety Bay was a polluted area. Again, after 2000, Mr Fred Dawson, the head radiation protection officer dealing with the safety officer at the MOD, advised that the Ministry of Defence would be found liable and that there was significant reputational damage involved in denying liability in this area. More recently, the community council, under the chairmanship of Colin McPhail MBE, whom I congratulate on the work he has done to expose this matter, solicited statements by former and present residents about the scale of what happened in the ’40s and ’50s. I understand that the leader of Fife council, Alex Rowley, has assembled a mass of evidence that is available to the Ministry.
It is hardly surprising that the Scottish Environment Protection Agency states:
“The total number of radioactive…particles…that have now been recovered since the beginning of our investigation in September 2011 is over 1,000. Of these sources, five had a radioactivity content of greater than”
the accepted level of radium-226. After that report, we cannot doubt that the dumping of materials was done by the Ministry, that those materials have radioactive content or that, because of coastal erosion, the particles are being brought up to the surface in greater numbers. Action must now be taken. The discovery of radiation particles on the surface is not an historical problem that is diminishing the further we move from the time of the dumping and that is likely to disappear over time; contaminated particles are being discovered all the time. That is aggravated by winter storms and rising coastal erosion. Such particles are being washed up or found on the foreshore at the rate of 100 a month.
Let us be clear what the Ministry of Defence promised us would have happened by now. In February 2012, the Ministry agreed to an “Investigation Plan”, which listed the stages of work that would be undertaken. The Ministry promised that in the second part of stage 3, which was due to happen between February and May this year, it would outline management options for the clean-up of the site:
“MOD will set out within the investigation report outline management options which may include remediation.”
That was supposed to have happened seven months ago. The report also stated:
“The options should be distinct and range from the ‘do minimum’ to the ‘maximum possible’.”
It recommended an holistic approach and said that the listing of the options was to have happened seven months ago. It then said:
“It may be appropriate to sift the outline options…to whittle the number down to a manageable size”.
That has not been done either.
It said that stages 4 and 5 were then to be progressed by the appropriate persons. Stage 4 should
“comprise the long-term management/remediation solutions”,
with consideration of
“source removal, pathway disruption and receptor protection…to reduce the level of uncertainty.”
Stage 5 should then be delivered by the appropriate person, meaning the polluter, the Ministry of Defence.
Not one of those promised actions has yet happened. Seven months on from the deadline agreed by the Ministry, there has been no option study published and no narrowing of the options. Although the Ministry has been named as the polluter, none of the options has been costed and none of the clean-up has yet been agreed. None of the work has been planned or gone out to contract, far less any clean-up done. Work that was supposed to have been completed on a timetable from February to May this year has not been done, and we are still waiting for the options paper to be published and the consultation entered into.
The community council chairman was promised in a letter from Mr David Olney of the Defence Infrastructure Organisation, dated 26 March 2012:
“MOD experts are already in regular contact…in order to ensure the successful completion of the investigation by May 2013.”
That has not happened. The effect is that work that should have been commissioned in the autumn and completed by the winter has now been delayed. The likelihood is that we will face another winter of coastal erosion, with more particles being brought to the surface, and that a summer and autumn of delays will be followed by a winter of further delays, about which I want to ask for answers today.
The consultation that was promised has ground to a standstill. The last meeting of the Dalgety Bay particles advisory group was held on 22 May and the last forum meeting on 30 May. A meeting of stakeholders was promised before the end of the year, but none will take place until the beginning of next year, which means that work is unlikely to start before next summer, if then.
The Minister must also consider the fact that the delays are all the more regrettable because nearby, in Almondbank in Perth, at another ex-Ministry of Defence site where contamination was discovered, the clean-up was agreed and carried out within six weeks. It appears that that was because the remedial work was a condition of sale, with penalty clauses included. It looks like the Ministry is willing to act with speed only when there is a legal obligation to do so.
Machrihanish, where there are far lower levels of radiation, was also cleaned up without anyone having to come to Parliament to beg for it to be done. Again, that was because of a condition of sale in a commercial contract. Must we really accept that the Ministry of Defence will move only when there are commercial obligations and stall when it feels it has only a moral obligation to act? Have we to wait for the Scottish Environment Protection Agency to impose statutory obligations on the Ministry of Defence, which it is entitled to do?
The delay is galling because, as I understand it, the Ministry of Defence will announce in the next few days that it will break up submarines at Rosyth, next door to Dalgety Bay. For months it has been consulting on a plan, one of the options in which is to store not only low-level but intermediate radioactive material there. In that case, it would be nuclear waste.
The Minister has accepted responsibility not only for the DIO but for Scotland as part of his work in the MOD. As any visit he makes to Scotland will prove, the Ministry cannot command any public confidence when it seeks to guarantee safe long-term storage of either low-level or intermediate radioactive nuclear waste in Rosyth if it cannot even reassure the people of the nextdoor town that it will take responsibility for the safe disposal of the long-standing radiation waste at Dalgety Bay. Would the Minister be happy to accept the storage of even more radioactive waste in his constituency if he had no assurances about the safe storage of the existing waste?
Thomas Docherty (Dunfermline and West Fife) (Lab)
I am grateful to my right hon. Friend for securing this important debate. Does he agree that there is no way in which my constituents in Rosyth or his in Dalgety Bay will accept for a second that waste being stored at the site or in the wider West Fife area?
Mr Brown
My hon. Friend is absolutely right. It seems that one part of the Ministry of Defence has no clue what another part is doing. It wants to store waste at one place in that part of Fife but refuses to clean up the mess left by previous waste in another part. It is shocking that there is no co-ordination within the Ministry, and I believe that people who work on the nuclear programmes in the MOD are unhappy with the state of affairs that the Minister and his colleagues have left us with.
I come now to the delays. When replying to the previous debate, the Minister said we should take into account the views of Public Health England, which he said had not exactly given a “ringing endorsement” of the report produced that showed the risk and named the polluter. The letter sent to SEPA from Public Health England stated on 28 June:
“I am writing to provide comments on the…risk assessment …Regarding your contaminated land assessment, we agree that radium-226 contaminated objects recovered from Dalgety bay include objects that could give rise to radiation doses that exceed the relevant criteria for the Radioactive Contaminated Land (Scotland) Regulations 2007; specifically the effective dose criterion of 100 MSV.”
Whether or not that is possible, it is important that such objects are removed from the beach and disposed of appropriately.
On 10 July Public Health England wrote:
“It is clear that there is a level of radioactive contamination that requires further investigation and appropriate action.”
The response stated:
“You also asked about the extent that risk mitigation is required. It is clear that doing nothing is not an option and as noted above, it is important that agreement is reached by all of the interested parties on the best way forward.”
Public Health England then wrote formally to all parties on 21 August saying that it has
“consistently called for a management strategy to be developed and implemented at Dalgety bay.”
It concluded:
“We agree that the…criterion on effective dose could be exceeded for ingestion.”
There is no doubt about where the health authorities stand on the issue.
I understand that the MOD is worried about creating precedents, and that 15 sites with similar waste have been revealed by the MOD, including Dalgety Bay. I know that a radioactive waste inventory of 2010 suggests there are many more sites that are not under the control of the MOD but may have radioactive waste. However, I have always argued that because of coastal erosion on a site beside the sea, there is a special case for action in Dalgety Bay that the Ministry of Defence should now accept. Nothing excuses it for refusing to act on the incontrovertible evidence now available.
In the past few months, all the facts have been produced, researched, documented and published in forensic detail. We know that without doubt the MOD was responsible for dumping the waste, and that it knew for nearly 25 years without telling us that there were safety issues and risks that should have been dealt with. We also know that if it does nothing to fund the clean-up, it will have legal obligations that it will eventually have to meet. It is surely time to bring this sad saga to a conclusion in the only way possible, and I hope I will not have to ask you, Mr Speaker, for a fifth debate before the responsible course of action is pursued. That responsible course is for the MOD to own up to the damage, to pick up the bill to get rid of the waste and clean up the area, and to do so as soon as possible. The patient and long-suffering residents of Dalgety Bay deserve nothing less.
The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)
I congratulate the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) on securing this debate—his fourth on the subject since November 2011. Believe me, Mr Speaker, I sincerely hope that he will not have cause to call a further debate, and that some of the things I say today will reassure him about what is happening and what is to be done in the near future, and that that will be helpful for him and his constituents.
As he said, I visited Dalgety Bay in July to see the situation for myself, and I have read the case file in depth. I assure the right hon. Gentleman that I have taken a close personal interest in this matter. We now have the draft outline management options appraisal report dated 30 September. That has been shared with SEPA and will be published early in the new year. I would be surprised if he has not had sight of it already, but if he has not, I will ensure he gets a copy.
Following a meeting between SEPA, the MOD and Public Health England on 28 November, the preliminary findings of the detailed risk assessment, heralded in July, will be available early in the new year. I think SEPA has now agreed that both are needed to determine a credible and coherent way forward.
Contrary to the impression that the right hon. Gentleman and others continue to give, the MOD has never sought to abdicate its legal responsibilities, much less “pass the buck” or delay progress in reaching a resolution. We have been upfront about the Department’s historical activities and the part they might have played in introducing radium into what was the royal naval air station Donibristle and HMS Merlin. Moreover, he will recall that we previously intervened to remove contaminated material from gardens within the housing estate that now occupies the former defence sites, while taking care to avoid blighting his constituents’ properties. Furthermore, removal of contaminated material is one of the options contained in the September options appraisal.
To date, our support to SEPA alone has cost in excess of £1 million. Work undertaken by the Department has included: a site investigation; an ongoing monitoring and recovery programme; continual work to reduce the hazard by removing any radioactive contaminants found; and most recently work to develop the more detailed risk assessment necessary to inform the discussion and development of an effective long-term management strategy. This work has the support of both SEPA and Public Health England, which, despite its name, is also responsible to the Scottish Government.
As the right hon. Gentleman would expect, the MOD sought legal advice, and this has been shared with SEPA. Senior counsel’s advice deals with judicial review of SEPA’s risk assessment, SEPA’s appropriate person report, to which he referred, and the statutory guidance on which it apparently relies, and the advice is that this matter could be subject to a judicial review favourable to the MOD. That opinion was informed by acknowledged experts in radiological assessment, as he would expect. Rather than seeking to settle the matter by potentially expensive, protracted and divisive legal means, however, my Department favours dialogue and the development of a robust evidence-based understanding of the risk that accords with established best practice and is scientifically rigorous.
I understand the frustration caused and the impatience of the right hon. Gentleman and his constituents with the clean-up, and I can assure him that we are genuinely working as fast as we can, with the parties concerned, to bring the matter to a satisfactory conclusion. He will understand better than most, however, the complexity and the scientific and technical difficulties posed by the site. I am reliably informed that the site is unusual and that that has resulted in some of the delays to which he referred. I hope he agrees that, without the understandings I have mentioned, it is not possible to engage all interested parties in developing and delivering a viable long-term solution that is proportionate to the risk. It remains open to SEPA, if it is confident of its reports, to designate the MOD as an appropriate person, triggering either acquiescence by MOD or a legal challenge, but to date there has been no such designation.
The right hon. Gentleman has not specified precisely what remedial action he seeks. If I can be candid with him—he has referred to this too—I fear large opportunity costs translating to waste where there is negligible risk to public health. He will know that if the MOD concedes this case without identifying where any significant health risk might emanate on the site, the precedent could cost hundreds of millions of pounds in extensive and unnecessary remedial work across the country. Statute calls for a risk-based approach, but it remains doubtful whether there is a significant risk of harm. It is also unclear whether the activities undertaken on the land after my Department vacated the site changed the risk by potentially exposing the public to contamination.
Ultimately, the presence of radium at Dalgety Bay must be viewed and addressed in the light of the statutory regime for contaminated land, rather than the correspondence from the 1990s to which the right hon. Gentleman referred, or concepts such as ALARA —as low as reasonably achievable—designed primarily for other purposes.
The draft report from the Committee on Medical Aspects of Radiation in the Environment states that
“there does not appear to be a current risk from external radiation”.
I take that to mean gamma and beta radiation. The right hon. Gentleman will recall that the Centre for Radiation, Chemical and Environmental Hazards has previously concluded that the likelihood of a member of the public inadvertently ingesting an object contaminated with radium that could cause them significant harm is less than one in 10 million. I remind him that, in 1998, he was aware of the view that the annual risk of contracting a fatal cancer through inadvertent inhalation or ingestion was found to be less than one in 1 million—something that he regarded then as a “negligible risk”. Indeed, he pointed out at the time that it is more negligible than the risks run by people living among the granite of Aberdeen.
After the right hon. Gentleman made his remarks, a scoping risk assessment was undertaken by the Centre for Radiation, Chemical and Environmental Hazards in 2012. It took account of the two high-activity objects found in late 2011 and two subsequent objects found in April 2012, and, together with the current management measures, concluded that the risk of attributable cancer from Dalgety Bay was actually less than one in 10 million. That is less than the risk that informed the right hon. Gentleman’s 1998 reassurance by an order of magnitude. In addition, the most recent cancer report collated by COMARE found no evidence of the occurrence of cancers in the local population that would ordinarily be attributed to the presence of radium-226.
The right hon. Gentleman—who was of course Chancellor, then Prime Minister, between 1997 and 2010 —did nothing on this subject during that time other than to announce that his constituents faced a negligible risk of harm in 1998. I have to say to him that he needs to be very careful indeed about raising fears in his local population. He knows full well that the Government will comply with statute, but I have told him that we will go beyond that. We will voluntarily play our full and proper part in protecting public health, but that has to be evidence based and underpinned by a proper risk assessment.
Mr Gordon Brown
I think the Minister knows—and no one should be under any other impression—that it was only in 2010 and 2011 that the scale of the particles appearing on the surface became so great that we had to have the extra investigations, to find out what needed to be done. The main point, which should not be evaded when we are talking about all the other issues in this debate, is that this clean-up will have to happen. The engineering options will have to be set out, and the Ministry of Defence will have to accept responsibility. When the Minister presents the options paper in January, will he narrow down the options to those that are realistic, and then have an immediate public consultation on them? Will he then agree to set a timetable under which he will agree to fund the chosen option? We have agreed that he wants to dispense with lawyers whenever possible. Let us now have a sensible timetable so that we can get this done. We must not go through another winter with this contamination rising to the surface.
Dr Murrison
I have given the right hon. Gentleman an assurance that I want to see this sorted out quickly. There are two bits of material that are necessary in order to do it properly. One is the options appraisal study to which I have referred. It is currently in draft form and will be published very soon. The other is the risk assessment. The two need to tie in together because we cannot otherwise make a determination on which option to choose, or on whether to choose a mixture of some of the options, in order to obviate the various risks that might be posed by contaminants across this complicated site. I think it is true to say that SEPA now agrees that both those elements will be necessary in order to plan credibly and comprehensively for the future at Dalgety Bay. I hope that the right hon. Gentleman is getting a sense that those two things are now coming together very quickly, and that we will be in a position to make a determination on this matter, which I hope he will find satisfactory, very soon.
Dr Murrison
Before the right hon. Gentleman intervenes again, may I just comment on the objects that were found and the influence they had on the assessment of risk? As I said, the risk was determined at one in a million. That went down to one in 10 million. It was the same organisation that did the assessments. What had changed were the mitigation measures taken, notwithstanding the finding of the four high-intensity objects.
Mr Brown
I accept what the Minister says, but the health protection organisation that advises him has said that this work has to be done. I repeat: the clean-up will have to happen. It is right that the engineering options are investigated in detail so we can target where the remedial work must be done, but I put this again to the Minister, as I think he misunderstood me: when he publishes his options paper in January, having a range of all possible options will simply mean another few months of delay. Can he not narrow down the options by January, so that we can then set a realistic timetable to get the work done, and proper funding for it, as well as the public consultation exercise? There is one kind of options paper that looks at everything. There is a specific type of options paper, which was promised and which should be done by January, that looks at the main and realistic options for cleaning up as soon as possible.
Dr Murrison
Yes, of course, but it is not a decision to be taken unilaterally by the MOD; SEPA will wish to take a view and it has a copy of the draft paper already. It will want to make a determination, it has said, once it is in possession of the risk assessment to which it has contributed and, indeed, which it has formed in a way, because it has insisted on particular data sets making up that exercise.
Lindsay Roy (Glenrothes) (Lab)
Does the Minister accept that the MOD cannot abdicate its responsibility in this area?
Dr Murrison
The MOD has consistently made it clear that as the default position it will accept its legal responsibilities, but that it wants to go beyond that and make sure—without the intervention of expensive lawyers who will wrap us up for years—that we take action by negotiation with all interested parties so we can get a plan that will satisfy the right hon. Gentleman and his constituents. Our position in respect of liability has not changed at all.
In its draft report, COMARE says that
“we recommend that, in conjunction with all stakeholders, an evaluation of the means of remediation should be instituted immediately considering efficacy, practicability and cost.”
I wish to conclude this evening by saying that we could not agree more. To go back to my opening remarks, I sincerely hope very much that while the right hon. Member for Kirkcaldy and Cowdenbeath has been assiduous in bringing this matter to the House—I commend him for that—he will not have to be here for a fifth time in another six months.
Thomas Docherty
Further to the point that my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and I have made to the Minister about submarines, will he take the opportunity to give real cast-iron guarantees to my constituents and those of my right hon. Friend that there will be no attempt to move on these submarines until this is all joined up going forward?
Dr Murrison
The hon. Gentleman is talking about the submarine dismantling project and will be aware that there are seven hulls currently at Rosyth awaiting dismantling. Their cores have been removed; he knows that. The pressurised vessels that contain those cores remain, and because of the exposure to radiation over the years they have become intermediate level waste and need to be disposed off responsibly. The hon. Gentleman will probably be aware—because Babcock has briefed MPs and the councils—that Babcock is not interested in storing the intermediate level waste. It is difficult to see how this becomes a relevant factor in the context of Rosyth.
I am very grateful for the opportunity to come here to talk about Dalgety Bay again. I hope that I have made it clear that I take a personal interest in this; I hope the right hon. Gentleman is reassured by that. I will do my utmost to make sure that this process is moved on as swiftly as possible
Question put and agreed to.
Westminster Hall
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Tomlinson Report
(11 years ago)
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Guto Bebb (Aberconwy) (Con)
It is a pleasure to serve under your chairmanship this morning, Sir Roger.
I am pleased to have secured this debate on the Tomlinson report prior to the Christmas recess, because it is important and touches on a lot of my work on interest rate swap mis-selling. The report’s scope is wider than just the interest rate swap mis-selling scandal, and it looks at how a certain part of the Royal Bank of Scotland, namely the global restructuring group, has been operating in relation to small businesses. It is important to place on the record that Lawrence Tomlinson’s findings reflect what I have seen both as a constituency MP and in my work on interest rate swap mis-selling.
Prior to the report’s publication, Lawrence Tomlinson spoke to the all-party parliamentary group on interest rate swap mis-selling, and it is fair to say that many Members in that meeting were shocked by what they heard about banks’ behaviour. What should concern us more than the fact that Members were shocked by Mr Tomlinson’s comments is that many of them were not surprised. When some of the report’s findings were highlighted, it was concerning to see that such activity was recognised by Members from their constituency casework. If MPs are not surprised by allegations of behaviour that verges on the criminal, there is cause for significant concern about banks’ behaviour.
Since the publication of the report and its findings, there has been a certain degree of blow-back. Elements of the press have suggested that Mr Tomlinson might have a personal agenda or vendetta against RBS. I therefore want to place on the record that I have never banked or had any banking facilities with RBS, and have no vendetta whatever against it. My concern lies with the numerous constituents who have been treated in a manner that I find unacceptable. It is important to highlight what the report found and how it resonates with those of us who have dealt with businesses that have been badly treated by their banks.
The report was met with a significant degree of sympathy when originally published, but concerns have been highlighted since then. I want to examine three key issues of concern today; other Members may have different issues to discuss. First, I want to concentrate on the report’s findings in relation to whether the bank deliberately attempted to engineer situations in which businesses defaulted or breached their banking covenants. One of the report’s key claims is that businesses often found themselves in difficulties due to the bank’s deliberate efforts to ensure that that happened, including through revaluations. Once banking covenants were breached, businesses were placed in the so-called supporting hands of the global restructuring group.
The second question that deserves consideration is about the nature of the support that businesses receive once subjected to the support structure of the GRG. Is it really trying to get businesses back on track, or—as in many cases that I have seen, and in many cases highlighted by Lawrence Tomlinson—are businesses subject to unfair and penal rates of interest and charges, and often asked to pay for reports and valuations that are almost never in the businesses’ interests?
The third question is about the impartiality of the whole insolvency process. The report asks significant questions about whether the process and all the professionals involved actually operate in an independent manner. I have seen a number of cases of valuations changing dramatically because valuers have been instructed to undertake a second valuation by the bank. That raises significant concerns about the independence of those valuations. Consultants, solicitors and accountants have been asked to undertake work, paid for by the business, on the instruction of the banks. Time and again, that work has been less than helpful to the survival of the business.
When I conclude my remarks, I will touch on the selection of Clifford Chance to conduct an internal review of RBS. I have no doubt that Clifford Chance is a reputable firm of solicitors, but I have concerns about whether it will pass the smell test of being impartial enough to undertake such a review, given its links to RBS.
Have RBS and the global restructuring group been guilty of engineering a default or a breach of covenant? There are examples. A constituent of mine had a quarry with landfill rights that was valued at £9.5 million. The bank decided to enforce a revaluation of the asset, which came back at £2.5 million. As one can imagine, the impact of a £7 million reduction in value was an immediate breach of the banking covenant. After long and hard-fought efforts by the company, there was a final agreed valuation of £4.5 million. The company agreed to that simply because it was desperate and wanted to try to keep trading. How can a £7 million reduction in value occur when the company undertaking the revaluation was the same one that made the original valuation only a few months previously? That question needs to be answered. Also, why did the company have to pay £14,000 for a valuation that it successfully disputed?
I was contacted by a business yesterday with a large portfolio of flats, one of which was valued by the GRG at £100,000. A sale price of £145,000 was achieved yesterday, but the bank is still unwilling to make any compromise on the valuation of the entire portfolio. When one flat is sold for £45,000 in excess of the bank’s valuation, one must question why the whole portfolio is not re-examined from a banking perspective. The business is paying penal rates of interests on the basis that it breached its loan-to-value covenant, yet the one sale that has been achieved shows that the asset’s value was much higher than the value that the bank placed on it.
Another example, of a hotel in north Yorkshire, landed on my desk because the business has also been affected by interest rate swaps. The hotel was independently valued by Matthews & Goodman at £3.4 million, but the bank was clearly unhappy with that valuation, which gave the business a healthy loan-to-value position, so it instructed the business to get a second valuation within two months. The business was charged £3,500 for the privilege, and the second valuation came back at £1.65 million. The result was that the business was in breach of its banking covenants. It is unsurprising that the business feels hard done by: an independent valuation suggested a value of £3.4 million, but less than three months later, another valuation, done on the instructions of the bank but paid for by the business, was less than half that.
Glyn Davies (Montgomeryshire) (Con)
I thank my hon. Friend for allowing me to intervene. There is a similar example from my constituency. Does he agree that it is often the time scale in which the bank demands a response that kills a business completely? A business in my constituency was given 24 hours to resolve a position that was not a difficulty. The business was bankrupted and its principal has gone to work in the far east, where they have created many jobs and much good business. That has been taken away from mid-Wales.
Guto Bebb
That is a fair point about timing. Another of my constituents was told that his bank charges would be increased to a weekly fee of £4,000. The letter informing him of that arrived on 21 December, just before his business closed for Christmas, which I am sure was enjoyable because of that letter. There was nothing to be done until the new year, because the business was closed. There is an issue there. To go back to the hotel I was talking about, as a result of the lower valuation, the business can show on paper that its bank charges over the following six months were £250,000 higher than they had been in the previous six months.
Tessa Munt (Wells) (LD)
I applaud the hon. Gentleman’s work in this area, and it is a joy to work with him. I want to mention a similar case involving a constituent who had a long-term arrangement with a bank. His business, which owns housing, has been told by the bank that it wants to finish his loan on 31 March, so he is required to sell the housing on 1 April. How can that be fair?
Guto Bebb
That is an issue on which the bank would have to respond, because my view is that clearly it is not fair.
I have a fourth and final example of businesses finding themselves in difficulty due to decisions taken by the bank. A company that contacted me recently had net profit of £272,000 on turnover of £3.5 million in 2008, net profit of £281,000 on turnover of £4.4 million in 2009, and net profit of £268,000 on turnover of £3.9 million in 2010. Those are all healthy figures. The company employed about 40 members of staff. In late 2010, however, an agreed overdraft facility with the bank was withdrawn, because a loan agreement under the EFG—enterprise finance guarantee—system was declined. The company was therefore put into GRG support, and the group proceeded to disallow a payment of £14,000 in corporation tax, on which basis the company found itself in difficulties and ended up going into administration. The final set of management accounts for the nine months before the company went into administration showed a net profit of £190,000. The company would argue that its difficulties were caused by the bank refusing the corporation tax payment, even though the final accounts showed a profit.
Such businesses feel extremely hard done by as a result of the way that the GRG and RBS have behaved towards them. My evidence could be described as anecdotal—I am more than happy to accept that—but it is important to emphasise that the cases highlighted in the Tomlinson report are the tip of the iceberg; they are not representative of an issue created by Lawrence Tomlinson himself. I have seen these issues in my constituency, and other Members have seen them in theirs.
Once businesses are in the GRG, the concern is that its attitude and behaviour is less than helpful. RBS argues that the whole purpose of the group is to put businesses back into health, but it is difficult to see how a business allegedly subject to cash-flow problems is helped by having an additional £250,000 in fees in a six-month period. Time and again, I have seen the fees charged by the bank go up when businesses go into the GRG, and they apparently bear no relation to the amount of work done in support of the business.
So-called independent reviews are forced on businesses by the bank, whether through a valuation, accountancy work or solicitors. Professional fees are charged to the business, but the instructions come from the bank and, often, the reports go to the bank first. We have to be concerned about that. Furthermore, the businesses often have no say whatever in who the reviewers will be. There is a question about the conflict of interest faced by those professionals: if they are being paid by a business, but instructed by the bank, surely they are conflicted in their work.
The other thing that I have seen time and again is payments by suppliers not being prioritised. There is almost never a case in which a payment to suppliers would be allowed if that took the business beyond the terms of its overdraft or facilities, and yet I have never seen a case in which charges due to the GRG have not been taken because they will take the business over its overdraft limit. That is a fair point to make, because if a business can go over its agreed limit in order to pay the bank charges, why on earth will the bank not allow a payment to a supplier if that supplier is crucial to the continuation of the business in question?
I have already mentioned a constituent of mine struck with a £4,000 weekly fee for the continuation of his banking facilities. To return to him, after three months of negotiation, the GRG agreed that it would accept £2,000 per week. There was no explanation as to why the fee was initially £4,000, or why £2,000 was now acceptable. I get the impression that the reason why it was £4,000 to start was that the bank thought that it could get away with it; the fee was subsequently £2,000, because the business put up a fight—its accountants and solicitors argued the case, as did the MP.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Given all that, does the hon. Gentleman agree that removing the cash flow that assists in running the business when it is under pressure simply creates additional problems?
Guto Bebb
Absolutely. When a business is taken into the GRG in order to help with cash flow, it is difficult to envisage why there is therefore justification in imposing a £4,000 or even £2,000 per week charge for support. There is no indication of what that support entails, but it certainly does not support the cash flow—let us put it that way.
The company I mentioned was also expected to produce new accounts. It had monthly management accounts produced by its accountants, but that was not good enough for the bank, which had to have KPMG to do the work. Again, it was not good enough for the bank for the company to use its solicitors to value assets that were subsequently sold; it had to use solicitors chosen by the bank. That is oppressive behaviour by the GRG towards businesses that it is allegedly meant to be supporting.
It is important to bear in mind that when we highlight such cases, the concern is that we have examples from throughout the country, which makes the case that there is an issue here that needs to be looked at. I am pleased that the regulatory authorities are taking a look at the Tomlinson report, but I hope that they also take on board the comments made today by me and other Members on our experiences of businesses not included in the Tomlinson report. This is happening throughout the country and it needs to be highlighted.
I also want to highlight an interview with Derek Sach, the founder of the GRG, by Debtwire in October 2012, which is rather chilling to someone who is of the view that the bank ought to be there to support small businesses. He describes the steady flow of “new distressed businesses” into the GRG as an opportunity. That is a key point. If the head of the GRG considers that distressed businesses coming into his organisation are “opportunities”, his view is that the group is there not to support businesses, but to gain commercial advantage on the back of those businesses. Furthermore, if any Members present represent a shipping business, they should be concerned, because Mr Sach also emphasised that he sees significant “opportunities” in that sector, because shipping is going through a difficult period—in other words, the GRG vultures are hovering, waiting for a further supply of distressed businesses of which to take advantage.
Throughout the process, I have also seen numerous examples of instructions by the GRG not to prioritise the Crown on VAT, corporation tax or pay-as-you-earn payments. That is concerning from any high street bank, but to see such an instruction to businesses coming from a bank that was supported and saved by the taxpayer should cause serious concern to Government. I hope that the Minister will respond to that specific point.
I have a final point to make before my brief comment on Clifford Chance. The whole insolvency process is a concern. When an insolvency practitioner or administrators go into a business, the poor old creditors will often receive little in return, because the fees will take the vast majority of what is available. Hon. Members need not take my word for that, because in a recent article, James Nicholls of Nicholls & Co, an insolvency lawyer based in Birmingham, highlighted the fact that the insolvency business is complicit in what is, in my view, an abuse of small businesses. He made the point that
“we in the insolvency industry have been complicit, collaborative and have completely failed in what our true roles should be. Almost everyone in our industry has effectively been ‘bought off’ by the Banks—accountants, IPs”—
that is, insolvency practitioners—“lawyers, surveyors—everyone.” That is not my comment but a comment from somebody involved in the insolvency industry. His argument is that the industry has turned a blind eye to the behaviour of the GRG and other turnaround companies: it has been bought off by the fees and affected by the culture that has existed in the past decade.
If we are serious about supporting small businesses and supporting the growth of our economy through their development, we have to ask ourselves whether that sort of attitude towards them—seeing them as opportunities to make money rather than as businesses to be supported—is the right way forward.
Jason McCartney (Colne Valley) (Con)
Everything my hon. Friend is saying is familiar to me. I have been supporting a decent-sized manufacturing business in my constituency. The bank concerned is not RBS but another major bank; I want the Minister to be aware of that fact, and I might speak with him afterwards. When a business needs support and is feeling a bit vulnerable, perhaps because it has just lost a contract or is restructuring, instead of getting support from its bank it gets a hike in interest rates and has extra costs imposed on it—for example, an extra £10,000 a month in accountancy costs—and there is no pathway for returning to regular lending.
The circumstances my hon. Friend has described are ones I am seeing with a business in my constituency; instead of getting the support it needs, the bank’s behaviour is creating worry and concern. I am supporting that business as best as I can. This debate is a timely one.
Guto Bebb
I appreciate my hon. Friend’s intervention, as it highlights the fact that this is not only an issue for those businesses highlighted in the Tomlinson report but something that we are seeing in our own constituencies.
James Nicholls concludes the article I mentioned by saying that the insolvency industry—by that he means accountants, solicitors, insolvency practitioners and so forth—needs
“to stop defending practices that on close and moral scrutiny just do not stand up to the ‘smell test’.”
I say, “Hear, hear,” to that.
I will conclude my comments by discussing Clifford Chance. I have no doubt, as I said in my opening remarks, that it is a reputable firm of solicitors, and make no comment about its behaviour, which I am sure is of the highest standard. However, by choosing Clifford Chance to undertake an internal review of the allegations made against the GRG, RBS is doing itself a disservice and is not creating any confidence in that review process.
Let us think of the relationship between Clifford Chance and RBS over the past couple of years. Clifford Chance worked on the sale of £80 billion of toxic UK commercial real estate by RBS, which was called Project Isobel internally; it acted on behalf of RBS on the sale of RBS Aviation Capital; it was instructed by RBS to deal with the recent IT outage suffered by RBS and NatWest; and it advised RBS on the LIBOR scandal.
I have no doubt that Clifford Chance feels that it could act impartially on the review, but businesses up and down the country genuinely feel that they have been treated badly by the GRG and RBS and they need to feel confident that the bank is taking their concerns seriously. I would argue that the impression given of a conflict of interests between Clifford Chance and RBS is enough of a reason for RBS to think again and appoint another firm to undertake the review. I welcome the fact that RBS is willing to undertake an internal review, and it has argued that it is creating an independent internal review; but that independence must be beyond reproach. Given the commercial relationship that I have highlighted between Clifford Chance and RBS, it is difficult to make the case that the review will be truly independent and will be able to gain the confidence of the business community. I ask the Minister to convey my concerns on that matter to RBS.
Thank you, Sir Roger, for allowing me to speak for so long on this issue, as I am aware that other Members wish to contribute. My concerns are simple. I believe that the issues highlighted in the Tomlinson report are worthy of consideration, and that it is good that the regulatory authorities are investigating on the basis of the report. But it is also important that Members of this House from all parts of the country highlight their experiences with the global restructuring group. RBS is not, in my view, the only bank to have behaved badly, but RBS and the GRG are the focus of the current report.
Toby Perkins (Chesterfield) (Lab)
I am grateful to the hon. Gentleman for giving way just as he is concluding his remarks, which have been very thoughtful. He is right to say that the GRG might not be the only perpetrator of this kind of behaviour, but it is the focus of the report. Does he think that the evidence that he has heard from colleagues and has read in the report is enough to say not just that there might have been bad practice but that, as Tomlinson appears to allege, systematic fraud is being perpetrated by RBS—is that the case that he is making?
Guto Bebb
I would be extremely wary of using the word fraud. In my view, there has undoubtedly been systematic bad behaviour and I could speak at some length about West Register, which is part of RBS, and the way in which assets have been taken from businesses by the GRG and West Register—there is a conflict there. However, even with the privilege afforded by being in the House, I would be careful about using the word fraud.
Tessa Munt
Does the hon. Gentleman agree that we could summarise the matter in this way? Customers have trusted their banks over so many years and that trust has been built up through generations. People still think that they should trust their banks, but there is now a complete imbalance in that relationship, as a practice has grown up in which highly commercially minded organisations are managing personal money and business money. People are now not qualified to understand what they are being offered by their so-called friends, the business or relationship manager and their bank.
Guto Bebb
Undoubtedly. That imbalance is something I have highlighted time and again in relation to the issue of interest rate swaps. I do not think it is reasonable to assume that we are talking about two equal parties when one is a banking organisation that has the ability to pull someone’s livelihood away from them at the stroke of a pen.
To conclude, the attention focused today on the GRG and RBS reflects the fact that RBS was bailed out by the taxpayer to such a great extent. With that taxpayer support comes added scrutiny. We should not take our eye off the behaviour of other banks and there are issues within those banks, but the key point is that the bank that we are talking about today is supported by the taxpayer and so has an obligation to justify its behaviour, over and above what is expected of other banks.
Natascha Engel (North East Derbyshire) (Lab)
It is a pleasure to serve under your chairmanship, Sir Roger. I am delighted that the hon. Member for Aberconwy (Guto Bebb) has secured this important debate on what is an absolute shocker of a report. He has led a campaign to expose the bullying tactics that were often used by banks on interest rate swaps. We have all been quite shocked to discover that interest rate swaps were just the tip of what is a very large iceberg.
The Tomlinson report gives us an insight into behaviour that, if it is not systematic fraud, certainly reflects a culture and set of practices in the banking sector that are shocking in the eyes of most right-minded people. Small and medium-sized businesses are already struggling in a difficult business climate; to find that the very institutions that are supposed to help them through that difficult time are using practices that make their situation even more difficult—and often force them into insolvency —is truly shocking.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
On interest rate swaps, is my hon. Friend aware that tailored business loans sourced from the Clydesdale bank, for example, have been excluded from regulations and from the review? Businesses taking out those loans are just as badly affected as everyone else, so does she agree that such loans should be included in a review?
Natascha Engel
Absolutely, and I will conclude later by saying that that means we really have to look at the whole banking sector. The Banking Commission has done a good job of starting to expose some of these malpractices, but they are very worrying. The issue does not affect just RBS, and it needs to be looked at more widely.
What is really worrying is that RBS would, arguably, not exist if not for the fact that it was bailed out, and is 80% owned, by the taxpayer. However, some of the practices exposed by Tomlinson represent a double whammy for the taxpayer. I can cite examples of RBS using the GRG to take money out of bank accounts that businesses had set up expressly to pay Her Majesty’s Revenue and Customs. The bank was, therefore, not just taking taxpayers’ money so that it could continue to exist, but taking money from accounts specifically set up to pay HMRC.
I started to get involved in this issue as a result of constituents coming to see me about interest rate swaps. One particularly big example involves a man who owns care homes, which are disproportionately affected by interest rate swaps. He was a solvent customer running a successful business, but RBS bullied him into taking on loans that included interest rate swaps. He wanted to refuse, but RBS bounced his cheques until he took the loans on. He is now involved with the GRG, even though it was expressly set up for severely distressed customers. He is not in severe distress now, but he soon will be, because the money he has to use to pay back the interest rate swaps RBS forced him to take on should be going into investing in his care home business. In addition, when RBS first forced him to take on the loan, the exit fee was £10,000. Only a few months later, it was £150,000. Given the amounts involved, we really need to start taking a serious look at what RBS is doing.
The hon. Member for Aberconwy was reluctant to use the word “fraud”, and I understand why, because it is a serious accusation. However, what I would like to hear about from the Minister is the reverse: what makes him confident that systematic fraudulent activity is not happening in RBS? I am focusing on RBS because that is what the Tomlinson report focused on, but also because RBS is more than 80% state owned. What makes him confident that the bank is not forcing people into the arms of the GRG, with the result that perfectly solvent businesses are not solvent any more, and asset stripping them at the same time? What makes him confident the bank is not taking huge fees from companies that bank with them, asset stripping them and making sure they can no longer exist properly?
Tessa Munt
On that point, the bank sold the business of one of my constituents, which was bought by another of the bank’s customers, who then found themselves in exactly the same situation as their predecessor. The bank therefore profited from not only the distressed sale, but what happened afterwards. Worse still, the sale happened as a result of interest rate swap mis-selling, but there is another interest rate swap agreement with the new company, so something that happened in 2005 happened again in 2007. Very often, these things are happening to the people who provide large numbers of jobs in our constituencies—the businesses that will provide the jobs and the growth.
Natascha Engel
Indeed. Those responsible are laughing all the way to the bank—ha, ha! The engineering of loan defaults allows a company to be put into the GRG. What we find, and what we see in the Tomlinson report, is that the lending is refinanced—companies are forced to refinance—and the bank gets far higher margins on the new loans. The bank also prioritises taking disproportionately high penalty fees from companies.
All of that is chipping away at small and medium-sized companies, which just want to get on with their business; they do not want to have to worry about what these massive organisations are doing. The banking sector is supposed to help people. Before the crash, banks were over-generous in flinging money at people; after the crash, they have become highly reluctant to lend even to perfectly good businesses. Where they do make business loans to companies, they are behaving, if not fraudulently, then at least appallingly badly, as I think we can all agree.
The all-party group’s investigation into interest rate swap mis-selling revealed not just the banks’ bullying tactics, but many cases that highlighted the imbalance between the size of the banks and the size of small and medium-sized enterprises, which the hon. Member for Wells (Tessa Munt) mentioned. We recently had a meeting with the Minister about that very issue. Can we really say that individuals have access to justice, when RBS—I repeat that it is mainly state owned—can call on some of the best legal minds in the country to support it against tiny businesses? I would say that those businesses do not have access to justice, and I would like the Minister to look at that.
To return to interest rate swap loans, which is where all this started, another problem is the foot dragging by the banks, which are looking into this, and which would say they are dotting the i’s and crossing the t’s; by the Financial Conduct Authority, which is also making sure it gets everything absolutely right; and by the Treasury, which is not putting enough pressure on the banks and the FCA to make sure this issue is dealt with swiftly. As we have seen, exit fees can go from £10,000 to £150,000 in only a few months, and interest rate swap mis-selling is costing businesses vast amounts, so every day matters, because all this money is going to the bank, not the businesses.
We cannot be confident—the Tomlinson report highlights this—that systematic fraud is not going on, perhaps in the wider banking sector, but certainly in RBS. I would really like the Minister, when he responds, to say what he is doing to make sure we can be confident that systematic fraud is not going on at RBS and more widely in the banking sector. I will conclude there, because I would like to give him as much time as possible to respond.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I congratulate the hon. Member for Aberconwy (Guto Bebb). I must be honest: I had not intended to speak, but given that there are so few contributors, I want to say a little about my experiences and, more importantly, those of some of my constituents. I also congratulate the hon. Gentleman on the work he has done over a sustained period with the all-party group on interest rate swap mis-selling, which is what initially drove me towards the all-party group.
I want to tell Members about the sad experience of one of my constituents four or five years ago, although I suspect that one or two people in the room will be sick of hearing about it. The story initially confused me, and that is part of the problem: this is a complex issue, which makes it all the more difficult for a layperson to understand. As anyone who has had a constituent come to them to explain their difficulties will know, it takes considerable time to plough through what the constituent is saying, and to begin to understand the complexities of the banking system that has been operated for businesses for a considerable time. The lack of understanding that MPs will have initially, coupled with the fact that perhaps some sectors of the media do not understand the problem, means that light has not been shone on the issue in the way that it deserves to be. Stuck in the middle are businesses, which are going to the wall. As a result, people are losing their jobs. That is having an impact on family life across the length and breadth of the country.
A gentleman who was banking with Barclays bank got in touch with me about a family-run business that had been around for more than 20 years. It operated caravan parks in four parts of the UK: one was in my constituency, a couple were in the south Lake district, and one was in the Yorkshire dales. The company was encouraged, by almost a separate arm of Barclays bank, to look at investment in the business; the offer came in that guise. It was told, “We have set up a special arm of the bank to assist you; we can do some good business here and develop your business further.” The end result was the bank shifting products; it asked its client to sell one product back to it and to take out another. It ended up with three of the parks having to be sold so that the company could retain one, which continued to operate in Dumfries and Galloway for a period.
The businessman was reluctant for me to create any kind of a storm, because he could see that the first thing the bank would do was immediately move to close the business down. However, time passed and eventually administrators moved in. It all happened at and around the time of the LIBOR scandal and the involvement of The Daily Telegraph and Guardian Care Homes. That very much drew the issue into the spotlight, and as a result, I had a closer look at the case that my constituent had brought to me. I went to the administrators and said, “Quite clearly, this is a case of mis-selling. If this is mis-selling by the bank, and you are conducting business on behalf of this bank, you are doing nothing more than driving this business to the wall.” The administrators could not work quickly enough; basically, they drove the business into the ground.
That comes back to the point that the hon. Member for Aberconwy hinted at. The administrators were fine; their cheque was signed off. However, anyone else who was owed money was left waiting in the wings. The administrators and anyone dealing with the insolvency are absolutely guaranteed their money, despite the plight that many businesses are in. The shocking thing about the business that went down was that it did so owing £1.2 million, of which £900,000 was bank charges. That was punishing—crippling—and it destroyed that business. Goodness only knows how many other businesses the length and breadth of the country have experienced the same thing.
The Tomlinson report’s title is “Banks’ Lending Practices: Treatment of Businesses in distress”. Businesses in distress is one thing, but businesses being driven into distress is completely different. We heard this morning from the hon. Gentleman, and from my hon. Friend the Member for North East Derbyshire (Natascha Engel), about some experiences; I have three cases before me. One involves a gentleman whose small business—the family have a number of businesses—is some 200 yards along the street from my office in my constituency town of Dumfries. He discovered that the bank was dipping into other bank accounts—not only those that were relevant and related to his business, but those of family members. It had taken total control of all his finances. That poses a serious question mark about how banks are carrying out their business and what they are doing to people.
When my constituent contacted me, I said, “Come back to me in a couple of days”—because he was scheduled to meet the bank—“and let me know what action I need to take.” He came back saying, “It look as if they are prepared to move and assist.” The fact was that those were mere platitudes. The bank did not help him one iota, and that business, which is down the street from my constituency office, is closing down.
Another businessman who is, again, involved in caravan and camping sites has been mis-sold products. He does not have a kind word to say about the global restructuring group. His view is that the bank will quickly move to settle with him on the products that he was mis-sold. There has been an admission, but he also knows what is waiting in the wings. If he takes that early settlement, it will move in on other aspects of his business and close him down. That is no way to treat people who have probably been loyal customers of these banks for many years.
The most shocking case I have concerns a gentleman who is involved in property and is a private landlord. In the mid-1990s, his business had a value of about £300,000 to £400,000; gradually, over the years, he built that up into a business that provides jobs, of course, as well as a roof over the heads of individuals and families, and it was worth several million pounds. He then fell foul of the bank. He made me aware—he is an astute businessman—that he was always wary of the bank’s promises that what it was selling him was good for his business. The value of that business has fallen dramatically, and it may be worth somewhere in the region of £1.5 million to £2 million. However, stuck in the middle of all that are people living in homes that he is providing as a private landlord.
Sandra Osborne
Does my hon. Friend agree that private landlords seem to be targeted by the banks? I had a constituent in that business who was taken to a hotel in Glasgow and treated to a big presentation about how the loans could help with the business. They were not told all the facts and then ended up getting into difficulty. Does he agree that this has been a conscious effort to dupe people?
Mr Brown
I can only agree with my hon. Friend. I do not think there is any doubt that certain sectors have been targeted. I mentioned at the start of my contribution the caravan camping leisure sector, which Barclays had created a separate arm for, so there is no doubt there. Let us be honest: the types of businesses that can grow, even under difficult financial circumstances, appear to be targeted. There is an indication in the Tomlinson report that there have been elements, if I can put it this way, of predatory practice.
Again, I want to emphasise the point made by the hon. Member for Aberconwy: this is about businesses being told what is good for them. It is about businesses, once they get into financial difficulties, being told, “We need a report. We need someone to come in and do some work on how you’re running your business. We need valuations—and, by the way, you’ll pay for them at our behest.” The cost is not a few hundred pounds, or a couple of thousand pounds. These are significant sums of money. In any other world, we would call what the banks are doing an absolute rip-off. They actually gerrymander the valuation of businesses. That is simply not acceptable.
On the last couple of occasions on which I have attended meetings of the all-party interest rate swap mis-selling group, chaired by the hon. Member for Aberconwy, I have made this plea. The Royal Bank of Scotland—I should have declared at the beginning of my speech that I have banked with the Royal Bank of Scotland for more than 40 years; I try my best to keep on the right side of it—is 80% state controlled. We cannot release it back to where it was before the banking crisis. I have been pleading with the chair of the all-party group, and there is a Minister here this morning, so I plead with him: do not release the Royal Bank of Scotland and send it back whence it came, because we need some kind of control over this bank until some of the problems that it has caused are sorted out.
I know that the hon. Member for Aberconwy was anxious about the language that we should use in this place, despite the cover that we have, but I think that there is a culture of predatory business that is destroying businesses and, more importantly, destroying people’s lives. I apologise if I have missed a piece of work that the Select Committee on the Treasury has carried out, but I think that we need some of these people back in front of the Treasury Committee, explaining some of the charges that they are imposing on business. They are crippling business, not helping it. These big banks are organisations that we all looked at years ago, before the crash, and thought, “These are decent people that we can all do business with.” Frankly, they have been wolves in sheep’s clothing. They do this nation and the economy of this country no good whatever when they take businesses down.
Toby Perkins (Chesterfield) (Lab)
It is a pleasure to serve under your chairmanship, Sir Roger, as we discuss a subject that is vitally important for small business owners across the country. As someone who was a small business owner before coming into this place, I like nothing more than the opportunity to reflect on what is happening with small businesses and, of course, the vital relationship between small businesses and their banks.
I congratulate the hon. Member for Aberconwy (Guto Bebb) on securing the debate. Everyone in the House will know how much of his parliamentary energy he has dedicated to the cause of small business redress, most notably through his campaigning on the interest rate swaps issue—an issue about which he and the Opposition share many concerns.
This debate and this report go to the heart of several big questions that Government and society need to address. What are banks for? Whom should they serve? What is the role for Government in that relationship? Where does the balance lie for banks in protecting their own interests and those of their customers when a conflict is seen to exist? A key question is not whether there has been any wrongdoing, but whether, as has been alleged in the Tomlinson report, there has been systematic fraud by Britain’s largest bank. We need to be clear that that is what Tomlinson is suggesting in his report. It is an incredibly powerful and potentially huge allegation from someone who sits at the heart of Government as an entrepreneur in residence at the Department for Business, Innovation and Skills.
The report also poses questions about how a responsible Government should balance the need to expose wrongdoing and scrutinise questionable practices, which has come across loud and clear in this debate, with the need for a measured and considered approach to evidence gathering, particularly when the allegations are as serious as those made in the Tomlinson report. The report is clear in its call for a change in the culture of British banking. Indeed, Tomlinson echoes concerns and remedies that the Opposition have already called for.
Mr Tomlinson is a much respected entrepreneur who has won admiration from across the business sector for his own business success as a British manufacturing success story, but he is involved in a long-running and bitter dispute with RBS. Given the way in which his report changed between the original draft that was sent to RBS and its subsequent publication, many people feel disquiet about the independence of the report and the strength of the evidence base that led to a report as hard-hitting and potentially damaging to UK plc as this one.
As my hon. Friend the Member for Streatham (Mr Umunna) has said and few will disagree, there were many things wrong with banking practices and many causes for concern about the way in which the relationship between businesses and the banks has been conducted in recent years and continues to be conducted today. That was why my hon. Friend publicly called for those guilty of LIBOR rigging to face jail, and why Labour has led the way in calling for decisive action on the mis-selling of interest rate swaps. We have been very much with the hon. Member for Aberconwy on that. We have been resolute in calling for speedier action to bring about closure and settlement for companies that were mis-sold products, and concerned at the way in which the Financial Conduct Authority has failed to ensure that the banks complied with timetables that they had promised to adhere to. At this stage, I would like to place on the record my admiration for the work done by Bully-Banks to highlight some of these issues and to ensure that the matter is kept under the glare of public scrutiny. Indeed, as we meet today, banks have paid out less than 3% of the amount that they have set aside for compensating the victims of that scandal.
Those concerns were also why Labour tabled an amendment to what was then the Financial Services Bill that would require Ministers to bring forward proposals to help firms to pursue collective redress against the mis-selling of swaps, which the Government combined on to vote down.
Sandra Osborne
Does my hon. Friend agree that tailored business loans, which are currently not included in the review, should be considered as well?
Toby Perkins
I think that many important points have been raised during the debate and that is certainly one of them.
We share the disappointment at the continued excesses in bank bonuses and the failure of the Government’s bank bonus levy to yield the returns that it promised. After all, we are having this debate just a day after publication of a survey showing that managing directors at banks in London are expecting a 44% rise in bonuses for 2013.
I turn now to some of the contributions made by hon. Members to the debate. Unsurprisingly, the hon. Member for Aberconwy made a series of significant contributions to the debate that he initiated. It was interesting that he reflected on the fact that Tomlinson had spoken to the all-party group on interest rate swaps. I was surprised to discover that during this process, Tomlinson never spoke to RBS and never gave it an opportunity to put the allegations that he was making in an alternative light.
The hon. Gentleman refused to take the bait that I generously offered him to say that the behaviour highlighted in the Tomlinson report would have verged on the illegal. I think that he understates the case. Tomlinson is fairly unequivocal. He is clearly alleging systematic fraud on the part of Britain’s largest bank—in effect, it is feathering its own nest by bringing down businesses that without the intervention of the bank would have survived and thrived.
Guto Bebb
It is fair to say that the allegations in the report are extremely serious. That is why, in my initial remarks, I welcomed the fact that the Government have referred the report to the relevant regulatory authorities—because I think that it is important that those allegations are looked at very carefully. However, the purpose of this debate was to highlight the significant effort in the media to portray Mr Tomlinson as a gentleman with a vendetta against RBS. The opportunity today was to highlight the fact that constituency MPs have seen behaviour by RBS and the GRG that is identical to that highlighted in the report.
Toby Perkins
There is no question about it: we have heard a lot of evidence of that sort. I agree, of course. I welcome the fact that the Government have referred the report on, but it is hard to see how they could have done anything else, on the basis of the strength of the report. The way in which the situation has been handled poses questions about judgment in terms of the seriousness of the allegations being made.
The matter will now be looked at by the Financial Conduct Authority. We are talking not about an external report to which the Government have to respond, but about a report written by someone at the heart of Government, which is apparently based on anecdotal evidence and which does not give RBS much of a right of reply. That is why I have questions.
The hon. Member for Aberconwy raised a legitimate question about the impact of the charges levied by banks on businesses that are already struggling with cash flow, and the powerlessness that businesses feel when they enter the restructuring process. In some cases, a business enters the process knowing that it is in trouble and feels as though the process is making the situation worse. I also recognise that Tomlinson highlights, as my hon. Friend the Member for Dumfries and Galloway (Mr Brown) has said, the fact that some businesses did not consider themselves to be in crisis until the moment they entered the process. The report raises many questions and we need to hear the Government’s response. It is important that we continue to put pressure on the banks, and indeed it is hard to see how that pressure will be alleviated.
My hon. Friend the Member for North East Derbyshire (Natascha Engel) highlighted suspect practices by RBS that were experienced by a business in her constituency. She repeated Tomlinson’s claim that systematic fraud was taking place. Interestingly, she asked the Minister to explain why he was certain that such practices were not occurring. Given that the report has come from the heart of Government, I imagine that he must be pretty clear that such fraud existed. I do not want to prejudge his comments, but I would be interested to hear what he has to say on that. My hon. Friend also made a significant point about the imbalance and unfairness of the relationship between banks and firms that are battling to stay afloat and do not have the resources to take on a major bank.
My hon. Friend the Member for Dumfries and Galloway raised an example from Barclays that it made it clear that such practices are not confined to RBS, although the Tomlinson report was entirely about RBS. My hon. Friend focused on businesses being driven into distress. He said that RBS was 80% state controlled. Although RBS is state owned, it has become clear under successive Governments that the bank is not state controlled; it is run in its own way. Perhaps we need to consider the fact that an organisation owned by Government is not always working in the best interest of British businesses and UK plc.
As I have said, we share many of Mr Tomlinson’s concerns and conclusions, and I now turn to the areas on which we agree. The Tomlinson report recognises the fundamental faults of the lack of competition in the British banking system, on which the Opposition wholeheartedly agree. Some 89% of small businesses are locked into the big five banks. The report also speaks of the need to change banking culture so that banks see small businesses as partners rather than merely cash cows, and so that the two can grow locally together. Such a model would not only be good for small businesses but lead to a stronger and more durable overall economy. That is why Labour proposes a new generation of local banks based on the Sparkassen model to add genuine competition on the high street. That would create a major new player that would not operate according to the same lending models as all the other banks, and would boost local decision making.
Although net lending has fallen every year during the crisis, our biggest European competitor, Germany, has seen an increase in lending over the same time. After the crash in 2008, a crisis occurred in bank lending, and far from being improved in the years since, it has continued to constrict. Tomlinson is right to say that we need greater competition. Alongside the new local entrants to the banking market, we are calling for greater bank account portability to ease the path into the market. Even a huge bank such as Santander found it exceptionally difficult and expensive to gain a foothold in the UK market.
We also agree that the culture of selling additional products and services alarmingly supersedes that of best serving customers’ needs, as was demonstrated by the interest rate swap scandal. Britain is currently facing a mutual crisis of confidence in small business lending, and in the relationship between banks and businesses more widely. A survey of members of the Federation of Small Businesses found that more than half of small businesses believe that banks do not care about small businesses, and, similarly, banks fear lending money to businesses. Such mutual distrust is one of the reasons why we have had the slowest recovery for 100 years. The Tomlinson report will, indisputably, further damage the confidence between banks and businesses. The Government have a grave responsibility to ensure that, when such damaging criticisms are made, every possible step has been taken to verify and scrutinise those criticisms before the Government endorse them.
In that context, we have significant reservations about a report that contains such serious allegations of systematic and widespread corporate fraud. There are concerns that, at best, the Tomlinson report will not be seen as being truly impartial. We have reservations about the Government’s endorsement of the report when its evidence base has not been subject to any public or, as far as we are aware, departmental scrutiny. The Secretary of State for Business, Innovation and Skills told the House during recent Business, Innovation and Skills questions that Tomlinson’s
“accusations are echoed in the report published by Sir Andrew Large, who was appointed by RBS.”—[Official Report, 5 December 2013; Vol. 571, c. 1080.]
However, the Tomlinson report states that businesses rarely survive the global restructuring group process, and that they never come out again. Tomlinson highlights the fact that
“a whistleblowing ex-RBS banker confirmed that they could not think of any occasion in which a business entered RBS’ Global Restructuring Group and came back into local management.”
The report by Sir Andrew Large showed that 50% of businesses traded out of the GRG, and that only about 10% became insolvent, so it is difficult to see how the Secretary of State could use the Large report as a justification for the publication of the Tomlinson report.
The Parliamentary Private Secretary to the Secretary of State for Business, Innovation and Skills appeared to be supportive of what the hon. Member for Aberconwy said, so I do not know whether his contribution has the Secretary of State’s implicit support. The hon. Members for Aberconwy and for Wells (Tessa Munt) certainly appeared to be working collaboratively. The allegations in the Tomlinson report are incredibly serious, and they clearly carry the stamp of Government.
If Labour had been in office when the issue came to prominence, we would not have been as quick as the Secretary of State has been to rush out this departmental report, about which there are many questions to answer. I am told that if Tomlinson had chosen to speak to RBS, he could have been referred to companies such as Samsonite, Fairline, Independent Slitters Ltd and many others, which would have told him that the GRG process was positive for them. He chose not to do so, and as a result the report represents serious concerns but does not reflect all points of view in a balanced way.
Had Labour been in office, we would have ensured that the FCA, which is the appropriate body to investigate such grave allegations, was immediately commissioned to conduct a full and proper inquiry before the trust between banks and businesses could be damaged by a sensational report such as the Tomlinson report. I do not suggest that bad practices do not exist or that we have not been pushing the banks to identify where they have failed their business customers, but we consider that the anecdotes in the report provide a pretty tenuous basis for such serious allegations to be made with the stamp of Government approval.
With that in mind, I ask the Minister to address the following questions. Was the Secretary of State aware of Mr Tomlinson’s ongoing dispute with RBS when he was commissioned to produce the report? If so, what assessment did the Secretary of State make of any potential conflict of interest before giving it the departmental stamp of approval? Why did the Secretary of State trumpet the report as independent when it was produced in his Department by someone with a close interest in both the party and the issues under discussion? Why were earlier references to malpractice at Lloyds removed from the final version of the report so that it focused purely on RBS, the bank with which Mr Tomlinson is in dispute, and why was RBS not shown the final report, nor given a chance to submit evidence to it?
The report is sadly lacking in detailed referencing and evidence. Given that the basis of the report seems to be that many of the businesses will have collapsed—presumably, that is on the public record—will the Department be publishing detailed citations for where the allegations have come from? Is the Minister personally satisfied that due diligence was carried out by his Department before it promoted the report? Does he agree that if the report’s claim that RBS was systematically involved in deliberately distressing businesses that would, without its intervention, have thrived, that would be a matter of corporate fraud on a huge scale, and such an allegation should be thoroughly investigated before being produced in a Government-backed report? Does he think that the appropriate level of scrutiny was given to the report prior to publication?
Finally, as we head towards a general election, I suspect we will hear from Ministers why they think the way in which the Secretary of State operated was not the way things would have been done under a Conservative Government. If we had a purely Conservative Government, would they have handled the report in the same way? If not, in what way would it have been different?
The Financial Secretary to the Treasury (Sajid Javid)
I will start by welcoming you to the Chair, Sir Roger, and congratulating my hon. Friend the Member for Aberconwy (Guto Bebb) on securing this important debate. I will try to address the concerns raised, and I thank all hon. Members for their contributions in this debate.
SMEs are a vital part of the UK economy; they contribute significantly to economic growth. Access to finance is important for funding investment, ensuring businesses reach their full potential, and for facilitating new business start-ups. As hon. Members who have contributed to today’s debate have made clear, it is essential that our banking system works in the interests of SMEs and treats them fairly.
I will turn specifically to the report. Lawrence Tomlinson is one of BIS’s two entrepreneurs in residence. His appointment was made by BIS officials, not by Ministers, following an open competition for which there were more than 200 applicants. Mr Tomlinson is independent of BIS, but, as an entrepreneur in residence, he has the scope to explore and raise matters that he regards as important to SMEs. His report was prepared in that context, so it was not commissioned by the Department or by Ministers. It was a personal report by Mr Tomlinson; it is not a Government report.
I will deal with the questions asked by the hon. Member for Chesterfield (Toby Perkins), which were all in the same vein. He referred to the report coming from the heart of Government, so it is worth restating that this is a personal report by Mr Tomlinson. It is not a Government report, so Mr Tomlinson was free to publish whatever he saw fit. No Ministers or officials were involved. What was eventually published by Mr Tomlinson was entirely his own choice. It was also his own choice whether to involve the banks that he refers to in the report and what resources he wanted to use.
Toby Perkins
The hon. Member for Aberconwy referred a few moments ago to the smell test. I do not know whether the Minister is attempting to distance himself from the report, but anyone applying the smell test would say that an entrepreneur in residence at the heart of BIS was the person selected by BIS officials to do a report that was promoted and welcomed by the Secretary of State for Business, Innovation and Skills. It does not feel independent.
Sajid Javid
I disagree with the hon. Gentleman. The value of the report is that it is entirely independent. It was done by Mr Tomlinson in a personal capacity. He was free to look at any of the issues that he saw as important to the SME sector. I will look at the important issues he has raised, but at this stage I want to make it clear that it was a personal report by Mr Tomlinson and not a Government report. Once that is taken into account, the answers to the questions that the hon. Gentleman asked become clear.
The allegations made in Mr Tomlinson’s report are deeply concerning, and they have raised questions as to whether banks—particularly RBS—are treating their customers appropriately. We expect all banks to act with integrity across all the business activities that they engage in. Separately, as we have heard, the new management of RBS also commissioned Sir Andrew Large to conduct an independent review to examine RBS’s support to SMEs and the decisions that they make on SME lending. Following that review, a report was published on 25 November, and RBS has committed to implement its recommendations in full.
The reports, which were not Government reports, contained some very serious allegations, as we have heard from various hon. Members, particularly from my hon. Friend the Member for Aberconwy. It is now the responsibility of the Financial Conduct Authority to undertake investigations into allegations surrounding RBS’s lending practices and treatment of small businesses.
The FCA has now considered both reports. It has notified RBS that an independent skilled person will be appointed in accordance with the FCA power under section 166 of the Financial Services and Markets Act 2000 to review the allegations made against RBS.
Natascha Engel
Is there a time limit on the investigations being launched by the FCA? Foot dragging is a really serious issue, and every single day means more money lost to small businesses, so is there a specific time frame to which that person is working?
Sajid Javid
First, the FCA has yet to appoint the skilled person. I am not aware of a specific time limit, but it is fair to say that the FCA understands the urgency of the situation and the need to look into the allegations as quickly as possible. However, the hon. Lady will agree that it should take whatever time is necessary to get to the bottom of such serious allegations. The FCA will need to be satisfied that the skilled person appointed to review the allegations is sufficiently independent to carry out the work.
Sajid Javid
I will in a second. If the findings of the review reveal issues that come within the FCA’s remit, it can consider further regulatory action.
Natascha Engel
I am sorry to press this, but one of the very serious issues is the foot dragging, and the more time that is taken, even if it is under the guise of making sure that every i is dotted and every t is crossed, means more small and medium-sized businesses are unnecessarily going under, so the time pressure is really serious. I want to re-emphasise that the FCA must be put under pressure by the Treasury to ensure that the review is done as quickly as possible.
Sajid Javid
I agree with the gist of the hon. Lady’s comments, but I am not sure what she means by foot dragging. The report was published on 22 October. On 23 October, it was given to the FCA, and, within days, the FCA announced that it would investigate, so it would be wrong to accuse the FCA or anyone else of foot dragging, but she is right to suggest that we must stay on top of this and make sure it is handled in a timely way.[Official Report, 19 December 2013, Vol. 572, c. 7MC.]
The hon. Lady and other hon. Members mentioned the allegations of fraud in the report. They will understand it is not for Ministers to determine whether criminal activity by any institution or individual has or has not taken place. That is something that the courts and authorities must look into. If she or other hon. Members have been contacted by businesses with concerns, it is timely to remind her that micro-enterprises can go to the Financial Ombudsman Service with any such concerns. Businesses can also raise concerns directly with the FCA, which will investigate if it is appropriate, and of course any organisation is free to go to the police with any concerns about criminal activity. The police may involve other authorities such as the Serious Fraud Office.
Mark Durkan (Foyle) (SDLP)
In respect of some of the issues that hon. Members may be hearing about, as the Minister is aware, the arm of RBS operating in Northern Ireland is Ulster bank. Customers of that bank talked to Tomlinson, and other issues have arisen since the report. Will the skilled person appointed by the FCA look specifically at questions about the practices that seem to have been instilled into Ulster bank as well?
Sajid Javid
My understanding is that the FCA’s investigation through the skilled person will examine all allegations in the report and some similar allegations in Sir Andrew Large’s report.
I also mention, as my hon. Friend did, the Clifford Chance report commissioned by RBS and described by RBS as independent. I note my hon. Friend’s concerns about Clifford Chance; I listened carefully to what he said. Although it is for RBS to decide whom to appoint, I will ensure that his concerns are conveyed to RBS.
The hon. Member for Dumfries and Galloway (Mr Brown) discussed the future direction of RBS. He and others will be aware that on 1 November this year, the new management of RBS set out a new direction for the bank, which will lead RBS to boost the British economy rather than burden it. It will also enable RBS to focus on its core British business of supporting British families and companies. Ross McEwan, RBS’s new chief executive, has committed to improving RBS’s lending performance across the UK and announced the ambitious goal of becoming the No. 1 bank for small businesses and enterprises throughout the UK, as measured by a newly created independent survey to be run by the Federation of Small Businesses and the British Chambers of Commerce.
The Tomlinson report also recommended that state-owned banks be split into small banks focusing solely on retail and commercial lending as a means of improving competition in the banking sector. The Government are already committed to greater competition and diversity in the UK banking sector both locally and nationally, which is why we asked the Independent Commission on Banking to investigate competition issues in the UK banking sector as part of its work.
The ICB uncovered a number of issues, and we are taking forward its recommendations in the Banking Reform Bill and through other legislation. We are removing the competitive advantage that big banks get from the “too big to fail” system by introducing ring-fencing in the Bill. We have also secured a new seven-day switching service delivered by industry that will allow both consumers and SMEs to switch businesses accounts far more easily, and we have introduced a strong competition objective for the regulator, the FCA, to help it promote competition much more effectively.
The new regulators have already introduced big changes on the regulatory side to make it easier for new banks to enter the market, grow and compete with the large incumbent banks. We are also taking further action in the Banking Reform Bill by creating a new payments regulator to ensure that new and smaller banks have fair and transparent access to the payment system, and giving the Prudential Regulation Authority a secondary competition objective to strengthen its role in ensuring competitive banking markets. The Bill will also give the FCA further competition powers.
Hon. Members mentioned the future of Lloyds and RBS. At the national level, both RBS and Lloyds are in the process of divesting part of their UK banking businesses, creating new challenger banks. The Government have taken the first steps to return Lloyds to the private sector and are actively considering options for further share sales. The reintroduction of the TSB brand on the high street is great news for competition. That action is further evidence of the Government’s stated aim not to be a permanent investor in the UK banking sector.
The Government do not believe that there is a strong case for breaking up the core operations of any bank in which we have a stake. The cost of reorganisation would be attributable to the banks, and consequently to the taxpayer. The time required to execute such a reorganisation would also be lengthy, further delaying the Government’s ability to return the banks to private ownership.
Before I conclude, I turn to a couple of the other issues raised by hon. Members. My hon. Friend had concerns about insolvency, relating not just to the Tomlinson report but to the process more generally. His comments show how much he has researched the subject, so I take what he said seriously. He will know that the Department for Business, Innovation and Skills is the lead on insolvency issues, but I will ensure that my colleagues in BIS are aware of his concerns. Perhaps, if he finds it useful, I could arrange a meeting for him with the relevant Minister to discuss this important issue.
My hon. Friend will know, however, that insolvency procedures can be commenced only by a court order, and that the whole process is subject to supervision by courts. It is deliberately designed to ensure transparency, make the process legitimate and provide a forum for any disputes, as they often occur throughout such a fought process. I will take the issue forward for him and see whether more can be done to listen to his concerns.
Toby Perkins
I suspect that the extent to which the Minister has attempted to distance himself and the Government from the report speaks volumes. Does he believe that how BIS and the Business Secretary have handled the Tomlinson report and its impact on RBS’s performance is ultimately helpful to this Government’s future success, or does he think that it should have been handled differently?
Sajid Javid
I say again for the record—I hope that I have made it clear to the hon. Gentleman—that this is a personal report by the entrepreneur in residence at BIS. That has always been the Government’s position, and neither BIS Ministers, Treasury Ministers or any other Ministers have ever said anything different. Nevertheless, it is an important report. He will know that the entrepreneurs in residence initiative was started by this coalition Government in order to allow further analysis of what can be done to help the SME sector.
In that vein, we welcome the Tomlinson report, which is why we take its allegations seriously and why we are pleased that the FCA has acted quickly so far to consider them. This debate has shown how much parliamentary interest there is in the issue on behalf of our constituents, due to the number of small businesses in our constituencies that have come to us with similar concerns.
Guto Bebb
The hon. Member for Chesterfield (Toby Perkins) highlighted concerns about the fact that there was no advance consultation with RBS, but in his comments, Sir Andrew Large said that managers at RBS had very little understanding or scrutiny of the global restructuring group. In view of the fact that the report highlights concerns about the GRG, is it really a huge loss that consultation did not take place with a group of managers who did not know what was going on within the GRG, according to Sir Andrew Large?
Sajid Javid
My hon. Friend raises an important point. I hope that all that will be considered in the independent inquiries taking place.
I congratulate my hon. Friend once again on securing this important debate on issues about which he and many other Members feel strongly. Those issues will be seriously considered by the FCA, and further as required. It is important at this stage, though, to allow the FCA, as the conduct authority, to investigate the claims made in the Tomlinson report.
Hypothyroidism
(11 years ago)
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Mrs Caroline Spelman (Meriden) (Con)
I am very grateful to have the opportunity to raise this subject in Parliament. It was first brought to my attention by a constituent; I will obviously keep her name confidential, but she is content for me to discuss her experiences, which are not unusual. Hypothyroidism is not a small or niche illness; it is estimated that up to 3.5 million people in the UK may have a thyroid problem. It disproportionately affects women compared with men, by a power of 10, and the effects of the disease can be really debilitating, with the many symptoms including tiredness, aches, weight change, coldness, memory loss and depression. Even more seriously, the disease can impact on the functioning of the heart. The problem is that many of these symptoms are not unique indicators, and therefore they may be hard to pinpoint or describe.
When someone is suspected of having an underactive thyroid, or hypothyroidism as it is known, their GP will usually do a blood test to check the levels of the thyroid-stimulating hormone, or TSH. This test is called the TSH or FT4 test. In the UK, an abnormal test result will only come back for someone who is above the “over” levels of the TSH bell curve for the population. That means that some people may have sub-clinical levels of hypothyroidism but they are not flagged up for treatment. Once again, there is a disparity between the number of men and women with sub-clinical levels of hypothyroidism; three times as many women as men suffer from those sub-clinical levels. The opposite can also be true. Doctors have to consider how to treat patients with abnormal results who otherwise show no clinical signs of hypothyroidism. Therefore, it is accepted that GPs might face many different problems when trying to treat a patient with hypothyroidism.
However, my constituents know exactly how difficult and frustrating it can be to live without effective treatment of their condition. I expect that all of us know someone who has suffered from hypothyroidism, and I think that we are all aware of the impact it can have on someone’s quality of life.
Jim Shannon (Strangford) (DUP)
In her introduction, the right hon. Lady mentioned that about one in 50 women and about one in 1,000 men develop the disease in their lifetime. Does she agree that if someone has a family history of the disease, perhaps at a certain stage of life there should be a check carried out on them to see if they have it?
Mrs Spelman
I thank the hon. Gentleman for his intervention, because that is an excellent suggestion; it is what I would describe as a no-brainer. If someone has a family history of the disease, surely that should be a very strong indication for the GP to be proactive in monitoring the possibility of it appearing in subsequent generations within the family. The Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), is responding to the debate and perhaps she could respond to that point.
The constituent who first brought this issue to my attention a couple of years ago is, in fact, director of the charity Thyroid UK, which has been contacted by 19,000 thyroid sufferers. There was recently a petition with more than 5,000 signatures from sufferers who wish to see this matter debated and this disease being better dealt with. Therefore, I want to take this opportunity to raise awareness of this serious disease, the methods of diagnosing it and the ways of treating it. I also want to question the broad range of GP responses to diagnosis. More training is required to ensure that GPs respond consistently and are ready to test a patient fully for thyroid problems, so that a quick and full diagnosis can be made. That should include checking someone who has a family history of the disease, which was the excellent point made earlier.
If hypothyroidism is left undiagnosed, it can affect heart health, as I said before. It can also be a risk in pregnancy for a younger woman. If they are undiagnosed, sufferers have to live with unabated symptoms. Wrongly diagnosed patients spend time and money on visiting different specialists, as they try to find an answer to the symptoms they know they have. That is obviously a waste of both the patient’s time and the doctor’s time, as well as a waste of precious resources within the NHS. Effective and quick diagnosis is needed. There are many stories of misdiagnosis, for example where depression or fibromyalgia is diagnosed, and therefore the patient is given the wrong prescription, which can include anti-depressants and other hormone-altering drugs.
There is also an argument that in the long term correct diagnosis and treatment will cost the NHS less. In addition, a healthy, active working patient will cost the state less in benefits. My constituent had to give up work during a period of five years, and she very much regrets that her symptoms necessitated her having to do that. The disease obviously has a huge impact on someone’s life and on their overall earning capacity within their working lifetime.
It is imperative that all GPs are trained in identifying this condition, and that they are reminded to consider that certain symptoms might indicate hypothyroidism even if someone’s TSH test comes back as normal. For example, could it be that the patient is still affected by sub-clinical hypothyroidism? Should the range for those considered “normal” be reduced to bring in these borderline and sub-clinical patients? In the UK, the test considers anything above 10 ml of TSH in serum in the blood as abnormal. However, given that 10 ml is an average figure, there will be individuals who may be hypothyroid with TSH levels below the 10 ml figure. So there may be an argument for reviewing the 10 ml level. At the very least, there should be assurances that the tests are standardised, with reproducible performance in different laboratories. I have discovered that in Germany the threshold is, in fact, 3 ml, but I have to say that it is measured in a slightly different way from the way that we measure it here. However, one question that I put to the Minister is this: why does there seem to be a more sensitive threshold in another well-developed country such as Germany, which might allow a doctor to be alerted sooner than might be the case here?
When a normal result is shown but symptoms are present, why is it not regular practice to carry out a T3 test, in case the problem is caused by a malfunction of the pituitary gland rather than a malfunction of the thyroid gland, or a lack of conversion from T4 to T3? A consistent and sympathetic approach to hypothyroid diagnosis by GPs and specialists is necessary, putting the needs, experience and concerns of patients first.
There is also an inconsistency in the prescription medicines that are offered. Guidelines from the National Institute for Health and Care Excellence clearly state that levothyroxine should be prescribed in the case of overt hypothyroidism, and that might be why the 10 ml level is required by the test. NICE also states that T3 should not be used in conjunction with levothyroxine.
First, it should be made clear that the test to see if the disease is present should not be set at a level solely for identifying the level needed for prescription and a curative drug. The threshold perhaps needs to be different to ensure that there is early and correct diagnosis. People need to know with certainty what illness they might have, in order to give them at least the ease of mind that they have the answers to their health questions.
Recently, the Medicines and Healthcare products Regulatory Agency called into question levothyroxine tablets made by a company called Teva. The agency recognised that levothyroxine is now far more controlled in its production and sale here in the UK. Levothyroxine is licensed in the UK, and I am not suggesting that those problems have not been dealt with; they have been. However, in the minds of patients, doubts were of course raised at the time.
Levothyroxine is not a drug as such, but is a naturally occurring thyroid hormone made to replace the missing hormone in someone who suffers from hypothyroidism. NHS Choices is clear that the drug does not usually have any side effects, unless too much of it is taken. Levothyroxine sodium can also be used.
A naturally desiccated thyroid treatment, or NDT, is a medication made from dried porcine thyroid glands. Before artificial thyroxine existed, this product tended to be used. I do not know at what date it ceased to be licensed, but presumably it was licensed in the 1960s, when it was the only product available. It is not now licensed in the UK, as the hormone levels in the naturally desiccated thyroid treatment can be inconsistent and both T4 and T3 hormones are present. However, my constituent is anxious that sufferers such as herself, who do not respond well to the artificial thyroxine product, should be able to be prescribed NDT treatment as an alternative.
The Royal College of Physicians advises against the use of the hormones T3 and T4 together, as that is inconsistent with normal physiology and high risks of long-term harm may outweigh the considered short-term benefits to the patient. However, NDT is prescribable by GPs, on their own direct responsibility, in respect of their patient’s health. Therefore they are rightly under no obligation to prescribe it. The Minister might like to reflect on the fact that, within the NHS, such variation can be a cause of concern among patients, some of whom do not have access to a GP who will prescribe it for them.
This inconsistent approach by doctors has caused distress among patients, some of whom have received the drug from GPs although others have not. Patients do, of course, compare notes. This inconsistency needs to be addressed. Combination and NDT drugs probably do not yet meet the clinical requirements to be licensed in the UK. However, it is surely time that a T3 replacement medicine or a combination medicine that meets the requirements is researched and produced. There is official recognition of some patients’ preference for such medicines, although it was understood, when studying patients who were unaware that they were taking a combination drug, that there is no clinical benefit. There is guidance to GPs on explaining the possible benefits and dangers in full to their patients.
There may be sufficient justification for a reappraisal of the treatment of hypothyroidism in the UK by such bodies as NICE and the Society for Endocrinology. Such a professional reappraisal would also benefit from the involvement of patients. The results of any reappraisal should be communicated clearly to patients, health care professionals and prescribers, and we parliamentarians, who take up individual cases.
I pay tribute to the work of the charity, Thyroid UK, which provides important support to the large number of sufferers, and families, affected by this disease.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my right hon. Friend the Member for Meriden (Mrs Spelman) on securing a debate on this issue. This is, as she says, an opportunity to highlight something that we do not discuss often in Parliament. I hope that the debate will prove informative for those who wish to learn more about the condition, and will be useful to those who are affected in the way that she so ably described. I will mention the help and support that is available and will try to respond to the points that she made. If I am not able to respond to each point, I will write to her.
As my right hon. Friend said, hypothyroidism describes the general effects of a severely underactive thyroid gland, where not enough hormones are produced to keep the body functioning properly. The condition can be congenital, but most commonly occurs as a result of an autoimmune disease that attacks the thyroid gland and impairs its function. The condition is not uncommon, as she said. In the UK, the annual incidence of primary hypothyroidism is 3.5 cases per 1,000 women, and 0.6 per 1,000 men, so there is, as she said, a disparity between men and women.
The effects of hypothyroidism can be pronounced and debilitating, as my right hon. Friend said. Often, the condition goes untreated, because symptoms are frequently subtle and non-specific—she highlighted some—and may be wrongly attributed to other illnesses. Fatigue, weight gain, dry skin, lethargy, memory impairment and tiredness are all likely to be present. In elderly populations, symptoms such as memory disturbance, impaired mental state and depression may also be seen. However, the good news is that, for the vast majority of patients, once the right dose of hormone replacement treatment is given, they will return to a healthy state. Continuous medication is usually required to maintain that correct balance, and patients needing it are entitled to receive their prescriptions free of charge.
However, to get the right treatment and to restore the balance of health and well-being, a prompt diagnosis is, of course, crucial. My right hon. Friend focused on that. A range of guidance is available to improve awareness of the condition among both members of the public and health professionals. NHS Choices provides comprehensive advice on the causes, symptoms and treatment of the disease, and more detailed clinical guidance is available on the NHS clinical evidence website.
Best practice on the identification and management of hypothyroidism has been set out by the Royal College of Physicians in its guidance, “The Diagnosis and Management of Primary Hypothyroidism”, which was developed on behalf of key organisations, including the British Thyroid Association, the British Thyroid Foundation and the Society for Endocrinology. The guidance is endorsed by the Royal College of General Practitioners.
Clinical symptoms and signs alone are insufficient to make a diagnosis of hypothyroidism, so the RCP guidance makes it clear that the only validated method of testing thyroid function is blood testing, which must include measurement of the thyroid-stimulating hormone—TSH—and free thyroxine, or FT4, in serum. There is no evidence to support either the use of body fluids or the measurement of basal body temperature as a means of testing thyroid function. However, the guidance recognises that different methods of testing blood can give differing results, as my right hon. Friend mentioned. Highlighting in Parliament the RCP’s support for a helpful international initiative for greater harmonisation of reference ranges, and of the units used in expressing results of thyroid function tests, reinforces its thinking in that regard. My right hon. Friend is right to highlight that.
Once patients have been diagnosed with hypothyroidism, the vast majority can achieve successful management of their condition with a synthetic hormone replacement treatment. My right hon. Friend focused on the fact that some people do not get on with that treatment. The RCP guidance sets out that overwhelming evidence supports the use of thyroxine T4 hormone replacement—usually prescribed as levothyroxine tablets—alone in the treatment of hypothyroidism. The guidance does not recommend prescribing additional T3 hormone in any presently available form, including natural desiccated thyroid treatments, such as Armour Thyroid. This is because it has not been definitively proven to be of any benefit to patients and may be harmful. However, that does not prevent clinicians from considering other forms of thyroid hormone replacement, if appropriate.
For some patients, as my right hon. Friend highlighted, the wider availability of NDTs is a concern. It is worth making it clear that although this treatment remains unlicensed in this country, because the evidence base for its efficacy is unclear, GPs may prescribe it on a named-patient basis. I appreciate the push-back on inconsistency, but that is probably because it is unlicensed, so people have to find a GP willing to prescribe it on that basis.
To ensure that patients with the most severe and complex endocrine problems receive appropriate care and support, NHS England has published a service specification for complex endocrinology, setting out clearly what NHS England expects to be in place in order for providers to offer evidence-based, safe and effective care. That has been developed by clinicians and commissioners, with expert patient input. Certain patient groups have been calling for specialised training for endocrinologists and general practitioners in diagnosis and treatment. My right hon. Friend rightly focused many of her remarks on that.
Health Education England has responsibility for promoting high-quality education and training that is responsive to the changing needs of patients and local communities, and works with key stakeholders to influence training curriculums as appropriate. The curriculums of the Joint Royal Colleges of Physicians’ Training Board, which is responsible for the specialty of endocrinology, and the Royal College of General Practitioners, are both subject to regular review. As such, there are regular opportunities for stakeholders and interested parties, including parliamentarians, to express their views and influence the training of these clinicians. In light of the issues raised today by my right hon. Friend, I will write to the Royal College of General Practitioners, asking for its opinion on the guidance available to support its members in the diagnosis and treatment of hypothyroidism.
Mrs Spelman
My hon. Friend the Minister is coming towards the end of her remarks. Perhaps when she writes to the Royal College of General Practitioners, she will mention the excellent point raised by the hon. Member for Strangford (Jim Shannon). Where there is a family history of hypothyroidism, we should be thinking a bit more about prevention. When a patient presents with an ill-defined collection of symptoms, such a family history might set off an alarm bell in a GP’s head and precipitate a test, so that the hypothyroidism does not go undetected for so long.
Jane Ellison
That is a good point. There is some information on the NHS website, but I will certainly include that point in my letter, and hopefully I will get a response from the royal college, which I will pass on. The hon. Member for Strangford (Jim Shannon) takes a fantastic interest in health issues and, as ever, is here in his place.
I hope that the Chamber is pleased to hear that the National Institute for Health Research is funding a £164,000 study on whether people aged 80 or older with hypothyroidism would benefit from lower doses of hormone treatment. Older people often have the condition in a mild form, and may not have symptoms with adverse outcomes, so the current treatment might not be beneficial.
I always make the point in these health debates that the NIHR welcomes high-quality funding applications for research on any aspect of human health. My right hon. Friend the Member for Meriden highlighted some areas that she feels would benefit from further research, and I can only say that the NIHR’s door is open to high-quality bids in any of those areas. That might be worth passing back to the charities and experts working in this field.
As I come to my conclusion, I reassure the Chamber more generally about the Government’s commitment to improving outcomes for the 15 million-plus people living in England with long-term conditions, including hypothyroidism. Through the NHS mandate, we have asked NHS England to make measurable progress towards making the NHS among the best in Europe at supporting people with ongoing health problems. We want such people to be able to live healthily and independently, with much better control over the care they receive. Of course, that feeds into many other priorities, such as ensuring that people do not present at accident and emergency because the management of a long-term condition has gone wrong. We want to ensure that such people can be healthy, well and looking after themselves without getting to that stage.
The various improvement areas mirrored in the NHS outcomes framework—this is relevant to the point on local doctors—are also in the clinical commissioning group outcomes indicator set, so CCGs are also held to account for, and are asked to provide information to the public on, the quality of the services and health outcomes that they achieve through commissioning for people with long-term conditions.
At a service level, the new NHS improvement body, NHS Improving Quality, has made the development of evidence-based tools for the management of long-term conditions the subject of a key improvement programme for 2013-14. The interventions under consideration include care plans, care co-ordination, the use of technology, self-care and the role of carers. That work will be evaluated, with best practice identified, to help us drive improvement across a range of long-term conditions. I am sure that some of the conclusions reached and evidence gathered by NHS Improving Quality will be relevant to hypothyroidism.
In conclusion, I thank my right hon. Friend once more for securing today’s debate. I hope this discussion has been helpful in providing some reassurance on our commitment to improving the quality of life for all those with long-term conditions such as hypothyroidism. I will, of course, write to her to follow up on this debate, which I hope will both help her to reassure her constituent and add to the wider debate.
Rare Diseases
(11 years ago)
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Jim Shannon (Strangford) (DUP)
It is a pleasure to be called to speak in this debate, Mr Bayley, which I have sought for some time. It all goes back to a meeting that I had with a number of people from Northern Ireland back in June. They outlined their concerns about the funding and resources for rare diseases, and about strategy.
In this debate, we have an opportunity to look back. Governments in Westminster and the regions, and particularly in Northern Ireland, which I represent, are responding to a UK strategy. The timing of this debate is more appropriate than it would have been had we had it in September, or July last year, because we now have the chance to discuss where we go with the strategy, and how we tie it in throughout the United Kingdom. I appreciate the attendance of Members to discuss rare diseases. It is a pleasure to have so many in the Chamber—to make a contribution, I hope.
Some of the stories that I have heard about rare diseases would break your heart, Mr Bayley. That is where I am coming from, because my cases are those of constituents who came to me with their problems and asked me to portray or reflect on them in the House of Commons and, we hope, find a way forward. It is abundantly clear to me and to everyone in the Chamber that we need to be proactive, making changes that will give the people affected in our nation a better quality of life.
Let me set the scene with a few facts. One in 17 people in the United Kingdom will be affected by a rare disease at some point in their life, which equates to 3.5 million people; 75% of rare diseases affect children; and 30% of patients with rare diseases will die before their fifth birthday. The Teenage Cancer Trust has given me some facts. There are more than 6,000 recognised rare conditions, 80% of which have a genetic cause.
In June 2009, the UK adopted the Council of the European Union’s “Recommendation on an action in the field of rare diseases”. It recommends that member states
“Establish and implement plans or strategies for rare diseases”,
which should be adopted
“as soon as possible, preferably by the end of 2013 at the latest”.
We will not make that deadline, but I hope that we will make the deadline of February 2014, when all the regions will come together under the captaincy of the NHS and the Minister in attendance, who will push things forward.
In November 2013, a UK strategy for rare diseases was issued by Ministers from the four UK Health Departments, including our Northern Ireland Minister, Edwin Poots. The recommendation contains 51 commitments, which all four countries of the UK are committed to delivering by 2020. The commitments are UK-wide and will be implemented in country-specific plans for England, Scotland, Wales and Northern Ireland. Time prevents me from going into all 51 commitments, but I have been contacted by many groups, and I wish to raise at least some of the issues that they highlighted for me.
Graham Stringer (Blackley and Broughton) (Lab)
Before the hon. Gentleman gets into a long list, does he agree that the changes in the structure of the NHS have made achieving a strategy more difficult, because it is often not clear where the responsibility for dealing with rare diseases lies between the commissioning groups and NHS England?
Jim Shannon
The hon. Gentleman has outlined an issue that is of concern to us, and I hope that the Minister will respond to it in this debate. With great respect to the Minister, he always tries hard to respond to the issues that we ask him about; I do not mean to put up too high a pedestal, but we have high expectations of his response.
The Teenage Cancer Trust contacted me, and its correspondence included some of the figures I gave earlier, which indicate how important the subject is. The trust told me that seven young people per day between the ages of 13 and 24 are diagnosed with cancer. The trust has 27 cancer units operating throughout the United Kingdom and Ireland. There are around 1,200 new cases of cancer among teenagers and young adults in the UK every year, which is a significant number for a rare disease, as defined by the specialised services. Cancer, however, remains the most common cause of non-accidental death in young people, and the five-year survival rates are lower among teenagers for some cancer types than among children. I repeat that, according to the trust, 30% of rare-disease patients will die before their fifth birthday. It is a cruel fact that some children will not enjoy life beyond the age of five.
The trust has proposed recommendations. It believes that it is critical that the service model continues to be secure in the NHS, as part of a standard cancer care; in other words, diagnosis and care must be delivered at an early stage. It welcomed the setting up of the teenage and young adult clinical reference group in NHS England, and called on NHS England to continue to work with the group to focus development on the services.
I refer to NHS England, even though I am an MP for Northern Ireland and health is a devolved matter, because there has to be a driver on rare diseases, and NHS England is the driver to take all the regions forward together. When I refer to NHS England, I am referring to something to which we can all contribute, including those in our part of Northern Ireland.
The Teenage Cancer Trust also referred to the fact that there are different cancer biologies, treatment protocols and responses to treatment. All the issues need to be brought together, which underlines what the hon. Member for Blackley and Broughton (Graham Stringer) said. There has to be better co-ordination. The trust also recommended more trials relating to teenagers and young adults with cancer, and challenging the arbitrary age criteria that are often set for trials. It also recommended ensuring a mechanism for action on new drugs, so that they can be tested by different groups. In other words, it wants early diagnosis, a focus on the issue and, by releasing financial and regulatory burdens safely, to encourage more research development for teenagers and young adults.
Another trust recommendation was for a system that alerted GPs when they had seen a patient three times with unresolved cancer symptoms. That would help them to identify and manage those cases. That is to say, with cancer, when someone has had three strikes, it is time for the case to be looked at intensely, so that we can ascertain exactly what is wrong. The trust has put forward those ideas, which are important to what we are trying to do.
There are more than 60 different types of muscular dystrophy and related neuromuscular conditions. Approximately 1,000 children and adults for every 1 million of the UK population are affected by muscle-wasting neuromuscular diseases. It is therefore estimated that some 70,000 people are affected by a neuromuscular condition in the UK. A constituent I met in June, Dr Amy Jayne McKnight, chair of the Muscular Dystrophy Campaign in Northern Ireland, is a director of the Northern Ireland Rare Disease Partnership; she sent me the following quotation through the Muscular Dystrophy Campaign, with which I have contact:
“There is an urgent need to establish multidisciplinary support for people with neuromuscular conditions in Northern Ireland. The lack of a register of affected individuals makes clinical care particularly challenging due to a lack of planned services. My father, who has spinal muscular atrophy, experienced very sporadic clinical support and was only offered respiratory care after he ended up in intensive care—putting his health at risk. Individuals in Northern Ireland deserve the same care and support as those living in England; international standards of care guidelines exist for several neuromuscular disorders including NICE accredited guidelines for Duchenne and the forthcoming NICE guidelines for uncommon neuromuscular disorders. We need to build on existing expertise in Belfast, alongside support from Centres of Excellence in the rest of the UK, to enable an effective network of specialist services to be developed in Northern Ireland.”
That is a lengthy comment, but it puts in perspective what the partnership is seeking, and what the House should be doing in the strategy that we develop.
I have raised this issue with the Minister who has responsibility for health in Northern Ireland, Edwin Poots, but if all four UK countries are to fulfil their part of the deal, the United Kingdom Government must soon provide additional, ring-fenced funding to each region. Only then will people receive the care that they need. It is all very well to have a strategy, but we must have resources and finance in place to make it happen. The four regions need to work together to make it happen; that is what we should be trying to do.
Graham Stringer
The hon. Gentleman has raised some profound points about networks and information. I am not so familiar with the situation in Northern Ireland, but clinical reference groups are vital. He has talked about Duchenne muscular dystrophy. In England, patients suffering from neuromuscular diseases are often directed to a clinical reference group for generic neurological diseases, which is obviously inappropriate. Is that his experience in Northern Ireland, and does he believe that we should do something about the situation in England?
Jim Shannon
I cannot speak about other places, but I do not believe that that has been the case in Northern Ireland—I am not aware of it. In my area, there are young people with Duchenne muscular dystrophy, and I met some young people with Duchenne at an event held every year in the Methodist centre across the way. I have been to the past couple of events, and there has been only one person from Northern Ireland there. With my background information, I would say that what the hon. Gentleman describes does not happen in Northern Ireland, but he says that it does in England, and that needs to be addressed. I hope that the Minister will take that point on board when responding.
The United Kingdom Primary Immunodeficiency Network, or UKPIN, is a professional organisation for all doctors, nurses and scientists working in this field, and it covers six rare diseases. UKPIN—I need to be careful how I say that, because UKIP has no role in this matter whatever—has stated that its aims are the registration and accreditation of specialist immunology centres for primary immunodeficiency, or PID; the development of a national patient registry, to which the Government have given a commitment in the rare diseases strategy; and the development and dissemination of guidelines and standards for best clinical practice. The UK PID registry has been supported by the Healthcare Quality Improvement Partnership, and has engaged the participation of 95% of UK centres since its establishment in 2008. To date, nearly 3,000 patients have been registered, making it the second largest patient registry in Europe, after the long-established French registry.
The figures for Northern Ireland suggest that PID is as common as cystic fibrosis. A first report on the matter is at the presses, and we will soon have the opportunity to read it. Perhaps the most pressing point that has been raised is that there is a need for meaningful national and international collaboration on both research and development of clinical practice to ensure maximum benefit for patients. Let us not disregard international collaboration: if something good is being done in France or Germany, it would be good to exchange expertise, so that we can all improve and move forward. Groups such as UKPIN can take the lead in some of these matters. The UK has already led in the development of novel treatments—for example, with gene therapy—and in implementing novel technologies such as next-generation sequencing. It is crucial that there is ongoing investment to maintain that research.
Rare Disease UK has welcomed the promise of greater co-ordination of care for people with rare diseases. As we hear all too often, patients and families have nobody to co-ordinate the multiple elements of care and treatment that their condition necessitates. How often have we heard that, when it comes to health care? It is not just about care for rare diseases. Members here today all regularly contribute to our discussions on health issues in the House, and all too often we hear of people who do not know where to go or who to speak to, and are not quite sure who they need to be in touch with to help them. That is a key issue; if we could address that, it would be helpful.
Mr Nigel Dodds (Belfast North) (DUP)
I am grateful to my hon. Friend for raising this important issue. He touched on support and services for families, particularly at the early stages of diagnosis of rare diseases. That is especially important when the case involves a child, as many do; we heard that earlier. Does he agree that that is one of the most critical matters that needs to be addressed in any UK strategy, and that it is particularly important in Northern Ireland? He and I have shared some experiences of the deficiencies in that regard.
Jim Shannon
I agree entirely with my right hon. Friend. We have experience of those deficiencies in the health service—we are not immune from them in Northern Ireland. In this House, I always try to extol the health service in Northern Ireland and the good things that we are doing, but there are times when we fall down, and times when we have to improve. My right hon. Friend is absolutely right that there are things that we would like to see done better, and we endeavour to make sure that happens. We have a devolved Administration and a Health Minister in Northern Ireland, so we have an opportunity to make that happen. We have seen lots of changes for the better in the health service in Northern Ireland.
Patients’ uncertainty about who to contact can mean that they do not receive the information and support that they need or that they have to tell their story over and over. I have often told the story of the gentleman I mentioned, and other people’s stories as well, but I still have not got the answers that are needed. My goodness, but it is frustrating for the people concerned, and it is also frustrating for me, as an elected representative. People can feel lost in the health care system.
It has been outlined to me that any strategy must include the development of a generic care pathway to facilitate the delivery of best practice to all rare disease patients, not just those who have a specific service specification; an appropriate care plan for all patients with a rare disease; clearly stated principles about the standards of care that patients with a rare disease can expect, including patients with no diagnosis; and the development of seamless pathways for transition, from childhood to adolescence and on to adulthood and older age. How does the Minister feel we can put such a strategy into place?
We must ensure that there is evidence-based diagnosis and treatment of rare diseases, as without accurate diagnosis, appropriate screening programmes and targeting of diagnostic tests, patients and families cannot access effective treatment or therapy, or manage their condition appropriately. All those things are important to the person who is living with such a disease every day of their life. A delay in diagnosis, or a misdiagnosis, could also involve multiple avoidable appointments with doctors and consultants, incorrect treatments and diagnostic tests, and significant distress. I hate to talk about money but it is an important factor in how the health service works, so we have to consider it. If we can do things more efficiently and effectively, let us do so, and deliver a better service, without some of the current bureaucracy and paperwork.
The UK rare diseases strategy represents the first time the four nations of the UK have come together to recognise and respond to the needs of rare disease patients systematically and structurally. It follows the founding principle of the NHS that treatment should be a response to need. The NHS is an organisation that we love and have great pride in—a pride that was mentioned in the House yesterday—and we want it to deliver across the whole spectrum for everyone. The rare disease strategy essentially gathers a set of 51 commitments that all four nations in the UK could agree to implement. When the Minister responds will he tell us how the 51 commitments will be achieved—will there be follow-up regulation and monitoring to make sure that they all take place?
Regrettably, few of the commitments require the four nations to work together on rare diseases. I find that a wee bit hard to understand. We should be exchanging expertise. If in Northern Ireland we are more expert on one aspect of treating rare diseases, let us do that part; if someone in Wales, Scotland or England is more expert on another aspect, let them do that part. Let us exchange our knowledge with each other to take the strategy forward. For high-quality care to be available to all patients with rare diseases across the UK, such collaboration needs to improve and increase.
Mark Durkan (Foyle) (SDLP)
I commend the hon. Gentleman on leading the debate. On the issue of co-operation and co-ordination across the UK, does he agree that the issue of rare diseases could be taken up for focus work by the British-Irish Council? As that body represents all eight Administrations within these islands, not just the devolved regions of the UK and Whitehall, its involvement could help to foster a sense that across these islands there is an open faculty of all those who are trying to specialise in improving the treatment and care of people with rare diseases.
Jim Shannon
I agree with the hon. Gentleman. The Teenage Cancer Trust already has 27 units working across the whole of the United Kingdom and Ireland. Bodies are already working across the borders, so to speak. As I said earlier, if someone in the Republic of Ireland or someone somewhere else in Europe has knowledge and expertise, let us galvanise our approach and work together.
It is in the area of rare diseases where the value of resource and service sharing can most easily be seen. The population size and distribution in each of our four nations vary tremendously, as do the health care needs, and there are significant efficiencies to be gained from sharing the burden between the four health services.
The Brittle Bone Society has highlighted that there needs to be a clear commitment to develop a fully functioning and properly staffed transitional service offering all the multidisciplinary services needed for all-round care at this life stage.
There should also be consideration for other departments, such as mature or older well women and well men clinics. Charitable patient organisations may be resource-poor, and it takes time, care, consideration, planning logistical preparation, communication, and an effort to inform and advise members to recruit them to take part in vital surveys, research trials and other invaluable projects.
Research into and development of new treatments and medicines for rare and very rare diseases, known as orphan and ultra-orphan medicines, is an important feature in medical research and the life sciences sector. A large number of products have been developed or are in development to treat rare and very rare diseases. Such research can provide valuable insight into the treatment of conditions that affect large numbers of people. Research and development must be enhanced to provide hope and an answer for those who are suffering from such diseases. The fact that the number of people who suffer from a disease is small must not detract from the fact that a child or adult in the UK is suffering, and we must do all that we can to alleviate that.
The Specialised Healthcare Alliance has sent me some helpful information. It refers to highly specialised services for the rarest conditions, some of which we may never have heard of—apart, perhaps, from a mention on TV, which will probably have been the first we have heard of it—but unfortunately they are occurring more often. There are some 500 patients in England and some 600 patients across the whole UK. Such illnesses and diseases are complex and need the highest level of expertise and knowledge to address. The alliance states:
“Many patients in Northern Ireland, Wales and Scotland depend upon the quality of English highly specialised services for their patients, given the very small number of centres that can sensibly provide these services.”
That goes back to a point that I made in the beginning: we are dependent on England being the driver for the issue, and on NHS England as the organisation that we follow in Northern Ireland, Scotland and Wales. The alliance also refers to “properly funded administrative support”. These are issues that it would like to see taken forward. It also says that the problem of capacity in the system has to be addressed to ensure that resources are there and that opportunities for specialised services are and can be delivered.
An example of the need to work together in the regions can be found in the fact that there is a regional variation in post-bone marrow transplant care. Patients who have received a transplant will face a range of severe and debilitating late effects, as well as life-threatening infection, due to the nature of their therapy. Those complex needs have to be managed by a transplant clinician in a late effects clinic, in which the co-morbidities can be considered with a full range of treatments by a specialist team. Without security of funding, a transplant centre cannot provide that service, so variation will creep in where follow-up care is commissioned by clinical commissioning groups.
Only small numbers of people receive transplants—1,440 in 2011. A nephew of mine has received a transplant, which transformed his life greatly. We are thankful to the donor for making that happen. It was not always plain sailing; sometimes there were backward steps. Has the organ been accepted by the body? Was there medication to ensure that that happened? At the end of the day, he is a bright young man today, and doing very well due to his kidney transplant. Many years ago, it would not have seemed possible, but we now have the opportunity to see a young man who has done extremely well through a transplant. There is a clear argument for NHS England to foot the bill to ensure the security of the service. Furthermore, it should ensure that the right type of care is available by drawing up national guidelines on what constitutes a late effects clinic to eliminate variation.
Time has beaten me, and I want to give others the opportunity to speak. I am not going to go into any further detail on the issue. Although the key commitments are welcome, there are fears of how they will work in reality. The Department must work with other Departments regionally to ensure that not only are those commitments realised, but that there is no longer a regional disparity in service provision. I commented on regional disparity yesterday in relation to the debate in the Chamber, and there is also a clear regional disparity on this topic. How can we achieve this funding and heart? The rare disease groups have shown that there is heart in abundance. Those organisations have spoken to hon. Members present and other hon. Members, who are unable to attend. However, we also need Government commitment to funding. Perhaps today we will get the assurance that that is forthcoming.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bayley. May I begin by congratulating the hon. Member for Strangford (Jim Shannon) on securing this debate? He mentioned that one in 17 of the population can expect to be affected by a rare disease. I want to speak briefly on two issues: trigeminal neuralgia and headache disorders.
Trigeminal neuralgia is a relatively rare condition, thought to affect less than 0.1% of the population, and that has included me. I secured an Adjournment debate on TN in 2010, seeking, among other things, to raise awareness of the condition.
It is important that the rarity of that or any condition does not exclude it from research, funding and the search for treatments or even a cure, as the hon. Gentleman referred to in his excellent opening remarks. One vital corollary of such research is in getting to grips with misdiagnosis, which is a particular problem when dealing with rare diseases. We need to break the chain of rarity leading to lack of research and knowledge leading to misdiagnosis. Such a chain can mean ongoing misery for the sufferer, when it might otherwise be possible to make breakthroughs that could bring hope and relief to the afflicted.
Of particular importance in the case of rare diseases is the existence of support groups and networks. They are important for all sufferers, as one often finds that the very rarity of a condition serves only to exacerbate the sense of isolation felt by the sufferer. If people do not know what they are talking about, and do not know anyone among their family or friends who suffers from a condition as rare as, for example, TN, it is crucial that one can link up with fellow sufferers, not only to overcome the sense of isolation, but, in practical terms, to share experiences, advice and the latest developments in that field of medicine, surgery and so on.
The Trigeminal Neuralgia Association UK brings together consultants, sufferers, doctors and researchers—indeed anyone with a connection to the disease. It also raises awareness among the public and medical professionals. I know that similar groups exist for other diseases, and all those groups are of immense importance and value to all of us.
I am the chair of the all-party group on headache disorders. We have initiated an inquiry into headache services in England. We have had a number of written submissions and one oral evidence session already, with another to follow in January. Evidence submitted to the inquiry so far indicates that there is significant misdiagnosis and subsequent mismanagement of primary headache disorders throughout England. Sufferers of rare headache disorders, such as cluster headaches, are further disadvantaged by the lack of medical awareness and access to specialists in the UK. The inquiry is looking into the current provision of care for headache sufferers in England and what opportunities exist in the new NHS system to improve care.
The all-party group has heard that misdiagnosis and incorrect treatment for headache disorders place a huge burden on the NHS, for example, inappropriate referrals to secondary care, costly medical procedures, and a high number of unnecessary A and E admissions. That can continue for years and comes at huge personal, financial and economic cost. The patient group OUCH reports high suicide levels among cluster headache sufferers.
Without funding for research into primary headache disorders, little will be done to improve the lives of sufferers or reduce the burden on the NHS and the UK economy. Increased education of health professionals—currently medical students receive only an average of four hours’ training on headaches—and clear treatment pathways are also required to tackle rare headache disorders.
Will the Minister meet officers of the all-party group once a report is published, which will certainly be before the summer recess, so that we can discuss its findings with him and his officials? Obviously we would like to extend that invitation to the shadow Minister. If the Minister is prepared to do that, that would be a welcome response to this excellent debate.
Charles Hendry (Wealden) (Con)
I am delighted to have the chance to speak in this debate, Mr Bayley, and I congratulate the hon. Member for Strangford (Jim Shannon) on securing it. I have been in the House for more than 20 years in total, and I cannot remember having a debate on rare diseases in that time. This is an important subject that we need to address in a constructive way, as the hon. Gentleman has done.
Looking at figures before coming into the Chamber, I saw that there were about 6,000 rare diseases, which is a shockingly high figure. I do not think that many people realise just how many different types of diseases there are. As a parent, one has only to watch a programme such as “Children in Need” to see how many diseases are out there, to see illnesses that we have never even heard of, but that are having such a devastating effect on families and lives, and to see how much work still needs to be done in the area. If the debate helps to take that forward, that is all to the good.
I want to focus on two aspects: first, the families and voluntary groups that work in this space and secondly, some of the academic research that is being done into rare diseases. So much of the work in this area is done by families who have been affected by a child or a family member who has been unwell. The work that they then do to raise funds, either to support other families or to carry out research, is an incredibly important part of the equation.
I want to refer to two examples. The first, Charlie’s Challenge, was named after Charlie Boutwood, a constituent of mine, who was 20 months old when he was found to have a brain tumour. He survived thanks to incredible medical attention, but his parents set up the Charlie’s Challenge charity to put money into brain tumour research, particularly relating to children. Although brain tumours are the biggest single killer of all the cancers of children and young people under 40, less than 1% of the research into cancers is into brain tumours and particularly the effect on young people. The work of Charlie’s Challenge is to see how it can provide additional support and research funding into such an important area. The second is Tildy’s Trust, which was named after Matilda Curran, a young teenager—the daughter of a very close friend—who was found to have leukaemia and who died of it two years after it was discovered. Her parents set up Tildy’s Trust in order to provide support, research and funding for families who are going through similar circumstances.
Those are just two examples of a large number of such organisations, which are driven by incredible commitment and passion by families who have been affected, and to whom we should pay tribute, because of the immense contribution that they make. Sometimes I feel that more could be done by Government to help to join up the work of those many different organisations to try to provide a greater central force to take forward that work and to help to co-ordinate the valuable work that they do.
Alison Seabeck (Plymouth, Moor View) (Lab)
The hon. Gentleman is making an important and quite sensitive point, because a number of these trusts are set up on the back of and because of people’s individual experiences and losses. It is difficult sometimes to get them to talk to each other, because they are so very personal to people.
Charles Hendry
I think that is absolutely true and there is a role that the Department can perhaps play in bringing people together, when they have similar goals, and if they can combine their force and strength, the overall gain may be bigger than the sum of the parts. Perhaps that is something to which the Minister could respond when he replies to the debate.
My second point relates to the university work that is being done in this area. When I left the Government in September last year, one thing that gave me the most joy was to be invited by the university of Edinburgh to become a visiting professor. I have been incredibly impressed by the work that is being done in this area—not in the part in which I am involved, which is the business school—particularly by the medical faculty. Work is being done to look comprehensively at the patient experience and at how to bring together all the issues that affect patients who often are being affected by rare diseases and how they can combine the necessary research into that as well.
The issue is not only about the role of world-class research, which I think Edinburgh has in abundance, but about how that is tied in with the role of benefactors, because the work of the university of Edinburgh has been made possible by a small number of extraordinarily important contributions. The Euan MacDonald centre for motor neurone disease research is funded by an immense donation by the family of Euan MacDonald, but that in turn led to an even bigger donation by J. K. Rowling for the Anne Rowling regenerative neurology clinic. It is through the work of the university—of examining how it can bring together its extraordinary genius in looking at the challenges that have been presented by these rare diseases—and tying that in to extraordinarily generous benefactors that offers us a really great way to address some of the issues. The work being done in Edinburgh is of course being done in many other universities in this country as well, but if we can help, through the Government, to try and co-ordinate that better, we will see real progress.
I remember hearing former President Jimmy Carter talking about what it meant to him, in his lifetime, to have played a leading role in the eradication of a single disease—river blindness. What an extraordinary, unbelievable ambition, and it is a magnificent thing to have been achieved, just as Bill Gates is achieving similar things in different sectors. The more that we can co-ordinate that work, expertise and genius in our universities with the good will of so many people outside it, the more, as a succession of Governments, we will be able to say that what we have done has led to the eradication of some of these diseases.
Graham Stringer
The hon. Gentleman is making very serious points about the excellent research that happens in the university of Edinburgh and in many of our other medical schools up and down the country, but he has not referred to a problem, which is that an excellent drug, or one that is likely to be excellent, can be developed, but because of the nature of rare diseases—that very few people suffer from them—it is very difficult to get it through the trials process, because that is designed to see whether the drug works on large numbers of people, quite sensibly. Does he agree with me that NICE should have different rules for drugs related to rare diseases?
Charles Hendry
I agree with the hon. Gentleman. A constituent has written to me just this week about meningitis and a drug that has gone through the trials process. It has been approved, essentially, but is only being made available to people who can pay for it at the moment. It seems to me that when treatments could be made available, expediting the process of approval and then ensuring that they are generally available as soon as possible, to as many people as possible, should be an objective of its own. I absolutely agree with what he said in that respect.
Jim Shannon
As I said in my introduction, the Teenage Cancer Trust indicated that that was one of its recommendations and it would like to see that happening. Perhaps the Minister can respond to that recommendation from the Teenage Cancer Trust. When it comes to the trial, effectiveness and availability of the drugs, we have to look outside the box. That is what we are trying to do, and I think that the hon. Gentleman is also saying that.
Charles Hendry
That is exactly what I am saying. The other thing that we owe tremendous credit to the Teenager Cancer Trust for is highlighting the way in which teenagers are dealt with in hospitals. The issue is that sometimes they are put in children’s wards, which is clearly not suitable for somebody who is in their late teens, and at other times, they are put in wards with people who were in their 80s and 90s, who are dying or are ill with other conditions. Someone who is a teenager is at a particularly vulnerable time of transition in their life, and it is incredibly important that their needs are dealt with in a specialist way and that they are surrounded by as many people of their own age group as possible. I think that is an important part of the treatment and recovery process.
I encourage the Government to continue what they are doing to try and address the issues. The strategy that is being put in place is of great importance, but more could be done to achieve a bigger overall gain from so many different fragmented, but immensely worthwhile contributions.
Alison Seabeck (Plymouth, Moor View) (Lab)
It is a pleasure to follow the hon. Member for Wealden (Charles Hendry), who gave a thoughtful and extremely constructive speech, which I hope that the Minister will respond to, on an area that so far, nobody else has covered. I thank the hon. Gentleman. I also congratulate the hon. Member for Strangford (Jim Shannon) on securing this important debate, and I pick up on the point made by the hon. Member for Wealden that we have had a dearth of interest in rare diseases on the Floor of the House. However, we have some extremely active all-party groups, which I shall come back to later.
Rare diseases are perhaps not quite so rare. There are an extraordinary number of them, and many more are being discovered, with five new diseases being described in medical journals each and every week. The number of people affected can vary from a handful to a few thousand, which often means there are issues about how they are supported and how care is given. Of course, these diseases are often hard to diagnose and complicated to treat, but one in 17 people will potentially be affected by a rare disease of one sort or another.
Despite the vast number of rare diseases, I would like to focus primarily on one that will be familiar to a number of Members present: muscular dystrophy. It and related neuromuscular conditions affect about 70,000 people in the UK. Each affects different muscles, and their severity and the way in which they affect individuals vary greatly. Most are progressive, causing muscles gradually to weaken over time. These conditions can be inherited or can occur out of the blue, even when there is no family history.
The Muscular Dystrophy Campaign has welcomed the strategy. I was pleased the campaign was highlighted in one of the strategy’s examples of good practice, which noted that people with a muscle-wasting condition and their families can
“be seen in one place at one time by the local paediatrician, the regional neurologist, therapists from both local and regional services and a representative of the Muscular Dystrophy Campaign.”
That sounds wonderful, and Plymouth and the south-west are, in many ways, exemplars when it comes to treating and supporting people with muscular dystrophy. Unfortunately, the same is not true everywhere; there really is a postcode lottery, and we have heard examples today. It is difficult, certainly in a region as large as the south-west, for people with serious mobility issues to travel excessively long distances, so we have not quite achieved that level of provision.
Let me cite the case of a constituent, Sharon Kitcher. Her son James is 22, and I have known them for many years. He suffers from Duchenne muscular dystrophy. The family have been real champions for James and his care over many years, and they have certainly beaten a path to my door on many occasions. They are very tenacious, and rightly so. However, it has been difficult for them to ensure he gets the treatment he needs, even though they are strong and vocal in supporting him. It has been difficult to get the wheelchairs he has needed as he has grown, because such things take time. It has also been difficult to get the support the family as a whole needs so that the household can operate properly.
Since transitioning to adult services, James has really struggled to access specialist neuromuscular physiotherapy, which is an extremely important part of managing Duchenne. Currently, there is no cure for the disease. James’s mum told me:
“Access to specialist care is extremely important for my son. There has been a huge difference in the level of support he receives since he has entered adult services and accessing specialist neuromuscular physiotherapy has been a particular challenge”.
That, of course, is happening in a region that is leading the way, so I really have concerns about other parts of the UK.
Will the Minister therefore explain what steps his Department is taking to harmonise the levels of support patients with rare diseases receive when transferring from child to adult services? How does the recently published strategy seek to address the issues my constituent is experiencing? Does the Minister accept that the confusion in the commissioning process in the current health market is not helping families and practitioners to find the right course for some patients? The pathway has not been seamless, and I agree with the hon. Member for Strangford that our aim must be a seamless pathway for young people as they move into adulthood. This is a difficult period at the best of times. A member of my family was in a similar position; she made the transition as a young woman with Down’s syndrome, and the problems were exactly the same, so we do not seem to have made much progress.
My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) spoke passionately about his and OUCH’s experience, and I hope the Minister heard that. He also spoke about the importance of all-party groups, and most of us here belong to one or other of those linked to rare diseases. Our meetings are extremely well attended, and sufferers and their families—this is particularly true of the all-party group on muscular dystrophy—regularly come to Westminster. We hold regular inquiries into different areas of concern for sufferers, and the Minister has responded to issues that have been raised, as have other Ministers in the past. Those responses have been well thought through and considered.
I recently attended a briefing on alpha-1 antitrypsin deficiency. Alpha-1 is not rare, with one in 3,000 to 5,000 people affected, so I was concerned to hear about the frequency of misdiagnosis. Indeed, the introduction to the strategy states:
“Around 4 in every 10 patients say they found it difficult to get a correct diagnosis”—
for rare diseases. When the Minister winds up, perhaps he could outline how the strategy seeks to address that in the case of muscular dystrophy and across the board.
The Muscular Dystrophy Campaign is launching a landmark new project in July, and it is funded by the Department of Health, which is good. The aim is to secure neuromuscular service developments in the newly reformed NHS, and we shall see how that works, because, as I say, the jury is out on how the reforms have been put together. However, the principle behind what the campaign is trying to do is the right one. The project is bringing together specialist commissioners, clinical commissioning groups, clinicians and people living with muscle-wasting conditions so that they can work together to improve the patient experience. However, the project is about muscular dystrophy, and I come back to the point I made to the hon. Member for Wealden: myriad organisations, individuals and trusts out there are all trying to achieve the same ends, and we really have to find a mechanism to bring them together. I hope the work the Muscular Dystrophy Campaign is doing will help to show the Government how they can do that.
In closing, I want to touch on the question raised about the trials process for drugs and treatments. I met a mesothelioma sufferer—a very brave young woman who had picked the disease up through contact with her father’s clothes. She had to travel to Germany for treatment. She lived many years longer than she was told she would, and that was, without any doubt, because of the treatment. She had a good quality of life, but we had to battle hard to get any support for the cost of the treatment. NICE was particularly difficult, even though this tried-and-tested technique was being used in Germany. The problem was that there were not enough people in the pool here to justify NICE giving the treatment the all-clear so that this young woman could use it, and we really need to look at that. When medicines and treatments are available in America or Europe, where there are high standards of testing, there should be more flexibility than currently exists.
Mark Durkan (Foyle) (SDLP)
I commend the hon. Member for Strangford (Jim Shannon) on introducing the debate, which is taking place just a few months after the all-party group on muscular dystrophy concluded its inquiry; I took part in some of the evidence sessions. The group expressed the concern, which has been voiced in the debate, that some of the changes that are afoot could imperil some of the good, concentrated work that has been done on rare diseases. There is a fear that the confused migration of various functions and tasks means that some of the specialist focus over the past few years has been lost.
The Government have argued that there will be new approaches, and they have said that the UK strategy would help to take care of some issues, creating a new focus on rare diseases. However, they also said that the £50 million specialised services commissioning innovation fund would be used to support work on rare diseases. Only a month after the all-party group reported with its concerns, that fund was essentially withdrawn because of other funding pressures. The statements and assurances that we get do not add up. The fears and apprehensions of many of the rare disease campaign groups and others, including Members and all-party groups, are reinforced by the apparent confusion.
The Government need to do more to give the rare disease strategy credibility and traction. In an intervention on the hon. Member for Strangford, I talked about what was needed, in addition to work at the UK level, to get better co-ordination between NHS England and the various devolved health services. Besides each responsible health service area doing its bit, there is a need for real collaboration that transcends those areas. Indeed, I see that happening beyond the UK; I see it spanning the whole of the British-Irish Council, which includes the Republic of Ireland, the Isle of Man and the Channel Islands. There are people with rare conditions in isolated parts of these islands, and the idea of combining our efforts on rare diseases and trying to achieve an economy of effort that would not be possible within one jurisdiction or health authority is important. The British-Irish Council is ready made to bring added emphasis and commitment to such areas.
It is important to do more than just pledge greater co-ordination and prioritisation for rare diseases; another issue to be dealt with is resources. As individual health authorities find it harder to guarantee a competent concentration of commitment to rare diseases, we must find critical mass at a higher level that transcends the health authorities and the devolved health service areas. That is why the UK strategy is an important concept. The 51 commitments are strong and sound, but there are questions about whether they will, in practice, add up to a full strategy, if they are left to the interpretation of each area individually. At times, there seems to be confusion about when NHS England is driving for the UK as a whole, and when it is in the lead simply as a matter of quantum—because it is the biggest. I am not sure whether there is a full strategy and co-ordination plan, and we need to continue working on that.
Some hon. Members have mentioned excellent work done in various locations, some of which depends on the skilled and dedicated leadership of clinicians, who may move to other posts. We should not take it for granted that the excellence achieved in some places will be sustained and maintained. That is a challenge, not least in the area of rare diseases. People progress professionally and move on, and sometimes the services that they leave are not sustained and maintained with the same quality. That is why—to return to the idea of co-ordination and co-operation across the UK, and more widely across the British-Irish Council—I argue for a central, open faculty. Then the clinicians who provide treatment for, or do research on, rare diseases may not feel that they are working on in isolation, feeling nearly as lonely as some sufferers; instead, they may feel part of a working, open faculty, in which they can connect with other professionals and patients.
I commend the Government and devolved Administrations on formulating the strategy so far, but funding is a fundamental question. We need significant challenge funds to be available, so that specialists who respond to particular patients, identifying needs better and coming up with innovative treatments, are not left trying to busk around within their local health service, trying to get a bit of funding here or there. The fact that the £50 million innovations commissioning fund was an early casualty in the reorganised NHS does not give great encouragement. More needs to be done.
The Minister with responsibility for care is responding to the debate, and as the hon. Member for Plymouth, Moor View (Alison Seabeck) said, few of the rare diseases we have been considering have outright cures or treatments; for many with such diseases, the approach is supportive therapies and coping support. My remarks have concentrated perhaps more on clinical leadership, but care and support are also hugely important. I know that the Minister will be conscious of that. Aspects of what I mean include setting good models and examples of practice and experience; helping individuals—particularly the young people who are sufferers of so many of the rare diseases—and their families; and thinking about improving care networks and the meshing of services, so that people who provide services, whether in education or family support, understand better what rare diseases may entail, and their possible life-cycle variation during the life of a child. People who provide social and education services cannot readily make themselves experts in the conditions in question, and often they confuse conditions whose names sound the same, although they are very different in character, and give rise to different demands and behavioural consequences. Wider support is needed.
Finally, the Government need to take account of the context of welfare reform and changes to several benefits, and the fact that every so often, people must reapply and prove their case for benefits again. That is particularly hard when people have rare diseases. Those people and their families should not have to spell out their condition again, in all the medical jargon, and explain it. They should not be made to jump through those hoops. We should find a better way in the social security system of showing understanding about rare diseases.
Jim Shannon
The time it takes to process an application is frustrating for the person concerned—and it frustrates me and other hon. Members, too. In special cases such as those involving rare diseases, I have had to go to someone at the top of the tree in Northern Ireland, to expedite the process. Does the hon. Gentleman think that people with rare diseases should be put in a fast queue, to be processed more quickly?
Mark Durkan
I think they should be put in a “not to be neglected” queue, rather than a “too difficult for us to sort out now” queue. The problem at the moment is that if an applicant’s condition is deemed very rare or complex, instead of their case being given added attention and urgency, it is allowed to silt up. That can happen with medical treatment and the opportunity for further diagnosis, which often requires travel outside the jurisdiction, and with the social security issues that I have mentioned, and on which I want to finish.
The Welfare Reform Act 2012 contained provisions that seemed to assume that many people with lifelong conditions would suddenly improve and not want to let on about being cured. It is a bit much when families who have their hands full supporting someone with a rare condition—particularly a child or young person—as well as supporting other family members, must constantly jump through hoops for a system that is supposed to support them and understand their needs.
Alison Seabeck
Will the hon. Gentleman accept that there are also issues about the way in which general health funding is distributed? In Plymouth, we have a very high prevalence of rare diseases, perhaps linked to the heavy industry that we have had, yet we get half the funding per person that is seen in Windsor and Maidenhead, for example. Will he accept that that also needs to be revisited?
Mark Durkan
I absolutely accept that point. It also came through in the earlier inquiry work on some of the concerns voiced by the all-party muscular dystrophy group. That goes back to the point that I made about funding.
The real test of whether a strategy is coherent and effective is what happens when it comes to funding. We can have many good statements of intent. There are 51 commitments, which are very strong and sound. It all sounds great, but does it translate into money being available for support and treatment or, as happens with approving new drugs, does the finance test get in the way of support and treatment reaching people? The cost-effectiveness criteria used either by the National Institute for Health and Care Excellence or by the Joint Committee on Vaccination and Immunisation raise questions. Particularly in relation to rare diseases, if the test is almost that a possible new treatment has to throw two sixes to start, in circumstances in which people do not even have any dice, it is a serious problem. Although the rare disease strategy is a good start, it is only that—a good start. It will need more work and more resources, and will need to be informed by further research.
Hugh Bayley (in the Chair)
We now come to the winding-up speeches. I remind both Front Benchers that we have just under half an hour left.
Mr Jamie Reed (Copeland) (Lab)
Thank you, Mr Bayley; it is a great pleasure to speak under your chairmanship again. It is a huge privilege to follow the hon. Member for Foyle (Mark Durkan), who made an incredibly telling contribution to the debate as usual. He is one of the few hon. Members—I hope that he does not mind my saying this—that it is worth staying in a debate to listen to, and he always has been. There were also tremendous contributions from my hon. Friends the Members for Poplar and Limehouse (Jim Fitzpatrick), for Plymouth, Moor View (Alison Seabeck) and for Blackley and Broughton (Graham Stringer) and an incredibly insightful and welcome contribution from the hon. Member for Wealden (Charles Hendry), who reminded us yet again of what a genuine loss he is to the Treasury Bench.
I thank the hon. Member for Strangford (Jim Shannon), who spoke in a health debate in this Chamber only a fortnight ago. I commented then that his record in contributing to health debates in this Chamber is, in my experience, unrivalled—at least, he is always here when I am here. For those past contributions, for his speech today and for securing this very important debate, I cannot commend him enough.
Figures provided by Rare Disease UK show that one in 17 people will be affected by a rare disease at some point in their life. That equates to about 3.5 million people. As we have heard, three quarters of those affected by rare diseases are children and, tragically, almost one third of those children will die before their fifth birthday. As a father of four children, I can add no words to underline the stark brutality of that statistic. My heart goes out to all the families who have faced such a shocking loss.
The term “rare diseases” refers to more than 6,000 different conditions that can affect the young or old and have an impact on physical or mental health. These can be life-threatening, debilitating diseases, but the term can also refer to manageable conditions.
The very definition of rare diseases, and how these are manifested in the statistics that I have given and that we have heard from other hon. Members, illustrate the fundamental issues that arise when we try to establish a coherent, comprehensive and useful long-term strategy through which to deal with the problems that they present. Some rare diseases will be very similar and advancements in medical sciences and research in one area can greatly benefit another, but some classes of diseases can be extremely different from others and the treatments for those can be wildly different, not sharing any empirical research base. As we have heard, economies of scale are often hard, if not impossible, to find.
That huge difference in dealing with each disease highlights a problem in trying to gear the system with the tools and resources necessary to make advances. With limited resources, any improvement in one area of research can sometimes be at the expense of another. These are difficult calculations and choices. Research and development must be rewarded. Certainty and predictability of funding for this work are essential. Some research—potentially a good deal—will yield no tangible or quick benefit at all. Supply chains, researchers and research and development environments must be identified, supported, grown and nurtured. The loudest voices will not always be the most deserving.
These are invidious choices. Can the Minister explain the Government’s priorities in this regard? How will Government ensure that the right balance is struck between all these competing pressures, and can the Minister tell us what criteria are used by Government to decide how and which areas of research are prioritised?
In 2009, before the last general election, the Labour Government set in motion a UK strategy following the adoption of a recommendation from the European Union in which member states were required to commit to better research and more resources for tackling rare disease. I think that all hon. Members on both sides of the Chamber agree that that was an important step.
It is now just a few weeks since the current Government published the UK plan for rare diseases. We welcome that plan, but I am struck by some of the apparent contradictions between what the Government say they want to do and what they are actually doing. The Minister knows full well that I respect him significantly. We will be spending a lot of time together in Committee on the Care Bill next year, and I hope that we can perhaps establish a precedent and resolve those contradictions today.
In October this year, the specialised services commissioning innovation fund was scrapped. That fund was set up, amid great fanfare, just two months earlier, with the promise that it would save lives and help patients. The fund was intended to provide finances and resources needed to expedite the synthesis of hundreds of potential new treatments for rare diseases. The Prime Minister said that it was
“becoming ever more essential to get your products tested and adopted in the NHS much more quickly”
before warning that
“the newest innovations are often the lowest hanging fruit”
when savings need to be made.
As we have heard, the commissioning innovation fund represented a £50 million investment. The BBC reported that the fund was scrapped due to “financial pressures”. John Murray, the director of the Specialised Healthcare Alliance, called the decision
“bad news for people with rare and complex conditions”.
Will the Minister tell us what those financial pressures are? I could hazard a guess, but I think that we deserve to know.
Of course, this will not be the last time that the Prime Minister says one thing and does another, but can the Minister tell us how this decision affected the interests that I mentioned earlier? Has the Department assessed how this cancellation affected the research and development supply chain, its planning, its recruitment and its work streams? If such an assessment has not been undertaken, will he commit today to doing that? More importantly, has the Department undertaken any analysis of how this chaotic mess has affected the state of the art? Have any potential treatments failed to appear as a result of the funding cut? Have any treatment delivery work programmes been interrupted as a result? It is impossible to believe that the decision has had no effect. More importantly than anything else—I know that the Minister will want to answer this question—have the funding cut and its effects had any negative effect on patients living with rare diseases?
Just one month before the cut was announced, the all-party muscular dystrophy group warned that resources earmarked for rare disease medication had been absorbed by the overall NHS budget. Will the Minister explain how the removal of significant resources that were specifically earmarked for the research and development of new treatments for rare diseases fits with the Government’s stated aims?
Let me move on to the strategy. No one would disagree that there is a need for a co-ordinated effort from all the countries in the UK when tackling the issues before us. I would be grateful if the Minister could explain, when he responds, how the new fragmented system of commissioning of services in England will be able easily to co-ordinate the commissioning of research and the commissioning of what are often expensive treatments for rare diseases and, as we have heard, orphan and ultra-orphan conditions with the NHS in Scotland, Wales and Northern Ireland. Where is the guiding mind with which to achieve economies of scale and critical mass in research, which we know is necessary for these conditions?
It is clear that NHS England has a leading role to play in ensuring that the new strategy is implemented and implemented well. The benefits of a national body taking a lead on that are plentiful, but how does that fit with the idea of creating local areas of expertise, such as the centre at Newcastle university and the centres elsewhere in the country, to steer innovation? Is the driving force behind innovation and new treatments coming from NHS England or from experts on the ground, and how will that work in practice? Of course we need to allow innovators to flourish, but we also need to co-ordinate. Where does the responsibility for that co-ordination rest?
That brings me to my final point. As in any debate on matters relating to health issues, we must always focus on the patient. If patients are not seeing improvements in their care, or they do not experience any easing of the symptoms associated with their disease, the Government —any Government—will have failed. Innovations are meaningless if the patients who rely on them see no benefits. Without the resources to back them up, strategies are little more than meaningless words. For any of us to claim success, patient access to treatments must improve. Many groups, as we have heard, are calling for a form of adaptive licensing to be implemented with regard to treatments for rare diseases. Have the Minister or any of his officials had any contact with, made representations to or received representations from the Medicines and Healthcare products Regulatory Agency with regard to adaptive drug licensing for treatments of rare diseases?
Access to treatments raises several issues from the perspectives of the patient and the manufacturer. First, bringing drugs to market is difficult and expensive. Encouraging drug companies to manufacture drugs and treatments that will benefit a relatively small number of patients is an important and challenging task. In the case of motor neurone disease, for example, no new drugs for the treatment of the disease have been approved since riluzole more than 20 years ago.
We must always ensure that drugs brought to the market are safe and effective. That means that even if the new UK strategy is effective in encouraging greater innovation in the field for developing treatments for rare diseases, those treatments will not be available to help patients for several years. That is not a problem that has arisen solely under the current Government—nothing could be further from the truth—but it is a difficult, sensitive issue. To that end, what are the Government doing to ensure that new treatments are available to improve the quality of life for patients with rare diseases as soon as possible?
From the patient’s perspective, the issue is often cost. Prescriptions for those with rare diseases can amount to a significant financial burden. The previous Government put in place a framework that would have resulted in those with long-term conditions becoming exempt from prescription charges. Can the Minister explain why the coalition Government chose to scrap that? Enabling greater access to treatment is essential, and I hope that the Minister can explain why that has not been given more prominence in the strategy.
As I have said, rare diseases affect millions of people. The impact on sufferers and their families is immense, so the cost of getting the strategy wrong is high. More importantly, no matter how difficult it is and whatever our political allegiances, we are morally obliged to get this right. When the Minister gets to his feet, I hope he can give those people some confidence and help to resolve the contradictions I have outlined. Finally, if the Government can produce a coherent, integrated and effective approach to resolve the problems that they seem to have caused, and to progress those issues in a meaningful and timely manner, they will have my support and that of my colleagues.
The Minister of State, Department of Health (Norman Lamb)
It is a pleasure to serve under your chairmanship, Mr Bayley. I thank the shadow Minister, the hon. Member for Copeland (Mr Reed) for his generous offer of support, and I am sure that we will be able to deliver his preconditions for that support. I congratulate the hon. Member for Strangford (Jim Shannon) on securing the debate. He is, as the shadow Minister has said, one of the most assiduous attendees at health debates and a consistent contributor on a whole range of different issues. We all welcome his contributions. He always makes the case for better co-ordination and collaboration between the different nations of the United Kingdom, and I completely share that aspiration. There is great value in a bit of diversity in the development of our health systems, because we can often learn things from the innovation and experimentation taking place in other parts of the United Kingdom. In opposition, I visited Northern Ireland because I was fascinated by the way in which Northern Ireland commissions and provides health and social care together. I wanted to learn more about the experiences in Northern Ireland, good and bad. Such diversity is to be valued and we should not have a one-size-fits-all approach, but I agree with the hon. Gentleman about the importance of collaboration. The Government’s strategy is an example of where that can be really strong and effective.
Ms Margaret Ritchie (South Down) (SDLP)
On the Minister’s point about collaboration, is he aware that a drug to deal with atypical haemolytic uraemic syndrome has been approved in England but the same approval has not been given in the devolved institutions, particularly in Northern Ireland?
Norman Lamb
I was not aware of that, but I am interested to hear it, and the hon. Lady makes her case powerfully. Before I respond fully to the points made by the hon. Member for Strangford, I want to deal with some of the other issues that have arisen during the debate. Several hon. Members, including the shadow Minister, asked whether the new architecture of the NHS had damaged the co-ordination of work on rare diseases. In many respects, I can reassure hon. Members. There is a danger that if one was coming into this place from afar and hearing the debate, one might think that we were moving from an idealised, perfect scenario into something more troubling. We all know, however, that that is absolutely not the case. The treatment of rare diseases historically has been far from optimal, and the greater involvement of clinicians in the commissioning of care can have real benefits for patients. Until 31 March 2013, far from being a simple matter, specialised commissioning was fragmented across a range of NHS organisations including regional specialised commissioning groups, a national specialised commissioning team and local primary care trusts, which remained ultimately responsible for the specialised health care of their populations. From 1 April 2013, under the terms of the Health and Social Care Act 2012, NHS England became the sole direct commissioner of specialised services, which provides a greater simplicity in the commissioning of services.
Norman Lamb
I will continue, because I am conscious of the time. The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) made a valuable contribution. I learned something about trigeminal neuralgia, from which I think I understood him to say that he suffers. He asked whether it would be possible to meet once the report that he referred to is complete, and I would be happy to agree to that, diary permitting. I am sure it will be possible to do so at some point. He made some important points about misdiagnosis, and about the importance of support groups and networks. The internet now provides incredible assistance to people with rare diseases, because they can link up not only with those in their neighbourhood but with people and clinicians globally who can guide them in the treatment of their condition. He also spoke about unnecessary referrals to hospitals and the mental health implications of some rare diseases, and I completely agree with him.
My hon. Friend the Member for Wealden (Charles Hendry) made powerful points about the extraordinary work of so many families, and he mentioned in particular the work of Charlie’s Challenge and Tildy’s Trust. Such families do the most remarkable work, and they are often hellbent on producing a really valuable legacy from their experiences. His point about the Department helping to co-ordinate the work of so many such groups was well made. He also referred to the fantastic work that is going on in Edinburgh university, and I applaud all those involved.
The hon. Member for Plymouth, Moor View (Alison Seabeck) made the point that there is extraordinary variability of service around the country. That is something that the strategy can absolutely address, and I believe we will get powerful results. She referred to her constituent, young James, who suffers from Duchenne muscular dystrophy, and she talked about the importance of transition to adulthood. I focus a lot on mental health, and that transition is often a complete disaster. We need to do far more to improve it.
The hon. Member for Foyle (Mark Durkan) made some important points about collaboration. He referred to the British-Irish Council, and although I have no idea whether his suggestion is possible, I am happy to look into it. He talked about the funding challenge. We are in very tough financial circumstances and often—the contributions of many hon. Members this afternoon have emphasised this—the question is how the money is used, because it is frequently not used effectively. A misdiagnosis usually results in an inappropriate referral to hospital, and a patient goes down completely the wrong track. An enormous amount of money is wasted, and the patient receives very poor care. It is essential to improve the way in which the system works to extract better value. We recently announced integration pioneers in 14 areas of the country. None has had extra money, but they demonstrate that, by co-ordinating their efforts more effectively, they are producing much better results for patients. The shadow Minister was absolutely right that the one thing we should all focus on is the patient—the individual citizen—and their experience of the system.
It is fitting that this debate should happen so soon after the launch of the UK strategy for rare diseases. This strategy is an overarching UK-wide framework, setting out a shared UK strategic vision for improving the lives of all those with rare diseases. It is owned by each country in the UK and commits them to more than 50 actions—I think it was identified as 51—that will deliver better outcomes for those with a rare disease. It means that for the first time we are in a position to make a tangible, co-ordinated difference to those suffering with a rare disease. That is something we can all be really positive about.
As we have heard, one in 17 people will experience a rare disease at some point in their life, with the majority of diagnoses made in childhood. That amounts to some 3 million people in the UK. A disease itself may be rare, but having a rare disease is, alas, not unusual, because there are so many of them—a point made by the hon. Member for Plymouth, Moor View. They are a major cause of illness and make considerable demands on the resources of the NHS and other care services. The strategy for rare diseases is based around the more effective and efficient use of services—a point I made earlier—with better links to research and innovation. As the NHS constitution states, no-one should be left behind because of their condition, be it rare, very rare or yet to be diagnosed. To achieve this, England, Scotland, Wales and Northern Ireland have agreed to deliver the 51 commitments that focus on five areas.
The first is empowering patients—perhaps the most significant of all—making sure that they are listened to, informed and consulted every step of the way. No one knows the condition better than the person suffering from it; too often, they are ignored in a rather paternalistic system. We will continue to work closely with patient groups and others to improve services for rare disease sufferers. We will improve access to knowledge and support networks at UK, European and international level, and we will help patients to participate in rare disease registries. We will look at how those might be developed in England to better capture the patient experience.
Secondly, we want to develop more effective methods for identifying and preventing rare diseases. Carrier testing, preconception and antenatal care, along with newborn screening, all play a part. Rare diseases are often genetic in nature, and so can affect more than one member of the family. This makes it important that testing of other family members, where appropriate, becomes more routine.
The third area is better diagnosis, which has been raised during the debate, and earlier intervention. Too many people still wait far too long to get an informed, correct diagnosis. There are several things we need to address. We need to ensure there is better awareness of rare diseases. That is important across all aspects of health care. Not everyone can be an expert, but ensuring that the possibility of a rare disease is considered when a diagnosis is proving difficult can help. We need to ensure that all doctors are alert to the possibility of a rare disease when they see patients, even if they are not able to diagnose specific diseases. This means including better training on rare diseases in university courses and in professional development at work.
The training and education of clinicians is critically important. Health professionals do not need detailed knowledge of every rare condition, but all medical specialties and multi-professional care teams should have a general awareness of rare diseases so that they can make rapid referrals to specialists in the appropriate field. Making genetic testing more mainstream, harnessing the potential of genomic technologies and focusing on what our DNA can tell us will also help us to reduce the time to diagnosis.
Perhaps the most important commitment is to develop clearly defined care pathways between primary and secondary care and regional and specialist centres. Health care professionals, especially GPs who are likely to be the first point of contact, need to know how to access the pathways for those at risk of rare disease.
Fourthly, we want to see better co-ordination of care. Building on the fantastic NHS genetic services that already exist—this country is well recognised internationally for that—we want to see the development of centres of excellence in rare diseases, providing one-stop-shop services to patients through co-ordinated consultation and treatment schedules. The centres should also be knowledge and skills hubs—concentrating the skills together—that support local delivery of services and facilitate clinical trials and other research projects.
The last area of the strategy, but by no means the least, is recognising the absolute importance of research, which several hon. Members have touched on today. The Government are committed to supporting research into rare diseases. Such research holds the key to improved personalised and targeted approaches to health care. These have the potential to improve the effectiveness and safety of treatments, the speed of diagnosis and patients’ quality of life.
In the UK, we are lucky to have some of the best academic and clinical research in the world. It was no coincidence that Earl Howe launched the strategy at Great Ormond Street hospital last month. The hospital itself hosts a National Institute for Health Research biomedical research centre that continues to lead on experimental medicine, including the discovery of diagnostics and new treatments for childhood diseases. The shadow Minister—if I can briefly divert him from his iPad; I am sure he is catching up on important stuff—made the point about how we ensure that we make the right decisions on research priorities. Ultimately, it comes down to the quality of the proposition that is put forward, but I will write to him and other hon. Members on the issues raised that I have not touched on.
We also want to see more collaboration between patients, health care professionals and researchers, and for that to become normal custom and practice. At that same event, Earl Howe also announced that the National Institute for Health Research is establishing a rare diseases translational research collaboration to translate research into actual practice. As part of the NIHR rare diseases translational research collaboration, researchers will share their considerable resources and world-leading expertise to increase research collaboration and improve treatment and care.
Some £20 million over four years is being invested by the NIHR to fund the NHS research infrastructure focused on deep phenotyping—the gathering of information on the physical characteristics of people with rare diseases. The TRC will build on our British heritage as a world leader in genomics. It will provide national co-ordination to bring those with significant relevant NIHR-funded infrastructure in the NHS together. That will speed up the development of new diagnostics and treatments. That is also why rare diseases is one of the three priority areas for the Government’s initiative to sequence 100,000 whole genomes over the next three to five years. We want to see innovative research and cutting-edge technology translated into real patient benefit.
The strategy for rare diseases will increase access and lead to a more patient-centred, co-ordinated approach to care and treatment, clearly focused on the needs of patients and families. Each country in the UK will develop its own implementation plans over the next few months. We will ask a reconstituted UK rare diseases stakeholder forum to maintain an overview of the implementation of the strategy. The original forum was established earlier this year and comprises policy officials from the four UK countries, service users, industry, regulators and service providers. The forum played an invaluable role in the development of the UK strategy and will now have an ongoing role in monitoring the strategy’s implementation and reporting back on progress.
In England, our key delivery partner is NHS England. The recommendations of the UK strategy for rare diseases that relate to NHS England’s responsibilities for specialised commissioning will form part of the scope of NHS England’s five-year strategy for specialised services—an £11.8 billion plan to co-ordinate specialist services.
I want to thank all hon. Members for their contributions to a very useful debate. On all the other points that I have not been able to deal with, I will write to hon. Members.
Hugh Bayley (in the Chair)
I very much look forward to seeing some of the Front Benchers when we scrutinise the Care Bill in the weeks to come.
Sixth-Form Colleges (VAT)
(11 years ago)
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Lisa Nandy (Wigan) (Lab)
My constituency is home to two excellent sixth-form colleges, St John Rigby college and Winstanley college. Like so many of the 94 sixth-form colleges in the country, they do an excellent job, not only for their students but for the wider community. It is deeply unfair that they must pay VAT while school and academy sixth forms do not. In other types of free 16 to 19 education provision, funding is diverted to the front line. Why not for students in sixth forms?
Following recent changes to the funding formula, the anomaly has become unjustifiable. That view is shared by at least 74 other Members of Parliament, including the Chairman of the Select Committee on Education and my hon. Friend the Member for Barrow and Furness (John Woodcock), who wanted to highlight the case of Barrow-in-Furness sixth-form college but unfortunately cannot be here due to illness.
This unfair situation is exacerbated by the cuts made to sixth-form colleges in recent years. In 2010, enrichment funding was reduced from 114 to just 30 hours a year. Subsequently, the new 16 to 19 funding formula cut their budgets further—the average was 6%, which masks much more serious cuts for some. Last week, out of the blue, sixth-form colleges were told that 18-year-olds would no longer attract the same level of funding. Ministers argued that it was because those students have already received two years of funding, which completely misses the point that they are often the young people who most need and benefit from the additional help that we can provide.
Caroline Lucas (Brighton, Pavilion) (Green)
The hon. Lady is making a strong case. On behalf of the three sixth-form colleges in my constituency, I absolutely agree. Will she comment on the fact that the sixth-form colleges in Brighton disagree with the Government’s position that VAT costs are taken into account in the up-front funding allocation made to colleges? If she agrees, will she join me in saying to the Minister that surely that means schools and academies are effectively being double-funded, because they are getting that as well as the VAT rebate?
Lisa Nandy
Absolutely. Issues of a level playing field are at the heart of this debate and I hope that the Minister will respond to that in his closing remarks.
Taken together, in the worst cases, the funding cuts have left some sixth-form colleges reeling from a staggering 30% overall budget cut. We should consider the issue against that backdrop.
Civil servants originally estimated that creating a level playing field for sixth-form colleges in relation to VAT would cost £20 million. They have since revised that upwards on several occasions, arriving most recently at a figure of £150 million, which includes other institutions. I say to the Minister that it seems completely the wrong approach, given that the Government have accepted in principle that treating sixth-form colleges differently is wrong, to refuse to right that wrong for them because they do not want to do so for others.
The problems for sixth-form colleges are exacerbated by the fact that, unlike school sixth forms, they cannot cross-subsidise their 16 to 19 work with funding from pre-16 provision, which is more generous. Principals and teachers across the sector are taking agonising decisions about dropping courses, cutting staff or reducing activities. A survey last year found nearly half of colleges had had to drop courses, eight out of 10 had had to cut staff and an astonishing 71% had removed or reduced enrichment activities such as sport, music, drama and dance. That is a loss for all young people, but it is devastating for young people who have never had such opportunities open to them.
Mr Mark Spencer (Sherwood) (Con)
I congratulate the hon. Lady on securing this debate, but will she acknowledge that sixth-form colleges are often able to offer courses that school sixth forms cannot, because they have the ability to draw in expertise? Ultimately, we need a level playing field, so that all those offering sixth-form education are playing by the same rules.
Lisa Nandy
Absolutely. The issue of the level playing field has come up time and time again. The hon. Gentleman is absolutely right about courses and the staff that sixth-form colleges can use. I am concerned that that loss of staff has also meant a loss of expertise. If the sector is hit by anything else, we will struggle to get it back.
Kerry McCarthy (Bristol East) (Lab)
This issue has certainly been raised with me by St Brendan’s sixth-form college in my constituency. Another issue is the fact that the VAT situation does not allow adults to use the building for more than a short amount of time. Otherwise, that incurs VAT as well. The academy schools in my constituency lobbied me about that in the past, but thankfully we managed to overturn the situation for them. In terms of community engagement, does she agree that not being able to use the buildings in the evenings is a wasted opportunity?
Lisa Nandy
Absolutely. I am grateful to my hon. Friend for raising that point. There is also a wider point: sixth-form colleges benefit not only their students but the wider community. I know from my constituency that they are institutions rooted in the wider community, and they play a much more beneficial role across our town than it would appear from looking only at their core activities.
It is galling for my sixth-form colleges that while they are struggling with the impacts of the cumulative funding cuts, the Government are creating new free schools and academy sixth forms, with which they are required to compete but which are VAT exempt. Many people contacted me before the debate to point out, rightly, that a market does not function if competition is not fair. Many new free school sixth forms are struggling to fill their places, yet those places are funded too. Ministers are paying for places in new institutions to lie empty while successful and established sixth-form colleges are struggling to afford the students that they have.
Nic Dakin (Scunthorpe) (Lab)
I congratulate my hon. Friend on securing this debate and putting the case so strongly. She puts her finger on it: new institutions are being funded for phantom students who are not there, while existing institutions are not only not being funded for this year’s students but taking a 17.5% cut in funding for next year’s students, based on an existing 20% difference in funding. VAT is yet another anomaly. Does she not agree?
Lisa Nandy
Absolutely. I pay tribute to the work done by my hon. Friend and many of the other Members present. The fact that there are so many Members here for such a short debate should tell the Minister that there is huge strength of feeling throughout the House on this issue.
All of this would make more sense if the sector were failing, but taken as a whole, sixth-form colleges are not only lean and efficient institutions, according to the National Audit Office; they are also among the best existing provision for 16 to 19-year-olds. Some 80% of them are rated as good or better, and they consistently rate higher than other types of provision in terms of added value. I know that St John Rigby college in my constituency does tremendous work with young people from deprived backgrounds and outdoes almost every other type of provision in getting those young people to university.
Caroline Nokes (Romsey and Southampton North) (Con)
I congratulate the hon. Lady on securing this important debate. Does she agree that 16 to 19 provision in further education colleges—outside a school setting—can sometimes provide the impetus that 16-year-olds who might not have done well at school need to enable them to achieve their GCSEs and then go on to A-levels?
Lisa Nandy
The hon. Lady is absolutely right. I am grateful to her for raising that issue. The culture in sixth-form colleges is enormously beneficial to such young people, and the staff are obviously passionate and determined to ensure that those young people reach their potential.
In conclusion, Ministers have accepted that this situation is unfair, so will the Minister who is here in Westminster Hall today take steps to create a level playing field for sixth-form colleges?
Kelvin Hopkins (Luton North) (Lab)
My hon. Friend may be interested to know that my very first debate in Parliament, 16 years ago, was about sixth-form colleges and took place in this room, but that is beside the point. At that time, I described sixth-form colleges as the geese that lay golden eggs; I think she has made that point today. Of course, one other thing that sixth-form colleges do is to bring together young people from different schools and different communities. They are often situated in areas of diversity and they are a tremendous force for social cohesion. Does she accept that point?
Lisa Nandy
My hon. Friend is absolutely right, and his expertise on sixth-form colleges is well known; not only does he sit on the governing body of a local sixth-form college but he is chair of the all-party group on sixth-form colleges, which has done so much good work on this issue. I have to say to him that when he was first raising issues about sixth-form colleges in this place, I was actually at a sixth-form college in the constituency of the hon. Member for Bury North (Mr Nuttall). That shows that nothing changes.
As I was saying, Ministers have accepted that this situation is unfair, so will the Minister take steps to create a level playing field for sixth-form colleges? Will he make this important sector a promise that there are no more of these cuts to come? And will he join me in paying tribute to the extraordinary contribution that sixth-form colleges, such as my local one, make to young people and communities across the country?
Hugh Bayley
If it is yes and yes, I am glad to give the floor to the Chair of the Select Committee on Education.
Mr Graham Stuart (Beverley and Holderness) (Con)
Thank you very much, Mr Bayley, for calling me to speak. It is a great pleasure to serve under your chairmanship, and to confirm that both the Minister and the hon. Member for Wigan (Lisa Nandy), who secured the debate, had agreed to my speaking in it. I am sorry if I should also have informed you, Mr Bayley, but I think my bureaucratic resources ran out after contacting the Minister and the hon. Member.
Given the short time available, I will try to keep my comments brief. In October, I wrote a letter to the Secretary of State for Education. It is a shame, notwithstanding the great respect that I have for my hon. Friend the Exchequer Secretary to the Treasury, who is a deeply distinguished member of the Government, that we do not have a Minister from the Department for Education here to answer questions about what is essentially an education matter. That letter was co-signed by 73 MPs from across the House, and it made the point that the unfair treatment of sixth-form colleges as far as VAT goes made no sense and was, in fact, untenable. The good news is that the Government agreed, fundamentally, that they could not defend that treatment. The bad news is that they do not plan to do anything about it. That is a shame, because Government policy is to create a level playing field for 16 to 19 provision, and they are right to do so. If anyone wants to play party politics, I will point out that the Opposition were wrong to leave the position uneven when they were in power. However, the Government have set out their aim, but now they are not fulfilling it. They have moved in that direction, but there is a real opportunity to take action on this issue. In the overall scheme of things, it would not be that expensive to do so; for sixth-form colleges, it is estimated that it would cost no more than £30 million.
There are reasons why sixth-form colleges could be treated differently from further education colleges, if one wanted a stepped programme. To say, “This is wrong, but we can only afford to rectify some of it, so we will rectify none of it” is illogical. It would be better to do the right thing by sixth-form colleges, not least because, as has been said, they are the most successful 16 to 19 providers that we have. If the Government’s education policy is about anything, it is about raising standards across the board and, of course, closing the gap between rich and poor. Well, guess which the most successful institutions are in the 16 to 19 sector at doing both those things? You’ve got it—sixth-form colleges.
I have no sixth-form colleges in my constituency; I am not banging a constituency drum here. The sixth forms in my local schools will probably be cross with me for speaking up for sixth-form colleges so often. However, the whole point of the Education Committee is that we look at the evidence and try to work out what is the best thing to do. Well, guess what? Sixth-form colleges are peculiarly successful in addressing the Government’s two key aims on education, so it makes no sense to penalise them in the way that is happening now.
The VAT penalty that sixth-form colleges face is worth an average of £250,000 per college, and as has been said, the problem is worsened because, unlike other institutions, they cannot cross-subsidise. If that money were to be provided to sixth-form colleges, it would help them to save courses that are being lost, including less popular courses such as further maths. Ministers are quite right to identify the need to encourage science, technology, engineering and maths subjects. Sixth-form colleges can play a positive part in doing that, if they are provided with the wherewithal to do so.
Mr Robin Walker (Worcester) (Con)
I am grateful to the Chairman of the Education Committee for giving way; he is making a very strong speech. He talked about investment in STEM subjects. Worcester sixth-form college has received money from the Government to invest in a new science centre. However, does he agree that that money would go further if we were able to take action on VAT for colleges?
Mr Stuart
I absolutely agree with my hon. Friend, and I think there are feelings across the House on this subject. I said that I would keep my remarks brief, so perhaps I will bring them to a close. The big point is that sixth-form colleges have for years consistently been the most successful providers at delivering the Government’s key educational aims for 16 to 19-year-olds, but time and again, they appear to be on the front line of cuts in funding. That cannot make sense, in terms of having a rational, coherent approach to this issue.
Jason McCartney (Colne Valley) (Con)
I congratulate my hon. Friend on the great work that he is doing. He said that he has no sixth-form colleges in his constituency; I have no schools that provide sixth-form education in my constituency. However, there are three colleges there that provide sixth-form education: Huddersfield New college, Greenhead college, and Kirklees college. I also congratulate the hon. Member for Wigan (Lisa Nandy) on securing this debate, and I will continue to support this campaign.
Mr Stuart
I am grateful to my hon. Friend for saying so.
There is another aspect that it is worth pointing out briefly. At the moment, because of the freedoms for schools that I think are broadly supported across the House—there is certainly support for them on the Government Benches—there is a danger that we are sleepwalking into the creation of more small sixth forms, which we know, from sustained evidence gathered over time, perform poorly. At the same time, we are undermining institutions that have a long track record of success in raising standards for all, and in closing the gap between rich and poor. We cannot allow that to happen, so we need the Government to wake up and recognise the jewels that they have in the form of sixth-form colleges.
Far from seeing sixth-form colleges cut back, sliced and reduced in capacity and capability, I would have thought that, having found a delivery system that works better than others, we should desperately look at expanding and supporting it in a way that is fair to other providers. I do not want in any way to be prejudiced against sixth forms, but I would like a level playing field, because we have the exact opposite: we are seemingly strengthening those with the weakest record, and weakening those with the strongest record.
Mr Graham Stuart
I had better give way to the hon. Member for Luton North (Kelvin Hopkins) first, and then I will sit down.
Kelvin Hopkins
I congratulate the hon. Gentleman on his speech; I agree with every word of it. However, does he agree that the Government ought to be looking to create many more sixth-form colleges across the country?
Mr Stuart
I agree. If a system is most successful and cost-effective, establishes high standards, particularly for the poorest, and closes the wealth gap, I would think people would be delighted to see it expand. I will give way to my hon. Friend the Member for Eastleigh (Mike Thornton), and then I will draw to a close.
Mike Thornton
I thank the hon. Gentleman for giving way; I very much appreciate it. With the reduction in spending caused by VAT and the need to provide for those over 18, does he agree that it is very strange to cut money for colleges that aim specifically to get people good A-level results and other results at that level, when they are trying to educate people, including those who perhaps missed out earlier, but who are now able to catch up on their education between the ages of 18 and 19?
Mr Stuart
My hon. Friend is right. Perhaps that is the danger of making political promises that are nice and neat. His party might want to look carefully at the way that the protection of schools has left very few areas where we can cut in order to deliver reductions in spending. It could be that a series of measures that were positively meant have eventually led to this cut.
Those who are 18 at the start of an academic year and who are still at a sixth-form college are likely to be those clinging on to education, having struggled in post-16 education, and they may be at risk of becoming NEET—that is, not in education, employment or training. Again, it does not make sense for a Government who are rightly using the pupil premium and other measures to try to close the gap to finish up looking to make reductions at the end of the period—at the time when pupils need help to get over the line, and to get themselves on the first rung of the employment ladder—rather than looking to put in place additional support. The sixth-form college sector is not looking for special treatment; it is simply looking to be treated fairly, compared with other providers.
The Exchequer Secretary to the Treasury (Mr David Gauke)
Thank you, Mr Bayley, for calling me to speak. It is a great pleasure to serve under your chairmanship. I congratulate the hon. Member for Wigan (Lisa Nandy) on securing this debate, and on making her case so strongly. Indeed, it is noteworthy that this is a well-attended debate, as she has mentioned.
In the light of the remarks made by my hon. Friend the Member for Beverley and Holderness (Mr Stuart), I should mention that I am here as a Treasury Minister, as the debate relates to the VAT system. In respect of House of Commons workings, this is a Treasury matter, and this week the Treasury, rather than the Department for Education, was up for debates, although the hon. Member for Wigan has been most ingenious in getting a debate on sixth forms in a week in which Department for Education Westminster Hall debates were not occurring.
The hon. Lady has highlighted how sixth-form colleges interact with the VAT system. Let me say a little bit about that. VAT can be a rather complex matter. It might help if I provided some background, before turning to the specific issue of sixth-form colleges. One basic feature of VAT is that businesses are able to reclaim the VAT that they pay on their inputs. However, this does not apply to purchases, acquisitions or imports made in relation to non-business activities, such as the provision of free education. This means that bodies such as schools can end up with VAT costs on the goods and services that they buy in.
Clearly, it is always an option to meet these costs by increasing the funding made available to schools, for example. However, there is a risk of the burden of that funding falling on local taxation, as the state education system in England and Wales has historically been delivered by local authorities. To deal with that, in 1973 the Government introduced a scheme, now under section 33 of the Value Added Tax Act 1994, allowing local authorities to recover the VAT incurred on goods and services purchased relating to non-business activities. Local authority maintained schools are able to recover VAT under the umbrella of the local authority.
Since then, there have been extensions to that scheme, in particular to cover the position of academy schools. The Finance Act 2011 introduced a new VAT refund scheme, under section 33B of the 1994 Act, to ensure that funding for academy schools’ non-business VAT costs was consistent with that for local authority maintained schools. The specific purpose of the scheme is to ensure continuity in the funding of institutions that are leaving local authority control to become academies, so that they are not put at a financial disadvantage.
I hope that this slight historical excursion has made it clear that there is clear logic to the VAT treatment of local authority schools and academy schools making the move out of local authority control. That logic is rooted in the nature of the service being provided and the relationship to public sector local authorities.
Let me turn to the campaign by sixth-form colleges, of which hon. Members in the Chamber are well aware. The campaign has gained the support of 74 Members representing constituencies that contain, or are serviced by, sixth-form colleges, and the likes of my hon. Friend the Member for Beverley and Holderness. They wrote to the Secretary of State for Education, expressing their concerns.
Hon. Members have welcomed the introduction of the new 16 to 19 funding formula, which will mean that all 16 to 19 education providers are funded in the same way, and which is reducing the historical disparity between school sixth forms and colleges. However, the 74 hon. Members feel that the way that sixth-form colleges interact with the VAT system leaves them at a disadvantage, compared with local authority or academy schools. In particular, as we heard today, they have asked for their differential VAT treatment to be recognised in the way that they are funded.
Kelvin Hopkins
My memory goes back to when sixth-form colleges were grouped—by mistake, I think—with further education colleges and put into the FE sector. That is why the VAT mistake was made. Had sixth-form colleges been kept in the schools sector, this would not have occurred. Does the Minister agree?
Mr Gauke
I think that is probably a fair description, historically. Schools have been treated one way, in part, because of the relationship with local authorities and funding at local authority level, whereas other elements of the public sector do not get funding for VAT in the way that local authorities do. Sixth-form colleges and further education colleges are examples of that.
Nic Dakin
The Minister and I have exchanged words on this matter many times. The historical record is quite interesting. When colleges were incorporated, they had the same VAT rights as schools, because they came from the same part of the womb, as it were, but that was changed at the point of incorporation. Given the way that the landscape of education has changed, it is odd that new provisions, such as university technical colleges or 16 to 19 free schools, are entitled to the VAT, whereas sixth-form colleges are not. That anomaly was created on this Government’s watch. It would be better if it were not so.
Mr Gauke
It should be acknowledged—and it was, in earlier interventions—that notwithstanding the points that the hon. Gentleman makes, this is a long-standing issue.
Let me turn to the Government’s position. The academies VAT refund scheme is set up for a specific policy purpose, which is to remove a financial disincentive for maintained schools to convert to academies. As the purpose is specific, the Treasury has no plans to extend the scheme to colleges. Many other providers of public services are expected to cover their VAT costs from their funding allocations. This funding model is applied to bodies delivering—
Mr Gauke
I am grateful for the opportunity to complete my remarks. The academies VAT refund scheme is very specific. The Treasury has no plans to extend that scheme to colleges, and many other providers of public services are expected to cover their VAT costs from their funding allocations. That funding model is applied to many bodies delivering public services, and to some spending by Departments and non-departmental public bodies.
The Department for Education, however, has considered whether adjustments could be made to funding for 16 to 19 education to recognise the differential VAT treatment of different types of providers. In particular, the Department for Education has considered whether it could additionally fund sixth-form colleges by an amount equivalent to their typical VAT costs. The Department for Education has concluded that that is not affordable in the current fiscal climate. The £20 million estimate applies only to sixth-form colleges; extending extra funding to further education colleges, which have a similar case to sixth-form colleges, would cost some £150 million.
Kelvin Hopkins
I echo the Chair of the Select Committee on Education, the hon. Member for Beverley and Holderness (Mr Stuart), by saying that the amounts are small in the scheme of things. They are piffling amounts compared with the volume of the Government’s public spending. One penny on the standard rate produces £4 billion, and we are talking about £30 million for sixth-form colleges. It is a tiny amount of money.
Mr Gauke
I am not entirely surprised by the hon. Gentleman’s comments. I have no doubt that he would not hesitate to put up income tax by 1p. In the context of the current fiscal situation, we have to be very careful with public expenditure. The Department for Education will, of course, keep the sector’s funding under review.
Although I recognise that colleges have concerns, the reform of 16 to 19 education is one of the Government’s priorities. The Government remain committed to moving towards fairer funding of 16 to 19 education by levelling the rate of funding for schools and colleges by 2015.
Sir Peter Bottomley (Worthing West) (Con)
I am sorry that I missed the earlier remarks about 18-year-olds and the £700 cut in funding, which will mostly affect people in poorer postcodes. Does my hon. Friend the Minister accept that if the schools budget was increased by 0.8% rather than 1%, there would have been no need for a 17.5% cut in 18-plus funding to Worthing college and other sixth-form colleges?
Mr Gauke
Department for Education Ministers have decided to make savings in the academic year 2014-15 by reducing the participation requirements for 18-year-olds in full-time education. It is worth pointing out that most 18-year-olds will have already benefited from two years of post-16 education. We are of course in a situation where difficult choices must be made about public finances; my hon. Friend the Member for Worthing West (Sir Peter Bottomley) is well aware of that.
The Department for Education is introducing a series of reforms in partnership with the sector to help drive up standards and improve the quality of provision by implementing Alison Wolf’s proposals for 16 to 19 education, by introducing new traineeships for school leavers, and by reforming the apprenticeships programme to route funding directly to employers.
To conclude, while the Government recognise the concerns raised by sixth-form colleges, this position is not unique to such colleges. The Government have no plans to make any change in this area in the near future, given the fiscal climate.
Hugh Bayley (in the Chair)
Order. The Minister having sat down, I am bringing this debate to an end.
I want to put on record—an unadvisable thing to do to any statement from the Chair—that more than 20 Members were present for a half-hour debate, which is extremely unusual and indicates the importance that many hon. Members attach to the subject. I apologise to the Minister and the hon. Member for Wigan (Lisa Nandy) for the manner in which the debate was interrupted by a Division in the House.
Housing and Related Jobs (Greater London)
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Simon Hughes (Bermondsey and Old Southwark) (LD)
I thank Mr Speaker for choosing this subject for debate today. I welcome the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins) to the first debate that I have had with him on such issues and to his new responsibilities.
For the 30-plus years that I have had the privilege of being a Member of Parliament in Bermondsey and Southwark, housing has been at the top of the political agenda for my constituents. It is what they come and see me most about—they need more and better housing. We need more affordable housing of higher quality to meet the demands in a community such as ours. It is not that the local authority has not played a fundamentally important part; we have the largest local authority housing stock in London and one of the largest in the country. There is also significant housing association housing, and we have one of the highest proportions of shared ownership in the country. We have also seen considerable growth in owner-occupation over the years. It was only 2% when I was first elected and is now well into double figures.
As the Minister and everybody in London knows perfectly well, however, the legacy that this Government inherited has meant that we have seen relatively less housing being provided to meet the need in London. I am happy to give credit where it is due. More local authority housing was built under the Governments of Mrs Thatcher and John Major than thereafter, but we then had a period when, although money was spent by Government on bringing homes up to a decent standard, we did not build new local authority housing. We therefore have an accumulative deficit in housing need.
The other self-evident factor is that London has the greatest gap in the country between average family income and the average cost of a home. Both rental costs and purchase costs are far greater relative to income in London than anywhere else. We have a real crisis that the Government, to their credit, have sought to address. I am here to urge the Government to do more and to come up with specific proposals. In particular, I am here to place on the record in Parliament some of the recommendations of a report, which the Minister has now seen, commissioned and worked on by my colleagues in the Greater London assembly, who put forward proposals for how we can increase not only the number of properties built, but also the number of jobs created as a result. There is no better way to increase jobs and apprenticeships than through the construction industry. My constituency, like all others, will benefit from that upturn in jobs, and there are many who would want to work in the construction industry.
At our party conference in September 2012, my colleagues made housing a priority and specifically asked for various things. People can look up the full motion that was passed, but we wanted the Government, the Mayor of London and local government to
“stimulate a major programme of house building, increasing the rate of construction until we reach at least 300,000 houses a year”—
across the country—
“using untapped sources of finance and giving more freedom to social landlords, local authorities and local communities”,
and radical steps to be taken
“to improve land supply, through releasing public land with ‘build now, pay later’ deals.”
I persistently return to this issue.
I initiated an Adjournment debate in the summer on foreign purchases of properties in London. We have seen growth in the number of people purchasing from abroad and in the number of properties built and offered for sale abroad before they are offered for sale at home. That has caused particular anger and frustration. It has driven up prices, because if properties are opened up to the global market—Malaysia, Singapore and other places—and advertised to people who see London as a good place to invest in housing, the general price goes up because sellers can get higher prices for sales abroad. If local people cannot even get access to bid for properties until after they have been sold—on-plan or off-plan—to someone far away, that is a double frustration. That has been a real cause of grief and frustration to my constituents, in particular around the Elephant and Castle, where a huge development is ongoing, and elsewhere.
I am pleased that the message has got through and that local developers are now making commitments to offer property for sale locally. I am still frustrated that my local council, which Labour still runs, does not insist that the planning conditions that are meant to be applied, specifically that all developments should contain 35% affordable housing, are adhered to. That condition is regularly opposed or not fulfilled when planning permission is granted. I was particularly pleased, however, that the Chancellor responded specifically to the issue in the autumn statement as a result of, I hope, my debate, but also the propositions of others, and announced that, in the following financial year, any non-UK purchaser of residential property who sells a property will pay capital gains tax on that sale, as everybody else does. That has corrected a real injustice where residents in the UK felt that they were being penalised when those who came in from outside were not.
In October, against this background, my colleagues at the London assembly, Stephen Knight and Caroline Pidgeon, produced a report entitled “Affordable Homes & Jobs for London: A Seven Point Plan”. I thank them for their work and the Secretary of State for Business, Innovation and Skills for launching the report in Southwark. I will not repeat the history of difficulties, but I want to highlight one or two things before I concentrate on the proposals for how we get out of the difficulties and increase the Government’s current plans. We have a
“historically low cost of public borrowing”,
which is a plus, a
“high economic multiplier for investment in construction”,
which a plus, and a
“high level of spare capacity in the construction sector”,
which is again a plus. At the moment, we are placing
“13,000 homeless households into temporary accommodation”
in London every year, for which the best estimate of cost
“is £408 million every year”.
The best estimate for the cost to the taxpayer of poor housing is
“£17.5 billion a year in crime prevention, health costs and the loss of children’s future productivity”.
There are still lots of people in emergency temporary accommodation and in overcrowded homes, huge numbers on waiting lists and, as I indicated before, a multiple of 12.5 times the median income for London property prices. Furthermore, private rent levels have risen by more than 11% since June 2012.
The Mayor has his policy, and a draft housing strategy is out for consultation, so I encourage people in London to respond—the deadline is in February. I hope that people who read and hear our debate will look at the consultation and respond. Slightly, if not very frustratingly, when the report was compiled only 737 homes had been started by the Mayor in London this year, and only 5,225 homes had been built on GLA land, although the commitment was to build nearly 40,000. He therefore has a long way to go.
The Government have introduced policies that have certainly initiated significant new development of affordable housing. I hope that we are on target to deliver by the end of the Parliament much more affordable housing England-wide than in the previous Parliament—although the definition was changed—but we are still falling badly behind comparable countries. The report gives a table of the increase in housing completions since 2010 in the UK, Belgium, Finland, France, Switzerland, Poland, the Netherlands, Denmark, Sweden, Germany and Norway: all the others have achieved many more housing completions than we have. We have to be more ambitious. I remember, though I was not politically alert at the time, one of the great legacies of Harold Macmillan was building “homes fit for heroes”. We had a huge housing building programme after the war, as we did after the recession in the ’30s. I am clear that we need that sort of action now.
There are proposals for the Greater London authority to increase investment in and use much more GLA land for affordable homes, but I will speak about matters that the Minister and his colleagues in the Department for Communities and Local Government can deal with specifically. One thing is already on their agenda, which I welcome. This very week, the Minister sent me and colleagues a letter announcing the allocation for the new homes bonus; my local authority has received £10,845,251, according to the letter—I do not doubt the figure. This is a good initiative of the Government, and we welcome it. I am conscious that the GLA has experienced some top-slicing, which is controversial; none the less, the new homes bonus is allowing us to build many more homes and I am positive about it.
I want to propose, however, that the Government could usefully look again, and more boldly, at the housing revenue account and the way in which local authorities can deal with it. I ask the Government not only to take the welcome steps in the autumn statement—allowing shared spend of money up to the housing revenue cap—but to scrap the housing revenue account borrowing cap, allowing London boroughs to invest in affordable housing under prudential borrowing rules.
I want, too, the Government to increase their investment in affordable homes, shifting the balance of spending from housing benefit to bricks and mortar. We are in a nonsense position in this respect at the moment: for the four financial years of the current affordable housing programme, £4.5 billion is being invested by the Government to support the creation of affordable homes; over the same period, however, the Government are also spending an estimated £95 billion on housing benefit. In London, in 2011-12, £5.9 billion was spent on housing benefit alone; about half of that, or £2.6 billion, would provide 111,000 extra affordable homes.
I appreciate that we have to have the homes first, before we can move people from privately rented accommodation, where the rents are high, into much cheaper accommodation, which is their own. Of course there is a cycle, but it cannot be beyond the wit of Government to think of ways in which to forward finance that, so that we can build more quickly, move many more people into affordable housing and reduce the housing benefit bill, which I am sure that colleagues in the Department for Work and Pensions would wish. Only 11% of the annual housing benefit spend in London for four years would seem to be enough to fund 111,000 extra affordable homes.
On the benefit for jobs in London, the reality is not only that all the house building would produce extra jobs in the construction sector, which has the capacity—housing associations, too, have capacity, because I have spoken to them and they have confirmed it—but that there is opportunity for full-time employment and for apprentices. Eighteen per cent. of all small and medium-sized enterprises in London are in the construction sector. In the first quarter of 2013, however, the balance of construction employment in SMEs fell faster in London than anywhere else in the UK. Less than 20 years ago, more than two thirds of homes were built by companies employing fewer than 500 people; by 2012, only 27 companies were responsible for 70% of the housing starts in London. SMEs in construction have been squeezed, therefore, and some have left the market altogether.
The last benefit of such a programme is the apprenticeships. The Government have done a huge amount on apprenticeships, which I welcome, as the Minister would expect, but he knows about the capacity to recruit and retain other people as apprentices, who would then go on to the construction industry as a whole. In Southwark, we are bidding to have a university technical college in Bermondsey to specialise in construction skills, as well as in health service-related skills, because we believe that the market is there.
I will end with one encouragement to the Minister. I understand that the Treasury rules always make such issues difficult, because the Treasury counts local authority borrowing as public sector borrowing. I have, however, talked to the housing associations in London, which have been extremely helpful—there are 16 big ones and more than 300 smaller ones—and they are beginning to find ways of expanding the amount of social building. By and large, they are not simply building conventional, rented affordable homes; they are building homes that they sell at market rates and that they rent at market rates, allowing them to use private finance in their associations and so to cross-subsidise the affordable rented accommodation—so much so that associations such as London & Quadrant are now beginning to be able to relet and let their new affordable housing not only at the Government’s affordable rent—up to 80% of market rent, or even 60%—but even at target or social rents, which really meets the need.
As my last Christmas proposal to the Minister, I ask him to take back to Government the request that they should look at liberating local councils to do the same sort of thing, so that they can access not only the Treasury and public money, but the private sector, and lead in the regeneration of London’s housing. If we could get house building going in London, the land accumulation is waiting and ready. If we could add more incentives to the tax system so that people do not sit on land, but develop it, there would be huge benefit socially, to family life, relationships and mental and physical health, and economically. I hope that the Minister can be encouraged, but also encouraging, and go back to his Department to say, “We must do more, and we will find ways of doing so.”
The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins)
It is a privilege to serve under your chairmanship, Mr Bayley. I thank my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) for his generous comments, which are much appreciated.
I came into the Chamber towards the end of the previous debate, and saw many Members enthusiastically contributing to a half-hour discussion on VAT and sixth-form colleges. My right hon. Friend and I see housing as an important issue, so it is somewhat sad that only he and I are here now to contemplate the matter. I am sure we will not agree on all the issues that he raised, but I acknowledge the spirit in which he has approached the debate.
I also want to acknowledge the comments my right hon. Friend made about Margaret Thatcher and John Major, which are appreciated, as well as his recognition of the interventions that the Chancellor has already made to address concerns about foreign investors. I intend there to be a strong relationship between housing associations and the Department, so if my right hon. Friend has ideas for specific interventions in that sector that he would like to see developed further I encourage him to write to me with them.
I appreciate the opportunity the debate gives me to consider the document that my right hon. Friend mentioned, “Affordable Jobs & Homes for London: A Seven Point Plan”, and I am pleased to respond to the debate on behalf of the Government. In doing so, I must stress that the Government are fully committed to seeing the supply of all types of housing increase, not just affordable housing. Through a balanced package of measures targeting both supply and demand, we want everyone to be able to access the home that best meets their needs.
London is experiencing rapid growth. Although that is good for its economy, it puts massive pressure on its housing. However, we are responding to that pressure. Over the Mayor’s two terms, more than 100,000 low-cost homes to rent or buy will be built, providing quality homes for around 250,000 Londoners. That represents the highest number of low-cost homes delivered in the GLA’s history. Around 67,000 have already been delivered.
My right hon. Friend suggested that the Mayor should borrow against the GLA’s annual revenue stream to increase investment in affordable housing in the capital.
Kris Hopkins
Increased borrowing would only be a short-term approach and would not be sustainable year on year. The GLA already receives substantial capital grants to invest in affordable homes. The Government have provided £1.1 billion to the GLA from 2012-13 to 2014-15 to deliver affordable housing in London.
However, the Mayor recognises that more needs to be done. In his draft housing strategy, the Mayor has set out ambitious plans to double output, including an annual target to deliver at least 42,000 market sale, private rented and affordable homes, which is more than at any point since the 1930s; new funding of £1.25 billion to support the delivery of 45,000 low-cost homes from 2015 to 2018; and £160 million for a London housing bank to speed up building on large sites.
My right hon. Friend mentioned the use of GLA land. In 2012, the GLA inherited 625 hectares of land from the Homes and Communities Agency, and it is vital that a significant part of that is used for new house building. The GLA is already utilising land and property assets to drive economic growth and housing supply of all tenures. Much of that land has already been developed. Around 130 hectares have been released so far, with a gross development value of £3.6 billion. For instance, in recent months, contracts have been exchanged in the Silvertown quays and Royal Albert dock area, with a capacity for 1,500 homes and 29,000 jobs.
The GLA is also driving regeneration schemes through grant funding and infrastructure investment at Greenwich peninsula, Barking riverside, Kidbrooke in Greenwich and Woodberry Down in Hackney. Those four developments will provide in excess of 30,000 homes of all tenures. The GLA is using, and will continue to use, its public land holdings to deliver new homes in London.
My right hon. Friend suggests that the Government should scrap the housing revenue account borrowing cap, enabling London boroughs to invest further in affordable housing through prudential borrowing rules. I must stress that the Government’s first priority is to reduce the national deficit. Allowing councils unlimited borrowing would increase that. With the introduction of self-financing in April 2012, London boroughs collectively had about £1.4 billion extra headroom to invest in housing if they chose to do so. We recognise that some councils may need additional borrowing, which is why we announced in the autumn statement an additional £300 million of borrowing capability, which individual authorities may use on housing if they so choose. We expect that to support around 10,000 affordable homes over 2015-16 and 2016-17. The provision will be allocated through a competitive bid process.
I reiterate that the Government are committed to building more affordable housing. More than 170,000 new affordable homes have been delivered in England over the past three and a half years. In comparison, between 1997 and 2010, under the previous Administration, the number of affordable rented homes fell by 420,000, as my right hon. Friend pointed out. Our affordable homes programme is making almost £20 billion of public and private investment available to deliver 170,000 new affordable homes between 2011 and 2015. Some 98,700 affordable homes have been delivered through the affordable homes programme since it started in 2011, which is more than half way towards delivering the 170,000 new affordable homes we expect by 2015.
Up to an additional 30,000 homes will be delivered by March 2017, supported by a share of the £10 billion housing guarantees scheme and grants of £450 million. Around £23 billion of additional public and private funding will deliver another 165,000 new homes over three years from 2015. That will be the fastest annual rate of building of affordable homes for nearly 20 years.
We are also committed to boosting the supply of all tenures of housing and are investing in expanding the wider supply of housing. Housing supply is now at its highest since the end of the unsustainable housing boom in 2008, with 400,000 new homes built over the last three years.
I agree with my right hon. Friend that it is vital that Londoners—and everyone else around the country—are equipped to respond to the housing demand and to take advantage of the new jobs created by an increase in house building. That is why the Government have a range of measures and schemes in place to ensure that that happens.
My right hon. Friend talked about small and medium-sized enterprises. We have a shared desire to increase the number of homes built. Part of that will be to get all builders—not just the big six but small and medium-sized enterprises—developing new homes. The Government are playing their part in improving demand through schemes such as Help to Buy equity loans. Some 87% of builders out of the 939 registered with the scheme are small builders building 40 units or fewer. We are working with the Department for Business, Innovation and Skills to ensure that small builders are aware of the business bank, which includes schemes to provide lower levels of development finance guarantees.
We have introduced a range of measures to support apprenticeships. The Government introduced the apprenticeship grant for employers in February 2012, which pays £1,500 per apprentice to support employers of up to 1,000 employees taking on a new young apprentice aged 16 to 24. The Government fully fund the training costs for 16 to 18-year-olds to provide an incentive to employers to take on a younger person. For apprentices aged 19 and over, the Government will pay 50% of the assessed cost of the framework.
In conclusion, I acknowledge the scale of the challenge in London, which we and the Mayor are dedicated to tackling. Our housing strategy adds to a balanced package of support for both supply and demand.
Question put and agreed to.
Written Statements
Government Deregulation
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
The Government are today publishing the seventh statement of new regulation. This statement reports on regulations within the scope of the one in, two out rule which are expected to come into force between 1 January and 30 June 2014, and gives an account of Government regulation and deregulation to date. The statement shows that the sum total of Government deregulation between January 2011 and December 2013 will be to reduce the net annual cost to business by around £1.2 billion.
The statement also reports on the red tape challenge measures expected to come into force and progress on the targets; and EU measures which are implemented by UK regulations.
In parallel, Departments are each publishing a summary of the regulations they intend to introduce.
I am placing copies of the statement in the Libraries of both Houses.
Terrorist Asset-Freezing etc. Act 2010
(11 years ago)
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The Financial Secretary to the Treasury (Sajid Javid)
My noble friend the Commercial Secretary to the Treasury, Lord Deighton, has today made the following written ministerial statement:
Mr David Anderson QC has completed his third annual report as independent reviewer of terrorist asset-freezing legislation. The report covers a 12-month period of the operation of the Terrorist Asset-Freezing etc. Act 2010 and will be laid before Parliament today.
The Government are grateful to Mr Anderson for his thorough report and will consider carefully the recommendations he has made. The Government’s response to this report will be placed in the Libraries of both Houses on or before 11 February 2014.
Sustainable and Secure Buildings Act 2004
The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)
I am pleased to announce that I am today laying before Parliament the fourth report required under the provisions of the Sustainable and Secure Buildings Act 2004.
The report considers the progress towards the sustainability of the building stock in England over the preceding two years and Wales up until the end of 2011 when the setting of building regulations was devolved to the Welsh Assembly. The Welsh Government will be publishing their own report for 2012.
The report covers changes made to building regulations over the period and their expected impact, plans for future legislation, and proposals for the setting of targets in relation to sustainable buildings. The report also covers changes in the energy and carbon efficiency of the building stock, the extent to which buildings have their own facilities for generating energy, and the recycling and reuse of construction materials over the period.
This Government have, during the period of the report, continued to work to improve the energy efficiency of the housing stock, with the introduction of the green deal and changes to building regulations, most recently the strengthening of the requirements for new buildings in part L (conservation of fuel and power) of the building regulations.
The average energy efficiency rating for homes in England has continued to improve steadily during the period of the report and carbon dioxide emissions from the domestic sector are estimated to be 6 million tonnes lower in 2011 than 2009.
Telecommunications Council
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
The Telecommunications Council took place in Brussels on 5 December 2013; the Deputy Permanent Representative to the EU, Shan Morgan, represented the UK.
The first two items were progress reports from the presidency on the proposal for a directive of the European Parliament and of the Council concerning measures to ensure a high-level of network and information security across the Union. (First Reading - EM6342/13), followed by the proposal for a regulation of the European Parliament and of the Council on measures to reduce the costs of deploying high-speed electronic communications networks. (First Reading - EM7999/13). There were no major interventions on either of these items.
This was followed by the only substantive item, which was an “orientation debate” guided by a paper and two questions from the presidency. The first question related to the proposal for a regulation of the European Parliament and of the Council laying down measures concerning the European single market for electronic communications and to achieve a connected continent. (First Reading - EM13562/13 and 13555/13 + ADDs 1-2). It asked member states to indicate which of the actions contained in the proposal they regard as priorities; and whether it was appropriate to carry out such actions at EU or member state level. Commissioner Kroes opened the debate by noting the difference in pace between the Council and Parliament in discussing this file and expressed concern that there had been little progress in Council since the October European Council, compared to that of the European Parliament.
There then followed an extensive debate in which all member states intervened. All began their interventions by welcoming the overall objectives of the package in terms of completing the telecoms single market and the associated growth opportunities. However, France, Portugal, Czech Republic, Denmark and Sweden, called for the prioritisation of other, more advanced, legislative proposals over the connected continent package, in particular the proposals on electronic identification, broadband cost-reduction and network and information security. France, along with others, also forcefully questioned the speed with which this proposal was drawn together and called for the Commission to re-examine the rationale and evidence behind several parts of the package.
There were mixed responses to the individual components of the package. Many member states, including the UK, France, Germany, Poland and Italy, did not want to see Commission gaining any further competency over spectrum management, especially national auctions, although there was recognition, that there were some gains to be made from closer co-ordination between member states. On the roaming proposal, many member states supported the reduction of EU roaming charges, but noted that the current proposal was too complex, unlikely to achieve its desired effect and may have a negative impact on competition. Opinion was mixed regarding the net neutrality proposal. Spain and Hungary supported the draft proposal, while UK and Latvia did not. Similarly, member states views on the consumer protection elements of the package were also mixed. They were supported by Spain, Portugal, Hungary, Luxembourg and UK, while Germany Austria and Ireland were concerned that the current draft would erode their currently high-level of domestic consumer protection. France added that the proposals did not add any value to their domestic regime and were opposed on this basis, while Malta and Luxembourg were concerned about the effects of them on smaller electronic communications operators.
The second question considered the conclusions of the October European Council that covered several aspects of the digital economy—for example, cloud computing, big data and digital platforms—that are currently either unregulated or rely on “soft” regulation. The presidency asked if any regulatory framework was required and whether regulation should be at member state or EU-level. The major focus of this discussion was on big data and cloud computing. All member states began by recognising the importance of these two areas and the need to make progress. However, responses about how to achieve this were mixed, with some calling for further regulation and others pressing for a light-touch approach. Germany, Italy, Slovenia and Slovakia supported further work in this area, including the development of specific European frameworks. However, Sweden and the UK called for a light-touch approach and did not support further regulation on cloud and big data. However, it was recognised that the use of standards could help form any common framework.
During summing-up, Commissioner Kroes stated she saw the debate as a turning point. She suggested that Council supported an extensive examination of the connected continent proposal under the Greek presidency, and that there was high-level consensus on the need for action on spectrum, net neutrality and consumer protection, while acknowledging that roaming may be more difficult to reach agreement on. However, she also called for further progress under the current Lithuanian presidency.
The presidency largely agreed with the Commission’s assessment, although felt that the views of member states on parts of the package were more strongly held and differed from those that the Commission suggested. They would therefore hand this file over to the Greeks to begin detailed work on the file. However, in a procedurally unusual move, Commissioner Kroes challenged the presidency’s conclusions, as she believed that member states’ were calling for work to begin under the Lithuanian presidency. The presidency disagreed with this view, which was supported by an intervention from France.
There then followed two items under AOB. There were no major interventions on either of these items. The first was an update from the presidency on the proposal for a regulation of the European Parliament and of the Council on guidelines for trans-European telecommunications networks and repealing decision No 1336/97/EC. (First Reading - EM16006/11). The second item was an update from the presidency on the proposal for a regulation from the European Parliament and of the Council on electronic identification and trust services for electronic transactions in the internal market. (First Reading - EM10977/12).
Finally, the Greek delegation informed the Council of their priorities for their forthcoming presidency before Council adjourned until the next meeting in June 2014.
Oil and Gas Exploration
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I have today published a regulatory road map for onshore oil and gas exploration and a strategic environmental assessment, which represent important steps for onshore oil and gas exploration, including shale gas.
The Government are keen to explore the potential for shale gas in the UK, which could bring major benefit in terms of growth, jobs and energy security. However we must develop shale responsibly, both for local communities and for the environment. These documents will help ensure this and enable a sustainable and successful industry for the long term.
First, the regulatory road map sets out the process operators should follow when seeking to drill for onshore oil and gas in the UK. The content is primarily for unconventional oil and gas operations—specifically shale gas and coal-bed methane developments—but many of the processes described will apply equally to conventional operations.
The road map is intended as a first point of reference, so that operators, planners and the public can see the overall regulatory process. This will help operators in particular by making it clear what they need to do and when, while providing useful links to more detailed guidance.
The road map does not contain any new policy but sets out the current process in one place. It also reflects the regulatory differences between England, Scotland, Wales and Northern Ireland. It focuses on the exploration and appraisal phases, rather than production and decommissioning.
The road map can be viewed on the gov.uk website and will be kept up to date to reflect changes in regulation.
I have also today published for consultation an environmental report on our proposals for further onshore oil and gas licensing in areas of Great Britain.
The report identifies, describes and evaluates the likely significant effects on the environment of DECC’s proposals to invite applications for new licences, and of reasonable alternatives to that plan; and how these effects can be reduced or offset.
This report is a necessary part of the process of strategic environmental assessment (SEA), required by EU law.
The consultation will be open until 28 March 2014. Once the consultation responses have been taken into account I will issue a “post-adoption statement” which will summarise how the Government intend to proceed in relation to the 14th onshore oil and gas licensing round.
The environmental report can be viewed on the gov.uk website.
Healthy Living and Social Care
(11 years ago)
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The Parliamentary Under-Secretary of State for Health (Jane Ellison)
In November 2012, the Department launched the healthy living and social care theme of the red tape challenge. The Department sought comments on regulations affecting business and civil society through the red tape challenge website and responses from a range of different groups were received on a number of areas.
The Department looked at 555 regulations covering four areas: public health; quality of care and mental health; NHS; and professional standards. This builds on earlier work done to look at 255 regulations under the red tape challenge medicines theme.
We carefully considered the comments received through the red tape challenge website, alongside an internal audit of departmental regulations, the results of which have already been published. Using this information and running a rigorous challenge process we identified the healthy living and social care regulations that could be abolished or improved. I am proud to announce the results of this process here. Of the 555 regulations considered, the Department is proposing to abolish 128 regulations and improve 252 others. This means that 68% of the regulations under the healthy living and social care theme will either be abolished or improved.
The Department is responsible for key areas of public protection, and many of its regulations are therefore essential to protect patients and the public by ensuring essential standards are maintained. Nevertheless, we have actively embraced the regulatory reform agenda. There are a number of proposals the Department is looking to take forward, including:
simplifying a large number of professional standards regulations following the Law Commission’s recommendation;
working with the Department for Communities and Local Government to address the problem of duplication of inspections between the Care Quality Commission and local authorities through the focus on enforcement review of adult care homes;
updating the nursery milk regulations to make them fit for purpose to help effectively deliver a scheme that is efficient, sustainable, and gives better value for money;
improving the operation of the healthy start scheme, that provides vouchers for fruit and vegetables, milk and formula milk to low-income pregnant women and children under four. The Department will work with retailers to explore and implement practical ways to make the paper vouchers easier to handle by the end of 2015-16;
implementing the recommendations to review the human tissue legislation, which will potentially bring benefits to the regulated sectors through improving the efficiency and effectiveness of the regulators; and streamlining regulation; and
revoking the regulations which ban the sale of HIV home testing kits, and this is expected to benefit business significantly and have positive wider benefits for the public. The Department is taking forward work to implement this and other changes identified through the red tape challenge process by the end of this Parliament.
However, we do not want to stop there. Some of the comments the Department received through the red tape challenge related to non-regulatory issues. For example, comments received about the deprivation of liberty safeguards suggested that while the measures were important, the number and complexity of some of the forms made it difficult and time consuming for people to use them. In response the Department plans to tackle this in 2014 by both reducing the existing number of forms and redesigning them so that they are easier to use. Another non-regulatory improvement will be a reduction in the amount of unnecessary guidance issued by the Care Quality Commission when they introduce new fundamental standards of care, saving people time in familiarising themselves with it.
I am pleased with the outcomes of the healthy living and social care theme and the work that went into identifying regulations the Department can abolish or improve. The Department is committed to continue to look at how it can minimise burdens on both business and health care professionals. The Department is currently looking at opportunities to reduce burdens for those on the front line of healthcare and is engaging with relevant organisations and health professionals to progress this.
Details on the regulations the Department proposes abolishing or improving have been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed paper Office. The details can also be seen at: www.redtapechallenge. cabinetoffice.gov.uk/home/index/.
NHS Commissioning
(11 years ago)
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The Secretary of State for Health (Mr Jeremy Hunt)
NHS England’s board has today agreed its clinical commissioning group planning guidance and allocations. Final documents will be published on the NHS England website by Friday 20 December and copies will be placed in the Library.
As we set out in the mandate to NHS England, the NHS needs to change to meet the needs of an ageing population. This guidance will help commissioners develop plans for services that more closely address the needs of local populations and deliver better integration of health and social care services.
The planning guidance sets out the priorities for commissioners. Commissioners are asked to plan for the next two years, with a specific emphasis on improving health, reducing health inequalities and moving towards a parity of esteem for mental and physical health.
In order that such an important decision is considered objectively, free from party political considerations, the Health and Social Care Act 2012 made how health funding is allocated between different areas of the country a responsibility of NHS England.
The NHS England board has today made decisions on how to distribute its budget so patients benefit. This includes allocating funding for individual clinical commissioning groups.
The Government have protected the overall health budget and NHS England has today decided that every CCG in England will continue to benefit from at least stable real-terms funding for the next two years. Those areas with fastest growing populations will benefit from more rapid growth in funding.
By reflecting changes in population around the country and better targeting where the pockets of deprivation are located, the NHS can offer the best services where patients need them most.
Palace of Westminster (Restoration and Renewal)
John Thurso (Caithness, Sutherland and Easter Ross)
Following their consideration of the pre-feasibility study on the restoration and renewal of the Palace of Westminster in October 2012, the House of Commons Commission and the House of Lords House Committee agreed that the next more detailed study should be carried out by an independent third party and that it should focus on the costs and technical issues associated with the remaining options.
The contract for an independent options appraisal (IOA) has now been awarded to a consortium led by Deloitte Real Estate and including AECOM and HOK. This follows a rigorous evaluation and selection process. Work on the study is expected to begin early in 2014.
The palace will require very significant renovation in the years to come. The Commission and the House Committee recognised in 2012 that doing nothing is not an option. They accept their responsibilities as custodians of a great iconic building and the need to ensure its future. Selection of a preferred way forward is expected to occur during the course of the next Parliament, not this one.
The contract for the IOA will set a maximum price of £2,019,295 and a fixed price (which may be lower but not higher) will be agreed two months into the contract once the consultants have become familiar with the extensive survey work already done on the palace.
Independent Commission for Aid Impact (Triennial Review)
(11 years ago)
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The Secretary of State for International Development (Justine Greening)
On 21 March 2013, I announced the commencement of the triennial review of the Independent Commission for Aid Impact (ICAI). I am grateful to ICAI for its continuing valuable work and I am now pleased to announce the completion of that review.
ICAI’s role is to provide independent scrutiny of UK aid spending in order to deliver value for money for British taxpayers and maximise the impact of aid. Its specific functions are to:
i) produce a wide range of independent, high quality and accessible reports setting out evidence of the impact and value for money of UK development efforts;
ii) work with and for Parliament to help hold the UK Government to account for their development programme, and make information on this programme available to the public; and
iii) produce appropriately targeted recommendations to be implemented and followed up by the UK Government.
The triennial review of ICAI concludes that the functions performed by ICAI are still required, subject to some refinements to promote clarity and maximise value for money. In particular, the review recommends that ICAI should also focus on in-depth thematic reviews addressing wider development issues, alongside retaining the ability to produce shorter reports on topics of particular interest to stakeholders, which may include the country level. The review further concludes that an advisory non-departmental public body (NDPB) continues to be the most effective way of delivering these services.
The review also looked at the governance arrangements for ICAI in line with guidance on good corporate governance set out by the Cabinet Office, and found that ICAI’s arrangements largely comply with this guidance. In the few areas where there is not full compliance, it makes some recommendations in this respect, which will be implemented in full prior to the next ICAI contract period beginning May 2015. The review also makes suggestions regarding the role of the International Development Select Committee in ICAFs work, given the unique position of ICAI as an advisory NDPB that reports directly to Parliament.
The final report of the triennial review of ICAI will be made available on the gov.uk website and copies will be placed in the Libraries of both Houses of Parliament.
HM Courts and Tribunals Service Trust Statement
(11 years ago)
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The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
Her Majesty’s Courts and Tribunals Service (HMCTS) has prepared a trust statement providing an account of the collection of revenues which are due to be paid to HM Treasury. The statement includes the value of fines and confiscation orders imposed by the judiciary; fixed penalties imposed by the police; the value of collections; the balances paid over to third parties including victims of crime, the Home Office and HM Treasury; and the balance of outstanding impositions.
We welcome the Comptroller and Auditor General’s (C&AG) report on the trust statement which recognises the improvements in financial reporting made by HMCTS. The C&AG has, for the first time and subject to two specific exceptions, given an opinion that the trust statement presents a true and fair view of the transactions and balances reported.
The statement shows that we have continued the year-on-year improvement in the levels of collection. During 2012-13 more than £495 million has been collected from offenders, an increase of £11 million compared to 2011-12. Almost £59 million in compensation was paid to victims of crime—of which £25 million was funded by criminals’ cash and assets recovered through confiscation orders. In addition, following a change to the victim surcharge HMCTS is able to report increased receipts for victim support with £11 million being collected and paid in the year to support this work.
Confiscation orders are one of the key mechanisms available to the Government to deprive criminals of the proceeds of their crimes. The value of the order imposed, which is often very high, is based on the criminal benefit attributed to the crime and may, therefore, exceed the value of realisable assets that are known to the court at the time of imposition. Crucially, an outstanding order stops the criminal benefiting from the proceeds of crime and ensures that, if the assets are discovered in the future, they can be seized.
Confiscation orders comprise 70% (£1.4 billion including interest) of total outstanding impositions. All available actions and sanctions are taken to recover this debt and bring it to account as expeditiously as possible. However, around one half of this amount—excluding interest—cannot be collected as it includes £109 million (8%) relating to individuals who are deceased, deported or who cannot be located, £84 million (6%) relating to orders which are being appealed and cannot be enforced while under appeal; and £136 million (10%) relating to orders where all the assets have been assessed as hidden following the conclusion of financial forensic investigations. In addition there is a further £339 million (24%) of interest accrued on confiscation orders which are outside agreed payment terms.
Cracking down on those who do not pay is an absolute priority. The agencies involved in the enforcement of confiscation orders, including the Ministry of Justice, the Home Office, the Serious Fraud Office and the Crown Prosecution Service take every step to tackle outstanding debt including the addition of interest and imprisonment for those who do not pay. In relation to the outstanding fine debt the sanctions include taking deductions from offenders’ benefits or their earnings and seizing and selling their property and goods. Those who do not pay can also be imprisoned.
Criminals go to extraordinary lengths to hide the proceeds of their crimes by transferring funds abroad and concealing them with friends and family, but we are succeeding in recovering more money every year. The agencies responsible for enforcement are building better relationships with overseas authorities and engage specialist forensic teams to track down hidden assets. The 2012-13 trust statement analyses the confiscation order debt value by lead agency to assist the users’ comprehension of the contribution made by agencies involved in the enforcement of confiscation orders.
HMCTS recognises the importance of the recommendations made by the National Audit Office value-for-money study on confiscation orders and will work with our partner enforcement agencies to address those recommendations and ensure that criminals continue to be deprived of the proceeds of crime.
Legislation to allow HMCTS to obtain data from HMRC and DWP to be used for the purposes of setting fines and enforcing outstanding payment amounts came into force on 11 December 2013 and will allow HMCTS to increase the use of the attachment of earnings sanction. HMCTS has also rolled out a programme to implement the use of direct debit payments which can be used where outstanding fines are paid in instalments. The direct debit payment process will be easier for enforcement staff to administer than standing orders and should help to improve collection rates.
HMCTS has recently published an OJEU notice seeking a commercial partner to help increase collections, reduce enforcement costs and, importantly, ensure more criminals pay. A new national system has been implemented to manage the collection of fixed penalty notices, with all of the police forces having transferred to the new platform by June 2013.The continuing improvement the agencies are making combined with our future plans will ensure that more criminals pay and that taxpayers get better value for money.
Presumption of Death Act 2013
(11 years ago)
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The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
On 20 June 2013 the then Under-Secretary of State for the Ministry of Justice, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) announced she would make a further statement regarding the timing of commencement of the Presumption of Death Act 2013 (“the Act”) before the end of 2013—[Official Report, 20 June 2013; Vol. 564, c. 39WS].
When my hon. Friend made her statement in June regarding the Act it was expected that the work on the rules of court, regulations and associated procedures necessary to bring the Act fully into force would be completed in time for commencement to take place in April 2014. However, as my hon. Friend stated, this was not certain. In the event, the necessary work has not yet been completed. The proposed commencement of the Act will therefore be delayed until the next available common commencement date, 1 October 2014. I will make a further announcement to confirm the actual commencement date of the Act in due course and in any event before the summer recess.
On the same date, my hon. Friend also announced that the Ministry of Justice intended to publish a consultation paper on the possible creation of a status of guardian of the property and affairs of missing persons in 2013—[Official Report, 20 June 2013; Vol. 564, c. 39WS]. Work on this paper is progressing and publication will take place as soon as possible in 2014. I will make a further announcement in relation to the publication of the paper in due course and in any event before the Easter recess.
Huawei Cyber Security Evaluation Centre
(11 years ago)
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The Prime Minister (Mr David Cameron)
The Intelligence and Security Committee (ISC) reported in June 2013 on foreign investment in critical national infrastructure. The ISC raised concerns about the Huawei Cyber Security Evaluation Centre (HCSEC) and recommended that the National Security Adviser undertake
“a substantive review of the effectiveness of HCSEC as a matter of urgency”.
The Government responded in July to the ISC report, agreeing that a review would be carried out. This has now been completed and shared with the Chair of the ISC. An executive summary of the review has been published. Copies of this have been placed in the Libraries of both Houses. The Government’s main conclusion, which reflects discussion with the Chairman of the ISC, is that oversight of HCSEC should be enhanced, and that GCHQ should take a leading and directing role in its future senior appointments.
Network Rail
(11 years ago)
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The Secretary of State for Transport (Mr Patrick McLoughlin)
Today the Office for National Statistics announced that, following a review, Network Rail will be classified as a central Government body in the public sector. This is an independent statistical decision taken by the Office for National Statistics in light of the European system of national accounts 2010 (ESA10) manual from Eurostat which comes into force across the EU from 1 September 2014.
The Government welcome the ONS review and have always been committed to the transparent reporting of public liabilities. The change in Network Rail’s classification will mean that the company’s net debt, currently some £30 billion, will appear on the Government’s balance sheet. The Office for Budget Responsibility noted in its “Economic and fiscal outlook” published on 5 December, that this will likely increase public sector net debt by about 2% of GDP and public sector net borrowing by 0.2% of GDP on average. The Government remain committed to their plans to reduce the deficit and will continue to do so by taking difficult decisions to cut public spending and prioritise investment in infrastructure to deliver a stronger economy and fairer society. The new classification will be implemented from 1 September 2014 and will apply from April 2004. Until then Network Rail remains in the private sector.
I am committed to ensuring that Network Rail maintains the operational flexibility to continue to deliver a safe, punctual rail network and increased capacity for our busy railways and that it is able to attract a high calibre of staff, while still providing value for money and being accountable to Parliament.
My Department will agree appropriate accounting and governance adjustments for Network Rail to ensure it can continue to deliver world-class railway infrastructure when the company is reclassified for statistical purposes on 1 September 2014. I have accordingly agreed a memorandum of understanding with Network Rail that sets out how we will work together to develop and agree that framework. This memorandum has today been published on my Department’s website and copies have been placed in the Libraries of both Houses.
This Government remain committed to the railway. The ONS decision on the classification of Network Rail does not affect the planned improvement and investment in the railways, including Network Rail’s £38 billion settlement for the planned running of and investment in the railway in the five years from 2014. This Government’s plans for HS2 and the rail franchising programme set out in March this year are unchanged. The Office of Rail Regulation will remain the economic and safety regulator for the railway and the ONS decision will have no effect on rail fares, performance, punctuality, timetables, or safety. My Department will continue to consider how to best secure the benefits of private investment in rail infrastructure and work with Network Rail to deliver the best possible railway for the benefit of the whole industry, its passengers, and the taxpayer.
Automatic Enrolment Annual Thresholds
(11 years ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I am today announcing the proposed automatic enrolment thresholds for next year.
It is intended to lay an order before Parliament in the new year which will include the following:
£10,000 for the automatic enrolment earnings trigger;
£5,772 for the lower limit of the qualifying earnings band;
£41,865 for the upper limit of the qualifying earnings band.
I am also placing a copy of the analysis supporting the proposed revised thresholds in the House Library.
These papers will also be available later today on the www.gov.uk website.
Disability and Health Employment Strategy
(11 years ago)
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The Minister of State, Department for Work and Pensions (Esther McVey)
Later today we will publish the Command Paper Cm 8763 “The disability and health employment strategy: the discussion so far”.
There are 11.5 million working-age people in Great Britain with a long-term health condition. More than half—6.5 million—are classified as disabled under the Equality Act 2010, because they have a physical or mental impairment that has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities.
At any one time, some of these people will be unable to work, and we will continue to provide them with financial support. However, many disabled people and people with health conditions can and do work, and the employment aspirations of too many people remain unfulfilled. A number of factors contribute to this loss of potential, for example: entrenched beliefs about what individuals are capable of; an employment support that does not always meet people’s individual needs; and an inflexible benefits system.
This Government are already doing much to tackle these issues, including:
the implementation of many of the recommendations in “Getting In, Staying In, Getting On” has focused resources on tailored, personalised support for individuals, rather than on “one-size-fits-all” institutions and programmes;
our work to enable disabled people to fulfil their potential and have opportunities to play a full role in society through the fulfilling potential strategy series;
the introduction of universal credit, which aims to ensure work always pays;
the introduction of personal independence payment, a new disability benefit designed to better reflect today’s understanding of disability and deliver a benefit that is fairer, more transparent and sustainable;
the first national disability employment conference in July 2013, at which the Prime Minister launched our two-year disability confident campaign, working with employers to increase the employment of disabled people, and now including a series of regional events;
the development of a new mental health and employment resource pack to improve the employment support that Jobcentre Plus provides for individuals with mental health issues; and
the development of the Health and Work Service, as recommended by the sickness absence review. The service is due to start in 2014 and will support individuals with health conditions or impairments to stay in work.
However, we are determined to do more to enable disabled people and people with health conditions to get into, stay in and progress in work. This paper is the next important step in developing our approach and widening our focus. To do this, we need to concentrate on the skills, capabilities and aspirations of all individuals, offering the right support, early on, to those who need it. We need to focus on employers, so they are confident and able to employ and retain disabled people and people with health conditions. We need to ensure that all disabled people and people with health conditions can make a smooth transition from education to work.
In this paper, we set out a range of proposals to further improve our employment support, both for disabled people and for people with health conditions who do not consider themselves to be disabled. This will be followed next year by a further paper setting out our delivery plan.
Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Harris of Richmond)
My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.
Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013
(11 years ago)
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Lord Astor of Hever
That the Grand Committee do consider the Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013.
Relevant documents: 15th Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)
Noble Lords may recall that I led a debate on 15 October this year, introducing this legislation specifically for those seriously injured service and ex-service personnel resident in Northern Ireland who are entitled to an Armed Forces independence payment, or AFIP. This legislation provides access to additional benefits, schemes and services, known as passported benefits. The Motion was passed by the Committee but, due to a procedural error in the progress of the statutory instrument in the other place, the legislation must be debated again before it can come into force.
Although the AFIP has been available to seriously injured service and ex-service personnel resident in Northern Ireland, the legislative changes to provide access to passported benefits have not been implemented. A second statutory instrument, amending secondary legislation, will be in place shortly. Today’s debate gives Members a second opportunity to debate this legislation. It provides access to two minor but important legislative changes in respect of carer’s allowance and the Christmas bonus.
This legislative change will ensure that those who provide invaluable support to seriously injured members of the Armed Forces in receipt of AFIP have access to carer’s allowance in Northern Ireland from the Department for Social Development. Carer’s allowance is currently £59.75 per week. This change will make provision specifically for those who devote their lives to supporting our seriously injured people, providing some financial support for doing so. It is only right that a person caring for an AFIP recipient should have access to carer’s allowance. The provisions relating to the Christmas bonus will ensure that all recipients of AFIP automatically qualify for the tax-free, lump sum Christmas bonus of £10.
By putting in place the provisions to give AFIP recipients resident in Northern Ireland access to the additional benefits, schemes and services that are offered by other government departments, devolved Administrations and local authorities, the Government are giving them treatment equal to that offered to service personnel and veterans resident elsewhere in the UK. It is important that we address these issues, meeting the principles at the heart of the covenant across all Administrations for members of the Armed Forces and veterans who are seriously injured. I hope the Committee will therefore once again approve the order today.
Lord Empey (UUP)
My Lords, the Minister will know that my interest in these matters goes back to the passage of the Armed Forces Bill in 2011, when a number of amendments were discussed in relation to ensuring that the military covenant was applied universally throughout the United Kingdom, particularly in Northern Ireland. One of the points made at that time was that many of the services that are required to be provided for soldiers, former soldiers and their families are devolved matters in different parts of the United Kingdom. The question then arose: how could the Secretary of State for Defence prepare and deliver a report to Parliament, given that he or she would not be in control of many of the services required in the regions? It was also based on the general principle that these services should be as universally available to eligible personnel throughout the UK as possible.
There are a couple of aspects to this. I understand the technical matters that the Minister has addressed, and the fact that the legislation has had to be reintroduced. However, I seek the Minister’s assurance on a couple of issues. First, the welfare issues are currently before the Northern Ireland Assembly. I have no doubt that amendments will be tabled in that Chamber. Whether they affect any of this is unclear, but sooner or later the Welfare Reform Bill will be passed in Stormont, and then we will see where that takes us. Any amendments may well involve a cost to the Northern Ireland Assembly from the block grant. I think people realise that is the case.
The issue that concerns me more than that is that the Minister is saying that the Government have received the consent of Northern Ireland Ministers from the relevant departments for these proposals. Does that mean that the Government will require a legislative consent Motion to come from the Stormont Government or the Assembly, or is there sufficient administrative flexibility for Ministers in Northern Ireland, on their own, to give the Minister and the department the assurances they seek?
The second point is one I made during the passage of the Armed Forces Bill, and I know the Minister is aware of my concern. Although the fact—if it is the case—that he has the consent of Northern Ireland Ministers is welcome, Ministers in various departments will change from time to time. Therefore, the consent of Ministers cannot be guaranteed in the long term. What does the Ministry of Defence do in the event of a Minister refusing his or her consent? That was a point I made during the passage of the Bill. In the short term there is no problem; however, in the long term there may well be one.
I therefore seek an assurance from the Minister that the Government will take all necessary steps, legislatively if necessary, to ensure that the services provided to injured personnel and their families will be provided throughout the United Kingdom, even if there is opposition from the local Administrations. I fear that a pattern has developed whereby we are hiding behind the Sewel convention, to the extent that it is now regarded as a shibboleth. Is Parliament devolving powers or giving them away permanently to local Administrations? That is a big issue for devolution generally.
The specific issue before us is that currently the consent of Ministers in Belfast is required. I understand that. At the moment, it appears that that consent is being given, and I am glad about that, but in the long term it might not be. I say to the Minister that when the next Armed Forces Bill is introduced, which I gather will be around 2016, I would be willing to bring forward proposals to correct any difficulties that might arise because the ministerial team in Belfast had, by then, changed. The issue that concerns me could arise—we have seen it already with the National Crime Agency, where it is not yet resolved.
I feel very strongly about this issue. The House accepted, during the passage of the Armed Forces Bill, that regardless of where they come from or live in the United Kingdom, the services provided to help former soldiers and service personnel who have served in the UK Armed Forces should be available as equally as possible. Nobody should suffer discrimination because they happen to come from a devolved region. This is Parliament’s responsibility, because the Armed Forces are an excepted matter under devolution. In my opinion, it will never be a devolved issue. Therefore, this Parliament has an overarching responsibility to see that these services are provided on an equitable basis, irrespective of where the recipient comes from. I seek the Minister’s assurances on all these matters.
Lord Rosser (Lab)
My Lords, the Minister has reminded us that we debated this matter on 15 October when the order was agreed and we expressed our support for it. The Minister has explained why we have to approve the order again, and that is certainly not an issue on which I wish to dwell.
I have just a couple of brief points, since I do not intend to repeat what I said on 15 October. In responding to points I raised then, however, the Minister said that the number of,
“seriously injured service or ex-service personnel … covered by this order relating to Northern Ireland … is fewer than 20”.—[Official Report, 15/10/13; col. GC 213.]
I simply ask, since the order is not coming into effect on 28 October as was envisaged, whether anyone has lost out as a result, as the order itself indicates that it comes into force on the day after that on which it is made. It would be helpful if the Minister could clarify what date that is likely to be, and whether anyone has lost out as a result of this apparent delay in bringing the order into effect for the reasons the Minister mentioned.
Lord Astor of Hever
My Lords, I thank the two noble Lords for their contributions to the debate. I very much agree with the noble Lord, Lord Empey, that all services and benefits should be universally available throughout the United Kingdom.
Five Ministers of State for Northern Ireland provided consent for these amendments to be made. The departments are the Department for Social Development, the Department of Justice, the Department for Employment and Learning, the Department of the Environment and the Department of Health, Social Services and Public Safety. No further Northern Ireland government approval is required for this SI, but the noble Lord asked me about a possible future situation where a Minister refused consent. I am afraid that I do not have an immediate answer with me, but I undertake to write to the noble Lord on this important point.
The Deputy Chairman of Committees
My Lords, there is a Division. We will return at 3.52 pm.
Lord Astor of Hever
My Lords, the noble Lord asked me what impact the late implementation date would have on the access to a Christmas bonus of AFIP recipients in Northern Ireland. Although there is no legislative provision to make payment of a Christmas bonus to those individuals who have elected to receive AFIP—as the noble Lord said, there are fewer than 20 in Northern Ireland—payments have been made by the DWP to ensure that eligible seriously injured service personnel resident in Northern Ireland receive the same support as AFIP claimants in the rest of the UK and recipients of both the enhanced rates of personal independence payment, which include the Christmas bonus.
In summary, I restate the point I made when I opened this debate. The changes debated today are closely linked to the Government’s commitment to uphold the Armed Forces covenant. It is only right that we provide access to additional benefits, schemes and services to those most seriously injured, wherever they are resident in the United Kingdom. I believe that these changes will go some way to achieve this.
Smoking: E-cigarettes
(11 years ago)
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Viscount Astor
To ask Her Majesty’s Government what is their policy on regulation of the sale, advertising and promotion of e-cigarettes.
Viscount Astor (Con)
My Lords, electronic cigarettes are tubes that simulate the effect of smoking. Some e-cigarettes contain nicotine, but importantly they do not contain tobacco. Inside an e-cigarette is a small computer chip, a lithium battery, a heating element and a cartridge filled with water containing dissolved pharmaceutical-grade nicotine. You take a puff and the heater fires up the element to around 150 degrees centigrade, which heats the liquid in the cartridge so that it can evaporate. You inhale and that gives a so-called nicotine hit. You then exhale what looks like smoke but is in fact water vapour. E-cigarettes are regarded by some as a new and dangerous nicotine habit, but by others as a successful way to quit smoking. The truth is perhaps somewhere in the middle, but it is clear that e-cigarettes are here to stay. The market is expected to grow from £1 billion this year to £10 billion over the next five years. It is unregulated at the point of sale in this country, as it is in most countries worldwide.
There has been a recent attempt by the European Commission, which introduced a draft directive, backed by this Government, to regulate electronic cigarettes as medicines, but the proposal was thrown out by the European Parliament. A majority in the European Parliament supported using a mixture of tobacco regulation, controls on promotion and the reporting of adverse reactions. I understand that negotiations are continuing right up to today, and I hope that the Minister will be able to give us notice of any progress.
The Government have encouraged e-cigarette producers voluntarily to seek a licence for their products so that they can meet standards of safety and quality and be sold on prescription. Can the Minister say how many of the companies that produce and sell e-cigarettes have signed up to the voluntary code, and how many are estimated not to have signed up? Perhaps he could also confirm what the cost of validation might be for producers complying with a medical directive. I understand that it would be more than £250,000. This would put most of the smaller suppliers out of business and hand the industry over to the large tobacco companies, thus perhaps stifling competition.
As one drives into London on the M4, one can see three new vast advertising hoardings promoting e-cigarettes. Do the Government approve of this kind of advertising, which would not be allowed for normal cigarettes? There is a difficult issue here because most e-cigarettes are made up with 5% nicotine, but some, probably 10% of the market, have no nicotine in them at all. They are, for example, cherry or bubblegum flavoured. Some look like cigarettes and some like pencils, while others look like a pipe end without a pipe. If they wanted to regulate, how would the Government regulate an e-cigarette that contains no nicotine? Indeed, is it an e-cigarette, is it a toy or is it something else?
At the moment, e-cigarettes can be sold to children. Does the Minister believe that there should be an age limit, or will we see school playgrounds full of puffing children—or perhaps I should say even more full of children puffing? If so, would it be illegal for them to puff an e-cigarette that does not contain any nicotine? After all, what comes out of an e-cigarette is just harmless vapour, not smoke. Most e-cigarettes are made in China, with the nicotine and other flavours mainly being manufactured there. Is there any form of inspection regime for the importation of this nicotine additive?
There is evidence from America that e-smoking is on the increase, but not necessarily that e-cigarettes are a gateway to smoking, although it is estimated that the US has around 2.5 million users. We do know that nicotine is an addictive drug, and this new invention could set some on the path to nicotine addiction, but that is nicotine in very small amounts, which is hardly harmful in comparison with the danger of and damage caused by smoking. E-cigarettes could save the lives of millions of smokers by weaning them off normal cigarettes. They are a welcome aid to smokers trying to quit; for example, those who have failed with nicotine chewing gum or the patches. The value of the health gains associated with a single successful quit attempt is very substantial, and the Government’s own Department of Health estimates it at more than £70,000.
This is the dilemma facing health experts, policymakers and regulators—and, indeed, the Minister. There is very little research on the effects of e-cigarettes. While they are definitely less harmful than normal cigarettes, they contain carcinogens and toxic chemicals, albeit in very small quantities. E-cigarettes have been described as,
“the triumph of wishful thinking over data”,
and,
“an opportunity to improve public health”.
Closer to home, ASH—Action on Smoking and Health—supports the use of licensed nicotine products as an aid to cutting down or quitting smoking, and as a substitute for smoking. They satisfy the desire to smoke, help cut down on cigarettes and, of course, eradicate the smell of stale smoke and the effect of passive smoking on anybody nearby. Most diseases associated with smoking are caused by inhaling smoke, which contains thousands of toxic chemicals. As I have said, by contrast, nicotine is relatively safe.
My final question to my noble friend the Minister is: do we have to wait until the European Commission and European Parliament finally agree—if they ever do—or can the Government introduce sensible regulations on the advertising, promotion and sale of e-cigarettes? If the Government overregulate the sale of e-cigarettes and restrict their use, they will increase the costs to health in this country and miss an opportunity to cut down on smoking.
Lord Borwick (Con)
My Lords, first, I declare an interest as a trustee of the British Lung Foundation. Lung disease can affect everyone but it seems to be particularly prevalent in the poorest parts of the country. Of course, heavy smoking is strongly correlated with poverty.
Tobacco is by far the largest cause of lung disease, and a very large number of people suffer debilitation and a painful death because of it. I have many friends who have spent their lives trying in vain to help people addicted to cigarettes, and it is understandable that they passionately hate anything to do with smoking, including e-cigarettes.
When I visited the Consumer Electronics Show in Las Vegas, which I think is the largest trade exhibition in the world, in January this year, I saw about 200 Chinese manufacturers of e-cigarettes open for business. There is a tide of these things coming. They were the most common new product at the show after iPhone cases. One could wish that they would just go away, but of course they will not. So I congratulate my noble friend Lord Astor on opening this debate. Many people have been wishing e-cigarettes away; this is a useful chance to debate them.
People are addicted to nicotine but it is the tar that kills them. This seems well established. However, part of the addiction to cigarettes is not just the chemical nicotine but the handling of a cigarette, the sociability and the feel of it. Certainly, e-cigarettes provide a substitute for some of these sensations. They seem a reasonable and less dangerous product than conventional cigarettes.
The trouble is that we are fighting the battle against the killer tobacco on three fronts: on cost, by increasing consumption taxes; with education at earlier stages to ensure those likely to start smoking, namely teenagers, are aware of the risks involved; and by making cigarettes abnormal, by keeping them locked behind shutters at the supermarket and with other proposals such as plain packaging. It seems that the third front, denormalisation, is at least as powerful as the other two. The concern is that e-cigarettes can undo a lot of the good work that has been done to make smoking an unusual habit and smokers akin to pariahs. If it is okay to smoke e-cigarettes, will it become okay to smoke normal ones again? Will users ever kick the habit of enjoying nicotine and holding a cigarette?
Another important question must be addressed: what are e-cigarettes? Do they contain just nicotine and vapour, or anything else at all? This seems to call for regulation as a simple product, to ensure quality. Will my noble friend the Minister encourage his department to sponsor some research into the effects of nicotine alone? It is said to be dangerous to those with a heart problem or to pregnant women, but the truth is that there has not been enough research on the subject to be sure.
It is important to understand how e-cigarettes are changing the behaviour of smokers of conventional cigarettes. ASH has reported that as many as 1.3 million people occasionally use e-cigarettes and that 400,000 people are using e-cigarettes in total or partial replacement of normal cigarettes. That is great news.
The danger people spot is that children might become more likely to take up normal cigarettes after trying e-cigarettes. We cannot tell if that is so, because there has been not been any research on it, but logic suggests otherwise. Teenagers smoke cigarettes to look cool, and e-cigarettes are not cool—they are about giving up an addiction. No teenager wants to look as though they are giving up something: they want to look as though they have no problems.
According to research from the Institute of Economic Affairs from July 2013:
“Far from acting as a gateway to smoking, all the evidence indicates that e-cigarettes are a gateway from smoking”.
Evidence from ASH supports that statement. Indeed, the fact that 400,000 people have given up cigarettes is great news, and if we concentrate on that, we should say that there should be no real restriction on the sale or advertising of e-cigarettes. If they are mainly used by existing smokers as a way of quitting, we could even do good by giving them away to smokers.
If we are to have any regulation, it should be of the quality of the contents alone: restricting the ingredients to nicotine; ensuring damaging toxins are kept out of them; and not allowing flavoured e-cigarettes specifically designed to attract children, such as bubblegum e-cigarettes or such like.
In choosing today for this short debate, my noble friend Lord Astor has shown a downright astonishing ability to predict the future, because a provisional deal was reached last night in Brussels between MEPs and national Governments on a new tobacco products directive. Martin Callanan MEP has said that this directive will take the majority of e-cigarettes off the market. It would restrict all but the weaker e-cigarettes, even though smokers who are considering using e-cigarettes to break their addiction tend to begin on stronger e-cigarettes and gradually reduce their usage. Making stronger e-cigarettes harder to come by will encourage smokers to stay on tobacco. Among the points made in the draft directive, paragraph 3.7 states that its purpose is to stop the situation whereby,
“more people—unaware of the content and effects of these products—inadvertently develop a nicotine addiction”.
The idea that somebody will inadvertently become addicted without the help of the EU seems rather unlikely.
Finally, I pose a conundrum for the Minister. If we go ahead with plain packaging for cigarettes—which are actually illustrated with lurid photographs of health problems—do we allow e-cigarettes to be sold in similar packages if the manufacturer wants to? That is something that the great Sherlock Holmes might perhaps describe as a “three pipe problem”.
Viscount Ridley (Con)
My Lords, I congratulate my noble friend Lord Astor, on securing this debate. It is an issue of much greater importance than the sparse attendance might imply and one that is growing in importance. I have no interest to declare in electronic cigarettes: I dislike smoking and have never done it. I have only once tried a puff on an e-cigarette, which did nothing for me. I am interested in this issue as a counterproductive application of the precautionary principle. I should say that I am indebted to Ian Gregory of Centaurus Communications for some of the facts and figures that I will cite shortly.
There are, at the moment, about 1 million people in this country using electronic cigarettes, and there has been an eightfold increase in the past year in the number of people using them to try to quit smoking. Already, 15% of ex-smokers have tried them, and they have overtaken nicotine patches and other approaches to become the top method of quitting in a very short time. The majority of those who use electronic cigarettes to try to quit smoking say that they are successful.
Here we have a technology that is clearly saving lives on a huge scale. If only 10% of the 1 million users in the country are successful in quitting, that would save £7 billion, according to the Department of Health figures given in answer to my Written Question last month, which suggest that the health benefits of each attempt to quit are £74,000. In that Answer, Minister said that,
“a policy of licensing e-cigarettes would have to create very few additional successful quit attempts for the benefits to justify its costs”.—[Official Report, 18/11/13; col. WA172.]
But who thinks that licensing will create extra quit attempts? By adding to the cost of e-cigarettes, by reducing advertising and by unglamorising them, it is far more likely that licensing will create fewer quit attempts. Will the Minister therefore confirm that, by the same token, a policy of licensing e-cigarettes would have to reduce quit attempts by a very small number for that policy to be a mistake?
Nicotine patches are also used to reduce smoking and they have been medicinally regulated, but there has been extraordinarily little innovation in them and low take-up over the years. Does the Minister agree with the report by Professor Peter Hajek in the Lancet earlier this year, which said that the 30-year failure of nicotine patches demonstrated how the expense and delays caused by medicinal regulation can stifle innovation? Does my noble friend also agree with analysts from Wells Fargo who this month said that if e-cigarette innovation is stifled,
“this could dramatically slow down conversion from combustible cigarettes”?
We should try a thought experiment. Let us divide the country in two. In one half—let us call it east Germany for the sake of argument—we regulate e-cigarettes as medicines, ban their use in public places, restrict advertising, ban the sale of refillable versions, and ban the sale of e-cigarettes stronger than 20 milligrams per millilitre. In the other half, which we will call west Germany, we leave them as consumer products, properly regulated as such, allow them to be advertised as glamorous, allow them on trains and in pubs, allow the sale of refills, allow the sale of flavoured ones, and allow stronger products. In which of these two parts of the country would smoking fall fastest? It is blindingly obvious that the east would see higher prices—and prices are a serious deterrent to attempts to quit smoking because many of the people who smoke are poorer than the average. We would see less product innovation, slower growth of e-cigarette use and more people going back to real cigarettes because of their inability to get hold of the type, flavour and strength that they wanted. Therefore, more people would quit smoking in the western half of the country.
What are the drawbacks of such a policy? There is a risk of harm from electronic cigarettes, as we have heard. How big is that risk? The Minister confirmed to me in a Written Answer earlier this year that the best evidence suggests that they are 1,000 times less dangerous than cigarettes. The MHRA impact assessment says that the decision on whether to regulate e-cigarettes should be based on the harm that they do. Yet that very impact statement says that,
“any risk is likely to be very small”,
that there is,
“an absence of empirical evidence”
and “no direct clinical evidence”, that “the picture is unclear”, and—my favourite quote—states:
“Unfortunately, we have no evidence”,
of harm.
There is said to be a risk of children taking up e-cigarettes and then turning to real cigarettes. Just think about that for a second. For every child who goes from cigarettes to electronic cigarettes, there would there have to be 1,000 going the other way, from e-cigarettes to cigarettes, for this to do any net harm. The evidence suggests, as my noble friend Lord Borwick has said, that the gateway is the other way. Some 20% of 15 year-olds smoke, and evidence from ASH and a study in Oklahoma suggests strongly that when young people use electronic cigarettes they do so to quit, just like adults do.
If we are to take a precautionary approach to the risks of nicotine, will the Minister consider regulating aubergines as medicines? They also contain nicotine. If you eat 10 grams of aubergine, which you easily could with a plateful of moussaka, you will absorb the same amount of nicotine as if you shared a room with a cigarette smoker for three hours. It is not an insignificant quantity. That is data from the New England Journal of Medicine in 1993. If we are worried about unknown and small risks, can the Minister explain to me why, as Professor Hajek, put it, more dangerous chemicals, such as bleach, rely on packaging and common sense rather than on medicinal licensing?
There has been approximately an 8% reduction in the use of tobacco in Europe in the past year. The tobacco companies are worried. A big part of that reduction seems to be because of the rapid take-up of electronic cigarettes. They are facing their Kodak moment—the moment when their whole technology is replaced by a rival technology that, in this case, is 1,000 times safer. Does my noble friend think that there may be a connection between the rise of electronic cigarettes, the rapid decline in tobacco sales and the enthusiasm of tobacco companies for the medicinal regulation of electronic cigarettes?
It is not just big tobacco; big pharma has shown significant interest in the regulation of electronic cigarettes. That is not surprising because they are, again, a rival to patch products and other nicotine replacement therapies. Perhaps more surprising is that much of the medical establishment is in favour of medicinal regulation. I never thought I would live to see the BMA and the tobacco industry on the same side of an argument. The BMA says that electronic cigarettes cannot be considered a lower-risk option, but this completely flies in the face of the evidence. As we have heard already, electronic cigarettes are 1,000 times safer. The BMA says that it is worried about passive vaping, the renormalising of smoking and the use of electronic cigarettes as a gateway to smoking. The excellent charity Sense About Science, to which I am proud to be an adviser, has asked the BMA for evidence to support those assertions. I must say that there is a strong suspicion that the only reason the medical establishment wants to see these things regulated as medicines is because it cannot bear to see the commercial sector achieving more in a year in terms of getting people off cigarettes than the public sector has achieved in 10. Instead of talking about regulating this product, should we not be talking about encouraging it, promoting it and letting people vape indoors if they want to—in pubs, on trains and in football grounds—specifically so that they are tempted to vape instead of smoke? That would be of enormous benefit to them and to the country as a whole.
I end by asking specifically in relation to the agreement that, as we heard from my noble friend Lord Borwick, was agreed last night, what its impact will be on what is happening, and in particular on advertising. As I understand it, under the agreement reached yesterday, it will be possible for the advertising of these things to be banned as if they were cigarettes. What is the justification for that, given the proportionality and the evidence that they will actually save lives rather than harm them?
Lord Hunt of Kings Heath (Lab)
My Lords, first, I apologise to the Committee for being a little late for the start of the debate. I welcome this debate and I congratulate the noble Viscount, Lord Astor, on allowing us to discuss a very interesting subject. I am sure that we are all looking forward to the noble Earl’s response to the many questions that have been put to him.
With more than 100,000 people dying from smoking-related diseases across Britain every year, it is clear that we need to do all we can to support people to give up smoking and discourage young people from taking it up in the first place. One thing I am convinced about is that e-cigarettes have the potential to provide a significant boost to public health. I understand that the National Institute for Health and Care Excellence supports the use of nicotine-containing products such as e-cigarettes to aid smokers in cutting down on tobacco. As we have heard, an estimated 400,000 people across the UK have already switched from smoking to e-cigarettes.
I noted the comments of the noble Viscount, Lord Ridley, on the risks of regulation, and I agree with him that it is important that regulation does not stifle innovation. On the other hand, as with any new and fast-emerging product, some additional safeguards may be needed to cover any gaps in our existing consumer regulations. I want to ask the noble Earl, Lord Howe, about this. Does he consider that the medicinal regulation of e-cigarettes would put a lot of the current e-cigarette companies out of business? The noble Earl is of course very well acquainted with the work of the MHRA, issues to do with the regulation of medicines and, indeed, herbal medicines, which may be relevant in this context. I wonder if any work has been done to estimate the cost of regulation for these products.
For instance, I imagine that a dossier has to be produced with scientific evidence to show the efficacy and safety of these products. I wonder whether the noble Lord has an estimate of the cost of this, and whether that would inhibit many of the small companies in this market from being able to carry on in business when this is introduced. I support regulation that is light-touch and permissive rather than restrictive.
As the noble Viscount has said, the regulation of e-cigarettes has been debated as part of the EU trilogue negotiations on the tobacco products directive. Can the noble Earl inform the Committee of the progress of those negotiations? I understand that they are scheduled to end in the coming weeks, and an update would be appreciated, as would some sense of the timeline between agreement within Europe and the implementation of this proposed directive.
As the noble Lord, Lord Borwick, has commented, e-cigarettes have clearly been very successful in encouraging smokers to quit and to use e-cigarettes instead. He posed the question of whether there are circumstances in which e-cigarettes could be a passport to tobacco smoking. I think he talked about teenagers in particular, implying that some of the marketing approaches of the e-cigarette manufacturers might provide a cool image to young people, who would take up e-cigarettes and then be tempted to go on to tobacco products. I do not know whether the noble Lord, Lord Borwick, saw the complaints made about an advert for e-cigarettes screened by ITV on 3 December during “I’m a Celebrity”, which appeared to show a woman talking about oral sex, while at the end of the advert it was revealed to be a reference to e-cigarettes. The question I put to the noble Earl is: how do we ensure that e-cigarette manufacturers are not able to advertise in such a way as to make e-cigarettes attractive to young people who would not ordinarily have come to smoking, so that they act as a passport to tobacco smoking?
If the noble Earl can reassure us that regulation can be light-touch, that the process of being regulated as a medicinal product will not be overbearing, and that there can be appropriate controls on advertising, then we should welcome the impact of e-cigarettes, because the evidence is clear that they have helped a lot of people come off tobacco smoking. Surely, in the end, that is to be welcomed.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I thank my noble friend Lord Astor for securing this important and highly topical debate.
As we have heard, e-cigarettes are nicotine-containing devices that work by atomising a nicotine solution which is then breathed in as a vapour by the user. E-cigarettes claim to deliver nicotine to the user without the toxins and carcinogens found in tobacco smoke. They do not involve any combustion and do not produce smoke. E-cigarettes are a very recent innovation. They are available in various shapes and sizes, as we have heard, and many are designed to both look and feel like conventional cigarettes. Some even incorporate a light at the end of the device that glows when the product is being used, to replicate a cigarette. Today, they are marketed as a cheaper and healthier alternative to smoking tobacco. However, e-cigarette manufacturers have avoided directly suggesting that their products are smoking cessation aids, as making such claims would subject their products to regulation as medicines.
I turn to whether e-cigarettes are safe to use. When we compare the use of e-cigarettes to smoking of tobacco, the Department of Health is confidently able to say that e-cigarettes are likely to be much safer to use. That does not mean that e-cigarettes are safe to use; it probably says more about how enormously unsafe it is to smoke tobacco. Nevertheless, the safety of e-cigarettes is yet to be fully established. Given how novel these products are, we need to see much more evidence about their safety, especially regarding the use of e-cigarettes over a long period.
At present, e-cigarettes are sold without any product-specific controls relating to quality and safety in use, or specific provisions on advertising and promotion. There are general product safety provisions that apply to these products, but they are not designed for these sorts of product and are not fit for this purpose. We also must keep in mind that nicotine itself is not only highly addictive but can be highly toxic. Electronic cigarettes are not risk-free. Known and reported health risks include acute effects on lung function, possible pneumonia and other risks related to poor product quality.
My noble friend Lord Astor made reference to Action on Smoking and Health. ASH says that there is significant variation in device effectiveness, nicotine delivery and cartridge nicotine content, both between and sometimes within product brands. ASH cites research that suggests the presence of toxins, released in low concentrations, from the vaporisation process involving certain e-cigarette cartridges. It cites other research that concluded that e-cigarettes have a low toxicity profile, are well tolerated and are associated only with mild adverse effects.
As we have heard during this debate, the e-cigarette market is growing rapidly. More than 300 companies are estimated to be importing or supplying e-cigarettes in the United Kingdom. The e-cigarette market in the UK is estimated to be worth in excess of £100 million, and we know that across the world the tobacco industry is becoming increasingly involved. There is little doubt that awareness of e-cigarettes has increased quickly through advertising and promotion of these products. It has been said that e-cigarettes are being promoted in similar ways to how cigarettes were promoted before we introduced a comprehensive ban on tobacco advertising in this country. I am sure that I am not alone in noticing the vast amount of promotion for e-cigarettes in my local convenience store, or the representatives of e-cigarette companies in shopping malls or outside train stations promoting their products.
The University College London smoking toolkit study is a national study of smoking and smoking cessation in England. The most recent data from the survey suggest that electronic cigarette use by tobacco smokers has increased from around 2% in 2011 to around 14% in August 2013. If this trend were reflected across the UK, it would translate to around 1.4 million smokers who have used electronic cigarettes. There is little evidence to suggest that non-smokers are becoming attracted to using e-cigarettes.
My noble friend Lord Borwick asked about the behaviour of children and young people. ASH commissioned research into the use of e-cigarettes by young people and found that, in Great Britain in 2013, 95% of 11 to 14 year-olds and 90% of 16 to 18 year-olds have never used e-cigarettes. Among young people, e-cigarette use appears to be confined to those who have already tried smoking. Nevertheless, we remain concerned that e-cigarettes could quickly become popular with young people, particularly if they continue to be vigorously advertised and promoted. We are also very aware of concerns expressed that e-cigarettes could act as gateway products for young people into smoking, and will continue to watch the evidence closely.
The Government recognised in the tobacco control plan for England that smokers are harmed by the tar and toxins in tobacco smoke, not necessarily by the nicotine to which they are addicted. There is no way of avoiding these deadly toxins if you inhale smoke from burning tobacco.
Earlier this year, the National Institute for Health and Care Excellence published public health guidance on harm-reduction approaches to smoking. The noble Lord, Lord Hunt, asked about this. NICE recommends the use of licensed medicines only. The guidance suggests that while the best way to reduce smoking illness and death is to encourage smokers to quit completely, there are other ways of reducing the harm from smoking, even though this may involve the continued use of nicotine. If someone does not want to, is not ready to or is unable to stop smoking in one step, the guidance suggests that licensed nicotine replacement therapies could be of use.
My noble friend Lord Borwick asked about the possibility of sponsoring research in this area. We already know quite a lot about the safety profile of nicotine and its use in cutting down and quitting. The evidence we have is that these products are used mainly to cut down and quit.
My noble friend Lord Ridley called for clearer evidence of effectiveness. The problem is that there is not good evidence of effectiveness. These products are not magic bullets, in other words, but even at this stage we feel that we want to exploit the potential that we see in them. He referred to aubergines as potential medicines. I think he would agree with me that people do not eat aubergines in the expectation that that will help them to quit smoking. Clearly, whatever remedy we encourage has to be effective in its ability to cut down and quit the habit of smoking.
There is potentially a place for e-cigarettes within a harm-reduction approach to public health, but only if they meet the requirements set out in the public health guidance; that is, if they are licensed medicines. I would expect that the NHS and health professionals would also only recommend the use of e-cigarettes that are licensed as medicines. My noble friend Lord Astor asked whether we envisaged e-cigarettes being sold on prescription. We want effective products to be widely available, not just on prescription but in general sale outlets such as supermarkets and corner shops.
The noble Lord, Lord Hunt, asked how much it would cost an e-cigarette manufacturer to get a medicines licence. The impact assessment that we published estimated that the annualised cost to a single UK e-cigarette importer for complying with medicines regulation ranged from £87,000 to £266,000.
I am particularly grateful to my noble friend Lord Astor for securing this debate because it provides me with the opportunity to explain to your Lordships the action that is under way to regulate e-cigarettes. As the Chief Medical Officer for England has said, since more and more people are using e-cigarettes, it is only right that these products are properly regulated to be safe and work effectively.
A European tobacco products directive was proposed late last year and is now in its final stages of negotiation in Brussels. I can tell noble Lords that no deal has yet been reached in the discussions but the Government hope that agreement might be reached shortly. I reassure your Lordships that the United Kingdom has been active during these negotiations, as we believe that the proposed tobacco products directive will benefit public health and help to reduce the number of young people who take up smoking in the UK.
From the outset, it was envisaged that e-cigarettes would be regulated within the proposed directive. Protecting and promoting public health has always been our starting point, and we want safe and effective nicotine-containing products that can help smokers cut down and quit. The Government took the view that proportionate medicines regulation was the best way to deliver that objective.
Viscount Astor
Does my noble friend consider that e-cigarettes that contain no nicotine at all but contain other flavours will or should come under the tobacco directive?
Earl Howe
My Lords, that is probably the hardest question that my noble friend has asked me during this debate. My answer is that we certainly need to give careful consideration to that issue, which is about products that have the appearance of e-cigarettes but contain no nicotine. We would need to look at how common those products are or are becoming. Frankly, that work has yet to be done, but I am grateful to him for raising the issue.
I was speaking about our approach to the regulation of e-cigarettes, saying that we felt that proportionate medicines regulation was the best way forward. Nevertheless, we must consider carefully the views that have been forthcoming, including from the European Parliament, that there are alternative approaches to the regulation of e-cigarettes. Moving forward, the Government will want to be satisfied that the directive can deliver the right checks and balances on e-cigarettes. It is important to underscore the fact that there is a wide consensus across the European Commission, the European Parliament and European member states that additional regulatory safeguards are needed for this relatively new category of product. We are listening carefully to the genuine debate about how best to take this forward in the directive.
There is also emerging consensus that the advertising of e-cigarettes needs to be controlled. Options for doing so as part of the proposed European directive are under negotiation. In addition, the Committee of Advertising Practice, which writes and maintains the UK advertising codes that are then administered by the Advertising Standards Authority, announced in October that it intends to develop new rules to give clarity to advertisers and to ensure that e-cigarettes are promoted responsibly. It is considering running a public consultation on this issue early in the new year.
The Government’s priority during negotiations is to secure a directive that will reduce as far as possible how attractive e-cigarettes are to young people and closely to monitor the development of this market. When the directive has been settled, we will undertake an analysis to consider whether further action could be taken on a domestic basis, in particular to protect young people from e-cigarettes that contain nicotine. We also need to give further consideration to my noble friend’s question about non-nicotine-containing products, as I mentioned.
Regardless of how e-cigarettes are regulated within the proposed directive, we will still encourage the manufacturers of these products voluntarily to seek medicines licences for their e-cigarettes, so that they can be made available to support smokers to quit in the same way as other forms of nicotine replacement therapy, such as gum and patches. These e-cigarettes could be recommended for use in reducing harm, in accordance with the recently published public health guidelines.
Viscount Ridley
Has my noble friend taken on board the point that both I and the noble Lord, Lord Hunt, raised about the risk of regulation stifling innovation? By stifling innovation and slowing down the rate of take-up of these things, regulation could kill more people by preventing their coming off tobacco cigarettes.
Earl Howe
I most certainly have taken that point on board. I am grateful to my noble friend, who I hope will take some encouragement from what I said about our wish to see take-up of effective products. However, we need to be cautious about allowing products to flood the market that purport to contain certain quantities of nicotine and to deliver them safely but in fact do not. The safety and efficacy of these products are particularly important and we need to look at that.
EU: Financial Transaction Tax (EUC Report)
(11 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Harrison
To ask Her Majesty’s Government what assessment they have made of the Report of the European Union Committee Financial Transaction Tax: Alive and Deadly (7th Report, HL Paper 86).
Lord Harrison (Lab)
My Lords, I am delighted to introduce the new EU Committee report, Financial Transaction Tax: Alive and Deadly. I thank fellow members of the Sub-Committee on Economic and Financial Affairs, which undertook this inquiry, for the contributions they will make today, and other distinguished Members of the House.
This is an update report on the Commission’s contentious proposals for a financial transaction tax, following on from our March 2012 report, Towards a Financial Transaction Tax?. That report found the Commission’s proposals seriously wanting, and likely to fail the five objectives that the Commission had set itself. We contended then that there was a significant threat of relocation of financial activity outside the EU as well as the City of London, were the FTT to go live. You would have imagined that we would have rejoiced when the proposals for such an EU-wide FTT later ran into the sand—far from it. Let me explain.
In June 2012, a breakaway group of 11 member states, led by France and Germany, announced their intention to proceed with an FTT under the enhanced co-operation procedure, whereby nine or more member states can take a proposal forward without binding those who do not wish to participate. The UK Government made clear, with my committee’s support, that they would not participate. However, we were deeply alarmed that the proposal could nevertheless have a serious detrimental impact on the UK. We grew even more agitated when the Council vote approving use of the enhanced co-operation procedure went ahead without a text having been published—a veritable case of buying a pig in a poke.
Three weeks later, on 14 February 2013, the Commission did indeed publish its detailed proposal, but the revised version included new and disturbing anti-avoidance provisions, including the significant issuance principle. When we took evidence from Commission official Manfred Bergmann in March 2013, he told us, to our open-mouthed astonishment, that there would be no legal obligation on UK authorities to collect the new tax. This contradicted our view that the United Kingdom could indeed be obliged to collect the tax on behalf of participating member states under the EU regime, which requires all member states to assist each other in the recovery of tax. In our view, the proposal failed to meet the key criterion for enhanced co-operation, which requires that any proposal must respect the competences, rights and obligations of all non-participating member states.
We urged the Government to launch a legal challenge against the proposal. The Government belatedly took our advice, and in April this year challenged the use of enhanced co-operation. In the mean time, we asked the Commission to provide urgent clarification of the feared legal obligation that the United Kingdom authorities would have to collect the tax. This, the Commission signally failed to do for a full six months.
Later, a leaked Council Legal Service opinion concluded that the deemed establishment principle, on which the proposal was based, did not comply with the treaty requirements for enhanced co-operation on several grounds: notably, that it would represent extraterritorial taxation; it could discriminate to the detriment of other parties caught by the deemed establishment principle; it failed to respect the competence of non-participating member states; it would distort competition; and, finally, it would inhibit the free movement of capital.
In light of these significant developments, we undertook this short update inquiry, taking evidence from Heinz Zourek, Director-General, Taxation and Customs Union, European Commission. Our findings are clear: in our view, the Commission has failed to demonstrate that it has taken full account of the interests of non-participating member states. The Commission confessed that it had brought forward a deliberately contentious proposal with the studied intention of challenging participating member states to excise those elements they found inimical—an unworthy and divisive tactic. Moreover, it undermines the Commission’s obligations to defend the interests of all member states and throws into doubt use of the enhanced co-operation tool in the future—a significant by-product of this study. In contrast, we found the Council Legal Service opinion highly persuasive. It demonstrates in concrete terms how the proposal would breach European Union law in respect of the integrity of the single market. Moreover, we jib at the Commission’s artificial distinction between imposing the financial transaction tax and the collection of the tax from member states.
We published our report last week but already events have moved on. Media reports emerged that the Commission had finally produced a legal reply to the Council Legal Service. In addition, the Financial Times last week reported a compromise proposal emerging from the Lithuanian presidency, seeking to limit the tax’s broad scope while still retaining the element of restraining the impact on high-frequency trading. However, we understand that the compromise did not address key issues of extraterritoriality or the dubious legality of the tax. What update can the Minister give us on these negotiations? Does he predict, as we do, that the political weight behind the FTT—often misunderstood in this country—means that a proposal will nevertheless emerge in some shape or form? What efforts is he making to ensure that the potential damaging effect of such a tax is limited not only for the United Kingdom and other non-participants but, indeed, for all European Union member states?
I should warn the Minister that we do not let the Government off scot-free either. While we welcomed their legal challenge, we are frustrated that it took so long for them to sit up and take notice of the repeated, and increasingly admonitory, warnings that we have spelt out in no fewer than 12 letters to his ministerial colleagues over the past 18 months. What update can he give us on the progress of the Government’s legal challenge? When does he expect the Court of Justice to reach a decision? What assurances can he give us that the Government are taking the proposal, and its potential implications for the City of London, the United Kingdom and, indeed, the entire European Union, seriously? Are the Government engaging positively in negotiations in Brussels as they unfold, especially with other non-participating member states?
The financial transaction tax is a real and present danger to the City of London, Europe’s premier global financial centre, and to all of us who derive pensions and savings from its teeming financial activities.
Lord Vallance of Tummel (LD)
My Lords, I simply want to reinforce one specific point that has just been made by the noble Lord, Lord Harrison. Our report raises an important issue concerning the deployment of the enhanced co-operation procedure itself. The FTT case is only the third time the procedure has been used since it came into being in 1999, but it could well become more commonplace in a future where different groups of EU nations wish to take different courses, or proceed more quickly than others.
In the FTT case, the use of the procedure has left a bad taste in the mouth. When it was put to the vote last January, I imagine that, in abstaining, our Government naively assumed that the terms of the tax to be adopted would mirror those the Commission had already put forward and which had failed to find favour with many states, including the UK. But as the noble Lord, Lord Harrison, has said, the proposal the Commission advanced only three weeks later was significantly different, not least in its assertion of the twin principles of “deemed establishment” and “issuance”. That combination of principles could clearly have a major impact on financial institutions in non-participating and third-party countries which could not have been foreseen at the time of the vote.
It seems unlikely that the Commission was entirely unaware of the principles and their potential impact when the vote took place. Was this a matter of oversight or deviousness on the part of the Commission and sponsoring countries? Who knows? However, one can imagine that had the boot been on the other foot and a principal sponsor had been the UK, tales of Albion’s traditional perfidy would have been doing the rounds in the corridors of Brussels. This has not been one of the European Union’s finest hours and I say so sadly, as a strong supporter.
As to the lessons for the future, whatever the outcome of the FTT proposal, the enhanced co-operation procedure needs to be tidied up, made more robust and be seen to be fair. Put simply, all significant cards need to be face-up on the table when a vote is taken to adopt it. Ideally, a fully fledged scheme should be worked up and open to scrutiny before a vote is taken, accompanied by a thorough impact assessment that distinguishes between participating and non-participating countries, and with an analysis of any extra-territorial consequences. Without a reformed approach along these lines, what could be a useful and effective procedure will simply fall into disrepute. That is not in the interests of the European Union or its member states and I hope that, when the dust has settled on the specific FTT issue, the Government will take the initiative in calling for reform of the enhanced co-operation procedure itself.
Lord Dear (CB)
My Lords, I congratulate the noble Lord, Lord Harrison, on securing this debate. My contribution, like that of others, will necessarily be short and I will take a broad brush to this issue. I am a member of the EU Select Committee and of the Economic and Financial Affairs Sub-Committee, which conducted this inquiry. I think I speak for all of us when I say that we considered the financial transaction tax looking for a kernel of benefit to this country and a scintilla of logic behind the imposition of the tax. What we found, it is fair to say, was instead a desire to generate revenue quickly and to punish the financial institutions that it was thought had landed the whole of Europe—indeed, perhaps the whole world —into the sort of financial difficulties that we now experience.
That certainly ignored the issue of extraterritoriality. It also seemed to ignore the legitimacy of the tax itself and the tax’s impact on the financial markets, particularly, for example, on high-frequency trading. The consequences, as the noble Lord, Lord Harrison, has said, would include damage to the City: if the tax comes into being, it will almost certainly drive business away to places such as New York, Hong Kong and Singapore. Then there is the impact, as has already been said, on the 17 non-participating states and perhaps even on the whole of the EU. To put it another way, enhanced co-operation, on this occasion at least, seems to be the minority dictating to the majority, to the detriment of all.
We were disappointed by the slow take-up by Her Majesty’s Government, as has already been said, and by the sanguine approach adopted by the EU, which was typified in the evidence that was given to us on 19 March by Manfred Bergmann, the director of indirect taxation and tax administration at the EU— DG TAXUD is the acronym. Mr Bergmann seemed to take a particularly benign view of what would happen, and his evidence on the impact of the issuance principle, so far as it applied to non-participating states, was surprising. We welcomed the fact that the Council’s own legal service gave an opinion which, according to our report, said that,
“the deemed establishment principle does not comply with the Treaty requirements for enhanced cooperation”.
It listed a number of grounds, but perhaps the most important was the fact that the tax, if it comes into being,
“would exceed the norms of customary international law in respect of extraterritorial taxation”.
Her Majesty’s Government, as we have already been told, are now making a legal challenge—seeking an opinion of their own, if you like. I suppose one could say that is better late than never. Indeed, the timetable for that is already a matter of record in your Lordships’ Chamber.
In conclusion, I simply ask the Minister whether there is any chance at all that, if the result of the Government’s legal challenge reflects the advice of the Council Legal Service, the Government will adopt a more robust stance so far as the FTT is concerned, to the benefit of the whole country and, indeed, the whole of Europe.
Lord Hamilton of Epsom (Con)
My Lords, one of the reasons given for the introduction of the financial transaction tax is to punish the banks. This is a populist idea into which, I am afraid, our Government have also fallen. We do not want to punish the banks, we want to punish the bankers. The problem is that the bankers have all now gone, taking with them their bonuses and severance pay, and we are left with the banks, which we want to rebuild and whose balance sheets we want to get stronger. Instead, we impose levies on them and ask them for better borrowing ratios and to build up their reserves. When they are trying to do this, as well as dealing with a loan book that is looking a bit dodgy, we then complain bitterly that they are not lending to small and medium-sized enterprises. I am afraid that you cannot have it all ways round and we have to do something to encourage our banks to strengthen their balance sheets rather than tax them, which is of course what we would be doing with the financial transaction tax.
This morning we were debating in our committee what the priorities were for the EU. One of the areas identified was tackling the serious problem of unemployment, which looks to be structural in the EU today, and in particular the very high levels of youth unemployment. So what do we do? We introduce the financial transaction tax, which seems to be coming down the road and, according to an impact assessment conducted by the Commission, will cost 1.76% of gross domestic product in the EU and 500,000 jobs. Since then, the Commission has said, “No, that is not accurate”. Okay, I will take half of that: perhaps we will see GDP depressed by 0.85% and it will cost only 250,000 jobs. That is all right then, isn’t it? It will cost a fortune and do everything to counter the objectives of the EU such as bringing down unemployment—it will actually increase unemployment. This is the extraordinary way that this Commission operates.
Many of your Lordships have been to Brussels. Do we ever hear the people in the Commission talking about how they will make the EU more competitive and how they will deal with the challenges from the global marketplace? No, they are always talking about themselves and as if the EU were the centre of the universe, which to an increasing extent it is not. The EU is facing up to a diminishing share of world trade as time progresses, and it is time that it started to look outwards rather than inwards, and work out how it will face these challenges. The impact assessment thoroughly analysed that a lot of this business will be pushed abroad, and that is why it will cost so many jobs.
We then questioned the gentleman from the Directorate General of Taxation and Customs Union, did we not? We asked him, “What are you going to do about getting these other stock exchanges and so on to collect this tax?”. “Oh”, he said, “We are going to incentivise them to collect this money”. We said, “Really? How are we going to do that?”. He said, “We will allow them to keep the interest on the tax that they have collected for six months”. What world is this so-called intelligent man living in? Does he really think that the United States will collect taxes for foreign countries? It is quite unbelievable, and this is the real problem behind all this. I cannot imagine why anyone would want to stay in the EU, and I am glad that we will have an opportunity to get out of it in 2017.
Lord Carter of Coles (Lab)
My Lords, I congratulate my noble friend Lord Harrison on securing this debate. Like the noble Lord, Lord Dear, I take a wide view of this but want to focus on a couple of issues around the Treasury’s response, globalisation and the unreality of the course being proposed. We would all like to see a financial transaction tax that spans the globe, but it is totally impractical, as is such a tax that is driven by 11 members of the EU. The tax is too small and incomprehensible in how it will run.
We have heard the various arguments around specific concerns but we need to look at the unintended consequences of domestic legislation in a global financial world in which we have often seen ingenuity outrunning regulation. It is the lot of this market that it is ingenious and finds ways around things. As a precedent, we need only look at what happened in Europe in the 1960s, when the famous Regulation Q from the United States drove business offshore; it just shifted and created the Eurodollar market in the UK. It was a great achievement, and it is on that that London’s success is based. It is therefore rather strange that we are looking and not learning from those sorts of lessons. Inevitably, this activity will be driven offshore, and it will take with it jobs, data centres and all those things because these people need to be near the source of the power that drives it. The market will go to Hong Kong, Singapore and New York.
While other noble Lords have dealt with issues of enhanced co-operation and so on, I should like to focus on the issue before the Treasury. As our report shows, despite repeatedly calling the attention of the Treasury to the threats posed by the FTT, it was only in May that we had recognition of the issue and the concession that significant economic impact would result. I normally have a high opinion of Her Majesty’s Treasury but I have to say that on this occasion it was rather like the proverbial dog watching television: it could see it but did not get it. I hope now that the Treasury has got it because, unless there is an understanding of the consequences of the FTT, we will be in a serious place.
We should now look forward. One of the great successes of Britain in the post-war era was its re-emergence as the great centre of finance. That was driven by the Eurodollar. It is rather ironic that the people who drove it forward were, in fact, Harold Wilson and Lord Cromer. They understood the prize to be won, grasped it and created what now is a major source of national wealth. It would be slightly ironic if this market-friendly Government were unable to moderate or prevent the FTT. It would be interesting to hear from the Minister how we are going to preserve our place as the leading financial centre of the world.
The Earl of Caithness (Con)
My Lords, a policy conceived in revenge, born under the enhanced co-operation procedure and nurtured on envy, is a sad and frightening prospect. The FTT is such a policy, and unfortunately it is alive and deadly, as our report states.
Our report savages the proposal for the FTT. We are by no means alone: a recent report by Oxera for Marex Spectron reckoned that the FTT would destroy more sources of revenue than it would create public funding: it will cost more than it receives. Deutsches Aktieninstitut is also heavily critical of the FTT. It says that,
“the burden of the FTT as proposed by the European Commission amounts to between 5.0 and 7.3 billion euros annually for private households and non-financial companies in Germany”.
The Corporation of London has also been very critical and reckoned that the impact of the FTT would be higher for non-participating member states than for participating ones. We have to remember that the non-participating ones are in the majority. There will be further reports in the new year, and I have no doubt every one will be critical.
The attitude and behaviour of the Government has been commented on. It saddens me that my former department, the Treasury, has not improved its procedures. It was very slow to react in the first place. With hindsight, I remember we were not very quick in responding to ERM as we should have done. I thought lessons had been learnt. I have been on the committee since the first report was published, and I have noticed how almost offhand the correspondence has been. Since the change of Minister that has improved, and I ask my noble friend to make sure that that improvement continues, because it is vital that the Government listen to and work with the committee, rather than against us.
As for the Commission, there is not much left to say. I, too, sat open-mouthed at the evidence we took in Brussels from Mr Zourek. It was unbelievable, thoroughly unconvincing, almost unreal and not something I had ever expected to hear from the Commission.
Can my noble friend say something about the timing for the resolution of differences between the Commission and the Council’s legal opinion? That is important. Furthermore, is there a timing for, and any more information on, the resolution of our objection, and when will the objection by Luxembourg, on the same grounds as that of UK, be heard? Will it be at the same time as ours?
Viscount Brookeborough (CB)
My Lords, we are, as you see, very critical of the proposed FTT, for the reasons laid out in both reports, that of March 2012 and now this one.
I, too, have never seen such criticism of a Government’s response to an inquiry as can be found in paragraphs 12 to 20. I asked the Minister to explain why such a detailed and well researched report from a parliamentary committee was treated in such a dismissive way for so long. The lack of recognition and acceptance of the issues raised at the time have left us where we are now, and it is an example of the UK’s lack of engagement on what may become EU policy.
This brings me to the perceived attitude of our Government to the EU. All too often, we are prepared to say that our main interest is the single market and we are far too negative about most other things when we should not be. For example, regardless of whether we stay in the EU, amend the treaties, or get out, the success of the eurozone is important, not only to us but to the rest of the world. Suffice to say, a little more diplomacy, and less barracking from the sidelines, would not go amiss. Government ambitions for their future in the EU may be difficult, or even impossible, to achieve currently. However, that makes its lack of engagement in such issues as the FTT even more inappropriate. The adoption or otherwise of this tax will not sink the EU, but we could have had much more influence on what is now happening.
I wish to comment on this tax from the perspective of the majority of our citizens, who, like me, are lay people as far as finance is concerned. This is a direct tax and a bad precedent, not only on businesses but on individuals, which will affect most financial transactions, not only for the millions who own or trade shares but for those who have pensions. Almost everyone will be affected directly or indirectly. This is the thin end of the wedge, the slippery slope: a direct tax on individuals. Even worse, it is 11 countries attempting to tax individuals—nationals of countries outside their group and their own jurisdiction—entirely against their will and with no democratic mandate.
When a nation taxes its population, the Government must have a mandate and justify the purpose of doing so in a budget. There is no mandate or legal basis for this daylight robbery. Even worse than that, it is most inappropriate at present. I ask the Minister what the Government will do to ensure that this country and our citizens will not be adversely affected. I will just have time to address this if I borrow a little of the time of the noble Lord, Lord Flight. Box 1 of our report gives the objectives—I will not read them all—as laid out. On objective (a), as far as I am aware, there is currently no fragmentation to worry about. Objective (b) talks about the costs of the recent crisis. None of what we are talking about, or the bank resolution fund—which we are not talking about today, but which is important—refers to the current crisis and the cost. It is all about the future. Objective (c) adds:
“To create appropriate disincentives for transactions which do not enhance the efficiency of the financial markets and thus trigger overinvestment in activities which are not welfare enhancing”.
That is the woolliest rubbish of which one could possibly conceive. How on earth is an inert tax going to differentiate between actions which may not be welfare enhancing? That is absolutely ridiculous. Luckily, one other objective was dropped: namely, a new revenue stream that could gradually displace national contributions. Does anybody in this Room or anywhere else think that our contributions will ever be reduced by anything?
Lord Davies of Stamford (Lab)
My Lords, I start by congratulating my colleagues, who did 90% of the work on this report before I joined the committee, on having done some sound work and having revealed, way ahead of the Commission or the Government realising it, the impact on non-participating states of this proposal.
By the way, the Government’s position is quite absurd. Most reasonable, sensible people litigate only when they feel very strongly about something. If they feel strongly about something they are given the opportunity to vote on, they vote against. This Government succeeded in abstaining and then in starting litigation. Their credibility is pretty small.
In my brief time, I will summarise in four propositions what I feel about this proposal, about which I do not take as tragic a view as many of my colleagues. The first proposition is that all taxes are unpopular. Any new tax produces an outcry, sometimes hysterical, from those who are going to be, or might be, impacted. One has to keep one’s cool against that noise.
Secondly, all taxes have perverse economic consequences. I say to the noble Lord, Lord Hamilton, that all taxes, as a first-order effect, reduce GDP because they reduce demand. Whether they ultimately have a negative effect on a net basis depends on how that money is spent by the taxing authority. However, direct taxes are enormously dangerous because they impact directly on incentives to work, to save, to take risks, to set up enterprises and to invest. On the other hand, indirect consumption taxes have the effect of impacting most, by definition, on people with the highest consumption ratios—in other words, the poorest people in society—so they are very unfair. The financial transaction tax has neither of those two disadvantages. If you implemented it around the world, it might be pretty close to being an ideal tax.
Thirdly, contrary to what you might expect theoretically, tax arbitrage, or displacement of financial markets in response to taxation, is actually much less effective and efficient than you might suppose, for a whole host of reasons. One is that people always want to trade in the deepest markets. If you move out of the most liquid, deepest markets, you will find that you are operating against wider spreads, which will more than compensate for any avoidance of tax. That is particularly true if, as in this case, a tax is 10 basis points.
The main reason why the market in trading in UK equities has not moved into derivatives, contracts for difference, the option market and so forth is because people would be paying for much greater spreads than they would be gaining on the stamp duty tax—that tax, of course, is 50 basis points. There are other reasons why there is not so much displacement as you might expect, one of which is the time zone problem, another of which is that financial markets, particularly clearing houses and their principal customers—the major banks—do not like cutting across major tax authorities. They are particularly terrified of the IRS, of course, but they do not want to have an argument with any major tax authority, including, in this case, the Fisc or the Finanzamt. They do not want to have an argument with the Inland Revenue, which is why, when they set up American depositary receipt markets in New York in British equities, the American banks concerned have always paid the stamp duty at the front end on an advance basis: I think it is something like 200 basis points. They have accepted that although I do not think that obligation could ever be enforced in a court of law. Perhaps the Minister will confirm this.
Finally, the report argues that this tax will impact in practice on a lot of investors, both retail and wholesale, and on a lot of residents—institutional and otherwise, corporate and otherwise—in this country, even though we do not participate in it. If we get none of the benefits because we do not receive any receipts from the tax, of course, and the benefits of displacement from other markets where they are participating directly in the tax are much less than anticipated, there may well come a time when the equation is such that it would be worth our while to join in the tax and join in sharing in the proceeds. This is a matter which we need—if the tax comes in at all—to keep permanently under review.
Lord Kerr of Kinlochard (CB)
I would like to reassure the Minister that we support the Government’s present position. It was the abstention that surprised us, not the litigation. We were rather keen on the idea of litigation.
We have been disappointed by the disdain with which the Government have dismissed our concerns down the years. I was disappointed in 2012 when the Minister wrote to us, saying:
“We are sceptical whether other Member States will agree to a … sub EU-27 … FTT or that it would work. If they decide to go ahead with a EU17 FTT, it may not necessarily be bad for the UK because: UK may gain market share … and … the impact on the UK may be no different from that on other international financial centres outside the euro area such as New York or Hong Kong”.
Really? New York and Hong Kong are not subject to the mutual assistance directive; we are. New York and Hong Kong would not collect this tax, as the noble Lord, Lord Hamilton, pointed out. They would be laughing all the way to the bank. The true cost of the financial transaction tax—if it comes in—would be the transactions displaced, which would migrate offshore, out of the whole of the EU, including away from London. It is a pernicious proposal.
I was disappointed when the Government, in explaining why they abstained rather than opposed the idea of an FTT at 11, told us in Mr Clark’s letter this year that,
“the Government attaches great importance to the principle of tax sovereignty, and therefore believes other member states should be free to set their own tax policies … We also recognise that introduction of a FTT is of great importance to several of the participating member states. Voting against the authorising proposal, rather than abstaining, could have undermined these messages”.
I think that is completely absurd. I entirely agree with the doctrine of the principle of tax sovereignty, but that means that member states are entitled to impose whatever taxes they like in their own countries provided they do not discriminate against other member states and do not damage the interests of other member states. However, it does not mean that they are entitled to impose a tax that damages us because we have to collect it at no benefit to our Exchequer but at great damage to our markets. That is an absurd reading of tax sovereignty. It shows a defensive Treasury that is refusing to get out there, argue proactively and build alliances. After all, 17 member states are not going to implement this tax. Had we approached them and argued the EU interest, and argued that EU markets, including their markets as well as ours, would be damaged by this tax, I do not believe that it would have been impossible to block it. I think that the Government now agree, because they are litigating, that it is a highly undesirable measure.
I draw four short morals from this sad story. First, it is almost always a mistake to say, “Roll out the red carpet, let them do as they like, the business will come to London”. That was Boris Johnson’s position. As usual, he got completely the wrong end of the stick. Sadly, the Government seem to have held on to the wrong end of the stick for some considerable time.
Secondly, as the noble Lord, Lord Vallance, said, the enhanced co-operation procedure is a new procedure. Case law is being developed. It will take some time to construct sensible ground rules for ensuring that Articles 326 and 327 are respected. I suggest three rules: first, the substantive proposal must be on the table before the procedural decision is taken, as was suggested by the noble Lord, Lord Vallance; secondly, the Commission and the Council secretariat must ensure that any subsequent amendments do not introduce detriment to non-participants; and thirdly, the overall EU interest must be respected at all times by all the institutions, including the Commission, which must not allow itself to become the secretariat of a subset of member states.
Lastly, we know that the Treasury is short-staffed and short on EU expertise. It is all the more sensible, therefore, to listen to the expertise available in this House and stop dismissing our reports with delay and disdain. I know that the Minister will not do that.
Lord Liddle (Lab)
My Lords, I declare an interest as the chair of the Policy Network think tank, which produced the report for the City of London Corporation on the future of financial services in Europe. It is available on our website and includes reference to the financial transaction tax.
The Opposition applaud this debate. We agree with what my noble friend Lord Harrison said. He posed a number of relevant questions to the Government and the Minister that need to be answered. A rethink of the financial transaction tax is probably under way in Brussels at the moment. I remember, as a naive young man, reading the article by the Nobel laureate James Tobin which first proposed a version of the financial transaction tax and being very impressed by it. However, it was always clear that it was a very difficult proposal. It would certainly be difficult to make it work unless there was a transatlantic agreement—in the modern world, it may not be possible to do it even then.
Enhanced co-operation raises hugely difficult issues in this area. Under the treaty, enhanced co-operation can go ahead only where it does not do damage to the member states that are not taking part. Therefore, the Government were right in this case to mount a legal challenge. I am not normally of the view that one should conduct one’s engagement in the European Union by mounting legal challenges—negotiation is much better—but in this case, where enhanced co-operation was being pushed ahead in a way that was detrimental to other member states, they were right to take the matter to court.
Anyone who has talked to people on the ground knows that this proposal has run into great difficulties, that many of the member states that initially supported it are having very serious second thoughts and that it is almost certain that the Commission proposals will be heavily revised. We do not know what the outcome of that will be, but the existing proposal looks pretty dead in the water.
However, noble Lords have to take into account the extremely strong feeling on the continent—and in this country—that it was the financial sector that caused the crisis and it is the financial sector that has to pay for the consequences of its irresponsibility. Of course, that is not an argument for a financial transaction tax but that is the principle on which a lot of the political momentum behind this proposal is based. It is linked to the idea that when things go wrong in future there should be bail-ins, not bailouts, and is intended to provide revenues for dealing with bank resolution in the future.
In Britain we have raised taxes on the financial sector. The bank levy is now going to be £3 billion by 2018-19, and stamp duty will be a similar amount. So £6 billion a year, more than we raise in wine duty, vehicle excise duty and inheritance tax, will come from specific taxes on the financial sector. We should talk to our partners about much more effective ways of taxing the financial sector across the Union and get rid of this unfortunate enhanced co-operation proposal.
Lord Newby (LD)
My Lords, I am extremely grateful to the noble Lord, Lord Harrison, for introducing the report, and to all noble Lords who have spoken. I think that all bar a couple of members of the committee have participated in the debate or are here. I therefore feel that I am giving evidence to the committee rather than making a speech to the Grand Committee, which makes the challenge all the more formidable. As one would have expected from the committee, the document is thorough and well researched, and is bound, as previous reports on this subject have been, to help colour perceptions and debate in Brussels and across the EU, where sometimes the reports of your Lordships’ EU Committee are read more carefully than they are in the UK.
The committee’s report makes a number of points with which the Government strongly agree. First, the committee expresses strong misgivings about the legality of the FTT proposal. Obviously, the Government share those misgivings and that is why we have taken the case to the European Court of Justice. As the committee notes, of particular concern to the UK is the extraterritorial impact of the so-called residence principle, which, for example, would bring into scope of the tax a UK pension fund buying UK government bonds from the London branch of a bank headquartered in Frankfurt. This is, in our view, an infringement of the provisions of the treaty designed to protect the position of non-participating member states under enhanced co-operation, and that is at the heart of our challenge to the proposal.
That brings me on to the second point that your Lordships’ committee discussed and which has been raised this afternoon: the credibility of enhanced co-operation as a way of doing business at all. The committee makes the perfectly valid point that there is a real risk of harm to the credibility of enhanced co-operation as a tool in the future because of the way that it has been operated in this case. We agree that there has been a triple failure: in bringing forward this legislation in undue haste; in paying insufficient regard to the views of non-participating member states; and in failing to support the proposal with a sufficiently thorough impact analysis—a point tellingly made by the noble Lord, Lord Hamilton. We completely agree with the committee that, particularly if this tool is to be more frequently used, it must command the confidence of all member states. Indeed, this is the very point that the Government have been making to Council colleagues during these negotiations.
The conditions that govern the use of enhanced co-operation are set out in the treaty in quite high-level terms, which makes it important during these early uses of enhanced co-operation that the right precedents are set in order to give the kind of confidence that we believe all member states need if it is to be used more frequently. Like the committee, we do not believe that this has been a helpful precedent in that respect. The conditions set out by the noble Lords, Lord Vallance and Lord Kerr, about the future use of the procedure seem eminently sensible.
The third concern, rightly highlighted by the committee, is that it is highly unclear how the tax will be collected, and what collection obligations are implied for non-participating member states. What is clear, as the committee points out, is that the UK will be required to fulfil any obligations it incurs under the mutual assistance in recovery directive. For that reason, as the committee acknowledges in its report, we have included in our legal challenge the ground that an FTT would impose collection costs on non-participating member states that should properly, under the terms of the treaty, be fully borne by the participating member states.
However, there is a theme in the report on which I cannot agree with the committee: the suggestion that the Government have been in any way complacent in relation to the risks of an FTT. The Government made their concerns about an FTT clear from the outset. In November 2011 the Chancellor highlighted the serious problems with the Commission’s original proposal to other member states, and indeed UK-led opposition to what was on the table resulted in that proposal being dropped.
It was obvious then that the proposal had not gone away, and the Government were very soon considering, and indeed taking legal advice on, the implications for the UK of an FTT under enhanced co-operation. When Council authorisation for enhanced co-operation was sought at ECOFIN this January, we tabled a statement to the minutes of the meeting recording our serious reservations about the legality of the authorising decision. The report acknowledges the Government’s point that it would not have made a difference to a vote if we had voted against the decision, rather than abstained, but argues that we should have sought support for a blocking vote.
Lord Kerr of Kinlochard
It is certainly true that the report quotes the Government’s view, but I do not think that we shared the Government’s view or acknowledged it as being correct. The view of the committee was that it was a pity that the Government had not been out seeking allies against the tax.
Lord Newby
My Lords, we will probably have to agree to disagree on this. As the previous Financial Secretary pointed out in the correspondence that the noble Lord, Lord Kerr, quoted, it was clear from discussions that took place in the lead-up to the ECOFIN meeting that a qualifying majority of member states was prepared to support the authorising decision. Moreover, abstention had no bearing on the prospects for our subsequent legal challenge. The noble Lord, Lord Kerr, talks about building alliances, an issue that arose when we last discussed this matter, but we have to accept, as the noble Lord, Lord Liddle, pointed out, the strength of the political will across much of the EU to introduce this tax. The UK standing up to say, “We are going to vote against it” would not have affected that. It is inconceivable that this would not have gone ahead at that meeting, whatever we had done.
Lord Harrison
Perhaps the Minister can be helpful. The committee has made that point time and again. Would it be useful if the Minister demonstrated the activity of the Government in Brussels in talking to other member states: what canvassing they did and with whom they spoke? We would like to see the ocular proof of the Government’s enthusiasm to block this tax.
Lord Newby
My Lords, I will not go through a blow-by-blow account of which member state we spoke to at which point. The view was taken, which I believe was the correct one, that at that stage this proposal was unblockable, because of the political will to which the noble Lord, Lord Liddle, referred. We may think that other member states are misguided. History may prove they are misguided. But there is a slight tendency in the UK to believe that we always know best. We may well know best in this case, but the French and the Germans think they know best, and it is a bold UK Government—or committee of your Lordships’ House—who are unambiguously sure that they know better than a large number of major EU member states.
Lord Davies of Stamford
My Lords, I put it to the Minister that the Government’s position is completely absurd. He is saying that the Government did not vote against this proposal because they thought they had a majority against them. Any democratic institution would break down if no one bothered to vote because they thought that at any one time there might be a majority against them. If the Government really felt strongly about something, so strongly that they were prepared to litigate, which is a much more provocative thing to do because it would put at risk all sorts of good will, the least they could have done would have been to have voted against it when they had the opportunity to do so. By not doing so, they lost a great deal of credibility.
Lord Newby
As I said earlier, we will have to agree to disagree on that. I do not believe that the Government have lost credibility in the EU because of the stance they took. People believe that the Government understood the political realities.
Lord Kerr of Kinlochard
I am sorry to interrupt the Minister again, but from all I hear, I do not think that there was a campaign with a ministerial delegation and a City delegation visiting capitals other than the 11 arguing the damage to their markets and ours—the overall EU market—which would result from the FTT. If I am wrong about that and such a delegation did go out to Europe, I will withdraw my criticism.
I believe that Policy Network is right when, in its report this week to the City of London Corporation, it states that there is an urgent need to:
“Upgrade the UK’s presence and leadership in Brussels by building up close ties with like-minded member states. Moving from a reactive to a preventive and agenda-setting position seems particularly paramount in that respect”.
I hope that the Minister will at least agree with that.
Viscount Brookeborough
Perhaps I may ask a simple question. I think the Minister said that the majority of politicians in Europe wanted this tax and therefore it would be difficult. Can he explain how 11 out of the total of the member states comes out as a majority?
Lord Newby
I apologise if I said that. What I meant to say was that there was not a qualified majority against the proposal. There was not a sufficient weight to prevent the proposal going through. I think that that was borne out by what happened at the relevant Council meeting.
Lord Newby
My Lords, I have 12 minutes, of which I have used 11, and I have not answered a single substantive question posed by noble Lords. It is just possible that I might do so if I am allowed to respond to some of the points that have been raised.
I was asked where matters stand in terms of discussions in the Council. A Lithuanian document was produced last week which I think has been rather mischaracterised as to its significance. It is a short document and I have it with me. It was discussed briefly at last Thursday’s working group, but many participants were reluctant to discuss it, taking the view that the technical discussions should not run ahead of and potentially prejudice the more substantive discussions, so consideration of it was limited. There has been no substantive breakthrough in the negotiations recently, largely because of the situation in Germany. As noble Lords will be aware, the German coalition deal has now been ratified and we expect more progress in the new year.
The noble Earl, Lord Caithness, asked about the timing of the resolution of the difference between the Council and the Commission legal opinions. The conflicting opinions of the Commission and Council legal services were discussed by the 12 December working group and it is now for the Council members and the 11 participating member states to weigh these as they begin to consider a compromise proposal. We are not aware of any challenge from Luxembourg.
On the timing of the legal challenge, we have exchanged written arguments with the Council. Several member states and other eligible parties have intervened. Written proceedings will come to a close in January, and it is then down to the court. But, as noble Lords will be aware, oral proceedings would ordinarily take place after written proceedings close.
On the argument that has repeatedly been made about our engaging positively with other member states, the UK has been closely engaged with these negotiations from the start. We have held numerous meetings with other member states about the FTT. UK officials are closely engaged in the Council working groups, of which there have been five, including submitting detailed written technical questions to the committee. It simply is not the case that we have not been and will not continue to be fully engaged.
I have gone over my time, for which I apologise. I thank the noble Lord, Lord Harrison, and members of the committee again for the report, and for generating what has been, as usual, an extremely stimulating debate.
Lord Harrison
I apologise; the noble Lord’s comments have provoked a number of interventions. Can he promise the Committee that he will write to us on those many questions which he was eager to answer, and give us full and ample replies to those which he was not able to reach?
Barnett Formula
(11 years ago)
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Lord Shipley
To ask Her Majesty’s Government what plans they have to review the Barnett Formula in the light of the Local Government Association’s recommendation that it be replaced with a new needs-based funding model.
Lord Shipley (LD)
My Lords, I first declare my vice-presidency of the Local Government Association, and I thank noble Lords taking part in this debate for their contributions.
I have asked to discuss the Barnett formula today for three reasons: first, because the debate that will take place over the next few months prior to the referendum on Scottish independence in September will cause the Barnett formula to be under close public scrutiny; secondly, because of the rising demand across England for devolved powers from Whitehall similar to those available to the devolved Administrations of Scotland, Wales and Northern Ireland; and thirdly, because public spending cuts in England are making people in England question why the Barnett formula exists. That is of course a question that the noble Lord, Lord Barnett, has himself asked many times. Indeed, it is unclear why it has been left alone for a generation, why it is so out of date and why it allocates more money to the devolved Administrations per capita than it does to England.
The Barnett formula was devised as a temporary measure to resolve problems over the funding allocations between England, Scotland, Northern Ireland and Wales ahead of the 1979 referendum on Scottish devolution. Many things have changed since the formula was created. As the Local Government Association chairman, Sir Merrick Cockell, said recently, it is “a historic relic”. He is right, because it has locked inequalities into its system of distribution. The consequence is that in terms of identifiable public spending by country and region, all three of the devolved Administrations have higher public spending per head of population than that of any English region, including London. The Office for National Statistics says that in 2011-12, Scotland received £10,088 per head, Wales £9,740, Northern Ireland £10,623 and England just £8,491; those are the latest available figures. It is very hard to justify England doing so relatively badly, not least because of the claim, sometimes correct, that public services in Scotland are better than in England. There is a rising tide of opinion in England that tax revenue is being raised in England but is then diverted from England to be spent in Scotland on higher standards of public services. However, that is not entirely true: the tax raised in England is actually raised in London. Furthermore, if the formula did not exist and if Scotland was independent, tax revenues from oil would broadly make up for the loss because 90% of the oil would be in Scottish waters.
A Select Committee of this House reviewed the Barnett formula in 2009. It pointed out that the formula was used to allocate over half the total public expenditure in Scotland, Wales and Northern Ireland. It also pointed out that although the annual increment in funds is made on the basis of recent population figures, the baseline, accumulated over the past 30 years, does not reflect today’s population in the devolved Administrations. It is therefore out of date and takes no account of the relative needs of any of the devolved Administrations. The Select Committee recommended a UK funding commission—which seems to me to be an extremely good idea—that would identify a small number of need indicators and oversee the transition to a new system of block grant made over between three and seven years. It has not happened, of course, but I would submit that it cannot be delayed for long.
I turn now to the rising demand for devolved powers in England. The recent London Finance Commission report, Raising the Capital, results from London’s boroughs and regional government looking closely at the issues of taxation and finance in the wider south-east region with a view to considering a Barnett formula-style settlement for the capital. That is welcome, except for one thing. I am increasingly aware of a rising tide of opinion in London that it should keep more of the taxes it raises. The implications of this are potentially very serious for the rest of the UK, which is why we need to think very hard, as a United Kingdom, about where taxes are raised and from whom, about what levels of public spending should apply in each part of the UK, and about a system in which need is the basis for distribution.
This debate now goes further than just London. The Core Cities Group, representing Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield, is calling for a suite of fiscal reforms for England’s larger cities. The aim is the devolution of property tax revenue streams, including council tax, stamp duty, land tax and business rates, with the ability to reform those taxes while retaining prudential rules for borrowing similar to recent changes in Scotland through the Scotland Act and as now proposed for Wales. The aim would be to generate funding to stimulate economic growth according to local needs, allowing cities to raise sustained investment for vital infrastructure projects. These proposals would be cost-neutral at the point of devolution, with no additional money being sought from the national pot beyond that which the core cities already receive, along with the ability to raise new local taxes. Such reforms would give practical effect to the ambition of the coalition Government to promote “radical devolution”. Together, the English core cities and London represent more than half of the UK economy and almost half the population, but they control only around 5% of the taxes raised in their areas. Empowered cities could join up public services and reduce dependency on London, which takes me to the current state of local government finances in England.
Last week’s Autumn Statement exempted local government from the further reductions that were applied to Whitehall departments. These measures are welcome. However, some council services are in serious difficulty, particularly because those councils more dependent on central grant cannot raise large sums through council tax and other fees and charges. Central grants for local government are to be cut by 43% by 2015-16, and there will be a funding gap of more than £15 billion by the end of the decade if things go on as they are. That takes me to the issue of fairness.
The way the Barnett formula is calculated is widely acknowledged to give more to Scotland and Northern Ireland compared with their relative needs, and less to England and Wales than their relative needs would justify, by more than £4 billion a year. This is unsustainable. Governments have consistently said over many years that they will not review the Barnett formula and, in the case of this Government, not until the public finances are stabilised. I understand the Government’s predicament. I do not argue that Scotland should necessarily get less because I believe in a funding system based upon a needs assessment, but I do argue that Wales and the constituent parts of England should be treated equally and empowered to create more of their own tax income.
As an example, Birmingham has called for a single funding pot at the city region level for local authority spending, health, and for expenditure by the Department for Work and Pensions. Savings are there to be made by reducing duplication. If the referendum next September in Scotland is in favour of independence the Barnett formula will be abolished. If there is a no vote there will inevitably be a debate about yet further devolution beyond the Scotland Act, and I personally would welcome that. When that debate happens there will be a rising demand for the fiscal and political devolution offered to Scotland also to be available in England, with a system of allocation based on needs. Now is the time to act and to set up the UK funding commission proposed by the Select Committee of your Lordships’ House four years ago. We should create a place-based system of finance in England. This could be based on the governance that has developed locally—combined authorities, health and well-being boards, joint committees, local enterprise partnerships and so on. We should give local government and their partner organisations the power to allow individual areas to shape public services and investment, and to incentivise local growth by devolving powers on taxes and spending to suit local needs beyond the 50% permitted from growth in business rates.
In conclusion, it is important that we are not divisive. We should learn from the wealth of evidence on this issue and have a mature discussion as a United Kingdom on how devolution can drive growth and a bigger local tax base, as well as on how resources can be allocated more fairly on the basis of need. In the mean time, as we await the local government settlement tomorrow, it will not be enough for the Government yet again to push this issue into the long grass.
The Duke of Montrose (Con)
My Lords, I thank my noble friend Lord Shipley for introducing this topic and for giving us such interesting views on a new form of local government that certainly contains many elements.
As he said, it is of course most understandable that devolved Administrations and local government are all looking harder at the way funding from central government is divided up. All are facing much-reduced budgets and the actual cuts relate considerably to the application of the Barnett formula. Until the last election the Scottish Government revelled in the fact that their block grant increased by two and a quarter times to nearly £29 billion. The two years of the current Administration has seen this cut so far by £589 million. My right honourable friend the Chancellor of the Exchequer on 29 June, in Hansard at col. 306, seemed to estimate that the block grant in the current year would be only £26 billion. Perhaps the Minister can tell the Committee if this is still the figure that would apply.
Similar cuts are of course being felt across all Administrations. As my noble friend Lord Shipley was saying, there have been many calls for a needs-based approach to be used in a new calculation—to the extent that many in the public now think that this occurs under the Barnett formula; but of course this is not true. There is some evidence that it was considered in the early days under what was known as the Goschen formula, which was replaced in 1979. The arguments will have been used by Scottish Secretaries of State and others to obtain funding, but the approach has not been part of the Barnett formula.
The needs-based approach was certainly central to the recommendations of the report referred to by the noble Lord, Lord Shipley, which your Lordships’ committee produced in July 2009 and which was firmly rejected by the Government. It now appears that the issue has been taken up by the more recent Holtham commission. It would be interesting to know whether its needs-based formula was the same as that put forward by your Lordships’ report, but this development has meant that people are now beginning to put figures on the disparities that it has thrown up, and local government is taking much greater interest.
Of course, there is a great deal of rethinking going on, both in administration and on the financial front. The Scottish Government are having to juggle three scenarios: the cuts to their previous budget envisaged by the Chancellor using Barnett; their own proposals for a totally independent country, where we are not in the least clear as to what funding will be available under a great many headings; and the wholly new settlement promised by the implementation of Part 3 of the Scotland Act 2012, where the Scottish Government will be raising half the taxation required for their domestic budget. Of course, this will still be governed by the overall size of the estimate of what is due under the block grant.
Given the complications that all this envisages, it is quite easily understood that there is not much sympathy from that quarter for any further adjustments. If the Minister cannot give a positive response to the noble Lord, Lord Shipley, perhaps parties should think about whether this is something that should be in their election manifestos.
Lord Jones (Lab)
My Lords, I thank the noble Lord, Lord Shipley, for initiating this debate, and his succinct address.
Were he alive, Lord Roberts of Conwy would be here today. As a long-standing ministerial and opposition opponent of his, I think that his contribution to Wales’s public life was magnificent. He was more than ever loyal to Wales’s local government units, and his journey from the Methodist manse of Ynys Môn to high rank here in your Lordships’ House is a fine essay in giving good public service. Wyn Roberts built more roads than the Romans ever did, and he built schools and hospitals. He was a fine man.
As I see it, the background to the Barnett formula was the consequence of three beleaguered Administrations of which I was a member, led first by Prime Minister Harold Wilson and then by Prime Minister James Callaghan. The latter Administration was sustained by a Lib-Lab pact of a kind. In those crisis years, as he was addressing the complex algebra of local government finance, the noble Lord, Lord Barnett, knew that the IMF was kicking in the doors of the Treasury, that the British manufacturing smokestacks were falling down by the day, that the OPEC nations had trebled—indeed, quadrupled—the price of oil, and that a fearful inflation was raging, some 27% year-on-year in 1975. That also triggered off what is now called in shorthand trade union militancy.
I will give the following brief vision of how the noble Lord coped as Chief Secretary. You would find him in the Members’ Dining Room in another place with his great friend, the noble Lord, Lord Sheldon, and he coped by opening a half-bottle of House of Commons champagne. He then went back to the Treasury that little bit better in his morale. It was from these fires in British governance that the Barnett formula arose, as it were, metaphorically so, from the political loins of the noble Lord, Lord Barnett. My one observation is to be careful for what you wish if you are a Welshman in governance, particularly in Wales. Whatever the outcome of the Scottish constitutional debate, Barnett will come to the fore in all our deliberations and arguably shall be in the manifestos of the great political parties. That is for certain.
My caution is this. Roughly speaking, per head of the population in England the sum of money per citizen is exceeded in Scotland by £1,400; and in my own country, Wales, by some £800. I have spent only 43 years here in Westminster, and I am concerned that when Whitehall mandarins have their monthly meetings they may be tempted to consider how they may be able to get rid of the responsibility as it affects the Celtic fringes. I therefore feel that before one advances one should know precisely what the outcome is. That is what the noble Lord, Lord Barnett, always did; he was an accountant by profession. I offer again the sight of the noble Lord quaffing his half-bottle of Commons champagne before going back to address problems of great crisis.
Baroness Bakewell of Hardington Mandeville (LD)
Like my noble friend Lord Shipley, I believe that the Barnett formula is fundamentally unfair and I will relate this to adult social care. As we have heard, this is an out-of-date formula for allocating resources across the UK.
The Local Government Association estimates that allocating funding on a needs-based formula would potentially increase public spending in England by £4.1 billion. This would make a huge difference to services currently stretched to their limit. There would be a decrease in Scotland and Northern Ireland. Government figures already show Scotland as overfunded. In a recent report, the Treasury said that since 1998,
“public spending per person in Scotland has been around 10 per cent higher than the UK”.
In the current climate, this is simply unsustainable.
This unfairness is understood by most people in England. In 2012, the Future of England survey indicated that 52% of those surveyed felt that Scotland received more than its fair share of funding; this was up from 24% in 2002. What implications does this have for the adult social care system, which in England is underfunded? Over the past three years, budgets have reduced by 20%. There is a growing gap between the demand for social care and the resources invested in it. The Government are not providing councils with enough funding to deliver the care people need. An additional £400 million a year is needed to maintain the same level of service, excluding inflation.
In Somerset, a secondary school which covers an area of 600 square miles transports children to and from their homes, an expensive and large logistical exercise. Delivering dignified and appropriate care to their elderly relatives in the same area is much more challenging when often the assessment is for only 20 minutes of care and the drive to the next client is 30 minutes away. The solution is to reshape local health and social care systems and invest in community-based services. These will alleviate pressure on the acute sector. The Government have acknowledged this with the Care Bill and duties on councils to provide or arrange services that prevent, delay or reduce needs.
Reforms require proper resourcing. If the funding arrangements across the UK were fairer, more could be invested in the English social care system and preventive community care services, with reduced spending on expensive A&E acute services. People will rightly see the current distribution as unfair and look at comparisons in local services received north and south of the border. The English and Scottish social care systems are different. There is different legislation, and there are different entitlements and progress on integrating health and social care. Scotland is the only part of the United Kingdom to introduce free personal care where the full costs are covered by the state. In England, the plan is to cap costs. That is a major difference. In effect, English taxpayers, through the Barnett formula, are subsidising a level of care to which they themselves do not have access.
I am pleased that we have had the opportunity today to debate this issue and I agree with my noble friend Lord Shipley that it is right that the Barnett arrangements, agreed as a temporary measure in 1979, should be reviewed. Very few people consider 34 years as temporary. To question Barnett is not to question the future of Scotland in our union. Instead, this debate is about the question of basic fairness across the UK. I therefore call on the Government to set out their plans for making a constitutional settlement fair for all.
Baroness Eaton (Con)
My Lords, I also declare an interest as a vice-president of the Local Government Association, of which I am a former chairman, and I want to add my thanks to the noble Lord, Lord Shipley, for initiating this important debate. I strongly support the recommendation made by the Local Government Association that the Barnett formula should be scrapped, and I call on the Treasury to start evaluating the alternatives. As we have heard, figures from the United Kingdom Government highlight that Scotland is overfunded. The noble Lord, Lord Shipley, has made the case as to why the formula is unfair and I support his call for the return of the £4 billion to England that he referred to so strongly. This is imperative at a time when money is desperately needed for all public services, including for adult social care which we have heard about so ably from the noble Baroness, Lady Bakewell.
Basic fairness is not just about the money, important as that is. It is also about devolution from Whitehall to local government in England. This will give people a greater say in their public services and a more meaningful reason to vote in local elections. Recent polling by Ipsos MORI showed that 79% of people trust their council, whereas only 11% trust central Government. English councils are delivering for their communities and the Barnett formula should reflect that.
I would now like to turn very briefly to how the Government can deliver devolution across the United Kingdom in a way that is fair to England, Wales, Scotland, and Northern Ireland. As we have heard already in today’s debate, Her Majesty’s Government need to ensure that money is distributed fairly across the four countries. Having reformed the Barnett formula, HM Government should aim to implement the informative recommendations made in the document produced by the Local Government Association entitled Rewiring Public Services. They would make sure that the benefits of devolution are felt across England, and this could be achieved by, first, adopting five-year funding settlements for local government across the lifetime of a parliament. Progress towards this goal was made in the Autumn Statement, which announced that local public services will get the same long-term indicative financial statements as central Government.
Secondly, money should be shared more fairly around England by taking financial distribution out of the hands of Ministers and replacing it with an agreement across English local government. Thirdly, local government should be given wider revenue-raising powers, and fourthly, we should develop a market in municipal bonds that gives local government access to alternative forms of finance.
Local government in England is currently dealing with unprecedented reductions to its funding. Core funding will have been cut by 43% across the lifetime of this Parliament. There is, as the noble Lord, Lord Shipley, has said, a projected £15 billion funding gap by 2019-20 that councils must close in order to meet their legal responsibility to balance the books. The size of the challenge is so great that tinkering at the margins will not be enough. Without radical change in the way funding is distributed across the UK, we risk a situation where services in England that the public care deeply about will start to fail. Bold, imaginative action and political leadership are required to restore financial stability. It is time for a fairer deal for England and English councils.
Lord Bradshaw (LD)
In his reply, I would like the Minister to address the point that if any reform—which he may or may not agree to—is to be worth while, the work on structuring it has to begin now. Elections are coming along and it is most unlikely that people will put forward radical solutions before an election. If you wait until after the election takes place, you are five years from the next, and action has got to be a very early priority for the next Government.
Other noble Lords have explained how this money is needed and I will not spend time talking about that. The previous speech indicated that bold action is necessary, but bold action rarely comes very late on in a Parliament, so I do not expect it to happen immediately. However, I do expect a real attempt—cross-party agreement would be achievable—at a proper in-depth examination of the issues which have been revealed. I do not know how such a thing can be set up or how independent it can be but I urge the Minister to really look forward and give us some hope that things are going to get better. Everybody knows that local government services in many places are on the point of breakdown. As these cuts continue for the next two years, it is going to get very serious indeed, and politicians, at the next election or immediately afterwards, have to come up with some convincing formula about how this is going to be tackled.
It is no good talking about how the Barnett formula has served us well—that is really a lot of nonsense. It was a short-term measure set up to get through a difficult election period. However, that does not mean there is any justification for letting this hang on—it is time for new and radical thought, into which local government has a really good input. I commend that to the Minister and would like to hear in his reply what he intends to do about it.
Lord Wigley (PC)
My Lords, I thank the noble Lord, Lord Shipley, for facilitating this debate. I identified with many of the points that he made. I also join the noble Lord, Lord Jones, in his comments about the late Wyn Roberts, whom we all miss very much.
I am glad this opportunity has arisen to comment on the LGA’s submission on the Barnett formula in the context of the Autumn Statement. There is only time to make a few benchmark points today, but it is worth noting that the LGA is working on alternative funding proposals, which will be published, I believe, next summer. I welcome that, although I hope they will consult both the WLGA and the devolved Government in Wales in taking that forward. The implication is that there should be mechanisms for distributing resources according to need within England as well as within the UK.
Noble Lords will be aware of the grave dissatisfaction that has existed in Wales for many years with regard to the inequity of the Barnett formula. The report of the Select Committee on the Barnett Formula in the House of Lords in the 2008-09 Session,
“concluded that the Barnett Formula should no longer be used to determine annual increases in the block grant for the United Kingdom’s devolved administrations”.
It added the pertinent comment:
“The Barnett Formula also takes no account of the relative needs of any of the devolved administrations”.
The Holtham commission, which investigated these matters in Wales, produced two assessments. The first, on the basis of the formula used within England to distribute resources, estimated that Wales was underfunded in 2010-11 by some £300 million. The second independent assessment identified a £400 million shortfall. The Silk commission, which reported on possible changes to the financial powers of the National Assembly, agreed with Holtham in its analysis. The Holtham commission set out, as an alternative to the Barnett formula, parameters for a needs-based formula which included the number of children, the number of older people, ethnicity, income poverty, prevalence of ill health and sparsity of population.
The conclusions of the House of Lords Select Committee to which I referred spelt out as parameters the age structure of the population, low income, ill health and disability, and economic weakness. To that extent, the House of Lords Select Committee, the Holtham report and the Silk commission were moving in the same direction. The LGA in its paper recognised the significance of looking at,
“the total identifiable public spending”,
and states:
“Scotland is overfunded by £4.4 bn”,
although this appears to be on the basis of Scotland’s fiscal and macroeconomic position, not on the basis of any detailed analysis of Scotland’s needs, which seems perverse.
Of course, if Scotland votes for independence it will fund the entirety of its services from taxation raised by the Scottish Government. Independence, to that extent, would bring to an end any feeling, rightly or wrongly, that Scotland is being overfunded at the expense of England. Perhaps Scottish independence will solve the problem that is bugging some colleagues here today. I do not suppose that they would support a yes vote, however.
Whereas the LGA in its paper purports to represent councils in England and Wales, it pitches its arguments solely in the context of England. It opens with the words:
“English communities are being short-changed by as much as £4.1 billion a year”.
It makes no reference in its text to the fact that Wales also is being underfunded on that basis and, presumably on the LGA’s own logic, should be receiving £300 million or £400 million a year more to put this right. Here I must note that the WLGA, which represents Welsh local authorities, while supporting the LGA’s call for a needs-based formula, has said that it,
“certainly cannot support the idea of decimating Scottish local government expenditure to achieve this, or having the entirety of any redistribution of funding to be spent solely in England on social care”.
Is the decimation of Scottish local government the alternative that Scotland faces if it votes no next September?
In conclusion, I very much support the thrust of the LGA’s approach, although the details need much further consideration. I hope, however, that all UK parties will make a pledge in their manifestos for the 2015 election to introduce a needs-based formula for distribution of resources.
The Duke of Montrose
From the study that the noble Lord has made, perhaps I may ask him whether the shortfall that the LGA was talking about is based purely on equality of distribution, or took into account the Holtham needs-based formula.
Lord Wigley
The table that was published, which I do not have time to go into in detail, referred to, “Identifiable public sector expenditure”, which is a different concept from that which is attributed by Barnett and needs analysis in its own right.
Lord Teverson (LD)
My Lords, I note that the noble Lord, Lord Wigley, asked that political parties include a needs-based formula in their manifestos. I somehow suspect that they will not be on the front pages or among the first six pledges—or three or however many pledges we choose—because this is one of those subjects that has become all too difficult, which is why this temporary situation has lasted for three decades. It certainly needs to be changed but, having said that, what is the difference that such a change would make in England? It would be an extra 4%, which I am sure would be very much welcomed by local authorities but is not a big difference. It is rather an obscure issue for the electorate, which does not make it any less important, but most people would probably interpret it as something to do with the financing of one of the more obscure London boroughs, rather than attribute it to one of our noble colleagues here.
I should like to move on and ask: what should really be done if the situation gets a little more difficult? A needs-based formula would certainly be better. I am slightly sceptical about an independent commission but the European Union manages rather objectively to distribute structural funds, so it may be that this sort of thing can happen even within a political environment. Two areas are even more important than this, one of which is the rural/urban divide that, unfortunately, my Government have so far not been able to mend much, if at all, during their period in office. I remind noble Lords that rural areas pay higher tax bills, get some 52% less in government grants, and have fewer public services because they are more difficult to deliver there. That is one of the fundamental areas, which, if we keep a similar form of local government finance to what we have now, needs to be fixed very quickly and thoroughly.
The other area that has been mentioned by other noble Lords, which is equally if not more important, is that we need to do something far more basic than changing the Barnett formula: we need to increase substantially the taxation that is raised locally. Rather than mess around with the Barnett formula, we need to start to implement a much greater degree of localism. Clearly, we have got rid of a lot of ring-fencing over the past few years. We have got rid of capping, although we have replaced that with other ways of restraining local expenditure. We have taken away barriers stopping local authorities from raising revenues in all sorts of ways. I welcome that, which came from one of the Government’s early initiatives under localism. However, over the medium term we need to move financing from 5% towards 20%, and hopefully in the longer term far higher, so that we have much more local accountability and democracy, and better local decision-making. Within Europe we are the most centralised state as far as taxation is concerned, certainly among the major states. That needs to change. We need to change the rural/urban divide. If we can do all that, then I would support my noble friend Lord Shipley in changing the Barnett formula as well.
The Earl of Mar and Kellie (LD)
My Lords, I will speak briefly in the gap.
I was a member of the Select Committee which recommended moving from the Barnett formula to needs assessment. However, the first thing we learnt from the evidence was that the Barnett formula is extremely simple to operate, which was a bonus for the Treasury, which knew immediately how much was to be allocated to Scotland, Wales and Northern Ireland.
We learnt from the evidence that England and Scotland are pretty similar in terms of needs, while Wales has a disproportionate number of ill people and Northern Ireland a disproportionate number of young people. We also learnt, as I sincerely believe, that Wales misses out under the current arithmetic of the Barnett formula. In Scotland the Barnett formula is seen as a bribe to stay.
A more valid reason, and in my view the only possible justification, for the £1,600 per person additional spend in Scotland is that the tax take from Scotland does not include the oil and gas revenues, because these are allocated to the slightly fictitious area called the United Kingdom continental shelf, not to Scotland.
Ultimately, any perceived proposed reduction in the Barnett formula is a gift to the yes campaign and the possibility of Scotland becoming a better democracy. It was a great disappointment that there was no White Paper from the no campaign, one with a title something like “The Better Governance of Scotland”.
I understand that the three major parties still have no idea what they would like to deliver for Scotland; they need to work that out. They all talk about more devolution, but I wonder how much more can be devolved before eating into what I call the four pillars of reservation: microeconomics and taxation, the welfare system, foreign policy, and defence. The solution for a better United Kingdom is never going to be described in the party election manifestos, so there is more work to be done on this.
Noble Lords should not read anything into the fact that I am speaking from this side of the Committee—I have always done so since the Grand Committee came into effect. We were allowed to sit anywhere, and I like to see the whites of the Minister’s eyes.
Lord Kennedy of Southwark (Lab)
My Lords, like other noble Lords who have spoken, I place on record my thanks to the noble Lord, Lord Shipley, for initiating this Question for Short Debate in the light of the Local Government Association’s recommendation that the Barnett formula is replaced with a new needs-based funding model.
The Barnett formula is often discussed in your Lordships’ House and I hope that, in his response to the debate, the noble Lord, Lord Newby, will give us a bit more information than we were able to get in an exchange at Question Time, and address some of the points I am going to make about the funding of local government in England and Wales. Like all noble Lords, I am aware that the formula which bears the name of my noble friend Lord Barnett was devised when he was Chief Secretary to the Treasury and has been used for more than 30 years to allocate more than half of total public expenditure in Scotland, Wales and Northern Ireland.
The Barnett formula has been criticised on a number of grounds. It has been argued, among other things, that, because of its focus on population, it fails to recognise higher levels of poverty. In this debate it is useful to look at what has happened to local government in England and Wales in recent years, and in particular since 2010. We have a picture of local government that has been described by the Prime Minister as,
“officially the most efficient part of the public sector”.
However, his Government have made bigger and earlier cuts to local government than to any other part of the public sector. Their actions have been criticised right across local government and real inequalities and unfairness have crept into the system. I still find it shocking, when I look at the figures, to see that they highlight the West Oxfordshire District Council, the local authority that covers the Prime Minister’s constituency, which is ranked in the multiple indices of deprivation at 316—with one being the most deprived and 325 being the least deprived—and which is actually getting an increase of 3.1% in its spending power. Meanwhile, other local authorities such as Hastings on the south coast and Burnley in the north-west, which are ranked 19th and 11th respectively in the same indices, are facing the maximum cut in their spending power in 2013-14, which equates to a reduction of 8.8%. I agree very much with the comments made by the noble Lord, Lord Shipley, regarding the difficulties in which some local authorities find themselves.
It is also shocking to note that the 10 most deprived local authorities in England will lose six times the amount of spending power per head of the population when compared with the 10 least deprived local authorities by 2014-15, when compared with 2010-11. The noble Lord, Lord Shipley, also referred to the calls for further devolution of powers and fiscal reforms in England. I very much agree with his comments about the core cities.
Will the noble Lord, Lord Newby, address in his response the points that the Local Government Association is calling for, to which the noble Baroness, Lady Eaton, referred, including five-year funding settlements across the public sector to give more certainty to local government? That is a sensible idea. Will he also address the point about the distribution of funds in England being taken out of the hands of Ministers and replaced with an agreement across English local government? The current arrangements are opaque and, as with the figures I highlighted earlier, people struggle to understand them and how they are arrived at. They just demonstrate unfairness in the process—a process which disadvantages people living in our most deprived areas and communities. I very much agree with the noble Baroness, Lady Eaton, that the devolution of further power to local government in England is a good thing. Like her, I have also noted the MORI polling which shows that 79% of people trust their local council, whereas only 11% trust central government. I shall not comment further on that; I leave it there.
This debate has to address the issues around spending in our most deprived communities. How do we ensure that no matter whether you are living in a deprived part of Glasgow, a deprived mining village in south Wales or on a council estate in Southwark, central, devolved and local government provide the funding that helps you improve the situation in which you and your community find yourselves, whether through the provision of better housing, better schools, the means to get the skills and training you need to get a job to provide for your family, or to look after yourself in your old age as your needs change?
The noble Duke, the Duke of Montrose, made a number of important points to which I hope the noble Lord, Lord Newby, will respond. I again thank the noble Lord, Lord Shipley, for initiating this debate and look forward to the response of the noble Lord, Lord Newby.
Lord Newby (LD)
My Lords, this is an important subject and I am grateful to the noble Lord, Lord Shipley, for giving us the opportunity to debate it this afternoon, and for all the contributions that have been made.
For what is essentially a mathematical equation, the Barnett formula retains the capacity to generate considerable passion and debate, as we have demonstrated today. Clearly, noble Lords are aware of the formula’s origins in the late 1970s. The Government of the day decided at the time of the devolution Acts in 1998 to retain the block grant and Barnett formula arrangements for determining the budgets of the devolved Administrations. The noble Lord, Lord Jones, gave us some gory details of the state of the British economy at the time but also of the extremely civilised way in which the noble Lord, Lord Barnett, grappled with them. I am sorry that there is only water on offer to the Committee this afternoon.
Successive Governments have taken the view that while the Barnett formula may not be perfect, a persuasive case has yet to be put that an obvious alternative exists that would simultaneously satisfy the devolved Administrations in Northern Ireland, Scotland and Wales and all the other bodies competing for funding from the Government—not least Whitehall departments and local authorities. While it clearly is not perfect, the Barnett formula has proven to be a relatively transparent, durable, robust and fair method of calculating changes in budgets for the devolved Administrations since devolution. It operates at a high level, based on population shares and changes to spending by comparable UK departments. Despite a considerable element of transparency, once you look into it in any detail, it does feature certain aspects of the Schleswig-Holstein problem and at the margin gets extremely complicated.
Since today’s debate was prompted by the Local Government Association’s concerns about the formula, I stress that the Government understand the concerns of English local authorities. That is why in the Autumn Statement we recognised concerns about the administration of the new homes bonus by giving that back directly to local authorities, exempted local authorities from any further reductions in annual revenue budgets to assist them in freezing council tax in 2014-15 and 2015-16, and made additional funding available to support housing and other infrastructure development.
I will make a number of general comments now and come back to some of the specific comments under the headings England, Scotland and Wales respectively. The Government are reluctant to join those who call for a rapid demolition of the funding architecture for the devolved Administrations but we recognise that there is a range of valid views on alternatives. Changes to the devolution settlements already legislated for in relation to Scotland and in prospect for Wales are increasing the levels of accountability and flexibility the devolved Administrations will have in future over their own fiscal position.
Lord Newby
My Lords, as I was saying, changes to the devolution settlements already legislated for in relation to Scotland, and in prospect for Wales, are increasing the levels of accountability and flexibility the devolved Administrations there will have in future over their own fiscal position. That has been warmly welcomed in both those parts of the United Kingdom. Similarly, in England, the Government have already initiated an historic shift of power to local areas by removing ring-fences from £7 billion of local government funding and giving councils the ability to retain 50% of the business rates they collect; I will come back to that in a moment.
At least one other noble Lord has referred to the House of Lords Select Committee in 2009, which concluded that, despite some shortcomings,
“the advantages of the Barnett Formula—simplicity, stability and the absence of ring-fencing—are important and should be maintained whatever the future methods of allocating funds to the devolved administrations”.
While we recognise the concerns expressed about the formula, as made clear in our programme for Government, this Government’s priorities remain that we deal with the deficit, bring debt down, and build on the growth we are beginning to see demonstrated right across the UK. There are therefore no plans to review the formula in this Parliament.
I move on to the English, Scottish and Welsh contributions to the debate in turn. The noble Lord, Lord Shipley, made a powerful argument for more devolution within England and greater autonomy for the core cities, and London in particular. I have considerable sympathy with that. I was very much involved in plans for regional government during the previous Administration. My preference would have been to have powerful regions as counterpoints to, to a certain extent, Scotland and Wales. However, that vision of how we might manage affairs in England rather crumbled to dust.
It is interesting to note how the core cities have stepped up to the plate and are coming up with a number of innovative proposals, to some of which the noble Lord referred, to enable greater devolution to them. However, the problem with the core cities approach to devolution goes to the point made by my noble friend Lord Teverson, which is that they have the mass and momentum to take devolution forward, but if you are not careful, that will leave a lot of the rest of the country behind. It is difficult to see how to get some kind of uniformity of approach if the cities themselves take a huge leading role.
I agree completely with the need to develop further the place-based approach to financing local government. Although this may be a little pessimistic, it is one of the relatively rare innovations in public policy which I think has been an unambiguous success. I hope very much that we press on with it because not only does it give the flexibility that enables considerable efficiencies to be driven forward, it also gives local authorities a greater sense of their own destiny, which is important if they are to flourish in the medium term.
As part of his argument, the noble Lord, Lord Shipley, discussed the inequality in per head allocations between England and the devolved Administrations. There are, of course, very considerable differences between the regions of England. As he knows, the north-east has higher public spending per head than, for example, does Wales. There are obvious reasons for that, but it is worth pointing out that England differs considerably in the level of expenditure per head that it enjoys at the moment.
My noble friend Lady Bakewell was one of a number of noble Lords to set out the straightforward English case for a review of the formula as proposed by the LGA. I understand absolutely why she feels so strongly about it. She talked particularly about adult social care. As she will be aware, the Government are making enough funding available to ensure that local authorities do not need to reduce the level of social care services that they are providing through to 2015-16, and the range of reforms we are introducing are all aimed at allowing local authorities to do more in order to deliver better outcomes, including the new £3.8 billion health and social care integration pool. That is another example of taking an integrated approach rather than a silo-based one which, whatever is done with the Barnett formula, is very important.
My noble friend Lord Bradshaw enjoined the Government to start working on how we might replace the Barnett formula and suggested that we might adopt a cross-party attempt to do so. I suspect that that would be quite tricky between now and the next election, and I think that the most he can realistically hope for is a clear statement in each of the manifestos on how the parties plan to deal with this issue in the next Parliament.
The noble Baroness, Lady Eaton, pointed out the extent to which the Government are moving towards at least some of the LGA proposals, not least in terms of long-term indicative financial statements. That is a very welcome move, particularly because it has taken so long to do it. We are sometimes pretty reticent about claiming progress when we make it, but that is something which local authorities have been asking for for a long time, and there is real movement.
The noble Lord, Lord Teverson, as I have mentioned, talked about the rural/urban divide. He basically said that we should not get too obsessed by Barnett, but should worry about the whole raft of issues. I have a lot of sympathy with him on that.
The noble Lord, Lord Kennedy, made a point about the funding in West Oxfordshire. The only thing I would say about funding for any local authority area is that, if the Barnett formula has elements of the Schleswig-Holstein problem, local government funding allocations in England are vastly more complicated than Schleswig-Holstein ever was. Despite there being allegedly objective formulae for determining that, I have always found it difficult to get from the formulae to the actual results; no doubt that is my inability.
The noble Duke, the Duke of Montrose, asked us to confirm a number of figures in relation to Scotland. I believe that they are correct, but if I am wrong I will write to him. He asked whether the Scottish Government’s current block grant absorbed the cuts. The cuts to devolved Administration budgets have tended to be proportionately smaller than those to Whitehall departments, but that is due to the comparability factor built into Barnett: specifically, the protection to English health and school budgets.
The noble Lord, Lord Wigley, discussed the challenges in Wales in this area, and talked not least about the Holtham commission, which was an extremely thorough piece of work and demonstrated one approach to an alternative needs-based formula to Barnett. Clearly, it is not absolutely straightforward to get from where we are now to a needs-based approach which everybody agrees is the optimal way forward, but I pay tribute to the Holtham commission for its work.
Finally, on the complications of making comparisons, several noble Lords, including the noble Lord, Lord Wigley, referred to the public expenditure statistical analysis figures on per capita expenditure. It is worth clarifying that these are not simply devolved Administration budgets. They include some bits of UK-wide expenditure, not least welfare. One must take that into account when looking at the comparability.
I know that I will not have been able to completely satisfy my noble friend Lord Shipley and other noble Lords, but I hope that I have been able to demonstrate that we are alive to the issues and are moving towards greater place-based delivery for England, which will help local authorities deal with the challenges that they face. I am extremely grateful to my noble friend Lord Shipley for initiating the debate.
Lord Kennedy of Southwark
My Lords, in response to the point about the funding formulas in West Oxfordshire, I agree that it is very complicated stuff. Is there anything that the Minister or his department could provide to Members so that we may understand it further? If we have debates saying that this council got this and that council got that, it makes it more complicated. Some of the figures seem very unfair. If we understood how it was funded and more of what was behind that, maybe we would see a different picture.
Lord Newby
My Lords, there is to be a Statement before the Commons rises for Christmas about the funding for the next financial year, which will give the noble Lord’s colleagues in the other place, if not necessarily here, the chance to ask a lot of detailed questions about that. Perhaps it is a subject for another debate in your Lordships’ House.
House of Lords
Social Mobility: Public Schools
(11 years ago)
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Lord Lea of Crondall
To ask Her Majesty’s Government what assessment they have made of the degree to which those educated at public school disproportionately occupy senior positions in both public and private sectors in the United Kingdom; and whether they have plans to reduce any imbalance.
Lord Bates (Con)
My Lords, improving social mobility is the principal goal of this Government’s social policy. The Social Mobility and Child Poverty Commission was established to monitor the progress of government employers, the professions and universities in improving social mobility. Current evidence shows that, while improvements are being made in some areas, there is still much work to be done.
Lord Lea of Crondall (Lab)
My Lords, I thank the Minister for that reply, which I think means no. I have two supplementary questions. First, would he not agree with the recent and widely reported observation by Sir John Major to the South Norfolk Conservative Association on 8 November:
“In every sphere of British influence the upper echelons of power in 2013 are held overwhelmingly by the privately educated or the affluent middle class. To me from my background I find that truly shocking”?
Secondly, would he accept that to give tax relief to public schools as charities is also truly shocking? Charities are supposed to be about assistance from the rich to the poor, not from the poor to the rich.
Lord Bates
My Lords, I thank the noble Lord for his question. He quotes Sir John Major; let me offer him a quote from Alan Milburn in November. In responding to criticism about why the previous Government had not done more to advance social mobility under their 13 years in office, he said that it is,
“wrong … to argue this is the consequence of the actions of any one government. Deep-rooted … and flatlining mobility have been decades in the making”.
That is why this Government have introduced the pupil premium, which is targeted at disadvantaged pupils; free childcare; and an increasing number of apprenticeships. As for the noble Lord’s point about charity status, that is for the Charity Commission. Of course, it has to demonstrate that there is a public benefit to that status, and I know that many independent schools take that very seriously and forge many partnerships with schools in the state sector as well.
Baroness Trumpington (Con)
My Lords, I ask the Minister whether he agrees that this particular Question is a damned silly one.
Lord Bates
My Lords, the brief says that there are no damn silly questions in your Lordships’ House.
Lord Campbell-Savours (Lab)
My Lords, the Minister and, indeed, the House and the whole country know that public schools are not charities. Their existence and treatment as charities brings charity law into disrepute. Why do we not end that arrangement, and if we need to subsidise private education—many might well want that; I do not know—transfer responsibility for subsidy from charity law to the Finance Act? Then we can have a full debate in Parliament, in the House of Commons when it is dealing with Finance Act issues, on what that level of subsidy should be.
Lord Bates
The noble Lord raises an interesting point which begs the question of why, if that was the key issue to be addressed, his Government did not tackle that over their 13 years. The point is that this is intergenerational; it stretches over a long time and the solutions will take a long time coming. The problems have been a long time coming, too, and this Government are focusing particularly on the work of people such as Graham Allen on early intervention in specialising and targeting the help at the poorer families to redress that balance.
Baroness Hussein-Ece
Does the Minister agree that until we tackle growing inequalities, we cannot hope to tackle social inequality? When you have a situation in which more than 60% of young black men in this country are unemployed, how on earth are we going to achieve social mobility?
Lord Bates
My noble friend raises a very important point, which is that the route back into social mobility comes through the place of work. That is why we are opening up 1.5 million apprenticeships and why bearing down on unemployment—it is a fact that we are now in the 17th month of falling unemployment among the young—is so critical to raising the prospects of the young people, as we so want to do.
Baroness Hayter of Kentish Town
My Lords, I apologise to the noble Baroness, Lady Hussein-Ece.
Even where two similarly qualified graduates attended the same university, what happens afterwards is that the privately schooled graduate is 8% more likely to get a top job than someone from the state schools—even at that stage. What are the Government doing with their own recruitment policies to make sure that that sort of unfairness does not appear within the Civil Service?
Lord Bates
That is a very good question and I know that many people in government—principally the Deputy Prime Minister—are focusing on how to make that more accessible through the internship programme, through ensuring broader and fairer access and through the business compact programme, where more employers are encouraged to sign up and have fairer and more inclusive recruitment policies. It has to be said that it is not just the Government having this problem. It runs right across society and is in the media, in corporations, in medicine and in the judiciary, all of which need to act to make sure that their access policies are as fair as possible to all.
Lord Elton (Con)
My Lords, if, as has been conclusively demonstrated, the private education system is better than the public one and provides a portal into all sorts of social and economic advantages, surely we should be trying to get more and more private education, and more and more people drawn into it from those classes which are at present excluded. The way to do that is not to cut off the funding but to increase it.
Lord Bates
My noble friend has great knowledge and insight in this area—and so do I. In my experience the greatest difference between our leading independent schools and the inner-city comprehensives, one of which I attended, is the level of expectations not only among the teachers or parents but, chiefly, among the pupils themselves as to what they can actually achieve. That is what we need to improve.
Lord Davies of Coity (Lab)
My Lords, in 1999 the previous Government made sure that more than 700 hereditary Lords could no longer sit in this House. Now then, can the Minister tell me how many Peers on the Conservative Benches came from Eton?
Lord Bates
In this debate, which is about raising the opportunities of the poorest in our society, it does not help to have a vindictive or negative view of people who have had the privilege of great education in this country. We want to ensure that that quality of education and that level of ambition and expectation are spread to all, irrespective of school attended.
Independent Panel on Forestry Report
(11 years ago)
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Lord Clark of Windermere
To ask Her Majesty’s Government what progress they have made in implementing the recommendations of the report of the Independent Panel on Forestry.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, good progress has been made in implementing the commitments set out in January in the Government’s forestry and woodlands policy statement. An update report published in July highlighted progress in establishing a new body to manage the public forest estate, in maintaining forestry expertise in government, in supporting the forestry sector to improve its economic performance and in giving greater priority to plant health. A further update report will be published in the new year. I declare an interest as a woodland owner.
Lord Clark of Windermere (Lab)
My Lords, I thank the Minister for his answer. Is he aware that there are suggestions that the new forestry body will be forced to sell some of its land almost from its inception? Will he assure the House that that is not the case, and that the Government’s new forestry body will be provided with sufficient finance so that it is not forced into land sales within its first 12 months of existence?
Lord De Mauley
Yes, my Lords. Although the new body will be able to buy and sell land in its role as a land manager, there are no plans for it to sell any part of the estate to raise revenue to support itself.
Baroness Parminter (LD)
Do the Government intend to maintain transitional arrangements so that there are woodland grants until the introduction of England’s rural development programme in 2015, so that the Government’s welcome commitment to increase woodland cover can actually be achieved?
Lord De Mauley
Yes, my Lords. We have addressed the impact of a gap between rural development programmes by encouraging applicants who were originally considering applying for grants in 2014 to bring these forward to 2013. The Forestry Commission is presently considering applications to fund the planting of up to 2,600 hectares of woodland in 2014. The current RDP has seen over 12,000 hectares of woodland planted and funded through the English woodland grant scheme. Current applications for planting in 2014 therefore represent an annual planting rate above that in the rest of the current programme.
Lord Hylton (CB)
My Lords, I declare my interests as on the register. Is the Minister aware that I have a children’s forest school in one wood and much used public access in another? However, this question is not just about greenery and fresh air. Do the Government accept the report’s point about the economics of our forestry and its supply chain? What resources will they provide for adding value to British timber, not just using it for firewood and biomass?
Lord De Mauley
That is an important point. The Grown in Britain initiative is genuinely making a difference. Early successes show that it is already delivering results, including gaining commitment from several major corporates to buy or stock more home-grown wood products. To date, 19 major UK contractors-group companies, with a collective turnover of over £24 billion, have pledged to look into ways of procuring more British timber. Grown in Britain is also forging partnerships with businesses in the construction sector to seek good examples of projects using British-grown timber to promote as case studies for other forestry supply chains to follow. There is a lot going on in that sector, and it is important.
Viscount Brookeborough (CB)
My Lords, does the Minister agree that most landowners in this country who have forestry think that it makes a great contribution to their businesses? Can he explain why state-owned forestry in all parts of the United Kingdom has failed to make money over so many years?
Lord De Mauley
My Lords, I agree with the first half of the noble Lord’s question but the Government would not agree with the second half. The Forestry Commission is a dedicated and well run organisation. It has an important function to carry out, and the various functions that it carries out will continue to be carried out.
The Lord Bishop of St Albans
My Lords, as Her Majesty’s Government will be aware, there are several very serious diseases affecting trees in this country. What steps are being taken to ensure that, with the reorganisation of the responsibilities of the Forestry Commission, this important disease prevention, control and elimination work will not only continue but be strengthened?
Lord De Mauley
That is one of my department’s top four priorities, and we are making rapid progress in taking forward the implementation of the recommendations of the expert task force that the Secretary of State set up. In fact, this morning I attended our monthly biosecurity meeting and we are absolutely focused on both those plant health issues that are approaching us from overseas and those that are here already. We have established a prioritised plant health risk register, we are appointing a new chief plant health officer and we are engaged in contingency planning, among many other things.
Baroness Royall of Blaisdon (Lab)
My Lords, I declare an interest as a member of the steering committee of Hands Off Our Forest. Primary legislation is clearly needed to set up a new management organisation for the public forest estate. The Forest Campaigns Network has been told by Defra that Ministers are committed properly to pre-legislative scrutiny, so I would be grateful if the Minister could tell the House when we will see a draft Bill and whether or not it will be in this Session of Parliament. Will the Minister also confirm that the organisation’s mission will be to protect and improve the public forests, woodland and other assets held on behalf of the nation and that, however the organisation is structured, it will not be in danger of future privatisation?
Lord De Mauley
My Lords, we have always said that we will legislate as soon as possible, subject to the availability of parliamentary time. That remains the position and we are serious about it. Yes, we intend to make draft legislation available for pre-legislative scrutiny, but it is important to understand that we have also been focusing on making progress on all 36 commitments, and not all of those need legislation.
Ticket Reselling
Lord Storey
To ask Her Majesty’s Government what plans they have to tackle the issue of ticket re-selling in the sport, music and entertainment industries.
Lord Gardiner of Kimble (Con)
My Lords, the Government discuss issues of ticket resale with the sport, music and entertainment industries on a regular basis. While the Government have no plans to introduce new regulations on the ticketing and events market, we continue to encourage improvements so that all customers have an opportunity to purchase tickets and can do so in a secure environment. The Government believe that it is for event organisers, together with the professional ticketing organisations, to determine suitable arrangements for ticket sales to their events.
Lord Storey (LD)
I thank the Minister for his reply. He will be aware that Operation Podium ensured that tickets to the Paralympic and Olympic Games were fairly distributed, and were prevented from falling into the hands of touts and criminals. He will also be aware that the Met’s operational report concluded that the lack of regulation in this area enables fraud and places the public at risk of economic crime. What action will the Government take to provide an open, transparent and above all fair market for consumers? Will the Minister host a round-table discussion to consider how to put an end to this crime?
Lord Gardiner of Kimble
My Lords, as the previous Government made clear, ticketing regulations for the London 2012 Games were exceptional and indeed a mandated requirement of winning the bid. It is a matter for the police to address cases of fraud and criminal activity while it is for event organisers, promoters and their ticket agents to find ticketing solutions; indeed, I think that Glastonbury is a very successful example of that. Of course I would be happy to arrange a meeting with the noble Lord to discuss these matters further.
Lord Clement-Jones (LD)
My Lords, abuses by secondary ticketing sellers were made plain by the “Dispatches” programme earlier this year, which my noble friend may have seen. Campaigners for secondary ticketing reform go all the way from rock band Iron Maiden to the Rugby Football Union, which is worried about the World Cup, and the Society of London Theatre. If we could do it for London 2012, why can we not do it for other events? Are there no heavy metal fans or rugby fans at DCMS, let alone theatre-goers? Is DCMS completely immune to representations from all these bodies?
Lord Gardiner of Kimble
I am sure the DCMS has aficionados of all those disciplines. Only today, officials were talking to the Rugby World Cup organisers about arrangements for the event. Those will include using bar coding, named tickets, staggered ticket release and reward to fans with a history of support. The Government are engaged in this matter, but all successive Governments, and indeed Select Committees that have looked into this in the past, have concluded that regulation is not the best way of achieving what we all want to do.
Lord West of Spithead (Lab)
My Lords, after our performance in the past three tests, does the Minister think it will be almost impossible to give away, let alone resell, tickets for the final two?
Lord Gardiner of Kimble
I very much hope that England will win the last two matches and make it 3-2. The important thing we need to remember is that very often people buy tickets and wish to have a secondary sale because someone cannot go or their team does not win into the quarter-finals or semi-finals, so there are practical difficulties. When a Select Committee looked at this in detail, it concluded that regulation was not the way to achieve what we want.
Lord Stevenson of Balmacara (Lab)
I return to the original Question. The report from Operation Podium makes it very clear that ticket crime has links to other serious and organised crimes, that criminal networks benefit from ticket fraud by about £40 million per year and that the proceeds are very rarely recovered. Given that the recommendation from Operation Podium was that consideration must be given to introducing legislation to govern the unauthorised sale of event tickets, why are the Government not prepared to move on this?
Lord Gardiner of Kimble
My Lords, it is not a case of the Government not wanting to move on the situation; it is that we have concluded, as did the previous Government and Select Committees, that there is a better way of resolving this. The noble Lord mentioned fraud, but the Fraud Act 2006 is readily available. Local authorities have by-laws already in existence, and those are precisely the by-laws that we need event organisers and the police to work within in conjunction with local authorities.
G8 Summit on Dementia
(11 years ago)
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Lord Patel
To ask Her Majesty’s Government what was the outcome of the G8 dementia summit.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, the G8 agreed to work together to tackle and defeat dementia. The declaration announced the G8’s ambition to identify a cure or a disease-modifying therapy by 2025 and to increase collectively and significantly the amount of funding for dementia research. The G8 also welcomed the UK’s decision to appoint a dementia innovation envoy who will work to attract new sources of finance, including examining the potential for a private and philanthropic fund.
Lord Patel (CB)
My Lords, I thank the Minister for his reply. Dementia is the dreaded diagnosis, particularly for the elderly, as it affects more than 5% of people over 65 and between 20% and 40% of those aged over 85. Because of the increasing number of elderly people, an increasing number of people are affected. I commend the Government and congratulate them on taking the initiative at the G8 and particularly on involving the WHO, because now it will become a global initiative. I have two questions. The first is about the funding that the Government announced. There is a great deal of confusion. Is it new money, money that has already been allocated to research or money that the Department of Health is giving for better diagnosis of dementia? Research on dementia must also focus more widely on understanding the biology of the disease, the inflammatory process and the epidemiology. Ring-fencing around a disease will not necessarily get to the point that the Government wish to get to. Secondly, what impact do the Government think the EU regulation on data protection will have on dementia research?
Earl Howe
The noble Lord asked a number of questions. The Government have stated an ambition to double research funding in dementia. That will depend on the quality of the proposals that come forward and on the rate of scientific progress. We very much hope that arising out of the summit, momentum will be gained, not only in this country but internationally. As regards the noble Lord’s second question, we recognise how important this is for future dementia research and I can tell him that the Government, through the Ministry of Justice, are negotiating with member states in Europe and are aware of the impact that the proposal would have on research. It is likely to be some months before there is an agreed approach between member states and the Commission, and the Parliament is unlikely to vote on the proposal before 2015.
Lord Warner (Lab)
The Minister will no doubt be aware that there is growing interest in this country in assessing whether drugs used for conditions other than dementia might be useful in tackling dementia. Will the Minister say what efforts the Government are going to put into this area as a result of the G8 summit?
Earl Howe
My Lords, we certainly hope that the private and charitable sectors will respond to the call, but at the same time the Government are not dictating to the research funding bodies which projects they should support. The Haldane principle is very important. The noble Lord makes an extremely powerful point, and we would hope that the pharmaceutical companies will wish to step up to the plate.
Baroness Hanham (Con)
My Lords, will the Minister be kind enough to explain exactly what is going to be achieved by training public servants such as bus drivers in dementia, what is the purpose behind it and what we hope those public servants will be able to do?
Earl Howe
My noble friend raises an important issue, because it is going to be increasingly necessary for not only health and care professionals but members of the public to be properly attuned to dementia and the needs of those who have the condition. We want to see all those who deal with the public trained in dementia, at least to a basic level, in a way that is appropriate to their level of engagement with those who suffer from dementia. Dementia training is now a key part of Health Education England’s mandate.
Baroness Greengross (CB)
My Lords, I would like to add my congratulations to the Government, and in particular to the Prime Minister on his personal commitment and on securing the summit focusing on dementia. I ask the Minister whether there are any commitments from other G8 countries, both for research and for the other side of this, which is care and how we help the growing number of people—it will be one in three of us in the near future—who are going to experience dementia, in all the G8 countries and beyond.
Earl Howe
My Lords, it is perhaps too soon to expect concrete proposals from other G8 countries, but I can tell the noble Baroness that the summit was not the end of the story. The G8 countries will be meeting throughout 2014 to build on and develop further agreements. We have agreed to host the first legacy event on social-impact investment in March next year. That will be followed by an event in Japan on what new care and prevention models could look like, and by an event hosted by Canada and France on how industry can harness academic research. There will then be a meeting in the United States in February 2015. We hope that the momentum generated by the summit will elicit the kind of commitments that the noble Baroness rightly seeks.
Lord Foulkes of Cumnock (Lab)
Is the Minister aware that after the very brief exchange about dementia yesterday, I heard it suggested that dementia should not be grouped in any way with mental illness because of the stigma involved? Surely the solution to that is that we must all work to remove any stigma from all kinds of mental illness.
Earl Howe
The noble Lord is absolutely right, but he will recall that the question yesterday dealt with the WISH summit, which was focused specifically on mental health and not on dementia. I did not mean to imply that there should be any less emphasis on tackling stigma in both areas.
Baroness Brinton (LD)
My Lords, I, too, welcome the result of the G8 dementia summit, but what progress is being made in appointing nurses who specialise in dementia in the same way that there are nurse specialists for cancer, rheumatology and epilepsy? Dementia UK’s admiral nurses are wonderful and provide real help to patients and families, but there are a mere 103 for an estimated population of 800,000 dementia patients.
Earl Howe
My noble friend raises a very important point. I come back to the point that I made a short while ago: people with dementia in practice access all parts of the health and care system. We want all staff who care for people with dementia to be trained to the level of their engagement so as to deliver high-quality care for people with dementia. I mentioned that dementia training was a key part of Health Education England’s mandate. Already, 100,000 NHS staff have received dementia training. As my noble friend will know, decisions on the commissioning of admiral nurses are made locally, but I recognise the work that they do.
Lord Walton of Detchant
Does the Minister accept that much of the increased incidence of dementia is a result of the fact that many of us are living much longer than was the case in the past? Does he further agree that there is clear research evidence to suggest that continuing intellectual and physical activity, care and attention to diet, and control of blood pressure can delay the onset of dementia in many individuals, and that, as a consequence, once early dementia appears, programmes to promote such physical and intellectual activity are very valuable? In such programmes, volunteers play a very important part across the country. What are the Government doing to promote these projects?
Earl Howe
The noble Lord, as ever, makes some extremely good points. My department is looking at the role of volunteers in a number of areas. He is right that increased age is the greatest predictor of dementia. It has been estimated that delaying the onset of dementia by two years could decrease the global disease burden by 22.8 million cases by 2050. The point that the noble Lord makes is therefore well made, and I have no doubt that there will be an increasing focus on this over the coming years.
Business
(11 years ago)
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The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)
My Lords, like me, noble Lords will have been completely dismayed to read the reports in the press this morning about the behaviour of a Member of our House. They will have been dismayed about the behaviour and dismayed about the shadow that it casts over the whole House. On behalf of the party leaders and the Convenor, whose collective views I know I reflect, I thought that I should briefly remind the House of steps that are already in train for us to deal with the small number of Members whose behaviour falls below the standards that we rightly expect.
First, I have recently taken proposals through the House Committee to adopt a new sanction which would in future enable us to withdraw financial support and access to facilities from Members who breach the Code of Conduct. This would enable us to broaden our range of sanctions and I hope that it will be welcomed when it comes before the House in the new year. Secondly, a Private Member’s Bill being brought forward by Dan Byles MP would enable us to expel permanently Members who commit a serious criminal offence. The Government support this Bill and I look forward to it making progress. Thirdly, it is my view and one that I know is shared by all the group leaders that we should be looking to amend our Code of Conduct to make it possible for us to have more discretion to take action against those who in future bring the House into disrepute.
Despite stories like today’s, I am extremely proud of the work that we do in this Chamber of legislating, scrutinising and holding the Government to account. For our part, the leaders will take forward in the new year the steps that I have outlined, but, ultimately, the reputation of this House rests in all our hands, which is why I believe that noble Lords will want to support steps to strengthen the sanctions available to us next year.
Unsolicited Telephone Communications Bill [HL]
Children and Families Bill
(11 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
15:42 - Division on Amendment 14 - Ayes: 225 / Noes: 221 - Amendment 14 agreed.
18:37 - Division on Amendment 16A - Ayes: 205 / Noes: 222 - Amendment 16A disagreed.
Baroness Butler-Sloss
“(2B) Involvement is any kind of direct or indirect involvement that promotes the welfare of the child; it shall not be taken to mean any particular division of a child’s time.”
Baroness Butler-Sloss (CB)
My Lords, it is with some regret that I have not sought to remove the presumption from the wording of Clause 11, although I still think it is unfortunate. I recognise the good intentions of the Government and their genuine desire to involve both parents, and more often the father, in a continuing relationship with the children after the separation of the parents. I entirely support that important aspiration. A serious part of the parting of parents is the failure of one parent, often the father, to have any future relationship with his children, who are then brought up in a one-parent family without the advantages of knowledge of and support by the absent parent.
I am, however, concerned about the message that separating parents may receive from the current wording of Clause 11. Originally the heading for this clause was “Shared parenting”. That heading, thank goodness, was removed, but it had been picked up by the press, and this clause may be seen by some as containing the right to equal access to children. There is concern, not just on my part but on that of many of the agencies, including the NSPCC, Barnardo’s and Coram.
The department has issued excellent guidance for those who choose to read it. I have no concern about the courts, judges and magistrates doing their best with litigants in person, in the absence of legal aid, to come to the least detrimental decision about the arrangements for the children. Most parents will be sensible about arrangements. However, there is a small percentage of parents—sometimes one parent, male or female, and sometimes both parents—who are utterly unreasonable, and no arrangements will be easy to achieve; sometimes it will be impossible to achieve any arrangements.
The groups of parents whom I worry about in relation to Clause 11 are those who try to settle the arrangements for the children without going to court. In the absence of lawyers to advise either side, the stronger, more dominant parent may insist on an arrangement based on equality, or at least on disproportion which is not appropriate for the welfare of the children. We know from the Norgrove report of the fine line between children at risk in the private law sector and those seriously at risk in public law. The parents of some of those children at risk may well make their decisions outside court. I want the weaker parent to have something in statute to hold on to if browbeaten.
I also worry about those who would go to court with an erroneous view of what this clause actually means, and with an inbuilt sense of their rights rather than the best arrangements for the children. The purpose of this amendment is to give some clarity to the clause and to help the public come to terms with putting the welfare of their children first. I beg to move.
Baroness Howarth of Breckland (CB)
My Lords, I support the amendment in the name of the noble and learned Baroness, Lady Butler-Sloss. As she said, we all know that when parents are in conflict they become engrossed in their own battle and lose sight of everything else of value, including the children. I apologise for my voice; I have just had the flu and therefore missed the first day on Report—some noble Lords will have been relieved about that.
I have talked to many children over the years, through my work at Childline and CAFCASS, who found themselves in that situation. They often feel that they are at the centre of that battle and not individuals themselves. I remember another famous quote that the noble and learned Baroness made at another time: we should never see children as objects of concern but as subjects in their own right. When parents haggle over children as property, it is our responsibility to ensure that their welfare is seen to. What has happened in the outside world is that in our attempt to focus, mainly on fathers, I have to say—there is not a balance between mothers and fathers, but a particular focus on the needs of fathers—we have lost some of that understanding of welfare, and the press really believe that fathers have had a bad deal.
I draw attention to a piece of research that was carried out recently by the University of Warwick under the auspices of the Nuffield Foundation. It looked at a large number of cases—197 were analysed— and determined how the county courts used a number of orders. It found that in contact orders,
“the courts are actively promoting involvement with the non-resident parent under the welfare paramountcy principle without the need for any further additional legislation. In 50% of all parental disputes studied, the post court care arrangement included regular, overnight contact allowing both parents to have involvement in the child’s day to day routine. 25% of cases ended in daytime only contact with the non-resident parent. Contact is often built up gradually by the courts using interim orders. This allows the courts to find an arrangement that works for the parent and the children”.
However, as the noble and learned Baroness, Lady Butler-Sloss, pointed out, our great concern is for the families who do not go to court. Courts will often find a good solution and be able to work through it. However, there is sometimes a perception among families that there is a presumption that children will be shared. I sometimes think of that picture from the Old Testament of the child being held up by one leg with the sword of Damocles held over it; it was the good parent who said, “No, I don’t want my child to be shared”. That is often what you find: it is the good parent who gives in and gives the child to the other parent, because they want the best for their child. It is therefore on that basis—and before my voice gives out—that I support the noble and learned Baroness’s amendment.
Baroness Deech (CB)
My Lords, I will speak briefly in support of the noble and learned Baroness, Lady Butler-Sloss, who knows more about children’s law than practically anyone in this House. There is one real problem after divorce, which is that fathers, for whom the door is open, do not come and visit their children. We cannot do anything much about that. The clause may give such absent fathers the notion that they have rights but no responsibilities. If there is one thing that our family courts have got right in recent years, it is the welfare of the child. I very much hope that the House will listen to the wisdom of the noble and learned Baroness, Lady Butler-Sloss, and will let the courts get on with the good job that they have been doing without resorting to a rather artificial notion as set out in the clause as it stands.
Baroness Hughes of Stretford (Lab)
My Lords, I, too, support the amendment in the name of the noble and learned Baroness, Lady Butler-Sloss, to which I have added my name. We had a very good debate in Committee on Clause 11 about the status of the presumption that is enshrined in that clause. Concerns about preserving the overriding status of the presumption of the best interests of the child in the Children Act have been largely assuaged.
By definition it is very difficult for both parents and children when a family breaks up, and as the noble Baroness, Lady Howarth, has underlined, things can get very heated and parents can get very focused on coming out of that conflict with what they regard as the best arrangements for them.
As I made clear in Committee, I start from the position of sharing the Government’s desire to enshrine in public policy the principle of joint parental involvement in a child’s life, including after separation. I argue that for most children, the paramount principle of the child’s welfare, as enshrined in the Children Act 1989, cannot be fully met unless both parents are fully involved in the child’s life and have a continuing relationship with the child. Perhaps slightly differently to the noble Baroness, Lady Deech, I think that there is an issue to be addressed here, particularly for fathers. I agree with the Government that the principle of parental involvement needs strengthening.
However, if we agree—as I think we all do—that the paramount consideration is the welfare of the child, and that this principle should not be jeopardised or diluted, then we must also ensure that the presumption in Clause 11 is not misinterpreted and applied in ways that can be detrimental to children. Specifically, Clause 11 must not send the signal that parental involvement, which regrettably the Government initially called “shared parental responsibility”, is taken to mean that the child is divided according to some a priori formula, whether that is 50-50 or something else. Clause 11 gives a right to the child to expect continued meaningful involvement by both parents after separation. It must not be interpreted as giving a right to both parents for equal—or near equal as possible—time with the child. I know that the Government’s Explanatory Notes make clear their intentions. But there are a number of reasons why the Minister must take seriously the possibility, indeed the likelihood, of such misinterpretation.
First, the experience in Australia is that 65% of fathers interpreted “shared parental responsibility” to mean equal time. Litigation between parents increased as a result, and they had to change the system. Secondly, as touched on by the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Howarth: the clause, unless it is qualified on the face of the Bill in the way that this amendment seeks, could inadvertently increase the risk of harm to children, because only 10% of separating couples resort to the courts to resolve their contact disputes, with the majority of parents reaching agreements privately. There is concern that if it is the expectation of those parents that the law now says that the child’s time has to be carved up, then some parents may seek to use the new changes as a bargaining tool and put pressure on the other parent into making contact arrangements which are not in the best interests of the child.
Again, evidence from Australia suggests that similar reforms resulted in an increased reluctance for mothers to disclose abuse, for example, with many feeling that if there is a legal presumption of shared contact, there was little point in disclosing problems in the family. Given that the vast majority of cases do not go to court, if as a result of Clause 11 there is a common perception that having the child’s time shared out will be the norm in future, then even in families where there is no abuse or there are not problems we may still see the unintended consequence of nomadic arrangements, with a child moving between homes in a way that we would all want to avoid for obvious reasons. This would not be in the interests of most children.
Finally, and very significantly, we have to respond strongly to those parts of the media, which have promoted the interpretation which we are discussing now, despite the best efforts of the Government. I do not believe that any amount of communication or clarification can shift this now. This is why Amendment 14 is so necessary—the Government’s intention and interpretation would be quite clearly on the face of the Bill, and enshrined not in guidance but in law.
Last night we received a policy statement from the Government about Clause 11 and Amendment 14. This makes clear the Government’s intention—it is not to promote a particular division of time, but they feel that the most effective way of dealing with this is through a wider communication strategy to explain to parents what the interpretation is. This is wholly inadequate, for the reason I have just expressed; this view is already well entrenched, partly because of the initial nomenclature of shared parental responsibility and partly because parts of the media have triumphantly proclaimed that this means an equal proportion of the child’s time is to be spent with father and mother. That view is now so well entrenched that I am very concerned about the impact on expectations and, therefore, on negotiations between parents, particularly those not going to court. The most emphatic and unambiguous way of disabusing people of that false impression is to put the amendment alongside Clause 11 into the Bill. The Government will then have something in law that they can go to town about in communications, explaining Amendment 14 if it became part of the Bill.
Baroness Walmsley (LD)
My Lords, I believe that there is only one a priori formula, as the noble Baroness puts it, that we should have in our mind today, and that is the UN Convention on the Rights of the Child, which gives children the right to be safe and protected and the right to a family life. We all agree that that right to a family life, where it is in the child’s best interests and safe to do so, should include an ongoing relationship with both parents. Unfortunately, in many cases the parents themselves feel that they cannot continue to do that within the same home, so they separate. I believe that it is the Government’s intention in this clause to give the child that right back and ensure that the child continues to have a relationship with both parents where it is safe to do so and in the child’s best interests.
Governments make their intentions clear in more than one way. The wording of legislation is one thing, but Pepper v Hart is another. I am hoping that, in his reply, my noble friend the Minister will make it very clear that what the media have been saying is not the Government’s intention. Indeed, my noble friend has made that very clear to probably all of us in this Chamber now in private meetings, but of course it has to go on the record for people to be able to rely on it, and I am very much hoping that he will be able to do that.
The noble Baroness, Lady Hughes, mentioned the media. I call on the media—indeed, I challenge them—to give just as much space and just as large headlines after today’s debate to the Government’s real intentions on what this legislation and any surrounding regulations really mean, rather than what they mistakenly thought that they meant, which caused an awful lot of concern and worry to families who can really do without that sort of worry when they are going through the stress of breaking up and wondering what they can do to cause the least possible damage to their children’s lives while they do so. I very much look forward to my noble friend’s reply.
The Minister of State, Ministry of Justice (Lord McNally) (LD)
My Lords, I am very pleased to follow my noble friend in this debate, not least because well over two years ago, when this legislation was first mooted, I went to see her as the oracle on matters to do with the welfare of children. I said that the Government were thinking of legislating in this area, and I remember that she gave me very clear marching orders—whatever else the Government did, it must be clear that the paramountcy of the welfare of the child should be ingrained in this legislation. I have certainly taken that to heart as this legislation has passed through.
It is also true, as has been indicated and as the noble Baroness, Lady Hughes of Stretford, referred to, that we learnt lessons from the Australian legislation and we have listened to what has been said as this Bill has moved through both Houses. We have been trying consciously to get the balance right. When we were talking about the misrepresentation in the press, there was an opinion that the legislation as it stood was biased in favour of the mother. What we have been trying to do in this legislation is to have wording that gives a very clear guide that, where possible, and as my noble friend Lady Walmsley has just indicated, it is in the interests of the welfare of the child that both parents should be involved.
Baroness Howarth of Breckland
I apologise for interrupting but, just so that the record is absolutely straight, the Minister has mentioned on two occasions the perception that fathers were not getting the same sort of attention as mothers. Does he acknowledge that the research carried out by CAFCASS and by Nuffield shows that that is a perception and not an accurate procedure? If the noble Lord continues to repeat that perception, it will be picked up again. It is not a fact.
Lord McNally
I hope that the noble Baroness takes what she has said to heart; what I am trying to avoid is replacing one perception with another. There is equal danger that, after a debate such as this, another perception gets flagged. What I want is to emphasise what is in the legislation and what is intended by the legislation and to use all the means at our disposal to make sure that that is fully understood by all the agencies involved and the widest range of public opinion as possible. As my noble friend has indicated, that also means that there is a certain sense of responsibility on the part of the media in reporting the intentions of Parliament.
When a case is before the court, neither parent has a right to any specific level of contact, direct or otherwise. The court must consider the child’s welfare above all else and make its decision on that basis, weighing up the evidence before it. That will continue to be the case, and nothing in Clause 11 changes that. The wording of the clause is deliberately neutral; it does not seek to pre-empt court decisions and, as now, it gives courts the flexibility to determine the arrangements that they believe are best for the child, taking account of all the evidence before them. We think that that is the right approach.
However, I agree wholeheartedly with those who have highlighted the need for a clear understanding of the policy. The reality is that any provision which impacts on parents and their private family relationships is extremely sensitive. Even the wording of the amendment could be misinterpreted in the media and give rise to unintended consequences. There is no guarantee that it would not. For example, as I said, a parent who already has very limited contact through no fault of their own may interpret the wording as endorsing that position. Our priority must be to draft legislation which achieves our intended effect and to take other steps to communicate to society more widely what that effect is. As I said, it is unlikely that separating couples will look to the Children Act 1989 to try to predict the outcome of their dispute. They will look for information online or talk to their friends and family, to organisations which they trust or their legal advisers.
The Government’s “Sorting out Separation” web app will be the first port of call for many parents looking for information about any aspect of separation and it will then signpost them to further sources of help. The app itself will set out clear information for parents about the law, and this information will make it plain that the change is not intended to be about the division of the child’s time. We will also ensure that organisations with the Help and Support for Separated Families kitemark have clear and accurate information about the changes. The web app will be embedded on the sites of organisations that have this kitemark, including, for example, Relate. This means that people accessing these websites will be able to click on a link and access information on the web app. In addition, the minority of separating parents who turn to the courts will need, first, to have attended a MIAM, and they will be encouraged to find a different way of resolving their dispute. Parents will be given information through all these routes and through other services that they may engage with.
The way to ensure an accurate understanding of the policy is for the Government to work with organisations in the sector to develop clear information which can be disseminated through these routes, not to reword the clause in an attempt to prevent inaccurate reporting of what we want to achieve. Officials have already begun discussions about the information to be developed and these will continue. We want to work with relevant voluntary organisations so that we are confident that we can address the concerns.
Right from the beginning I have never been in any doubt about the intentions of the various—in this case—noble Baronesses who have contributed to this debate. However, it is a matter of judgment, and I am asking for the House’s support this afternoon for the Government’s position. I have thought long and hard about how we can address the problems of misperception and misrepresentation, and I honestly believe that the solution put forward by the noble and learned Baroness, Lady Butler-Sloss, may lead us into the same problems but via a different route. We have tried very hard to get the balance right and, even at this late stage, I ask her to withdraw her amendment.
Baroness Butler-Sloss
I thank all noble Baronesses for their contributions and I hope that the Minister will forgive me for not thanking him. I am particularly grateful to my noble friend Lady Howarth, who has put right the perception that in some way the courts are unfair to fathers. It is a perception which has, from the beginning, been inaccurate. When I was President of the Family Division, I went round the courts and made a lot of inquiries. After I had retired, I was very grateful for the CAFCASS report, which absolutely clarified what I had understood to be the case from judges right across the country—that they try cases fairly and that there is no prejudice against fathers.
I find it difficult to understand why the Minister thinks that what I think is a very modest amendment for clarification is going to be widely misinterpreted and somehow bring back the situation before Clause 11 was put forward. I take issue with him on one point. He talks about going to legal advisers. How many people in this country have the money to go to legal advisers if they do not have legal aid? It is this Government who have taken legal aid away from private law cases. When he talks about going to legal advisers, it will be a very small minority of that very small minority who actually fight cases who will get to lawyers at all. They may or may not go on the web and they may or may not read what I consider to be the excellent advice that the Government give. They will look at what the press has said and, despite the wonderfully impassioned suggestion of the noble Baroness, Lady Walmsley, may or may not choose to take any interest in this particular debate, and may perpetuate a very dangerous perception.
I must say that I worry about ordinary people on the ground who cannot get on and decide to separate. I sometimes used to say to warring parents, “You are the last people who should be making decisions about your own children because you cannot think straight about what is happening next”. Those are people—without legal advice, lawyers in court or probably ever going to court—where one of them will be dominating the other and the arrangements for the children will be unsatisfactory and, in some cases, positively dangerous. All I am asking for is some clarification, particularly for a mother because there may well be a more dominant father, although there can be a dominant mother. I have certainly seen dominant mothers and not only in the American press. It is possible that the mother or father who is not the dominant parent will look at the law and see that there is an explanation of what is in Clause 11 with this amendment.
I am truly sad that the Minister thinks that that will create some misinterpretation. Speaking for myself, I cannot see it and I rather hope that noble Lords will not see it either. I would like to test the opinion of the House.
Lord Northbourne
“Children’s welfare: duties of parents
For the purposes of section 3(1) of the Children Act 1989, the duties of the parent to their child are—(a) to safeguard and promote the child’s health, development and welfare;(b) to provide in a manner appropriate to the age and development of the child—(i) direction; and(ii) guidance,to the child;(c) if the child is not living with the parent, to maintain personal relations and contact with the child on a regular basis,but only in so far as compliance with this section is practicable and in the best interest of the child.”
Lord Northbourne (CB)
My Lords, in Grand Committee my Amendment 56 attracted a good deal of support; there was a strong response from nine Members. That is why I am bringing it back on Report as Amendment 15.
On 9 December the Daily Mail carried an important article by Sir Paul Coleridge, a senior High Court judge with 42 years’ experience in the family and criminal courts. He drew attention to what he called the “social revolution” that has taken place in our society. Marriage, he says,
“has come to be seen as unfashionable, serial fatherhood is widespread and an ever-growing number of children are no longer brought up in stable households”.
The statistics about families that we have heard today seem to confirm that. For example, the Centre for Social Justice has recently calculated that family breakdown is now costing this country £46 billion a year—more than the defence budget. According to the Office for National Statistics, the proportion of children born to unmarried mothers last year hit a record 47.5%: that is, very nearly half. Almost half of all marriages, as well as a huge number of informal parenting partnerships, now end in divorce or separation. According to the Marriage Foundation, only 50% of children born today will be living with both their parents on their 16th birthday. What are known as “four-by-four families” are increasingly becoming a problem for schools in some disadvantaged areas. In case any noble Lords do not know what a “four-by-four family” is, it is a mother with four children by four different fathers.
Every society needs to be concerned about the way in which its children are brought up and about how they are being prepared for adult life, for citizenship and for their probable role as parents. In our society today, unwanted children, family breakdown and failure to provide a stable and supportive family for too many of the nation’s children as they grow up are seriously damaging the life chances of future generations.
Baroness Butler-Sloss
My Lords, I declare an interest as a trustee of the Marriage Foundation. I express my admiration for the tenacity of the noble Lord, Lord Northbourne, in pursuing this difficult, worrying and extremely important issue. Parenting must be a matter of responsibility rather than rights; that point needs to be put forward again and again in every single place where it can possibly be put. The admirable proposals that the noble Lord, Lord Northbourne, put in Amendment 15 ought to be placed somewhere by the Government. Whether they should be in primary legislation, I am not convinced, but certainly they should be in guidance and, possibly, in part of the pack given to parents when they separate so that they can recognise their responsibilities after separation. I should like to see this sort of thing in libraries, as part of the school pack in the sixth form and in sixth form colleges, and in universities and colleges of further education. The duties of parents that the noble Lord, Lord Northbourne, has set out here should be part of what all young and not so young people who are of an age to be parents should have in their minds.
We ought to stop talking about the rights of parents and start talking about the responsibilities referred to in the Children Act, and also about duties. It is interesting that the word “duty” is almost never used, but it is as important today as it was in the 19th century. It is time we started to use it again. I express again my admiration for the noble Lord, Lord Northbourne, and I hope that what he has said will be taken further.
Baroness Tyler of Enfield (LD)
I declare an interest as a vice-president of the charity Relate. I have great sympathy with what the noble Lord, Lord Northbourne, is trying to achieve through this amendment, although I feel that primary legislation is probably not quite the right place to put across this very important message. I agree with the noble and learned Baroness, Lady Butler-Sloss, that it is important to emphasise at every opportunity that this is about parental responsibilities rather than rights. That must flow through all the messaging and communications that we talked about when we discussed the earlier amendment.
I, too, should like to see this guidance offered at many different opportunities. I should like to see this sort of guidance as an integral part of relationship education. We talked about the importance of relationship education in Committee, and I suspect that we shall return to it later. I should also like to see it included in the various pilots for birth registration in different venues. It would be good to see it included there, and in the various packs—Bounty packs and others—that are prepared for new parents. I should like to see it at the new-parent stage, at the education stage and especially in the various advice and guidance packs that are available for separating parents. It has a lot to offer. It is a very important set of messages. I just happen to think that primary legislation is not quite the right place for it.
Lord Hope of Craighead (CB)
My Lords, since the Minister may be looking at this matter more fully, I suggest as a footnote to this discussion that he might look at the Family Law (Scotland) Act—I think I have the correct name of the Act, although I cannot give the date. The introductory text to that Act makes exactly the point the noble Lord, Lord Northbourne, is making. It talks about the responsibilities of the parent to the child. The following section I think uses the word “rights”, but it is talking about the child’s rights rather than those of the parents. It is the counterpart to responsibilities. It has been set out in primary legislation, I think on the recommendation of the Scottish Law Commission, that it is a useful checklist of the corresponding rights of the child, but particularly of the responsibilities that rest upon the parent throughout the child’s childhood. The Minister might find this piece of comparative law helpful.
Baroness Howe of Idlicote (CB)
My Lords, I will add a brief note. While I probably agree that the Bill is not the right place for these proposals, I remember the excitement of the early days when I appeared in your Lordships’ House and what was then the new Labour Government had brought in something called citizenship. It generated a lot of excitement because it would obviously have been a good place in which to put over the responsibilities of parents. Alas, it never happened, because citizenship got whizzed all over the place.
I have somewhat changed my views over time on PHSE. That also could be used rather more effectively in schools in the future in these areas. Above all, I emphasise the point that the earlier you can work with children on what their own children are going to need, the better. Hopefully, not only will it prepare them for being better parents but it might also help them be rather better sisters and brothers, if they are living in households where they need that extra guidance.
Lord Ramsbotham (CB)
My Lords, yet again one finds oneself rising in admiration for my noble friend Lord Northbourne’s persistence in pursuing these matters over and again. I always listen with great care to the good sense that he exposes on these occasions.
Recently I had to inspect prisons in Kenya on an extradition case. I was very struck that as we went inside each prison, there was a large board that was published by the Human Rights Commission of Kenya, listing the rights of prisoners and, underneath them, a list of their responsibilities. Reflecting on what my noble and learned friend Lady Butler-Sloss said, I remember seeing in a young offender establishment in Belfast the most imaginative course that I have seen for young people, which was called “Learning to live alone”. In addition to all the practical things that it taught them, parenting skills were in there. I remember being very taken by the fact that the question of rights and responsibilities was used in that course to educate them in their responsibility as parents. It was very well and admirably done, because it was not overdone; one has to be terribly careful about preaching to the young. The sooner that one can start getting the idea of parental responsibility out while people are at school, rather than waiting until they become parents, the better.
Lord Elystan-Morgan (CB)
My Lords, there is very little that I wish to add, or indeed properly could, to what has been said so splendidly by everyone who has taken part. I join in congratulating my noble friend Lord Northbourne. He has been dedicated, committed and consistent in his campaign, and I am sure that it does not end today.
The one point that I wish to make, which follows on from what has already been said by more than one contributor to this debate, relates to fathers. We hear so often of fathers who have been deprived of custody of their children, and indeed of contact with them. A huge campaign, which I think is very misinformed, has been fought over the years, and I know many judges who have suffered considerably on account of the malicious attitudes of people in that connection. The point that I wish to make is the obvious one: we should be thinking all the time of those hundreds of thousands, possibly millions, of fathers who have no interest whatever in maintaining any relationship with their children. As a circuit judge sitting in family matters, I felt that if there was a magic wand that one could wave to bring about a better situation in the family context, it would be someone to inculcate those people with a feeling for their responsibility.
Lord McNally
My Lords, all the contributions that have been made share the view of the noble Lord, Lord Northbourne, that it is important that children have appropriate support and guidance as they go through life, and as they themselves become parents. I do not think that there is disagreement here, although I think that a number of noble Lords caveated their support for the noble Lord with the same doubt that I have over whether what he seeks to do is necessarily best done in primary legislation.
Still, a number of the points that have been raised colour this debate. I fully agree with the noble Baroness, Lady Howe, and the noble Lord, Lord Ramsbotham, among others, that the earlier we start educating children about the responsibilities they will one day have as parents, the better, and I think that sometimes we have been afraid of taking those messages into school and the mainstream of our education.
Lord Northbourne
I am of course most grateful to the noble Lord for a very full response. I hate to say this, but I think that the statistics which I disclosed in my earlier remarks show that those well intentioned things which the Government are doing are, alas, not achieving the objective we hope. I wonder if we could not perhaps rethink how we approach this issue. Instead of telling young people what they should not do, why do we not make them feel good about doing what they should do—proud to be a father, proud to be a good parent? I do not know, but it is just an idea.
Anyway, I think I have to accept that primary legislation is not the answer now. I believe one day we will find it will improve the law in the 1989 Act because it is currently too vague for words to be of the slightest use, but that is another matter. I beg leave to withdraw the amendment.
Lord Lloyd of Berwick
“Care proceedings: standard of proof
(1) The Children Act 1989 is amended as follows.
(2) In section 31 (care and supervision), after subsection (2) insert—
“(2A) Subsection (2) above shall be interpreted so as to permit a court to infer that a child is likely to suffer significant harm from the sole fact that the child is, or will be, living with a person who is a possible perpetrator of significant harm to another child.
(2B) For the purposes of subsection (2A), a person (the person concerned) is to be treated as a “possible perpetrator” if—
(a) a child has suffered significant harm;(b) the court is unable to identify the actual perpetrator of the said harm but identifies a list of possible perpetrators by finding (in relation to each such person) that there is a real possibility that he caused significant harm to the child; and(c) the person concerned is one of the persons on the said list.””
Lord Lloyd of Berwick (CB)
My Lords, I imagine that most of your Lordships have some experience of the procedure for taking children into care, probably more experience than I have. For those who have no such experience, perhaps I should say a few words of explanation.
We are concerned with the interaction of two sections of the Children Act 1989, Section 1 and Section 31. Section 31 provides that a child may be taken into care only if it,
“is suffering, or is likely to suffer, significant harm”.
“Likely to suffer”, in that context, does not mean more probable than not. It means only that there is a real possibility that it will suffer significant harm, a possibility, as it was put by one learned judge, that cannot sensibly be ignored.
Section 31 is usually referred to as the threshold provision. Section 1 sets out the welfare principle, and it is at the welfare stage that the court decides, after a full hearing on all the facts, what is in the best interests of the child in question. The fact that the threshold stage is satisfied in any particular case does not mean that a child will necessarily be taken into care. Conversely, if the threshold test is not satisfied, the court has no power to make an order under Section 1 and the child will remain at risk, if there is a risk.
Those are the relevant provisions. How then have they worked in practice? Where a child has been seriously injured while in the care of its parents, it may be taken into care without the court having to decide whether it was the father or the mother who inflicted the injury—let us call that child, child A. The difficulty arises when the father and the mother split up. Let us suppose that the father goes to live with another woman who already has a child—let us call it child B —about the same age as child A. If the local authority has proved on a balance of probabilities that it was the father who injured child A, child B may be taken into care, depending on what is in the best interests of that child. The threshold in that case will have been passed. However, it often happens that the father and the mother each blame the other for the injury to child A and, as a result, the court cannot decide at the threshold stage where the truth lies. One very experienced judge, Mr Justice Wall, later to become President of the Family Division, described this as a commonplace occurrence. In a very recent case, Re J, the Supreme Court has decided that if at the threshold stage it cannot be decided whether it was the father or the mother who injured child A, child B will remain at risk in those circumstances.
The noble and learned Baroness, Lady Hale, who gave the leading judgment in that case, went on to say that such cases are of “vanishing rarity”. I am not sure why she should have made that point. She cannot surely have been saying that because such cases are so rare it does not matter if an occasional child is left at risk. But, whatever the reason, it is on this point that I would respectfully disagree with her and for a number of reasons.
In the first place, if cases in which the court cannot reach a decision at the threshold stage are as rare as all that, why have they caused so much concern? That they have caused concern is not, I think, in doubt. That concern first came to the surface as a result of an earlier observation made by the noble and learned Baroness, Lady Hale, in a case called S-B, a case on very similar facts in which she held that the threshold had not been crossed. Once again, the noble and learned Baroness described that case as being one of “vanishing rarity”. Again, if that be so, why did the local authority in the more recent case, Re J, go to the length of constructing an artificial case, which it did, in order to challenge the decision in S-B? Why did it take that case all the way to the Supreme Court to test that very point? It simply does not make sense. The answer must surely be because cases such as S-B and Re J are not as rare as the noble and learned Baroness, Lady Hale, had in mind and because the decisions in S-B and Re J have caused real concern among local authority social workers.
Secondly, I turn to the Government’s approach. On 25 November the three of us—one of whom cannot be here today—had a useful meeting with the Bill team, for which we are very grateful. In a letter dated 29 November it was said that the Government could find no evidence that social workers were in any way concerned about the present state of the law. That letter was followed up by a letter of 4 December, in which the Government quoted the views of the Association of Directors of Children’s Services that it does not recognise Re J as having caused concern among social workers and it is unaware of any problem in this field.
Lord Brown of Eaton-under-Heywood (Non-Afl)
My Lords, I supported this amendment in Grand Committee, and having added my name to it, I support it again today. I stress again today, as I did in Committee, that this is a threshold provision—that is fundamental. That provision dictates just when the court gets jurisdiction to deal with a case. The situation is identified in the proposed amendment and has been explained by the noble and learned Lord, Lord Lloyd. The question is, when an adult who is caring for a child is the possible perpetrator of the death of or serious injury to another child, does the court have the power to deal with the case? Has the threshold been crossed?
That is a very different question—and this is also crucial—from asking whether a care order or a supervision order should then be made. The noble and learned Lord, Lord Mackay of Clashfern, said in Committee that it would be “quite unfair” to take someone’s child into care merely because another person who has come to join that family is a possible perpetrator of another child’s harm. I entirely agree with him on that. But as the noble Baroness, Lady Howarth, noted in Committee:
“It is not being suggested that the children should be taken away. The suggestion is whether we are able to move to the welfare question”.—[Official Report, 21/10/13; col. GC 329.]
The noble Baroness had earlier explained that the result of the comparatively recent interpretation given by the courts to Section 31 was that the social workers,
“now … cannot move to the welfare principle quickly enough, which means that often they cannot gain access to the home where the perpetrator is living”.—[Official Report, 21/10/13; col. GC 326.]
She also noted that,
“social work organisations are extremely concerned about this situation”.—[Official Report, 21/10/13; col. GC 326.]
Indeed, Lord Justice McFarlane in the Re J case described it as,
“a cause of concern amongst child protection agencies”.
Apparently it is now suggested by some that there is no real need for this concern, and that social workers have no such concern. I do not pretend that I ever practised in the field of family law, so I can claim no personal experience of the problem resulting from Re J. But having read and reread more than once the very full counsel’s opinion by a Queen’s Counsel specialising in this area of work—an opinion to which the noble and learned Lord, Lord Lloyd, has already referred, and which he yesterday copied to many of those who were to take part in this debate—it is difficult to see how the present interpretation of the Children Act 1989 could be thought not to cause concern. It is all very well to say, as has been said, that Section 31 has stood the test of time. As has been pointed out, Section 31 only received its present interpretation in the 2009 case of Re S-B. It was that interpretation by which all seven members of the Supreme Court understandably felt themselves bound in Re J last year.
These comparatively recent decisions are the ones which counsel says,
“have caused such consternation amongst those working to protect vulnerable children”.
As to the suggestion that there is no problem in practice, counsel observed:
“This is certainly not my experience nor that of my colleagues working in the field of child protection”.
To the question whether there is the need to ensure protection of unharmed children, where another child has suffered harm or death commonplace, counsel answered with “an unequivocal yes”, having himself,
“acted in many cases involving an unharmed child living with a possible perpetrator of past harm to another child”.
He says:
“The working of the amendment would mean that the Section 31 threshold can be crossed on the basis of likely significant harm. This would then open the way for the full range of protective orders available to the court (the ‘welfare stage’ of the process). Once the threshold is crossed, the court would be in a position to account for all relevant factors”.
A little later he adds:
“It by no means follows that the unharmed children would be removed permanently. The amendment ensures a legal structure whereby the Section 31 threshold is crossed to enable that welfare balance to be conducted. If it is not crossed, then that stage is never reached”.
His opinion ends thus:
“The best solution to these cases is to find the threshold crossed but that the welfare decision must be made with it very much in mind that the parent is a possible rather than an actual perpetrator. The proposed amendment would achieve that balance and secure child protection”.
That is the question before us today. Should the threshold be lowered to where for the first 20 years of the Children Act’s operation it was understood to be, to enable the court to move to the welfare stage and allow it, with the help of the social workers, to investigate all the circumstances of the case and decide whether, in those circumstances, some care or supervision order should be made? No child could properly be taken into care merely—and I stress that word—because one of its carers was the possible perpetrator of past harm. I think that we all agree on that, but that fact alone must warrant a full welfare investigation. Surely we owe children at risk no less than that.
Baroness Butler-Sloss
My Lords, this amendment raises an issue that has engaged academic legal discussion for about 18 years. I hear with some surprise the fact that some dramatic change was made in the case of Re J. That is not my impression.
There are, of course, two schools of thought, as there are in so many issues, even in family law. During the many years when I was a family judge, I heard many child injury and death cases and agonised over where the line was to be drawn between the protection of a child from significant harm and the importance for the child and the rest of the family of not removing that child from the family home on insufficient evidence. In the case that precipitated this amendment, as the noble and learned Lord, Lord Lloyd of Berwick, pointed out, the seven members of the Supreme Court were in fact unanimous on this issue although they disagreed on some less important points, as I would respectfully call them. They decided on the balance of the bare facts of the case that they were against the removal of the children and that the threshold had not been crossed. Put at its simplest, this is a question of whether you remove a child on suspicion or go to the welfare stage on suspicion or whether you have to have evidence before you cross the threshold.
I was never a Supreme Court judge, but I respectfully agreed with the seven—
Lord Elton (Con)
I have one difficulty. I understood that it was not at this stage a question of removing the child—I thought that it was a question only of moving to the welfare stage. The noble and learned Baroness has just said the contrary.
Baroness Butler-Sloss
I am sorry—I was talking about the removal of the child or looking at other aspects of the welfare stage. I am sorry if I conflated that, but the noble Lord is absolutely right. It is a question as to whether the court can make decisions which include the removal of the children or the removal of the parent or putting in place supervision orders or various other intrusive orders into the family.
I suggest that this House should be cautious, when seven judges have said that the threshold has not been reached and crossed, about passing an amendment to the contrary effect. I was going to go through at some length the two cases that I think are relevant, because we go back to 1996—we do not start in 2009—but it is probably unnecessary. However, it was unrealistic for the Supreme Court to be given the one bare fact and not the surrounding circumstances, although it was undoubtedly intentional. In my experience of 26 years sitting as a family judge, 15 of them spent hearing this sort of case—many children who died and many who were seriously injured—as well as eight years spent hearing them on appeal, then going back to hearing them again as a first-instance judge, I do not remember a single case where this bare fact was the only point that the court had to deal with. So I believe that the cases are rare, although I entirely accept what the noble and learned Lord says—that even the rare cases, naturally, have to be protected. But if there is nothing but suspicion, I would suggest to your Lordships’ House, as the Supreme Court judges said, that you should not remove the child on suspicion.
The court has the jurisdiction to look at the entire case, although it is not able to make a decision on welfare in looking at the threshold point. There may have been some degree of confusion in Grand Committee as to what in fact the local authority and the court could do. I hope the House will forgive me if I go through briefly what I understand the situation to be. I would be astonished if it has changed from the days when I was sitting as a judge.
If you have a person, whom I will call P, who has been in a pool of possible perpetrators but not identified as the actual perpetrator of the injury or death of a child, the social workers are not precluded from investigation. I respectfully disagree with my most experienced noble friend Lady Howarth in saying that the social workers might not be able to enter the house or make the proper investigations. With the person, P, having been in a pool of possible perpetrators of the death or injury of a child—in the particular case of J, the child aged, I think, three weeks died of asphyxia but also had terrible injuries—the social services, if they had been alerted that P was in a new family, would see that as a highly relevant factor and naturally very worrying. The local authority has a duty under Section 17 of the Children Act 1989 to safeguard and promote the welfare of children in the area who are in need. It is almost certain that the sole fact available, that P had been in a pool of perpetrators, would trigger immediate action by a local authority.
Under Section 47(1)(b), a local authority in circumstances such as these would have a duty to make inquiries. A social worker would investigate and be likely to visit the family. If the inquiries are frustrated by access to the children being unreasonably refused, there may therefore be grounds for seeking an emergency protection order under Section 44(1)(b) or (a), for possible removal of the children from the home because of what is going wrong if they are not being allowed to see the children.
The local authority could also seek a child assessment order under Section 42(3). In any event, the local authority would be likely to seek an interim care order from a family judge under Section 38(2) in respect of the children. It would not look well to the judge if the parents refused access to the children; that would be a major marker against what was going on in the family. The children might be taken into interim care but, in the case of J, the mother very properly left the home so that the children could continue to live with the father. She moved out.
There would be a directions hearing by the judge of the care application and a CAFCASS guardian would almost certainly be appointed. During the period leading to the substantive care hearing, the family would no doubt be examined in depth. At the main hearing, P would clearly have to give evidence and be cross-examined as to what happened in the first family when the child was injured and died. She—it was a woman in that case—and J would be cross-examined up hill and down dale as to why she had not protected the child, whether she was actually the perpetrator, why she had not seen the injuries to the child, what she was doing while this child was being hurt, and whether she covered up for the other parent. Those are terribly relevant factors and, I would suggest, relevant factors to crossing the threshold if she gave unsatisfactory answers and if she was not believed by the judge. There would be assessment reports from the social worker, and of course the guardian would give his or her own report on the family’s position. All the circumstances would be very carefully considered by the judge in deciding whether the evidence available to him or her was sufficient to cross the threshold barrier.
Clearly, how well the new family were getting on and the care given to the new family by P and by the other partner were relevant to identifying whether there were other concerns that might tip the evidence over the threshold. Only if there were no evidence at all other than the bare fact of P having been in the pool but not having been proved to be the perpetrator would the evidence be insufficient to cross the threshold, and the judge would not make a care order or some other order excluding P from the care of the children. That is the point at which, if you do not cross the threshold, you cannot make a decision about removing the children or putting in a supervision order or any other sort of order.
I am very grateful to my noble and learned friend for giving me the opportunity to read the opinion of John Hayes. Of course, I respect his experience as an advocate in care proceedings but I disagree with his conclusions. Perhaps I may make a number of points on his opinion. He talks about a case of twins where the unharmed twin would be in danger if not removed from the family where the first child had been injured. In that case, the unharmed child would certainly be removed. However, we are considering a new family where one adult member is a possible perpetrator but there is now a new family unit with an adult against whom there are no allegations at all. It may also be relevant that in the J case the injuries perpetrated on the child took place seven or eight years before, and undoubtedly P would have matured. I believe that in that case she was extremely young—16 or 17 years old. She was in a much more stable and supportive environment and therefore might not pose a threat.
Taking the other points made by Mr Hayes, if a local authority becomes aware that a possible perpetrator is in the new family, I have no doubt that it will issue the proceedings even if there are no other concerns, and I am surprised to hear John Hayes say something to the contrary. I do not believe that the judge at the interim care stage would dismiss the proceedings before having the opportunity to see all the reports and examine all the evidence. If counsel for the parents applied at the interim directions stage to have the case dismissed, I would be equally surprised if the judge dismissed the case before the full hearing. I certainly would not have done that because I would have been worried. Of course, you would be worried until all the facts were in front of you. I would hope that the child’s guardian would look at the best interests of the child in the broadest sense and take into account the need for a balance between protection and the right of the child to have a normal life with the natural family. Interestingly, Mr Hayes talks about the balance between protection of the child and the rights of the parents to have a family life. For goodness’ sake, the right of the child to have a family life is much more important than the right of the child’s parents. What we have here is a balance between protection and the right to family life.
It seems to me that there has been an overreaction by academics, some social workers, some lawyers and some judges. The other side of the coin is the real danger that, if this amendment is passed, children may be permanently removed from their parents, their homes, their schools and their friends on a suspicion that the person concerned was in the pool of perpetrators, although he or she cannot be proved to have done the harm. That would be a great injustice to children, it would cause significant harm where there was no serious threat to children’s well-being and it would tilt too far towards intrusion by the state into family life.
Baroness Deech
My Lords, I have grappled long and hard with this tricky issue. I should like to reduce it to three brief propositions, which have led me to agree with the noble and learned Lords, Lord Lloyd and Lord Brown. First, it is sadly too frequent that we do not know which of two parents may have harmed a child. Each blames the other; it is not provable; and one of them goes on to form another family. There must, therefore, be some danger because the parent either did it or stood by while it happened. Secondly, we are talking about only reaching a threshold. It is not a question of leaping to the conclusion that the child must be removed. It simply triggers the ability of the courts and social workers to investigate what is going on. Thirdly, there is absolutely no possibility of harm ensuing from the amendment put forward by the noble and learned Lords, whereas there is a distinct possibility of harm if this amendment is not agreed. A number of distinguished academics have written with great alarm calling for a change in the current situation and in support of the amendment moved by the noble and learned Lord, Lord Lloyd, with which I hope that the House will agree.
Baroness Howarth of Breckland
My Lords, I find myself in a maelstrom of lawyers with no voice. My position is that we been asking two questions which do not necessarily have the same answer. When I read the response from the department about this proposal, it became clear that we are considering two different issues. One is whether a local authority has enough powers to move into a family and take action if it believes that there is significant harm or the likelihood of significant harm. Of course, the ADSS and everyone else will say that they do have enough powers because that is clearly so. The criticism comes when local authorities do not move when they have that capacity.
The question we are considering is when two people have been in a situation where a child has been harmed. Perhaps I may put a bracket around that thought for a moment while we remind ourselves of the time when, if a child was murdered and you could not prove which of two people had done it, both were acquitted. There was a huge campaign by the NSPCC to ensure that that could not happen; that is, if a child was dead and clearly it was one person or the other, both people involved were likely to find themselves found guilty until such time as there was greater clarification. We can close the bracket there and say, “Here we are: we find ourselves in a situation where there are two people involved, someone has committed harm and maybe killed the child”. Recently, I spoke to a serious lawyer and a previous Attorney-General, who I probably should not name at the moment, who said, “If there is the slightest margin that there is a risk that the child might end up dead, what action do you take?
My noble friend Lady Deech has made the speech which I would have liked to have made. She has made important points. This amendment will do no harm. This afternoon, your Lordships have had a real seminar on Section 31 of the Children Act and the level of thresholds. It is important that we take action that protects children if it does no harm. I am more concerned that action is not taken by local authorities than that they are likely to whip children into care. To use a word we heard earlier, the “presumption” that local authorities take children into care wantonly is just not true. In fact, it is very difficult to get your child into care if you want to. A great deal of work and assessment thresholds should be considered.
All we are saying is that to get to the threshold of Section 31 where there has been this risk and there is possible danger, the local authority should be enabled to take some action, which will not necessarily, as mentioned by the noble Lord, Lord Elton, result in the child being removed from home. In fact, it is unlikely, unless there are serious risks, that the child will be removed from home. The amendment will clarify this bit of law. Do not worry if you feel confused: sometimes I find it extremely confusing and, despite what their bosses say, quite a lot of social workers on the ground find it confusing, too.
Lord Walker of Gestingthorpe (CB)
My Lords, the spectacle of a succession of retired senior judges re-arguing the law in your Lordships’ House may be a relatively novel and possibly relatively unwelcome experience for those noble Lords who are not versed in the technicalities, but I nevertheless rise very reluctantly to oppose the amendment. No one could be fuller of admiration and respect for my noble and learned friend, Lord Lloyd, who moved the amendment, but it is right to say a few words because this is not just a point for lawyers. It is a point of enormous importance. It is a terrible thing if a child is taken by the state away from his parent or parents on inadequate grounds on the basis of suspicion that is unfounded. It is also a terrible thing if the child is not protected against abuse in the home. There will always be cases in which it is hugely difficult for the courts to determine which of those is the more important, because it is often a question of balancing one risk against another.
As my noble and learned friend Lord Mackay said on an earlier occasion, I believe that the threshold test in Section 31 of the Children Act has stood the test of time. In one form or another, this point has been considered on at least six occasions since 1995 either by your Lordships’ House in its judicial capacity or by the Supreme Court. It is not correct that the case of Re J has suddenly plunged the whole of the law into uncertainty. Re J was a remarkable, unusual and sad case, as so many of them are. I will say a word about that and about what the Supreme Court decided. I will do that as briefly as I can.
My noble and learned friend Lord Lloyd gave us child A and child B. In fact, in Re J they went from child A to child F. We start with the mother. She is ultimately the wife in a stable marriage. The wife, in a relationship with another man, had child A and child B and child A died of serious non-accidental injuries at the age of only three weeks. That led to proceedings in relation to child B, who was the other child of that relationship. Child B was then adopted and disappeared from the scene.
Child C was in fact a child of the same mother and father but was believed to be the child of another father, and it was only later that a DNA test established the true paternity. Child C was one of the children who formed the later stable relationship between the wife and her husband. They had one other child, who was not the subject of care proceedings, child D, and children E and F were the children of the husband through another relationship.
So it was a very complicated situation indeed, and it was children C, E and F in relation to whom the care proceedings were taken out. By then, the mother, who was, as my noble and learned friend, Lady Butler-Sloss, said, very young at the time that child A and child B were born, appeared to be in a stable relationship, but in the proceedings relating to the death of child A and the future welfare of child B, the family judge said, almost in terms, that it was unnecessary to decide whether it was the mother or the father who perpetrated the injuries, because both were involved. Each covered up for the other and failed to see that the children received proper medical care.
That was the background to the later child proceedings in relation to child C, child E and child F, and those are the proceedings that ultimately came to the Supreme Court as Re J. They took an extraordinary course, as my noble and learned friend Lady Butler-Sloss mentioned, in that the local authority, for reasons best known to itself for which it no doubt sincerely thought good, decided that the case should be tried solely on the fact that the mother had been a possible perpetrator of the fatal injuries to child A, without letting in any other facts at all. That was the remarkable feature of Re J, which was the subject of considerable adverse comment in the Court of Appeal, in which my noble and learned friend Lord Judge sat, together with Lord Justice McFarlane and another Lord Justice. That, I suggest, is what made Re J truly a rare case, although the sort of problem that it raised is, sadly, by no means rare.
As to what the Supreme Court decided, it is correct to say that the noble and learned Baroness, Lady Hale, said, in effect, that membership of a pool of possible perpetrators is not enough unless the judgment goes as far as to say that, on the balance of probability, this was the perpetrator. My noble and learned friend Lord Lloyd said that Lord Wilson disagreed. He did, but he went further. He said that not only is it not enough, it should not be taken into account at all. Lord Sumption agreed with Lord Wilson, so they both went further than the noble and learned Baroness, Lady Hale, in saying that membership of a pool is not enough. The other three members of the court indeed expressed the view that the law was over- complicated, a view that one can readily agree with, but, nevertheless, concurred without hesitation in the result.
Since the original case in 1995, in which the House of Lords in its judicial capacity was split 3:2—a case in which my noble and learned friend Lord Lloyd was a member of the Court—there have been five unanimous decisions by the House of Lords in its judicial capacity or the Supreme Court which have reached the conclusion that this is how Section 31 should be applied.
My noble friend Lady Deech said that the amendment would do no harm. I respectfully suggest that it would, at least in this respect. It would introduce the phrase “a real possibility”, which is the judicial gloss that has been put on “likelihood, looking to the future”, to describe something that lies not in the future but in the past. If I may say so, that is a very unlawyerly way to express oneself.
I apologise: I have gone on at much greater length than I intended. Those are my reasons—with huge respect to my noble and learned friend Lord Lloyd—for opposing the amendment.
Lord Judge (CB)
My Lords, to add to a maelstrom of lawyers is not a particularly bright idea at this time in the afternoon, but I declare an interest as I was a member of the Court of Appeal that decided, when we decided it, the case of J. The case was brought to us so that the threshold test could be clarified: that was the only purpose of it. It was brought by a local authority, deliberately focusing on the single fact of possible perpetration and omitting any other consideration, so that the issue could go to the Supreme Court and that five previous decisions of the House of Lords could be analysed once more. We followed the previous decisions of the House of Lords and immediately gave leave for appeal to the Supreme Court—a very unusual step for the Court of Appeal to take—because it had to be addressed in that court.
Once it is established that an individual living in a household in which a child or children have been killed or seriously injured was one of the possible perpetrators of the injuries, but the evidence is not sufficiently clear for the court to identify who is actually responsible, where does that leave us? It leaves us with the possibility that the individual was, indeed, responsible for the death or those injuries or some of them. That seems to me to be a stark fact, but there is a further consideration. Often the ill treatment has been repeated; these awful occasions are not, generally speaking, a one-off. Generally, what you have is a series of repeated assaults on the child that culminate in an attack in which the child sustains fatal injuries. J was such a case. What that little baby had gone through in three weeks is beyond description.
Therefore, in many of these cases, although not all of them, the person who has not actually caused any injury has undoubtedly been aware of the fact that the child has been suffering. It is not just that the child cries—we all know that babies whinge and cry, some more than others—but this was a child with evidence on its little body of injury. Indeed, although these cases are largely confined to the family court, one needs to stand back and wonder why on earth criminal prosecutions under the Domestic Violence, Crime and Victims Act are not undertaken—not simply to establish who is guilty of the murder or manslaughter, but, where the evidence is uncertain, to demonstrate that both, on any view, are culpable in the sense that they have allowed the child to be bullied and abused in the way that has culminated in its death. If there had been a criminal prosecution and a conviction, it would not have occurred to anyone to say, “Oh well, that conviction is irrelevant to the threshold test that the family court has to ask in relation to another case”.
If there are combinations of events like those that have happened, it seems to me that they raise issues of great relevance to the threshold test in family proceedings. It is not a question of removing a child from a family on the basis of suspicion alone; it is that the threshold test should be allowed to be tested by reference to all the relevant evidence. If all the relevant evidence reveals that the threshold test should be passed, then you move on to care proceedings. For me, the idea that we should exclude from the threshold test possible relevant material is not how justice is done.
Lord Hope of Craighead
My Lords, I hope that I may be forgiven for adding one more lawyer’s speech to those which have already been given, and particularly that the noble Baroness, Lady Howarth, will forgive me for doing this. My reason for wanting to speak is that I presided over the case of In re J in the Supreme Court. I think that the noble and learned Lord, Lord Judge, expressed great concern that the issue was being brought before the courts on a hypothesis; I think I am right in saying that he said that it is not the business of the court to judge hypothetical cases. We took the view that we should decide the case on the material that we were given, but it is right to stress, as the noble and learned Baroness, Lady Hale, stressed, that the situation we were presented with was highly artificial in order to test one particular point: whether the “sole fact”, as it is put in the noble and learned Lord’s amendment, was enough to cross the threshold.
I do not want to add anything to the clear description which the noble and learned Lord, Lord Walker of Gestingthorpe, gave us as to what the case of In re J was all about, but I should like to say briefly why I join with the noble and learned Baroness in resisting the amendment. In my case, it is particularly on account of its wording, given the use of “sole fact” and the reference to “real possibility”. My objections can be summarised on three simple grounds: first, the amendment as it stands is wrong in principle; secondly, when you look at the structure of the statute it is unnecessary; and, thirdly, from the point of view of family life in circumstances that are quite likely to occur, it could indeed be damaging.
First, on the principle, I respectfully suggest that the golden rule is that a prediction of future harm has to be based on facts which have been proved on a balance of probabilities. It is only then that the state would be justified in removing a child from the family; in our democratic society, it is not enough that there should be suspicion. It has to be based on proof, so the state should be required to demonstrate that it has real and current concerns about the child’s safety before the child is taken into care. I appreciate that I am moving through all sorts of stages in making that proposition, but that is the background to the point I wish to make. I stress that if we look at the wording of Section 31(2) of the Children Act, which we do not have on the paper before us, when it states that a child may be taken into care only if,
“the child … is suffering, or is likely to suffer, significant harm”,
it is using the language of proof, not of possibility. That was a point made by Lord Nicholls some 18 years ago in the case of In re H.
As I think the noble and learned Lord, Lord Brown of Eaton-under-Heywood, accepted, the amendment has the effect of lowering the threshold to some degree. It assumes that the state cannot prove that the carer in question was the perpetrator—that all it can prove is that she was a possible perpetrator—and that that bald fact is all that can be done. Even allowing for the point at the end of the proposed amendment, that this is a “real possibility” and something that cannot sensibly be ignored, I suggest that we are still below the threshold which Section 31(2) sets.
Secondly, on necessity, it is important to appreciate that the noble and learned Baroness, Lady Hale, was not saying that the problem which the amendment is addressing is rare in itself. She was not saying, I think, that it is rare for two people in the situation in which the carer in this case was placed to blame each other, so that the court is unable to decide between the two. What she was saying was extremely rare was the situation which the court was being presented with: that this was the sole fact. As she put it in her judgment, the issue hardly ever comes before the court at the threshold stage packaged in that way. The point which she was making, and which one can see by studying the structure of the Children Act, is that in Part V, and in particular in Section 47, powers are available to the local authority to make inquiries and, if it is thwarted, to take further steps which may ultimately lead to an emergency protection order being applied for and so on, as the noble and learned Baroness, Lady Butler-Sloss, explained to us.
In the case of In re J, there was a difference of view as to whether the sole fact which has been referred to was relevant at all. In my judgment, I used the words “relevant” and “sufficient” to try to explain the difference of view. Lord Wilson and Lord Sumption said that it was not relevant at all; the rest of us said that the fact of the possible perpetration was relevant and could not be ignored, but it is not enough and is not sufficient to cross the threshold and therefore something more must be found.
The problem with the amendment is that it has absolutely no context attached to it. The sole possibilities are stated in the amendment in the starkest possible terms. However, as soon as you start to examine a particular case—as the noble and learned Lord, Lord Judge, did when he talked about the number of injuries inflicted in that tragic period of three weeks—you are adding something that is not in the amendment. Indeed, the noble and learned Lord, Lord Lloyd, said that the amendment is dealing with the situation of two possible perpetrators only, but it does not actually say that. It just says “a possible perpetrator”. As soon as you begin to make inquiries and search around, you are going to add things in which begin to build up a context which the social worker will be able to put together before the threshold stage has to be crossed when the case is brought into court. My objection to the amendment is really that: that it does not give you any context at all. Surely, that is taking the matter too far.
The third and final point is the risk of damage. Let us contemplate a situation which is not far removed from the situation of In re J, where the woman—and let us take the woman because it was the woman in In re J—is living in an abusive relationship. That was indeed the case here because she had separated from the previous partner because he was violent to her repeatedly and eventually she left him. All sorts of reasons can be imagined why she did not blame him. She may have been under pressure from him. She decides to create a new life for herself, as indeed she was doing in In re J, making a relationship with somebody who is absolutely blameless, who has children of his own already. There she is, now in family with him with a further child of their own.
My concern is that, if the amendment is passed in its stark form, it holds a threat over that relationship from the very beginning. There must be a question about, “Is it wise for me to enter into this relationship? Am I always going to be at risk of being before the court for a full threshold inquiry, simply because of what happened in the past?” The amendment pays no regard to the length of time that may have elapsed between the incident when the perpetration occurred and the moment at which the inquiry is being initiated. Without elaborating further, it is the starkness of the amendment, which lowers the threshold, that is a cause for real concern.
I wrote to the noble and learned Lord, Lord Lloyd, with a suggestion about how one might approach the problem—because I do appreciate that there is a problem—by suggesting that, without using the word “sole”, one might be able to reassure social workers that this factor is relevant, which I believe firmly would be the case. If an amendment were to be framed which made that point and put it beyond doubt, then I would be entirely happy and I hope very much that it would reassure social workers. However, the amendment as phrased goes far too far and is too stark and for that reason I support the noble and learned Baroness, Lady Butler-Sloss, in resisting the amendment.
Baroness Kennedy of The Shaws (Lab)
My Lords, I, too, oppose the amendment. I am glad that the noble and learned Lord, Lord Hope, has mentioned the difficulty where there is background of abuse against the mother of the child. I have been involved in cases where that has been the situation. That can often be the reason why a woman at trial does not testify, or at the police station does not give an account, of what has happened at the hands of her abusive partner who has also abused her child.
I was glad to hear the discussion that has just taken place, but my concern is the narrowness of the drafting. Before any judgment was made, I would want to be sure that one was able to explore the context and the situation that the mother was in at the time. Very often, battered women are frozen into a situation where they do not act to protect their child, and we should be very careful about not letting someone have a chance to make a new life with a new partner in very different circumstances where they would be perfectly good as a parent.
Lord Elystan-Morgan
I certainly had not intended to take part in this debate, which has been at a very exalted level. However, the speech from the noble and learned Lord, Lord Hope, reminded me of another point that has not been touched upon. If one reads the amendment as it is worded, one has the impression that the test should very probably be on the balance of probability. The noble and learned Lord, Lord Hope, referred to the judgment by Lord Nicholls in Re H 18 years ago. The judgment as I remember it, and correct me if I am wrong, was to this effect: normally the test will be on a balance of probability—less or more likely. However—I believe that these were his words—the more serious the accusation, the more cogent must be the evidence to establish that accusation. If I am right about that, and I believe that I am, it means that this amendment would undermine that principle in Re H completely.
Baroness Hughes of Stretford
My Lords, this has been a very long debate and I do not intend to extend it much longer, but I want to join the noble Baroness, Lady Howarth, as another non-lawyer in redressing the balance slightly. I have listened very carefully to all the excellent contributions. I say at the outset to the Minister that this situation presents a challenge to the Government and I hope that they will rise to it constructively; I am sure that he will try to do so.
We have heard from people across the House today, all of whom are very experienced in one way or another and absolutely committed to the welfare of children, yet this is a highly contested issue with at least three separate points of view being expressed during the course of today’s debate: those who think that there is an issue to be addressed and that the amendment from the noble and learned Lord, Lord Lloyd, attempts to address it; those who do not believe that there is an issue to be addressed; and those who believe that there may be an issue but this amendment is not the way to do it. I think there is an issue but, although we will wait to see how the noble and learned Lord sums up, I do not think it is one that the House could resolve by amendment to this Bill. However, I hope that the Minister, having heard the debate tonight, will be prepared to examine it further before Third Reading and come back with some proposal to try to reach a resolution.
It is clear from the debate that there has been a change in the way in which courts, rather than social workers, can apply the Children Act. That change was as a result of the intervention of the noble and learned Baroness, Lady Hale. In those situations where a child is living with someone who is a possible perpetrator of proven abuse to another child, whereas previously the court could have said, “That’s enough, that’s the threshold; we will now consider the welfare issues”, the noble and learned Baroness has said, “No, that is not enough”. Now the court cannot even consider the welfare issues to the child in the round. That is the crucial change.
I will not go through the arguments that have been put forward, but I shall just make one or two comments. The noble and learned Baroness, Lady Butler-Sloss, for whom I have the most enormous respect, said that there ought not to be the possibility of court intervention on the basis of suspicion. Normally that would be right, but the problem in this case is that it is not just suspicion; there is a proven fact of harm or death to a previous child by one or other, or more, of the parties. The difficulty is that we do not know which one.
The noble and learned Lord, Lord Walker, said that it is a terrible thing if a child is removed from its home on unfounded evidence. Yes, it is, but it is also a terrible thing if we learn only with hindsight that that child was actually living with someone who was the perpetrator and who was a danger to that child and injured or killed that child. Those are the very difficult judgments. I feel that, faced with that very difficult situation, I would be more comfortable—I am entirely with the noble and learned Lord, Lord Judge, on this—if a court were considering those issues rather than it having to say, “No, we can’t look at it, because we’re not allowed to any longer because the threshold can’t be met and that is the current ruling”. That is a great concern. As I say, I hope that the Minister will rise to the fact that we have a hotly contested issue on a very serious matter on which people whom we respect across the piece have come to different judgments. This needs to be resolved, and I hope that the Minister will set out a pathway by which that can be achieved.
Lord McNally
My Lords, I will certainly try to rise to the challenge. It would be a lot easier to rise to if the Titans who have clashed today had come to anything like a conclusive agreement about how it should be met. I have never been one to think that Parliament should never challenge the views of our courts, or vice versa. I have said before that I think a little friction between the two is sometimes quite useful. On the other hand, we have a separation of powers where we entrust our learned judges with making wise decisions.
I am therefore a little tremulous about suggesting that we accept an amendment that, if the noble and learned Lord, Lord Walker, is to be believed, and I am sure he is, flies in the face of six separate judgments by either the House of Lords in the old days or the Supreme Court. We have to think very hard before we pass an amendment that would challenge those judgments. If the case that has cast the matter into doubt was an artificial case aimed at clarifying the law—I have to say that the words you usually use are, “With the utmost respect”—it did not work.
I cannot make commitments to the noble Baroness, Lady Hughes, that we can solve this between now and Third Reading. Of course I shall take back the debate that we have had and the considerable arguments that have been made. It would be impertinent of me to try to encapsulate those; those who have been in the debate have heard cogent arguments on both sides.
All of us, whether we have had these responsibilities or are just ordinary citizens, know that when these things go wrong and a child is murdered, the media pack descends on, usually, a social worker and the consequences are extremely grave. On the other hand, as we also know, voices are raised saying that we are too casual in our willingness to take children into care. Accusations have been made at the other end of the corridor that local authorities can be cavalier. I fully take the point made by the noble and learned Baroness, Lady Butler-Sloss, and the noble and learned Lord, Lord Hope, that if you are going to take a child from its family you must have proof as well as suspicion.
These are very weighty matters. I put it to—I was going to say “my noble friend” but he is more like the constant thorn in my side—the noble and learned Lord, Lord Lloyd, that today would not be the day to test the opinion of the House. If he were to do so, I would ask the House, in all sense of responsibility, to vote against him.
The Government believe that Section 31 is robust enough. The point was made that it is not a threshold for social workers to make child protection interventions. That has been made very clear. The rarity of the case was dismissed. The noble and learned Baroness, Lady Hale, rightly said that so artificial a case on such a single issue is the rarity. That is where some of the confusion has arisen.
We have had some very strong arguments. In the light of the very full debate held in Committee, we have discussed this further with the chief social worker, the Association of Directors of Children’s Services and the College of Social Work, and they have all confirmed that they do not support this amendment.
If the noble and learned Lord, Lord Lloyd, does not press the amendment, I do not want to inflict another debate like this on the House at Third Reading. I do not think it would do a service to the House or be the way to make a very important law. This will have to stand for a very long time. If there are initiatives or suggestions that can get some unanimity across the Chamber—and, perhaps even more helpfully, on the Cross Benches—there may still be some time for movement, but as it stands now, and in the light of the advice that the noble and learned Lord, Lord Walker, gave us in a considered and thoughtful speech that Section 31 has stood the test of time and has been examined six times during that period, it would be impetuous of this House to back the amendment moved by the noble and learned Lord, Lord Lloyd, this evening. If he wishes to press it, I will urge the House, with the proper sense of responsibility, to reject it.
Lord Lloyd of Berwick
My Lords, I am very grateful for the Minister’s careful response to this amendment. I am also very grateful to all those who have spoken in support of it. Of course, I am also very aware of those who have spoken against it. Even if I had thought that we would win tonight, I would not want to divide the House. It would be highly irresponsible to make a snap decision on such an important and difficult area as child protection.
The one thing that the debate has established beyond any doubt is that there is a problem here that needs to be solved urgently. As I have said from the very start of this amendment, this should be a non-party matter. It is purely a matter of law reform. That is why I was so very glad to hear the noble Baroness, Lady Hughes, suggest in her excellent speech that there is an opportunity between now and Third Reading to hold some sort of discussions on an all-party basis to see whether there is some way in which we can find a way forward which would satisfy all the lawyers here as well as the public at large. If we can find such a way forward, that would be by far the best solution. If we cannot, I respectfully suggest to the Minister that this is a case for a reference to the Law Commission for an urgent hearing about what is best to be done in this situation.
Lord McNally
As I said before, I am worried. We have very strict rules about bringing matters back at Third Reading, and I do not want to lure the noble and learned Lord into thinking that by withdrawing he can be guaranteed a Third Reading debate. On the other hand, the point he has just made may be a way forward on this. I do not know. I swear I have never said this before across the Dispatch Box, but I am not a lawyer. If the lawyers can help us in this, we will consult, but I do not want to inflict on the House a Third Reading debate of this complexity, which would not be very popular with the House.
Lord Lloyd of Berwick
I fully understand and accept the position which the Minister has taken. It would be admirable if we could organise some sort of cross-party discussion, perhaps with outside assistance. Lawyers need assistance from social workers to find out the best way of finding a solution. If we can find one before Third Reading, so much the better; if not, then clearly it ought to go to the Law Commission for a quick hearing. I beg leave to withdraw the amendment.
Lord Low of Dalston
“( ) the need to continue to develop an inclusive system where parents of disabled children have increasing access to mainstream schools and staff and which have the capacity to meet the needs of disabled children.”
Lord Low of Dalston (CB)
My Lords, we now come to Part 3. I shall move Amendment 16A, and speak briefly in support of Amendment 34A in the name of the noble Baroness, Lady Howe.
In 1978, the noble Baroness, Lady Warnock, described inclusion, or integration, as it was known at that time, as,
“the central contemporary issue in special education”.
It has not lost much of its salience in the time that has elapsed since then. It refers to the opportunity, or even the right, for disabled children to be educated in mainstream schools alongside their non-disabled peers as an expression of their right to take their place in the community as fully equal members of that community. It is a right that many disabled people feel has been too long denied and which is accordingly all the more highly prized, especially by many parents so far as the education of their disabled children is concerned.
The right to inclusive education is contained in Article 24 of the UN Convention on the Rights of Persons with Disabilities, which the UK ratified in 2009. In relation to the right to education, states are also under an obligation to take measures to achieve the progressive realisation of the right. When the UK ratified the convention, it entered a reservation and interpretative declaration to the right to inclusive education, but the terms of its declaration made clear that the UK accepted the obligation of the progressive realisation of the right to inclusive education.
This amendment was recommended by the Joint Committee on Human Rights to place the principle of inclusion in the Bill among the general principles set out in Clause 19, in line with the rights contained in the UN convention and in terms which closely follow the language of the UK’s interpretive declaration.
In Grand Committee, the Minister outlined steps which the Government were taking to promote the principle of inclusion, which he considered made it unnecessary to amend Clause 19. He referred to duties under the Equality Act 2010 to prevent discrimination against disabled people, to promote equality of opportunity, to plan to increase access over time and to make reasonable adjustments to policies and practices. For the most part, however, the measures he referred to were what I might call “soft measures”, such as continuous professional development of staff and development of expertise in supporting children with SEN. He also relied on the fact that guidance on inclusion would be given in the SEN code of practice.
Why should one want to go further than this? There are six reasons. First, the code of practice, the latest draft of which was issued on 4 October, is very much watered down compared with the existing guidance. In particular, it contains many fewer of the sorts of examples and scenarios which help to bring the principle of inclusion to life for people who need guidance in how to implement it. We need something like the JCHR’s principle in the Bill as a necessary peg on which to hang stronger guidance. Secondly, the principle of inclusion continues to be the subject of considerable litigation. This suggests that the current state of the law and guidance leaves considerable scope for uncertainty. Putting the JCHR’s general principle in the Bill would help to remove this uncertainty and clarify the law and relevant guidance. Thirdly, the JCHR has recommended our amendment. Fourthly, it is in line with the obligations to which the UK has signed up under the UN convention. Fifthly, as I have said, the language of the amendment closely follows that of the UK’s own interpretive declaration, so should hardly be uncongenial to the Government.
Sixthly, there is otherwise nothing about inclusion in the Bill, notwithstanding that inclusion remains one of the central contemporary issues in special education, as I have said. The Minister will point out that Clauses 33 and 34 effectively contain rights to inclusion, but—and this is the most important point—these are rights to inclusion for the individual child. We need a general principle in the Bill in the terms of this amendment which gives local authorities an obligation to,
“continue to develop an inclusive system where parents of disabled children have increasing access to mainstream schools and staff and which have the capacity to meet the needs of disabled children”.
We need an obligation of this sort in the Bill and one which lays the obligation on local authorities to take a strategic overview of the provision in their area and plan for its strategic development in line with the principles of inclusion, and in a way which enables that principle to be progressively realised. Without this, we continue to encounter the problem of children being rejected by individual schools which do not have the facilities—because the legislation is drawn in such a way that they can do that—because the authority has failed to take a strategic overview and ensure that there are schools in their area which have the requisite facilities.
There is one general point. I see that people might worry that an amendment in these terms, which speaks of the progressive development of an inclusive system, with increasing access to mainstream schools, might tend to exclude the possibility of education in special schools for those who want it. That is not my intention at all. I am in favour of what I call a mixed economy of provision. There is nothing in this amendment which would take away the right of a parent to opt for a special-school placement if they want to. This is enshrined in the legislation. Under the law as it stands, which is retained in this Bill, no one can be compelled to send their child to a mainstream school who does not want to.
I will just say a word about Amendment 34A. My Amendment 16A covers the importance of developing an inclusive system in which disabled children and young people are increasingly welcomed by mainstream schools with the right skills to support them. The general presumption in favour of mainstream education is maintained in Clause 33. That is why it is disappointing that the potential for special academies to admit children with SEN without an education, health and care assessment and plan is included in Clause 34(9). The fact that academies are brought within the SEN framework by this Bill is very welcome, but the inclusion of Clause 34(9) seems oddly at variance with this approach. As I said at Grand Committee, this clause undermines a long-standing consensus that children and young people should be placed in special schools only where this has been identified as the most appropriate placement, following a statutory assessment and decision-making process which takes full account of the wishes of the parent.
Draft regulations under Clause 34 allow a child or young person to be placed in a special school without an EHC assessment and plan on an indefinite basis, provided that the placement is reviewed termly. Some parents may welcome this power because of the potential to give swifter access to a special-school place. Without a full assessment and decision-making process, however, there is a high risk of inappropriate placement. This new power to place children in special schools outside the rigour of a statutory assessment and decision-making process risks a return to a time when parents could be pushed into accepting a special-school place for their child, not because it is the best placement for them but because the mainstream school had not, for whatever reason, provided the appropriate support. In fact, it would take us back to the situation which obtained before 1999.
I support the noble Baroness, Lady Howe, in proposing that this subsection be removed and, in so doing, I beg to move Amendment 16A.
Baroness Howe of Idlicote (CB)
My Lords, my amendment, which I am pleased to hear the noble Lord, Lord Low, is also supporting, is very much along the lines of the discussion we all had in Committee. Currently, as we know, any child who has special educational needs but does not have a statement must be educated in a mainstream school. There are no exceptions to this duty, which helps to ensure that children and young people are not inappropriately placed in special schools.
Under both the old and the new regulations, a child can attend a special school on an assessment place. Despite some sympathetic comments by the Minister in Grand Committee, the Government’s proposals will still potentially allow special academies, including free schools, to admit children or young people permanently into school without their having had their special needs statutorily assessed, or an education, health and care plan put in place for them.
Illustrative regulations accompanying Clause 34 —Regulation 2(2)—will also allow children without an EHC plan to be placed in any special school on an ongoing basis provided the situation is reviewed annually. Although the Minister stressed that the support of professional advice would be needed, I fear that not enough safeguards will be in place to stop children or young people being admitted without their needs being fully assessed and agreed by a range of professionals with the child or young person and his or her parents.
Baroness Warnock (CB)
My Lords, I have added my name to the amendment of my noble friend Lord Low for reasons that I think are a worry for everybody who is concerned with Part 3 of the Bill; namely, the lack of clarity as to how children who do not get an EHC plan will be placed, and the processes by which they are placed. This must be a worry for parents with moderately disabled children as well as for people who are concerned with the clarity—as we hope—of the legislation.
I am not a wholehearted, ideological supporter of inclusion for all children. I think that special schools are enormously important, and there was a time when it looked as though we were going to have specialist special schools, beacon special schools and special schools whose expertise would flow over into mainstream schools much more readily than it does at present. Therefore, I am by no means concerned to uphold a view that would end with all children with disabilities being educated in the mainstream. In some cases, it is very difficult to ensure that children with disabilities do not interrupt or destroy the possibility of the education of other children in the school—this, of course, goes particularly for children with behavioural and emotional difficulties.
The Bill needs to be much clearer on how children will be placed within their local authority area if they do not have a plan made out especially for them—I think that that is still a matter of lack of clarity. Parents find it very difficult to make the decisions and choices that the Bill very properly emphasises, because of the difficulty of access to exactly what the ordinary, mainstream school will be able to offer their child. I know that a large number of parents want mainstream education for their children whatever their disabilities, whether they are going to get the best possible education and the best possible chances or not—it is a fixed belief that it is a right for a child to be educated in the mainstream and for parents to make that demand.
Parents who are genuinely interested in finding the right school for their child who has a disability, but may not be severely disabled or have a complex disability that speaks for itself, need the means to make a properly informed choice. That is why I like the wording of my noble friend’s amendment—although I find the grammar rather difficult—and why I strongly support it.
Baroness Wilkins (Lab)
My Lords, I speak in strong support of the amendment of the noble Lord, Lord Low, which is set out so comprehensively and to which I added my name. If accepted, it will reassure those of us who are concerned that elements of Part 3 of the Bill could weaken the right of disabled children and young people with SEN to be included in mainstream education. Sadly, the noble Baroness, Lady Campbell of Surbiton, is not able to be in her place today because, like many people, she has a bad cold. But many noble Lords will have heard her give eloquent testimony of the blight that her segregated education laid on her life. It was not necessary, and it is something that has never left her.
It would be welcome if the amendment were further strengthened by extending the duty to post-16 providers, to ensure consistency for disabled learners across the educational experience. Local authorities such as Nottingham, Calderdale and Newham have used such duties to good effect. They have provided specialist support services and training for mainstream schools so that those schools are confident in implementing inclusive educational practice. This has increased the number of disabled children and young people with a wide range of impairments and health conditions being included in mainstream education. But while some local authorities have been proactive in promoting inclusive education at a strategic level, a lot of work still needs to be done to support the development of inclusive education across the country, especially when half of our disabled children and young people with SEN are still being placed in segregated educational provision.
I am very concerned that without an explicit duty, local authorities will become complacent—and, more worryingly, will revert to the practice of investing increasingly limited resources in existing segregated, rather than inclusive, educational provision. For instance, Kent County Council is already investing heavily in special school provision. Nigel Utton, a Kent County Council primary school head teacher and the chair of Heading for Inclusion, is quoted as saying:
“About half the children with statements in Kent are in special schools, with so much resource being targeted at special provision (not to mention the huge transport costs incurred) mainstream schools are left with a very small proportion of the special needs budget. The pressure on mainstream schools to achieve high academic standards, combined with budgetary pressures, is forcing many to not accept children with SEND statements or to persuade parents to leave”.
Such investment in special schools is not compatible with the Government’s Article 24 obligations. One such obligation is to develop and promote inclusive education across the country by building the capacity of mainstream schools to support the inclusion of disabled learners. The situation will only worsen if the Bill, and the draft SEN code of practice, do not include the explicit duty to promote inclusive education practice. I urge noble Lords to support the amendment.
Baroness Lister of Burtersett (Lab)
My Lords, I am glad to be able to follow my noble friend, who has made a powerful case. As a member of the Joint Committee on Human Rights, I simply want to put on record my thanks to the noble Lord, Lord Low, for taking the committee’s recommendation forward and for making the case for it so cogently. The committee saw this as a matter of principle. It is a principle that the Government do not disagree with, and I am at a loss as to why they have been so resistant to accepting that it should be in the legislation. I hope that the Minister will think again.
Baroness Whitaker (Lab)
My Lords, I support the amendments, because inclusion, which we all want to promote, still has to be fought for. That is why it ought to be in the Bill. I was on the boards of several special schools where some children were, I have to say, “parked”. On the other hand, I noticed the beneficial effects of children with disabilities being accommodated in mainstream schools—not only on the child in question but on the other children, who then have the opportunity to learn how to behave towards them, which they take. Children do not always bully other children with disabilities; in a good mainstream school they will have an incentive not to. The duty should be explicit, so it ought to be in the Bill.
Baroness Hughes of Stretford
My Lords, I shall briefly, but strongly, support both amendments. On Amendment 34A, the noble Baroness, Lady Howe, has fully explained her concerns, which I share, about the possible consequences of allowing specialist SEN academies to admit children without an ECH plan. That seems to run counter to the principle of inclusion and it also seems dangerous to admit children without that comprehensive assessment of their specific needs. I hope that the Minister will respond positively to that point.
When the noble Lord, Lord Low, moved Amendment 16A in Committee, he rightly said that although the code of practice had improved guidance on inclusion, in the Bill as it stands, inclusion is not referred to anywhere. Given the commitment of the Government and of noble Lords across this House to increase access to mainstream schools and to act in accordance with the recommendations of the JCHR, it seems very odd that this overarching principle is not enshrined in the legislation.
The purpose of the amendment is to insert that general principle alongside other general principles that are included in the Bill. As the noble Baroness, Lady Warnock, has said, this is not about pushing inclusion above everything else; it is about parental choice. At the moment, because local authorities and schools have not moved far enough towards making mainstream schools accessible to disabled children, many children are denied that choice.
Clause 19 sets out other key principles to which local authorities must have regard in fulfilling their obligations under Part 3: the wishes and feelings of children and their parents; the importance of child and family participation in decisions; providing adequate information; and supporting the child’s development and educational progress. Those are all very important. But equally important, I would argue, is the principle that local authorities should seek to maximise the opportunities for inclusion.
As the noble Lord, Lord Low, told us, when the Minister was arguing against the amendment in Committee, he said that the Bill maintained the general principle of inclusion in a number of other provisions and went on to list some of them. He also said that schools and colleges had important duties under the Equality Act and he told us about other measures that the Government were adopting to help mainstream schools improve their ability to include disabled children more effectively. However, he did not tell us why the Government would not accept this amendment alongside the other general principles that appear on the face of the Bill. If the Minister is not minded to accept the amendment today, I hope that he will not rehearse that information as we have already heard it and it is on the record. What we really want to know is why he will not accept the general principle of inclusion sitting alongside the other principles in Clause 19. That would send a strong signal to all educational settings, and to local authorities, that they must up their game and move closer and faster to being able to offer places to disabled children. That would catalyse a very positive and marked shift. I hope that the Minister will accept the amendment today.
The Parliamentary Under-Secretary of State for Schools (Lord Nash)
I thank the noble Lord, Lord Low, and the noble Baronesses, Lady Warnock and Lady Wilkins, for tabling Amendment 16A, and the noble Baroness, Lady Howe, for tabling Amendment 34A. I had an extremely helpful meeting with the noble Lord, Lord Low, and the noble Baronesses, Lady Howe and Lady Wilkins, recently, and I am grateful to them for helping me to understand these issues. As noble Lords know, they are, of course, immensely knowledgeable on this matter. They have spoken eloquently about an issue that I know is important to many in this House—inclusive provision for children and young people who have SEN or are disabled. We have had an informed and passionate debate.
Amendment 16A picks up a recommendation from the Joint Committee on Human Rights, as the noble Baroness, Lady Lister, a member of the committee, mentioned. The Joint Committee welcomed the Bill as containing,
“a number of provisions which … enhance the UK’s implementation of some of the relevant rights of children and young people”.
Those include the general principles in Clause 19; the extension of education, health and care plans to young people up to 25; the requirement for academies to be covered directly by the statutory framework for SEN; the duty to provide SEN information to children and young people; the measures to ease transition from children’s to adult services; the explicit reference to assist in preparation for independent living in a local offer; and the provision of direct rights of appeal for young people and the proposed piloting of children’s rights of appeal. However, the Joint Committee felt that including a principle on inclusive provision in Clause 19 would demonstrate the Government’s commitment, under the UN Convention on the Rights of Persons with Disabilities, to the progressive realisation of the right to inclusive education.
I make it clear at the outset that the Government are fulfilling their commitments under the UN convention. The Bill maintains the general principle of inclusion and does so through some of its key provisions. It places duties on schools and colleges to use their best endeavours to ensure that those with SEN get the support they need and holds a presumption for inclusion in relation to choice of schools and colleges through Clause 33. However, it also recognises that children and young people have different needs and different preferences for where they wish to be educated, including specialist settings such as special schools and independent specialist colleges. That is entirely consistent with the reservation and interpretative declaration that the Government made to Article 24 of the UN convention recognising special schools as part of the general schools system.
Beyond the Bill, as we have discussed in previous debates, local authorities, schools and colleges have important duties under the Equality Act 2010 to prevent discrimination against disabled people, to promote equality of opportunity, to increase access over time and to make reasonable adjustments to their policies and practices. Indeed, it was this Government, in 2012, who included schools in the provision of auxiliary aids and services, such as specialised computer programmes, sign language interpreters and hoists, within the reasonable adjustments duty under the Equality Act. I made a commitment in Grand Committee to look at the scope for improving the links to the Equality Act duties in the SEN code of practice and I am happy to reaffirm that commitment now.
We have previously discussed the inclusive schooling guidance. One of the striking findings in the responses to the Green Paper Support and Aspiration was that nearly half of those who responded to a question about the guidance did not know that it existed. That is why we put the key elements of it into the code of practice. I am happy to consider how the code of practice can be further improved in that regard. In view of all that, we do not believe that it is necessary to add to the principles in Clause 19 to fulfil our commitments under the UN convention. The principles in Clause 19 are designed to underpin the key features of the reforms, placing the views, wishes and feelings of children, young people and parents at the heart of the system and placing a focus on improving outcomes. They apply irrespective of where children and young people are educated.
We have heard in other debates about the important role that specialist provision plays in supporting disabled children and young people and those with SEN. The noble Lord, Lord Low, referred to the importance to parents of having that choice. Amendment 16A could run the risk of being perceived as a threat to specialist provision and as encouragement to local authorities not to place children and young people in specialist provision where that is appropriate for meeting their needs and where parents wish it, and could threaten the viability of high-quality provision for children and young people with SEN. I know that that is not in any way the purpose of the amendment, but it is an example of the kind of balance of arguments that we have to weigh.
The Government take very seriously their commitment to the convention. In addition to the provisions in the Bill and the government amendments on disabled children and young people that we will be debating later, we have taken a number of practical steps to build the capacity of mainstream schools and colleges to support children and young people who have SEN or are disabled. I spoke about these in Grand Committee. The noble Lord, Lord Low, referred to them as “soft measures”, but I would not describe them as such. They are certainly extensive. I will not go through them in detail, because I know that noble Lords have heard this before. However, we have invested considerable sums of money in training: there are over 10,000 new SEN co-ordinators, a number of schemes to develop the training of SEN, we have made grants to the Institute of Education, and we are involved in many other projects.
Chapter 6 of the draft SEN code of practice provides strong guidance to all mainstream early-years settings, schools and colleges to ensure they have high expectations for all pupils and students, provide high-quality teaching, have clear systems for identifying those who need additional support and provide that support as quickly as possible. We make it clear that schools are responsible for setting their own priorities for the continuous professional development of their staff and we recognise the key role played by the SEN co-ordinator in this and in other ways. In addition, as noble Lords know, the Bill now includes a new clause on supporting children with health conditions. Noble Lords will see that a number of government amendments have now been tabled to include disabled children and young people with SEN in the scope of a number of key provisions in the Bill. I will speak about those amendments shortly.
On Amendment 34A, tabled by the noble Baroness, Lady Howe, I understand her concerns and those of other noble Lords about the provisions in Clause 34(9), but I hope to reassure them. Clause 34(9) would enable a child or young person with special educational needs but without an EHC plan to be admitted to an individual special academy or special post-16 academy whose academy arrangements permit this. The admission of children or young people without EHC plans to special academies or special post-16 academies would be limited to those academies where the Secretary of State for Education had specifically agreed to permit that in the funding agreement in relation to specific types of children.
I reiterate what I said when we debated this issue in Committee. This is not a blanket policy and it is also definitely not part of any dark plan. On the contrary, the Government’s intention is to facilitate innovative new approaches and provision for the benefit of children and young people with SEN. The Secretary of State would look carefully at the detail of any proposal made by a special academy or special post-16 academy and would consider its educational merits and viability. Indeed, we have approved 16 free special schools. All are able, as things stand, to apply to the Secretary of State to have the competence within their funding agreements to admit non-statemented pupils. That is the status quo. Only one has so applied. They were approved to admit, on a temporary basis only, children with autistic spectrum disorder or with specific communication and language difficulties, but as far as we know none has been so admitted.
Concerns have been expressed by the noble Lord, Lord Low, the noble Baroness, Lady Howe, and others that children and young people might be forced into special provision and parents coerced by local authorities into placing their children in special schools. We will ensure safeguards against that are in place. First, the relevant academy’s funding agreement must stipulate that the special academy or special post-16 academy could admit only children or young people without plans who had a particular type of SEN set out in the agreement. Changes that suggested reducing the number of places for children with statements to enable the admission of children without statements would not be approved unless the case was supported by the local authority and by parents, and a lack of demand for statemented places could be demonstrated. Secondly, such a child or young person would be admitted to the academy only if their parents or the young person had applied to go to it. Thirdly, the child or young person should have those particular needs and their admission should be supported by a relevant professional opinion, such as that of an educational psychologist. Of course, parents of young people will continue to have the right to ask for a statutory assessment of their child’s needs to be undertaken and a right of appeal to the tribunal if the local authority decides not to carry one out. The academy would also have to adopt fair practices for such admissions in line with the principles of the school admission code. We would take very seriously indeed any instances where these freedoms were being abused. Very significantly, the new secondary accountability, the best eight progress measures, will become the main measure by which we assess the performance of all maintained schools and academies. This new approach will strip away the previous perverse incentives and will hold schools to account for the progress made by all their pupils, not just blunt measures of absolute attainment at grade C. This will move schools that have focused too much on those pupils who can achieve a C grade to focus on the progress of all their pupils and should particularly benefit SEN pupils in those schools.
Lord Low of Dalston
My Lords, I thank all those who have spoken. They all spoke in support of my amendment except of course the Minister. I thank the Minister for his full response. However, I have to say that I am not entirely persuaded by it. It was not a real advance on what we heard from the Minister in Grand Committee. In moving the amendment I think I showed that that was inadequate and that we still needed the amendment.
As I heard him, he has not said anything very different in substance today. He said that children have a variety of different special educational needs. That is right. These include a need for special school placement. In moving the amendment, I went out of my way to make it clear that nothing in the amendment is inimical to special school placement. The amendment follows the language of the Government’s own interpretative declaration when they entered their reservation to the UN convention. Therefore, there should not really be anything in the amendment that would be difficult for the Government to swallow.
Like the noble Baroness, Lady Lister, I do not see what is causing the Government so much difficulty about this. But I want to make it clear that I do not feel embattled. I moved the amendment not in a spirit of ideological embattlement or to provide a further chapter in the history of passionate and sometimes bitter arguments between adherents of inclusive and special education. I see it as much more a matter of good legislative housekeeping, in which we get the appropriate principles on the face of the Bill to drive their amplification in secondary legislation and guidance. As I have made clear, the code of practice as so far drafted, although a considerable improvement on the outline draft which was initially circulated, is still woefully defective compared with the guidance on inclusion which we have at present. The code, as so far drafted, is a real step backwards in this area. I feel very strongly, not as a matter of special education ideology, but as a matter of legislative housekeeping, that we need something like this amendment on the face of the Bill in order to drive the major strengthening of the code of practice on inclusion which is required. In that quite moderate and not embattled spirit, I nevertheless wish to test the opinion of the House.
“Children and young people with special educational needs
For the purposes of sections 22, 24, 25, 26, 27, 30, 32 and 62 of this Act, the term “children and young people with special educational needs” will be interpreted to include children and young people with a disability under the Equality Act 2010.”
Baroness Hughes of Stretford
My Lords, Amendment 17 would, for the purposes of Sections 22, 24, 25, 26, 27, 30, 32 and 62 of Part 3, include children with a disability under the Equality Act. It would interpret children and young people with SEN to include children and young people with a disability as well. The Government have tabled a number of amendments, I think, to achieve the same thing.
I will be very brief as this is not now contentious, given that the Government have moved on the issue, but my amendment would ensure that key clauses that relate to identifying children with needs, duties of the health authority, joint commissioning arrangements, the duty to keep provision under review, the local offer, advice and information for parents and so on would all now apply equally to disabled children without a special educational need under the terms of the Equality Act. This is important, not only in principle, but also in its practical effects, particularly for the local offer, which we will debate later on Report. The local offer is particularly important for children with a disability but without a special educational need because that is now to be the only way in which they can get services that they and their families need. It is very important for the local offer, particularly Clause 26 on the joint commissioning arrangements between health education and social care. When they are looking at what is needed in an area they will have to take into account the needs of all children with a disability, including those without a special educational need, which was not the case under the Bill as it was drafted.
I very much welcome the Government’s concession here, as far as it goes. The Minister knows that I would have preferred to have an amendment to apply the whole of Part 3 to children with a disability as well. That would have achieved a truly inclusive, integrated and comprehensive system for all disabled children, whatever their disability and whatever the extent of their need. Many feel that this was the promise of the Green Paper. However, we have come part way and that is to be welcomed.
Turning to the government amendments, I think that my Amendment 17 has the advantage of being completely comprehensible when you read it, but the 40-odd government amendments are not so easily understood. I understand that it has been done in this way to achieve a more comprehensive effect and I look forward to the Minister explaining that. I beg to move.
Lord Nash
My Lords, it may be helpful if I outline our government amendments in this group to enable noble Lords to have a debate if they wish to. In Grand Committee we had an extensive debate about the support for disabled children and young people and I know that this is an issue on which the noble Baroness, Lady Hughes, has reflected deeply, as have I since then. Many Peers expressed concern that disabled children and young people without SEN would miss out on the benefit of our reforms and, at the time of the debate, I introduced a government amendment to require schools to make arrangements for supporting children with medical needs. I also asked for help from noble Lords in understanding which groups of disabled children would not be supported by this Bill, the government amendment in respect of children with medical needs, the provisions of the Equality Act 2010 and Part 3 of the National Health Service Act 2006.
Following the debate, the Every Disabled Child Matters campaign sent some very helpful advice to the department in which it said:
“The Government rightly made the point in the debate yesterday that disabled children and young people are already protected by a range of other legislation, such as the Equality Act 2010, the NHS Act 2006 and the Children Act 1989.
We would like to stress that our concern is not about the rights of individual children and young people who may have a disability but no SEN. We completely accept that on an individual level they are protected under the Equality Act 2010 and other legislation. Our concern is about disabled children and young people as a group not being included in the joint commissioning arrangements, review functions, and local offer duty”.
It went on to suggest which clauses in the Bill might be amended to achieve this—Clauses 22, 24, 25, 26, 27, 30 and 32—and drafted a single amendment to deliver this. I am grateful to the noble Baronesses, Lady Hughes of Stretford and Lady Jones of Whitchurch, for their amendment, which is largely based on the Every Disabled Child Matters amendment.
We agree with Every Disabled Child Matters that the clauses identified should be amended. However, our view is that, by relating the provision for disabled children and the young people to special educational provision, a single amendment would not deliver the outcome that we all want, and that we need to amend each clause.
Clause 22 would be amended to require local authorities to exercise their functions with a view to identifying both the children and young people with SEN and disabled children and young people. Clause 24 would be extended to require health bodies to inform the child’s parents and their local authority where they are of the opinion that a child under compulsory school age has, or probably has, a disability. Clause 25 would now require local authorities to exercise their functions with a view to ensuring the integration of education and training provision with healthcare provision and social care provision for children and young people with SEN and disabled children and young people, where they think that this would promote their well-being, including in relation to their participation in education, training and recreation. In Clause 26, the duties on local authorities and their partner commissioning bodies to make joint arrangements for the commissioning of education, health and care provision for children and young people with SEN would be amended to include disabled children and young people.
Clause 27, which currently requires local authorities to keep under review the special educational provision and social care provision for those with SEN, would be extended to cover provision for disabled children and young people. They will broaden it to cover all education and training provision, not just special educational provision, for children and young people who have SEN or are disabled.
The amendments also require local authorities to consult disabled children and young people and their parents when carrying out that duty. The provisions in the local offer would include disabled children and young people, both in relation to the information to be published and in developing and reviewing the local offer and publishing comments. In Clause 32, the requirement on local authorities to arrange for young people with SEN and parents of children with SEN to receive advice and information on SEN would be extended to include provision for disabled young people and the parents of disabled children to be provided with information about matters related to disability. I have also tabled an amendment, which we shall come to later, to extend the requirement to cover children themselves as well as their parents. Clause 73 would make it clear that the definition of disability applied to the provisions covered by these government amendments is that in the Equality Act 2010.
Noble Lords will also be aware from commitments that I made in Committee that we are looking at ways of strengthening links to the Equality Act duties, including those to make reasonable adjustments in the SEN code of practice. The amendments that I am speaking to today will sharpen the focus on the Equality Act duties considerably. Since the code of practice is statutory, the guidance that it provides cannot be ignored. I will respond to the debate in the normal way in due course but I hope that noble Lords are reassured by these amendments.
Baroness Hughes of Stretford
My Lords, I thank the Minister for his explanation and I beg leave to withdraw the amendment.
Baroness Northover
“(5) Health care provision or social care provision which educates or trains a child or young person is to be treated as special educational provision (instead of health care provision or social care provision).”
Baroness Northover (LD)
My Lords, I would like to speak to the group containing government Amendment 17A and Amendment 18, tabled by the noble Lord, Lord Ramsbotham. Both amendments seek to set out the circumstances in which provision that would otherwise be health or social care provision should be treated as special educational provision. The Government have consistently given an undertaking to maintain existing protections for parents in the new system. Clause 21(5) was drafted as part of that undertaking. It sought to replicate as far as possible the case law established under the present SEN legislation, which in our view makes it clear that health provision, such as therapies, can be educational, non-educational, or both, depending on the individual child and the nature of the provision. Case law has established, in particular, that since communication is so fundamental in education, in addressing speech and language impairment it should normally be treated as educational provision unless there are exceptional reasons for doing otherwise. We have reflected this in section 7.9 on page 109 of the draft SEN code of practice.
We all share the aim of carrying the current established position through into the new system, but this is complicated legal territory and it has not been straightforward to find the right formulation. We are grateful to the noble Lord, Lord Ramsbotham, for his personal interest here and for his involvement with the Royal College of Speech and Language Therapists, which kindly shared and discussed its legal advice with the department. We have taken that advice into account in drafting government Amendment 17A, which we believe would maintain the position established in case law that we all seek.
In our view, a local authority and, where relevant, a tribunal, in considering whether healthcare provision or social care provision was to be treated as special educational provision, would ask themselves whether it was educational, taking the approach set out in the current SEN code of practice in respect of speech and language therapy. We have carried this into the new landscape of the Bill in relation to education and training. We believe that our wording is expressed a little more simply than the amendment of the noble Lord, Lord Ramsbotham, and that it is consistent with the present approach. I beg to move.
The Countess of Mar
My Lords, unfortunately my noble friend Lord Ramsbotham cannot be in his place to speak to his Amendment 18, and he has asked me to do so on his behalf.
He tabled this amendment to try to ensure that, alongside the recognition that speech, language and communication needs are special educational needs for an increasing number of children and young people in this country, speech and language therapy retains its status as a special educational provision. This is important for two reasons. First, under the new SEN system, parents of children with EHC plans can appeal to the Special Educational Needs and Disability Tribunal only if this therapy is recognised as special educational provision. Therefore, it is vital that speech and language therapy, officially a healthcare provision, retains its educational status. Secondly, as originally drafted, speech and language therapy could be left out of an EHC plan on the basis that it is not “reasonably” required.
My noble friend is pleased to see that in Amendment 17A the Government appear to have recognised this; he is therefore pleased to accept the government amendment and for Amendment 18 not to be moved.
Baroness Howarth of Breckland
My Lords, I have a simple question about this. Having been sick last week, I may have missed the answer in all the mass of information that usefully comes from the department. Again, it is a question about implementation, as my questions usually are. When anything classified as social care and health becomes an education provision, it will be financed. However, how will it be financed in a college for disabled youngsters where there are myriad therapists, who might be physiotherapists or speech therapists, or where the youngsters may have a residential social care provision in the same place but that is linked to the education? That is rather crucial—almost more crucial than the legislation.
Baroness Morgan of Ely (Lab)
My Lords, I speak in support of Amendment 18 in my name and that of the noble Lord, Lord Ramsbotham.
There are countless examples of parents around the country who have had to fight for special educational provision for their children. Of course, this is much easier to pursue for middle-class, articulate parents compared with those from poorer households, but the need for clarity about what provision is available and who should provide these services is essential for all parents who need extra help for their children, irrespective of background.
The problem is that, rather than clarifying the position on special educational provision and ensuring the Government’s stated intention of carrying the current established position into this Bill, the wording of the clause in the original draft set a higher threshold than that which currently exists—a danger identified by the sector and expert lawyers. Therefore, healthcare provision and social care provision could be defined only as special educational provision if,
“made wholly or mainly for the purposes of ... education or training”.
If the healthcare provision or social care provision did not directly enhance the education or training of the child, it could not be considered to be special educational provision; it would simply be defined as healthcare provision or social care provision.
I shall not go into the details here of why that makes a difference, as those were rehearsed in Committee, but, thankfully, the Government have acknowledged the concerns of Peers and have introduced new wording as a result of opposition to the initial draft. There was still, however, concern around this new wording, which is why the Government have moved even further to amend the language.
We have come a long way on this clause. We are grateful to the Government for that and we would like to recognise the work of the noble Lord, Lord Ramsbotham, the Royal College of Speech and Language Therapists and David Wolfe QC. On the whole, I welcome the fact that, on this issue the Government have listened to our concerns, and I, too, will be happy not to press our amendment.
Baroness Northover
My Lords, I thank the noble Countess, Lady Mar, for putting the noble Lord’s case. He is indeed a doughty fighter, as we all know. I am mightily relieved that he is pleased that the Government have put forward this amendment and that he is therefore happy for his amendment not to be moved.
I also thank the noble Baroness, Lady Morgan, for what she has said. I assure the noble Baroness, Lady Howarth, that joint commissioning will ensure that arrangements are in place to cover the financing. I will write to her with all the details.
At this stage of the evening, I am extremely glad that we all appear to agree. Clearly, it will very soon be Christmas.
Baroness Northover
(a) ”
(b) all the children and young people in its area who have a disability.”
Baroness Wilkins
“Data on the number of children and young people with special educational needs and disabilities
(1) A local authority in England must publish information annually within the local offer on the number of children and young people in its area who have special educational needs and disabilities.
(2) Information under subsection (1) must be published by type of special educational need and disability.”
Baroness Wilkins
My Lords, I hope that the Government will agree to this amendment. Clause 22 requires local authorities to identify children with special educational needs. This amendment would require the local authority to publish these data within its formal offer. I have tabled the amendment because I am concerned about the availability of good-quality data on children with SEN and disabilities. It is an important issue, which could well determine the success of the Government’s proposed reforms.
Accurate data on the number of children in their area is vital for local authorities effectively to plan and deliver services. The draft SEN code of practice, particularly in the section on joint commissioning, outlines the importance of local data sets in identifying the needs of children with SEN and in informing their decision-making. Without good-quality data, it is difficult to see how the Government or local authorities can effectively plan and commission services for children with SEN and disabilities. It also means that we have a very weak basis on which to determine the long-term impact of these changes.
I am pleased to see that the Government will be amending the Bill so that local authorities have a clear duty to identify children with disabilities, as well as those with SEN. However, there is compelling evidence that existing data sets are failing accurately to identify all children with SEN and disabilities. Currently, data from different sources for the same area can vary widely. Using deafness as an example, I know that different figures on the number of deaf children vary by as much as 30,000: according to the disability register, there are 7,500 deaf children; according to the school census, there are 16,000; and, according to the National Deaf Children’s Society’s survey of all 152 local authorities in England, there are 37,500 deaf children.
Sense has also identified a widespread failure accurately to identify numbers of children who are deafblind. In the local authority of Kensington and Chelsea, Sense has found that, according to the prevalence data, there should be around 10 deafblind children. However, the local authority has identified four. How many have been identified by the school census? The answer is none. These children urgently need specialist SEN support, so why is the system not capturing them?
In Grand Committee, the Minister enumerated the various sets of data that are published but failed to acknowledge that the existing data sets are inadequate. For example, the Special Educational Needs in England report does not cover all children with SEN and so misses more than 40% of school-age deaf children. A single data set is needed to bring together all the data from different sources into a format which would ensure well informed commissioning decisions.
It is difficult to see how the Minister’s department will meet the ambitions set out in the Bill unless we have a reliable and single data set that accurately captures all children with an SEN and disability. The current state of affairs cannot be allowed to continue whereby 152 local authorities are left failing correctly to identify and record all children with SEN and disabilities. I hope that the Minister will give the House reassurance that the urgency of this matter is recognised and that work is in hand to ensure that commissioning can rely on accurate data before this Bill comes into force. I beg to move.
Baroness Howe of Idlicote
My Lords, I support the amendment tabled by the noble Baroness, Lady Wilkins. Good quality data on children with SEN and disabilities must be in place before we proceed with these reforms. Unless action is taken, there is a clear risk that some children will continue to fall through the net. The department’s draft SEN code of practice acknowledges that issue and specifically highlights the importance of quality data on children with low incidence needs. Given that these children’s needs are relatively less common, there is an even greater need to establish their needs and whether local provision is sufficient to meet them.
However, as the noble Baroness, Lady Wilkins, has pointed out, existing data sets are flawed. The code of practice refers to the disability register. However, in the case of deaf children, I understand that it is identifying only around 7,000 to 8,000 children, whereas other estimates suggest that 40,000 would be closer to the truth. I understand that the department recently published guidance to local authorities on implementation of the new nought to 25 special needs system. In that, the Department for Education asks local strategic leaders to consider what their data tell them about local outcomes for children and young people with SEN.
My concern is that, whatever these data tell them, they are not going to give a reliable or accurate impression of children with SEN because the underlying data sets and systems are so fundamentally flawed. I hope that the Minister will be able to reply positively in support of this amendment or indicate that positive action is being taken to address these concerns.
Lord Low of Dalston
I, too, have put my name to this amendment and strongly support it. There is not a lot to be said in addition to what has been said by the noble Baronesses, Lady Wilkins and Lady Howe, but perhaps I could ask the Minister one or two questions which it would be helpful if he could respond to in responding to the debate. The information currently collected clearly does not include all children with SEN. What is being done to address that by the department? It is also clear that the information needed to be collected in order that we might get effective planning and commissioning is spread out over different data sets. It would be helpful to know what is being done to bring together the information to be found all over the place in different places to ensure that we get well informed commissioning and decision-making.
Finally, does the Minister know whether the department will take in hand the co-ordination of all the data required, or will that be left to local authorities? If it is going to be left to 152 different local authorities, it is difficult to see how the department will be able to meet the ambition set out in the Bill to improve commissioning without the data sets being improved. Does the Minister agree that it would be better for the department to co-ordinate this area of work rather than leave it to 152 local authorities? If it is left to the local authorities, it is hard to believe that we will get a coherent solution. There are bound to be variations and the data is bound to remain very patchy. Therefore, it would be very valuable if the department would take a stronger hand in co-ordinating this work and in making sure that we get the data that we need to have in order that the reforms in the Bill may be implemented in the way that the Government want.
Baroness Howarth of Breckland
My Lords, I understand that the Government probably do not want to increase the level of bureaucracy in local authorities in terms of information gathering. I also understand that they possibly do not want to have centralisation when one of their main tenets is to decentralise to local government. That being said, however, successive Governments have failed to get this right. Those of us who were involved in trying to implement the Chronically Sick and Disabled Persons (Amendment) Act 1976, which was a long time ago, remember that one of its main provisions was to try to get decent data on which to make strategic planning.
The only point I really want to make is that there is a conflict between that wish not to increase bureaucracy and not to be able to get consistent data on the same basis across the whole of the local authority areas in order to plan. It is not just local authorities which will be affected. I spend a lot of my time in charities. They need to plan their strategy for some very large amounts of provision. I have chaired a number of committees where we have needed data in order to make a decision as to how we are going to move resources from one area to another. If you do not have that information, you can get that wrong. I would like to know how the Minister thinks that that kind of strategic planning can be carried out when the data lack that clear underlying consistency but at the same time I recognise the difficulties that it may cause in other areas of the Government’s plan.
Baroness Jones of Whitchurch (Lab)
My Lords, I support Amendment 18C and very much echo the arguments put forward by my noble friend Lady Wilkins and other noble Lords in this short debate.
Clause 22 already sets out that it is a requirement on local authorities to identify all children in their area with SEN. The Government obviously intend this data gathering to take place and this work to be done; otherwise they would not have put this in the Bill. It therefore needs to be collected and collated in an organised and effective way. It cannot be argued that it is an extra administrative burden when the basic requirement for the information to be gathered is already in the Bill. Noble Lords have raised genuine concerns about the quality of data in the past and the challenge of improving that quality in the future. I would also like to ask the Minister how the Government, if they think that it is important for the information to be collected, intend to make sure that the quality is delivered so that a proper planning process can take place. Obviously, it is necessary to have this information as a precursor to planning service delivery for all those people with SEN in local authorities.
The amendment is partially about transparency. It is about making sure that the data are not only collected but shared in an appropriate way so that they help both planners and service users to have a more informed input into the local offer and help devise better services in the future. The data might also have the advantage of providing isolated families with the knowledge of how many other families, children and young people in their area share a similar type of SEN or disability, which may help to bring people together.
The amendment is very much in the spirit and intent of the local offer, which is designed to help parents, children and young people shape services for the future. That is part of an ongoing debate that we have been having. The data collection and the quality of that data are crucial to help make this happen. Therefore, I hope that the Minister will see the wisdom in the amendment and will be able to support it.
Lord Nash
My Lords, I would like to thank the noble Baroness, Lady Wilkins, for raising this important issue and noble Lords who have spoken on this matter. I accept noble Lords’ concerns on this. I understand that the noble Baroness’s purpose behind tabling the amendment is to put, as the noble Baroness, Lady Howarth, has said, local authorities and schools in a better position to make good commissioning decisions. Good commissioning is clearly an important underpinning to the reforms that we are making and the Bill already provides for joint commissioning arrangements across education, health and care for the provision that is reasonably required for local children and young people with SEN. That commissioning will be informed by the local joint strategic needs assessment and the data that are already available on these children and young people.
I accept absolutely that good data need to be available to inform commissioning, but I do not think that the local offer is the right place to publish that data. The purpose of the local offer is to set out what provision children, young people and families can expect in their local areas and it is to be used as a vehicle for discussion about the development of local services. It is not designed to publish information on the numbers of children and young people in the area with different types of SEN. It would not be appropriate to clutter up the local offer with such data. We accept that that information will be material to discussions about the development of provision in the local area, but that information is available elsewhere.
The department already collects data from schools and local authorities on the number of children with special educational needs and publishes this annually on the department’s website. This includes data about the number of children by type of special educational need and we will be expanding this information. At present, we publish data by type of need for children at school action plus and with SEN statements. However, as we move to the new system for school-based SEN support, we will also publish data by type of need for children who are currently at school action.
For disabled children, local authorities are already under a duty to maintain a register of disabled children and young people under Section 17 of, and Schedule 2 to, the Children Act 1989. The draft, new SEN code of practice reminds local authorities of that duty. The department also collects data on children in the early years through the early years census. For post-16, the Education Funding Agency and the Skills Funding Agency also collect data on young people in the further education sector, through the individualised learner record on a range of types of need. Requiring local authorities to publish this data in the local offer would just replicate data that is already available.
So far as bringing together these different data sets into one place is concerned, as I said, I do not believe that the local offer is the appropriate place to do this, and I do not think it is right that central government should impose on local authorities something that they should already be doing. Some local authorities may well be poor at carrying out their duties in this regard, but that is not a legislative issue: it is a matter of practice. We have made it clear in the code that local authorities have this duty.
The noble Lord, Lord Low, talked about incomplete data. It is true that SEN data from the early years census, although available on request, is not routinely published publicly, but we will make sure in future that it will be and will be linked up to the main SEN statistical publication. I assure noble Lords that the department is thinking about what the new arrangements in the Bill imply for data collection and we are seeing where there are possibilities for greater clarity and the joining up of data sets. The post-16 data that are collected by the department, the Education Funding Agency and the Skills Funding Agency are publicly available on a number of websites, and we are looking at ways to bring these together for greater clarity.
Indeed, more generally, we are looking to see how data can be brought together to reflect the new nought to 25 arrangements under the Bill. We will also consider whether there should be a collection of disability data from schools. I would be happy to discuss this further with the noble Baroness and any other noble Lords who are interested. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Wilkins
My Lords, I thank the Minister for that reply. Unfortunately, agreement has not continued from previous amendments. I thank all other noble Lords who contributed to this debate, but I find the Minister's reply extremely disappointing. He said that the local offer was not the place to put this information and that it would be cluttered up by it. But he then went on to enumerate various forms of collection of the data which fail to recognise that it is the quality of the data that are collected that is so criticised at the moment: it is failing to provide its purpose. It seems key that, without reliable data, local authorities will not be able to commission the services that are needed.
I will read what the Minister has said in Hansard and consider this further. As I said, I am disappointed in his reply, but, for the moment, I beg leave to withdraw the amendment.
(a) ”
(b) children and young people in the authority’s area who have a disability.”
(i) ”
(ii) the disabilities of the children and young people within subsection (1)(b)”
Baroness Howe of Idlicote
“( ) securing for children and young people with special educational needs but no EHC plan the education, health and care provision agreed under subsection (3)(a).”
Baroness Howe of Idlicote
My Lords, unfortunately, my noble friend Lord Ramsbotham cannot be in place at this time of the evening and he asked me to lead, on his behalf, on this group of amendments, about which I know that he has spoken to the Minister. Had he been here, he would have spoken first to Amendment 19, which is by far the most important in the group, because it is designed to try to strengthen the duty on local authorities and their health partners to make joint commissioning arrangements to satisfy the vast majority of children with special educational needs, including speech, language and communication needs, who do not have education, health and care plans.
At present, while 2.8% of all pupils in our schools have SEN with a statement, 16.2% have SEN with no statement. As a result, the schools they attend will have to try to obtain external support services such as speech and language therapy, educational psychology, children and adolescent mental health services and behaviour support teams for them. If such support is not available, their conditions may well worsen, resulting in the need for expensive EHC plans later on in their lives.
As currently framed, the duty on local authorities regarding those with SEN but no EHC plan requires them and their health partners to make arrangements to agree the provision of support—but, incredibly, not to secure its provision. Nor does the duty require partners either to operate or reach agreement on any provision, which is only sought on the basis of what is “reasonably required”. Health partners can use the NHS Act 2006 to decide for themselves what that amounts to, without even having to discuss with the local authority whether it would be appropriate to provide additional support in particular circumstances. What is more, there is currently no specific requirement for consultation on joint commissioning arrangements, and no specific requirement to publish what has been agreed.
Baroness Sharp of Guildford (LD)
My Lords, I have much sympathy with the amendment, particularly the point raised by the noble Baroness, Lady Howe, about those who do not have EHC plans. As she rightly said, we are talking about a large number of children—a much larger number of children than will have EHC plans—and it is important that there are facilities to meet their needs. The onus is now on schools to provide those facilities, but we know that traditionally, schools have relied considerably, first, on local authorities to help provide them and, secondly, on health authorities and, for that matter, social services to supplement them.
At the moment, there seems to be a void in the Bill on the question of how more specialist facilities are to be provided. The joint commissioning arrangements, as identified in the Bill, are fine, but at the moment they are targeted at those with EHC plans; there is no mention of those without them. I think that the idea is that what is available will be spelled out in the local offer—I look forward to what the Minister has to say when we discuss the local offer. At the moment, there are a lot of loose ends and, given the number of children and young people involved, I hope that the Minister will take the matter seriously.
Baroness Hughes of Stretford
My Lords, briefly, I support the amendments, especially Amendment 19. I do so because Clause 26, which deals with joint commissioning arrangements, is an extremely important part of Part 3 and the new apparatus that the Government are constructing. I support the amendments because they are aimed at strengthening the joint commissioning arrangements. They need strengthening because of the wording of the Bill. We discussed this in Committee. Clause 26 seems to provide that local authorities and health and education authorities must set up arrangements so that they can have a discussion about what needs to be provided in an area, but it does not say that they must secure the provision that they think is needed. That is an odd omission. Amendment 19, in particular, would create an obligation to secure the provision for children and young people who have not got the education, health and care plans agreed under Clause 26(3)(a). That is a very important amendment to make to the Bill.
As the clause stands, it says that the local authority and its partner bodies “must make arrangements”. The omission to do with “securing” is particularly important with regard to health. As we said in Committee, potentially they can use other legislation for absolving themselves from improving on the provision available, on the ground of cost. It would be very helpful if the Minister could put on record the Government’s intentions in Clause 26 in relation to securing the provision that is identified as being needed through the joint commissioning arrangements, particularly, but not exclusively, in relation to health.
Given that Amendment 19 seeks to strengthen Clause 26 in relation to that securing and, as the noble Baroness, Lady Sharp, has said, identifies the rather insecure position at the moment of children and young people without plans, I support it and hope that the Government are sympathetic.
Baroness Northover
My Lords, I thank the noble Baroness, Lady Howe, for speaking on behalf of the noble Lord, Lord Ramsbotham, and arguing his case for him. He and I had very useful discussions before he had to leave and I know how reluctant he was to depart. Noble Lords are right: this is a very important issue. These amendments are designed to ensure that those without education, health and care plans can have their needs met and that the joint commissioning arrangements are transparent and effective. We understand the purpose behind that.
It is worth emphasising—and helps me in understanding the provisions here—that I have just come, as it were, from the Department of Health and worked on the health Bill. The NHS is, and continues to be, a universal service. It must respond to the reasonable health needs of the population it serves. That will be an absolute requirement, connected with the fundamental duties on commissioners to meet the health and care needs of children and young people, and supported by the requirements in the National Health Service Act 2006 on CCGs to engage with the public and with professionals and to promote integration of health and social care and health-related services. It is worth remembering, then, the strength of those provisions from the health side when looking at these arrangements.
Joint commissioning is the heart of the new arrangements for SEN. The statutory framework makes local authorities and CCGs working together fundamental to how we meet the needs of children with SEN and disabled children. Working together is not an option; it will be a “must do”, thanks to this Bill.
Our joint commissioning requirements are backed up by powerful statutory accountability. NHS England’s mandate—the “must dos” for the NHS—sets a clear objective that the NHS must ensure that children with special educational needs have access to the services identified in their agreed plan. NHS England will be held to account for delivery of that, and it in turn will hold CCGs to account.
There is also local accountability, as every CCG’s plans and performance are scrutinised by the local health and well-being board. That board has a specific role to improve the health and well-being of the local population and reduce health inequalities. It must include representatives from each local CCG, Healthwatch and the local authority directors for adult social services, children’s services and public health. Those are key people, accountable for local services. They will prepare the joint strategic needs analysis of the population, including this group, at high level.
I hope this helps to reassure noble Lords that the needs of children and young people with SEN and disabilities with and without plans will be met, and that on that basis Amendments 19 and 22 are unnecessary.
The joint commissioning arrangements require that partners across education, health and care work together to deliver integrated services for those with SEN and disabilities. In the draft SEN code of practice we are explicit that arrangements must be established that are clear and robust, including what happens in the event of a dispute between partners, and should be specifically accountable to councillors and senior commissioners locally.
Equally, subsection (4) makes it very clear that partners must be able to reach agreement on a course of action in every case. The wording in the joint commissioning clause reflects the fact that the parties are expected to follow the arrangements unless there is a good reason to depart from them.
Baroness Hughes of Stretford
That is very helpful. Could the Minister clarify subsection (4)? It says:
“Joint commissioning arrangements about securing education, health and care provision must … include arrangements for”,
securing EHC needs assessments. It talks about EHC assessments only and EHC plans only; it does not talk about securing services for children without plans.
Baroness Northover
The noble Baroness will note that I have talked about supporting children with and without plans. If she bears in mind the responsibilities within the NHS, the NHS mandate, the responsibilities of the CCGs, what the health and well-being boards are designed to do and the intention within the health service to reduce inequalities and ensure that nobody is left out, and looks at those matters in conjunction with that, I hope she will see that there are very strong provisions coming from the NHS side that help to address this. In a minute, I may give her some more comments from the education side, but I hope she will appreciate that joining up with the NHS is a very positive move forward.
Under this Bill, the local authority is also required to consult on the local offer and when it is keeping its education and social care provision under review. Equally, there are duties on CCGs to ensure they, too, consult with local partners and patient groups, including at the commissioning stage. CCGs are held to account by NHS England for delivering this statutory duty, and NHS England has issued statutory guidance for CCGs on engaging with patients.
The noble Baroness, Lady Howe, made the point that the noble Lord, Lord Ramsbotham, made to me about the role of Nick Hurd and the Cabinet Office taking responsibility for youth strategy—for example, youth clubs and national citizenship services. That is distinct from departmental responsibilities for education, health and social care, which, obviously, are about the best services for young people as well as children. Cross-government working, especially between the Department for Education and the Department of Health, is critical to the success of these reforms. The Cabinet Office has a role to play because of its strategic oversight of support for young people.
I reassure my noble friend Lady Sharp—and this also picks up the point made by the noble Baroness, Lady Hughes—that the provisions in Clause 26 for joint commissioning embrace children and young people without EHC plans, as well as those with such plans. I hope that the noble Baronesses will be reassured by that.
As the noble Lord, Lord Ramsbotham, and I discussed before his departure tonight, the Government are clear that further legislation is not the answer. The noble Lord has identified an important implementation challenge and the noble Baroness made reference to that challenge.
We must indeed ensure that local areas take full advantage of the opportunities offered by the NHS reforms which I have, I hope, spelt out and by the Bill to secure the best possible planning and commissioning of services to meet local needs. Children with SEN and disabilities, who particularly need their health services, schools and local authorities to be joined up, must benefit from this. That is why I propose that instead of pursuing this amendment a better proposition, which is what the noble Lord, Lord Ramsbotham, and I talked about, would be to arrange a meeting with those working on implementation at the Department for Education and the Department of Health. The noble Baroness referred to that meeting; it would also be with the interest groups that the noble Lord mentioned—the noble Baroness mentioned local authorities, which are obviously also relevant here— and would be about what we should be doing to get the implementation right. I was very glad that the noble Lord, Lord Ramsbotham, was enthusiastic about contributing to that. Of course, he has a lot of expertise in this area.
I hope very much that we will go down that route and that instead of pursuing this amendment, we will take forward these discussions about how this is best implemented, while taking on board the issues which noble Lords have flagged up. I hope that I have been able to reassure noble Lords that the joint commissioning arrangements clause offers a strong framework that works with the NHS and will drive forward the SEN reforms locally, for those with and without plans, and that the NHS mandate, with its specific emphasis on inclusivity, addressing inequalities and on children with special needs, helps to underpin this. On that basis I urge the noble Baroness, on behalf of the noble Lord, to withdraw the amendment.
Baroness Howe of Idlicote
I am very happy to do so and also to thank the other Members who have taken part in the debate. It was very interesting to hear what the plans are. Thank you.
(i) ”
(ii) any children and young people in the authority’s area who have a disability”
The Countess of Mar
The Countess of Mar (CB)
My Lords, this is a long list of amendments with, the noble Baroness will be pleased to hear, a brief message. The Government are trying to ensure that children with special educational needs have the best education and we are all agreed that that is commendable. The Bill focuses on provision for SEN children and young people who are within mainstream education. This excludes some 100,000 youngsters who cannot have access to the traditional schooling system for reasons of chronic illness, disability, exclusion, relocation of looked-after children, or children who live in a secure environment.
The Government often give the impression that they believe that excluded young people are not interested in learning. As a result, the focus is on mainstream education. At Second Reading, my noble friend Lady Howe of Idlicote highlighted the BIS research paper from January 2013 on the motivation and barriers to learning for NEETs—young people not in education, employment or training. I discussed it further in Grand Committee. It is obvious that it is actually these barriers which make young people feel disillusioned. This leads to their exclusion from the education system and puts them at risk of joining the 979,000 young people who are currently on the NEETs register. These young people cost the taxpayer about £56,000 a time. It is vital that they are not left behind.
We know that the right support given at the right time can make an enormous difference and helps young people to achieve their personal ambitions. Students who appear to opt out of education do not do so on impulse. There is usually a chaotic background to their lack of engagement that needs to be dealt with sensitively. We must bear in mind when developing an education solution for these vulnerable young people that one size does not fit all. Clause 19 shows clearly that the Government are determined to involve children and their parents in the decisions around specialised education and that they get the right support at the right time. Surely, by allowing parents and children to have direct input into the organisations that could be part of their education provision, the Government would ensure that they have the best provision with the widest range of suppliers, helping them to achieve their objective.
Education provision for those outside the mainstream is often supplied by individual organisations such as Nisai and the Red Balloon project, which have created innovative ways to help those pupils who are currently out of school. Online and blended learning is one such innovative technique that has been utilised by parents to ensure that their children have access to the education they need. I described in Grand Committee the means by which this is achieved so I will not repeat myself. As I said then, this type of learning is an important tool for many parents but is not recognised as part of the framework of education provision for young people with special needs. This means that it cannot be rolled out to help numerous other children. It is available just to those parents who are in the know and can afford to pay. As it stands, money assigned to a pupil or student while inside the mainstream school system does not follow them once they cease to be on the school roll. This means that it is often difficult for them to access the alternative provision that would help them.
If online and blended learning was officially recognised as part of the education provision that can be provided by local authorities, it would become easily accessible and enable the Bill to fulfil its purpose,
“to improve services for vulnerable children .... to ensure that all children and young people can succeed, no matter what their background”.
In addition, the costs make sense. Online and alternative providers can help to save the Government money. Students will no longer need to be taught in isolation for a few hours a week by home tutors. They will join virtual classrooms of 10, with one teacher, and will have access at any time of the day or night. Local authorities, which are under pressure to reduce their costs, will be able to save on other parts of their budgets. For example, I understand that in 2010 Northamptonshire County Council spent more than £6 million on taxis for disabled special needs children, expelled pupils and young mothers. Saving these costs by centralising the use of online and blended learning would enable local authorities to allocate funds to other vital services.
If online and blended learning were to be formally recognised, there need be no fear that anything need be taken away from mainstream education for the majority of children. These amendments are simply about adding a safety net to catch youngsters who would otherwise be drinking at the last chance saloon. I have already used the example of Nisai to highlight the important role of individual organisations which have created imaginative ways to help those who are excluded and produced excellent results. It makes sense that the good work which alternative education providers have been doing for a small percentage of vulnerable young people can be rolled out to reach the most vulnerable in society.
Finally, I stress to the Minister that it is obvious that the use of online learning has support from all sides of the House. We noticed that in Grand Committee. We really need to enter the digital age in this educational field. Virtual education has been used successfully by universities for many years and I am sure that the noble Baroness would agree that it is time that primary and secondary education caught up. Most children are computer literate at a very early age and those who cannot attend mainstream schools would probably enjoy the ability to access educational material in virtual classrooms. I think particularly of the young people who I know best: those who are housebound or bedridden because they have ME. They can take small bites of material at a time and many have had excellent examination results.
I am very grateful for the meeting that I had with officials yesterday. I hope that, as a result, the noble Baroness will look on my amendments kindly and that, even if she is not prepared to see them within the Bill, she will ensure that online and blended learning are included in the relevant codes of practice. I beg to move.
Baroness Morris of Yardley (Lab)
My Lords, I support the amendment of the noble Countess, Lady Mar. I do not know what the Minister is about to say, so it might not be necessary for me to speak. However, in case we are not entirely satisfied with the Minister’s response, I shall offer a few comments in support now.
We may be missing an opportunity here. There has been a great improvement in blended and online learning over the past few years. A decade ago, I should have been sceptical about an amendment such as this. I should have still wanted almost to squeeze these children into the traditional model of education, which is of course what many of them are rebelling against, and which has failed to meet the needs of many of them. Having visited places like Red Balloon and talked to people who have now become proficient in online and alternative ways of supporting these children, I think the time has come when we ought to acknowledge that it could provide a very important, successful form of education for children whom we have failed in the past. I might not have thought of its fitting into this Bill, but it is an ideal place to acknowledge the growing importance that online and alternative methods of learning are playing in our education system. We ought to seize that opportunity.
My second point is that this fits in with two important aspects of the Government’s education policy. The first is the change needed in the IT curriculum for children in formal education, which the Government have done well to acknowledge. In doing so, they seem to acknowledge that changes in IT and learning are here to stay, and that we need to seize ways—of which this is one—to acknowledge the importance of information technology and digital learning in our education system.
The second, more obvious, fit with government policy is that this is an alternative to mainstream education. Among all the alternative provision, such as free schools, about which I have serious concerns, I see this as finding a way to let innovative education play its part in the education of children—something that we are not good at doing. Whereas I am sceptical about a lot of the ways that the Government are finding to put that innovation into the system, I wish they would seize this. If they were to look seriously at this amendment and touch base, they might see in it, for some children with special educational needs who are rebelling against mainstream education, and for whom mainstream education has never done a decent job, something which holds the key.
I look to the Minister for an acknowledgement of that, and either for this to go in the Bill or for a strong message to go out that this is a good thing which we ought to do all we can to support. Trying to read the Minister’s mind before she has spoken is difficult, but I hope that she is going to be sympathetic, if not in accepting this amendment, in giving a really clear signal that this is good, welcome and deserving of maximum support.
Baroness Northover
My Lords, I thank the noble Countess, Lady Mar, for highlighting this area. She has fought long and hard for those with ME, to whose situation she has made reference. In Committee, my noble friend Lord Nash clarified the Government’s position; that the majority of children and young people are best served by attending a mainstream institution. We had a key discussion on this earlier. We do, however, recognise that for some children and young people mainstream education is not appropriate, as both the noble Countess, Lady Mar, and the noble Baroness, Lady Morris, said. The education arranged for these individuals could indeed include the use of online provision as part of a blended package of support. Indeed, I understand that earlier this month, the Nisai Learning Hub was registered as an independent school that will provide alternative provision through a mixture of supported online and face-to-face learning.
Decisions on the use of such provision clearly need to take into account children’s and young people’s academic needs. It is also vital that their social and emotional development is supported, and that their health and safety are protected. Because of that, we believe that local authorities, mainstream institutions or special institutions should remain accountable for these decisions. However, to reinforce the point made by my noble friend Lord Nash in Committee, the provisions in this Bill do not prevent the use of alternative provision, including online and blended learning. I can reassure noble Lords that it can be included within an EHC plan, it can be funded by personal budgets and it can be part of the local offer used to support pupils without an EHC plan.
We appreciate that an underlying aim of these amendments is to highlight the benefits of online and blended learning for certain groups. The noble Countess, Lady Mar, and the noble Baroness, Lady Morris, made their case effectively and powerfully. We do not think that legislation is the appropriate vehicle to achieve this aim, but we shall reflect carefully on how the SEN code of practice and statutory guidance on alternative provision can better support informed decisions on this type of provision—decisions that are based on the best interests of the child or young person.
In doing so, we shall take into account the views of those groups facing particular barriers to mainstream education. The noble Countess highlighted some of these. To this end, I understand that my honourable friend the Minister for Children and Families has agreed to meet the noble Countess, Lady Mar, to hear experiences of the support needed for children and young people with ME. I hope that will be helpful to both sides. I should like to acknowledge the work of the noble Countess, Lady Mar, in supporting the cause of people with this condition.
I hope I have reassured the noble Countess and the noble Baroness that there is sufficient flexibility within the current arrangements to allow for the use of high-quality alternative provision, including online and blended learning, where it is in the best interests of a child or young person. Where there are restrictions, we believe that they offer vital safeguards in relation to the education, wider development and safety of pupils. We shall, however, look at how guidance can be improved so that decisions on the use of online provision are focused on the individual’s particular needs—that is at the heart of this. I therefore urge the noble Countess, Lady Mar, to withdraw her amendment.
The Countess of Mar
My Lords, I am grateful to the Minister for replying so kindly. I accept her offer to look at the guidance. I thank the noble Baroness, Lady Morris, for her very powerful support. I beg leave to withdraw the amendment.
(i) ”
(ii) children and young people in its area who have a disability.”
Gambling (Licensing and Advertising) Bill
Lord Gardiner of Kimble (Con)
My Lords, the Bill is a prudent measure, seeking to increase public protection for consumers based in Great Britain by tightening current legislation to ensure that all remote gambling, whether provided by British or overseas suppliers, is a licensed activity subject to the Gambling Commission’s standards and controls. This is a small but significant Bill, the key purpose of which had broad support across all sides in the other place. In fact, this Bill has its origins in the previous Administration’s review of the remote gambling regulatory framework.
Remote gambling is gambling in which people participate by the use of remote communication—internet, telephone, television or other kinds of electronic communication. Remote gambling is on the increase year after year. According to the latest Gambling Commission statistics, it has increased by 5% from last year alone, fuelled by the spread of fast internet connections and the use of mobile phones.
The Gambling Act 2005 currently regulates those operators who have at least one piece of their remote gambling equipment in Britain, described as,
“at the point of supply”.
These operators are required to hold a Gambling Commission licence and are subject to the commission’s licence code and conditions. However, there is no such requirement for remote gambling operators based wholly overseas. The Gambling Commission estimates that around 85% of remote gambling activity by British consumers currently takes place with operators that the commission does not regulate, and that includes many of the well known high street brands. This is a sizeable proportion outside the scope of the British regulatory regime. While these operators are governed by the regulatory regimes of the jurisdictions in which they are based, British consumers can experience varying levels of protection.
Given the increasing number of British consumers using these services, it is time to extend the regulatory framework established by the 2005 Act to this growing market. We need to move with the times and ensure that British consumers enjoy consistent consumer protection in an age where the use of technology is prevalent and means that operators transacting with British consumers can be based anywhere in the world.
The increased accessibility to online gambling products means that we need to take this opportunity to ensure that the Gambling Commission can monitor and respond swiftly and effectively to developments in remote gambling. While the current arrangements have not as yet led to widespread problems for consumers, the Government are committed to staying ahead. The market is growing and we need to take this opportunity to give the Gambling Commission the ability to identify and understand emerging issues before they manifest themselves on a larger scale.
The Bill therefore seeks to extend the regulatory regime established by the 2005 Act to all remote operators that seek to advertise and sell into the British market, whether they are based in Britain or abroad. In this sense, the regulation of remote gambling will move from the point of supply to the point of consumption by consumers.
With this change, all remote gambling operators advertising and selling into Britain will be required to hold a Gambling Commission licence, making them subject to robust and consistent regulation by the commission, increasing protection for British consumers; supporting action against illegal activity, including sports betting integrity; and establishing fairer competition for British-based operators. As licence holders, they will be required to comply with the Gambling Commission’s licence code and conditions, which include social responsibility and technical standards requirements, including licence conditions that protect children and vulnerable adults. It means, too, that for the first time all remote gambling overseas operators will also have to inform the Gambling Commission about suspicious betting patterns to help to fight illegal activity and corruption in sport. The recent allegations of match fixing illustrate the importance of extending this requirement to overseas operators, and the Financial Conduct Authority will further strengthen the existing arrangements by issuing new guidance to sports spread betting operators about their requirements to notify of suspicious market activity.
Advertising is of major importance to operators and central to their ability to attract custom; in many ways it is their life-blood in a very competitive market. The Bill will bring operators’ ability to advertise in Britain in line with the new regulatory regime. As a result of the Bill, all remote gambling operators wishing to advertise to British consumers will be required to hold a Gambling Commission licence. The requirement for a licence means that a failure to comply with the advertising codes of practice, which seek to ensure that adverts do not glamorise gambling, exploit vulnerable people, appeal to children or suggest gambling as a solution for financial difficulties, could result in an operator losing their licence. The loss of their licence would mean they could not advertise in Britain, which would go to the heart of the viability of their business.
The change in the licensing regime means the end of what has become known as the white list. At present, operators based in the EEA, including Gibraltar, or in a non-EEA country designated by the Secretary of State, are able to advertise remote gambling to consumers in Britain without a British licence. Those countries, known as the white list countries, include Antigua and Barbuda, the Isle of Man, the States of Alderney and Tasmania. The list was closed in 2009, pending the outcome of the consultation on the proposal for the Bill. The white list will be repealed by the Bill, and all operators, whether based in the EEA or elsewhere, will require a British licence.
The Bill also creates a new offence of unlicensed advertising of remote gambling in Northern Ireland, which has been welcomed and agreed by the Northern Ireland Executive and Assembly. Unlike Scotland and Wales, gambling is a devolved matter in Northern Ireland, but the law there is silent on remote gambling. For that reason, Section 331 of the 2005 Act, which prohibits the advertising of remote gambling by an operator from a non-EEA or white list jurisdiction, was also extended to Northern Ireland. The changes being brought in by this Bill require the repeal of Section 331.
The Northern Ireland gambling laws are currently in the process of being rewritten and updated. In the mean time, the Government and the responsible Northern Ireland Minister, the Minister for Social Development, Mr Nelson McCausland MLA, were concerned to ensure that Northern Ireland consumers continued to have the same protection as other British consumers in relation to the advertising of remote gambling, as was the case under Section 331. This new offence achieves that. It means that all UK consumers will enjoy the same protection in respect of the advertising of remote gambling.
So far as enforcement is concerned, overseas operators that are required to hold, but fail to obtain, a Gambling Commission licence will be committing the offence of providing facilities for gambling or the separate offence of advertising unlawful gambling. The Gambling Commission is empowered under the 2005 Act to take appropriate action against illegal operators.
The Gambling Commission has a number of enforcement tools available to it under the 2005 Act with which it is able to detect and disrupt unlicensed operators. It has wide investigatory powers under the 2005 Act and the Regulation of Investigatory Powers Act 2000 and employs expert staff with forensic accounting, e-commerce and police investigatory skills.
Stopping illegal advertising is an important way the commission protects consumers from illegal operators. The Gambling Commission has demonstrated that it is able to take effective, swift action to remove illegal advertising, including working with third-party carriers such as Google and Yahoo. Third parties which carry illegal advertising are themselves at risk of prosecution under the 2005 Act. Player education is another important tool in combating the use of unlicensed services. The commission also has power to bring criminal prosecutions, including in absentia.
The Gambling Commission also continues to build links and information-sharing gateways with regulatory bodies across the world. Many jurisdictions take account of prosecutions overseas when considering the ongoing suitability of licensees, as does the Gambling Commission.
Of course, I do not claim that the commission can eliminate all instances of illegal activity. The commission will, as it currently does, take a risk-based and proportionate approach to enforcement. There will always be some operators who do not comply and players who disregard the risks, but the Government are content that the existing powers under the 2005 Act provide the commission with broad investigatory and enforcement powers with which to achieve the consumer protection aims of the Bill. The situation is not unlike the difficulties posed by counterfeit goods. We cannot necessarily act to prevent their manufacture in overseas countries, but we can use all the tools at our disposal to disrupt and prevent their importation and sale in this country.
The Bill will increase consumer protection. As a result of the Bill, all operators selling or advertising in the British market, whether from here or abroad, will be required to hold a licence from the Gambling Commission. This Bill is a significant step towards enhanced consumer protection. It extends the scope of the 2005 Act to protect British consumers in this fast-growing market and will ensure consistency of consumer protection and a level playing field between operators. The increase of remote gambling makes this the right time to act to ensure that the Gambling Commission has the ability to intervene to protect British consumers of remote gambling now and in the future. I beg to move.
Baroness Pitkeathley (Lab)
My Lords, when it comes to gambling, I am far from being a usual suspect in your Lordships’ House. In fact, this is the first time I have ever addressed your Lordships’ House on this topic. I do so tonight because I have two important personal interests. The first is as a Channel Islander because this Bill has major implications for the Channel Islands, particularly Guernsey and Alderney. I am a very proud Guernsey woman—the only one, I think, in your Lordships’ House.
Electronic gambling is of major importance to both islands and is crucial to the economy of Alderney. The sector provides approximately £50 million a year of benefit to the Bailiwick of Guernsey’s economy, and it employs almost 400 people directly and in related services. For Alderney, one of the smallest of the Channel Islands with fewer than 2,000 residents, it accounts for 12% of its GDP. The consequences for Guernsey and, particularly, for Alderney, should this sector be threatened, are significant and would be of concern to those of us who recognise the importance of the Channel Islands to the British family, which the islanders always emphasise.
The development of e-gambling in Alderney since 2000 has been a huge success, largely because of the quality of regulation that its Gambling Control Commission provides. The commission knows that to survive and succeed it has to meet and exceed the highest international standards of regulation. It has set itself objectives which seek to ensure that all electronic gambling on Alderney is conducted honestly and fairly, that the funding, management and operation of electronic gambling on Alderney remains free from criminal influence and that electronic gambling is regulated and monitored so as to protect the interests of licensees’ customers as well as the young and vulnerable.
In order to do that, Alderney invested considerable effort and resource to become one of the very few jurisdictions to be placed on the UK’s e-gambling white list, which was mentioned by the Minister. The UK recognised Alderney as one of only five jurisdictions with regulatory regimes that were benchmarked to be of such a high standard that Alderney operators were allowed to advertise their e-gambling services in the UK. To achieve this, the Alderney Gambling Control Commission had to demonstrate the very highest standards of regulation, propriety and probity. It has done so to such an extent that the UK’s own Gambling Commission has come to rely on the AGCC providing a benchmark of best practice and it has recognised its enormous expertise in regulating remote gambling. Many British firms have established themselves there and have accessed the British public with little or no negative consequence in terms of player protection.
One of the consequences of the Bill should be that the UK and ordinary regulators should work even more closely together to protect the consumers of e-gambling. This would not only avoid duplication of effort, which is in itself sensible enough, but also ensure that, where the Gambling Commission finds itself stretched thinly by the new responsibilities in this Bill, it can ask Alderney to assist. Over the years the AGCC has worked closely with its UK counterparts in developing its own regulatory framework and has been influenced by what we do in the UK. It is one of the very few jurisdictions outside the UK which has placed a mandatory requirement on its licensees to contribute to research, education and counselling of problem gambling, and could be an exemplar for other jurisdictions. I know there is much concern about problem gambling, and rightly so, especially if unregulated operators are allowed to advertise their services, which might be a temptation to problem gamblers. Other noble Lords will no doubt speak about this.
Alderney is a jurisdiction which has had great success in e-gambling and relies on it as a significant driver of its economy. It is at the very forefront of excellence in e-gambling bodies around the world, and it wishes to develop its partnership with the Gambling Commission further within the framework of this Bill. Ministers will, I hope, not only recognise these developments but preserve them, as it is clearly in the interest of British players and the Gambling Commission for them to do so and to capitalise on the work done by the white-listed jurisdictions.
Can the Minister indicate to the House what has been done to ensure that the codes and practices as well as the expertise in the white-listed jurisdictions are being considered in the introduction and development of the new licensing framework? Can he also confirm that he will encourage the Gambling Commission to work with trusted white-listed jurisdictions to avoid any duplication of effort and to ensure that the best standards of regulation, of the sort that are provided by my sister island of Alderney, become the general standard for the United Kingdom?
I turn now to the other personal interest I have in this Bill, which is not as a proud Guernseywoman but as a proud mother. I have a daughter who is an amateur jockey and a son-in-law who is an owner. I often join them at racecourses in various parts of the country. Before I started doing this, I might have had an image of racecourses as rather bleak, rundown places peopled by shady characters out of a Dick Francis novel. Not so, my Lords. Even on cold and rainy weekdays I have found racecourses vibrant, exciting places full of both aficionados and newcomers, families as well as professionals—in short, people having a good time. They are also innovative, constantly trying new ideas and schemes to bring more people in—ladies’ days, music of all kinds and many other things which contribute to a family day out.
This is very pleasing to see and confirms the statistics of the British Horseracing Authority that horse racing is not only the country’s second most popular sport, with 5.6 million attendees at events in 2012, but also the second largest sporting employer. British racing supports a predominantly rural industry which makes a significant contribution to the British economy, generating £3.5 billion in annual expenditure and providing direct and associated employment for no fewer than 85,000 people.
There is, however, concern that the future of the industry is threatened by the inadequacies of the horserace betting levy, the legislative mechanism which provides racing a return from betting activity on its sport and which is used to fund prize money and other important expenditure, including regulatory and integrity services and veterinary research and education. This has fallen from an average of £106 million in 2003-04 to £66.7 million in 2008-09.
As just two knock-on effects, the number of horses in training has fallen by 10.6% between 2008 and 2012 while foal production was down 26% over the same period. The move by many betting operators to an offshore location for their remote gambling arms has been an important factor in the decline of the levy in recent years. Betting operators licensed offshore for remote operations are not liable to pay levy on their gross products on British racing from these sources. In other words, they are free riding. This is costing millions in annual levy receipts to racing and unfairly distorts the market against those operators which do pay the levy.
I think that British racing welcomes the Government’s introduction of this Bill, which will license all remote gambling, but as drafted it does not make any provision in relation to racing or the horseracing betting levy, meaning that the sport will not receive a return from remote betting activity, even once it is licensed with the UK Gambling Commission.
There was a Private Member’s Bill debate on offshore gambling in another place last year and the Minister of State for Sport, Hugh Robertson, said that any reform to the levy to capture revenues under a point-of-consumption licensing regime would constitute state aid, but a recent and comprehensive ruling from the European Commission will perhaps change the Government’s legal position. A French levy on online horserace betting has been approved, recognising racing’s special status and common interest with the betting industry. It sets a vital precedent and is, I believe, in the process of being reviewed by DCMS for any read-across to the Government’s previous legal position. I hope that the Minister will be able to update the House on that. The legal advice received by the British Horseracing Authority is that the collection of levy from remote operators under a point-of-consumption licensing regime does not constitute state aid. Amendments were put down on this matter in another place. Would the Minister be prepared to accept similar amendments in your Lordships’ House?
I should point out that there is no conflict between my support for Alderney in this regard and my call for changes to levy. The position of the Alderney Gambling Control Commission has always been that it would be willing to consider requiring its relevant licensees to contribute to the levy.
I understand that the Government have agreed to review the situation with regard to the levy. I hope that the Minister will be able to update your Lordships’ House on this when he winds up.
Lord Clement-Jones (LD)
My Lords, it has undergone a lengthy process but I welcome this Bill, which I hope will remedy clear flaws in the Gambling Act 2005. It has already undergone extensive pre-legislative scrutiny and well informed debate in the Commons. As my noble friend the Minister outlined in his introduction, the Bill will require remote operators to hold a Gambling Commission licence to deal with British consumers or to advertise in Great Britain.
The licences will be important. I understand that the licences for such online sites to be granted by the Gambling Commission will include a condition for comprehensive reporting of suspicious patterns of activity, but will the penalties for non-compliance be adequate? Much needed also is a licence condition for protection of player accounts following the Full Tilt case. What is the status of the consultation on this? Can the Minister give us an update tonight? What restrictions on advertising—for example, before the watershed—can the Gambling Commission impose and include as part of its licensing conditions. I hope that the Minister will be able to answer those questions.
Other questions remain with regard to the Bill and online gaming. What are the Government doing to combat problem gambling online, particularly as regards the ability to self-exclude, including “one stop shop” exclusion? What pressure are they and the Gambling Commission putting on operators to develop and use the necessary technology, such as play scan, to identify this? Will there be kitemarking of sites, as recommended by the Culture, Media and Sport Select Committee last May? Is it the Government's intention to introduce this and how will they fulfil it? Why are there no powers to block illegal offshore sites being introduced? If no statutory powers are proposed, is progress being made towards a voluntary agreement between ISPs? Why are there no measures such as payment blocking along the lines of the US Unlawful Internet Gambling Enforcement Act, which has been adopted by so many countries? Why are there no proposals, voluntary or statutory, to ensure that illegal sites cannot appear prominently in search results on search engines? How effective will monitoring and enforcement be? How will licensing checks be carried out by the Gambling Commission? Will adequate resources be given to the Gambling Commission to carry out regular test purchases and enforce conditions of the licences? When is it anticipated that the Bill will come into effect? How will the transitional provisions operate, particularly with regard to white-listed countries? The noble Baroness, Lady Pitkeathley, raised that point.
It is widely expected that the Treasury will announce a POCT—point of consumption tax—rate of 15%. Is 15% the right level to ensure that overseas operators cannot compete unfairly with UK-licensed sites in future? Some of the companies that continue to develop their software in the UK have concerns. They believe that the consequence of setting POCT at 15% will be that they and companies like them will be forced to relocate core services outside the UK. Investment in research and development, and in UK marketing, will be cut. The unregulated market, they say, will flourish, to the detriment of players and decent operators. The overall tax burden will be greatest for companies resident in the UK. What is the Government’s response? Can the Minister rebut these dire predictions? What discussions have they held? Why is the POCT being set at 15% if there are such risks in prospect?
There is also the question of whether the new legislation conforms to EU law, as it could be argued that one of the major objectives of the Bill is to bring offshore sites into the UK tax net. What, if any, moves are being made towards common pan-EU standards and compliance? Is there no prospect of a harmonised approach across Europe to ensure minimum standards and effective enforcement?
The Minister will also be aware that the National Casino Forum is seeking to amend the Bill to allow the UK onshore casino sector to provide its customers with the same online gambling experience as the online sector. Under existing regulation, onshore casino operators cannot indicate that the product is available from any internet-linked computer within the casino or advertise their online site on or around an actual computer with internet access. So a customer can bring their own internet access device—a tablet or a smartphone—into a casino and play online, perhaps even on the casino’s own online site, but the casino operator cannot offer that facility. What are the Government’s reasons for resisting such an amendment so far, despite the recommendation in its scrutiny of the draft Bill by the Culture, Media and Sport Select Committee, and the wide support that that has received? It appears that this is under consideration, but only by means of secondary legislation. That route seeks to categorise an internet access device as a gaming machine—perhaps a category A machine—if it is offered for use in a casino. Someone playing in the bar on their own iPad is not playing a gaming machine, but someone playing a device offered by the casino would be. If an internet access device is categorised as a gaming machine in these circumstances, it would become subject to gaming machine technical standards regulations. So a player using two different devices—one provided by the operator on the gaming floor in the casino and the other their own device—might face different conditions of play. That is totally confusing and unnecessary.
By contrast, the industry offered an amendment in the Commons that would have allowed the Secretary of State to control the number of such devices a casino could offer. I hope the Government will reconsider their position during the passage of the Bill through this House.
At the end of the day, we have to recognise that the Bill is very limited in scope and there are some key questions relating to ongoing Government intentions in other areas of gambling. The noble Baroness, Lady Pitkeathley, raised an important subject and concisely put the argument for going beyond the current four-year voluntary agreement with the bookies. Why is there no government commitment to consultation on future statutory arrangements to ensure the future of racing industry finances? I know that Ministers have believed hitherto that a new revenue-raising point of consumption licensing regime might constitute state aid. However, as the noble Baroness mentioned, the recent case in which a French levy on online horserace betting has been approved, in recognition of horseracing’s special status and common interest with the betting industry, now sets a vital precedent. I very much hope that Ministers will take note of that.
There is also the question of spread betting. That is, of course, currently regulated by the FCA, but how will its licences compare with those issued by the Gambling Commission? Should that not be included in the Bill, as some have argued, and brought within the ambit of the Gambling Commission? If not, can my noble friend confirm that an equivalent to condition 15.1 on reporting suspicious activity to sports governing bodies will be introduced, which will be enforced by the FCA?
Then there is the desirability of ensuring portability of casino licences as, faced with unused licences in a number of localities, logic would dictate. There are also all the issues surrounding FOBTs, which are now extensively under discussion. Of course, we have the whole area of match fixing. Do we need better definition of the offences or further sanctions?
Last, but absolutely not least, we have the issue surrounding the so-called Health Lottery. Do we have a national lottery, which has a monopoly, or not? If not, are we not putting at risk all those good causes that we support? I very much hope that the long-overdue consultation paper to test opinion on the impact of the Health Lottery, and the amendments that could be made to safeguard the National Lottery, will see the light of day very shortly.
It is clear that the Bill is one thing, but the many other issues that need resolving as regards the gambling industry, and lotteries and gaming, are another. Can my noble friend confirm in his winding-up today that all these issues are under active consideration, either by his department or by the Gambling Commission? I look forward to his reply.
Viscount Falkland (CB)
My Lords, this is quite a simple Bill, as other noble Lords have pointed out. I do not know whether other noble Lords have read the Second Reading proceedings in another place. In the past I did not normally have the habit of reading Second Readings, but I read that through twice and very interesting it was, too. It was really a kind of double act between Mrs Grant for the coalition and the department, and the Member for Shipley, Mr Philip Davies, who is a rising star in another place. I agree with the drift of Mr Davies’s speech that this is entirely a Treasury matter. A lot of the things that have been spoken about in another place and even tonight obviously have connections with what we are discussing, but not very close connections.
If it was foreseeable and acceptable, I would not oppose at all the idea of the Treasury to seek further contributions by introducing this point-of-consumption tax in Europe—provided that the licences are in order and so on—but the mistake that it made, if I may make this comment early, is the one that was made during the discussions we had on the pre-legislative scrutiny committee. The noble Lord, Lord Faulkner, who was in his place and is now elsewhere, was with me on that committee and will remember what killed the whole idea of casinos. When the Budd report came out, the idea that we could restore the magnificence of the seaside resorts by gambling and possibly by resuscitating entertainment and so on seemed rather improbable and fanciful. That appealed to the Government on one basis, which is where they fell down badly. That was that to address the danger of gambling by vulnerable gamblers, those people would have to decide to take money in their pockets and make sure that they had an adequate amount to spend over a weekend when they went up to, say, Blackpool—that was the most discussed place. But it was killed absolutely stone dead as was explained to me by experts from America because there is no way that you could get investment to produce the right project when the Treasury was putting such a high tax rate on it.
As I understand it, the guide is that a tax rate of 15% will be required. It is very interesting that the Treasury should do this. It is short-term thinking but it is also quite dangerous, because if you start putting a tax of 15% on licensed companies, it is going to make it very difficult for them to operate in a way that satisfies their customers. A large number of their customers will leave the well-regulated, satisfactory operators. The online companies that are licensed are extremely satisfactory. It will encourage people to go to places where they will be less secure as consumers, where there will be ability for people who are in danger, with their addiction going and so on. That has not been thought through by the Treasury, although I can see nothing wrong with the basic idea of the Treasury getting its hands on some more income.
Various other things have already been mentioned this evening that spring to mind. The Gambling Commission, for example, will have a great deal of responsibility as a result of this. I do not particularly like quangos of any kind, and I have not been too impressed by this quango so far. It is a poor replacement in terms of performance compared to its predecessor, on which it was based, which controlled casinos from the 1960s. The Gaming Board was extremely successful in that it did not grow unsatisfactorily into a kind of an empire. It seems to me that the possibility of empire-building as a result of this Bill is considerable. They will be flying around Europe inspecting places and so forth.
Certainly in the run up to the 2005 Act, we did not discuss online gaming at any length in the pre-legislative scrutiny committee. One afternoon I went to one of the leading online gaming companies. I have always been interested in gambling, unlike the noble Baroness, Lady Pitkeathley. I was particularly interested in this visit, because I was expecting something quite worrying. But I came away fully persuaded by the way in which that operation was run, how it took into account dealing with vulnerable gamblers, and the excellence of the staff—in particular, as regards protecting themselves from dangerous and vulnerable gamblers. For companies that work online, the last thing they want is those kinds of people. They would rather spend money on weeding them out before having to deal with them. They want regular players who have got the money to do what they do. They act responsibly and check them out thoroughly. They had three or four highly educated young women in that company who had psychology degrees. Their entire job was to follow and trace their customers’ betting patterns so that they could detect at any moment if they thought such and such a person ought to be watched closely. They would then report that to their employers.
I was convinced that these younger operators, these new people in the bookmaking firmament if you will, were extremely dedicated and extremely careful to run proper businesses, because they realised that integrity was what was going to bring them customers, so it was important that that integrity was maintained, even if it cost them a lot to do so. I have no doubt that the same thing will happen under the new conditions that are now being brought in.
I do not think adverts have anything whatever to do with anything. Adverts are just boring. People who are compulsive gamblers will not be watching adverts at any time. Any restriction that you place on gambling, rather like any restriction that you place on an alcoholic, a gambler will find his way around. So the companies that have the screening process that I have just described are doing a great service, really, to the respectable people who play on online sites. I do not know why we should be talking about advertisements, but I do not think that they do any harm—they are just ridiculous. I do not think that they will encourage even children to gamble, the advertisements that I have seen, and I have watched them quite carefully.
When I was a problem gambler in my early 20s—I would call myself a problem gambler, not a compulsive gambler—I got myself in some trouble, and I went along to see my bank manager to ask for an extension of my overdraft. It was a Scottish bank, with a formidable bank manager. After our discussion he looked at me very steadily and said, “We will grant you the extension of your overdraft that you asked for, but if you will forgive me I should like to make this remark. You have been paying one or two large amounts to a particular company. I would just like you to know that the managing director of that company is an important customer of this bank. He is a very rich man, and I would advise you not to follow the path of expenditure that you have been following in this regard”. It absolutely froze me dead, and I closed all my credit accounts. What my story tells you is that the old-fashioned bank manager was probably one of the best guards against improper expenditure.
Perhaps the Minister can tell me—I ought to know, if it has been published—what percentage of public indebtedness is calculated to be down to gambling. It is an interesting figure, and I reckon that it is a very large figure.
I do not want to go on about any of the other things. I think that this proposal will produce some problems later on, as I have described. As for racing, I hope that the noble Baroness, Lady Pitkeathley, has paid a visit to the racecourse, where her daughter may have ridden, which is so wonderfully run by the noble Lord, Lord Cavendish. He may even speak to us a bit about Cartmel, which is really one of the nicest and most jolly racecourses in England, with the kind of atmosphere that she so graphically described.
Gambling is really something that gets worse when you do not indulge in it with groups of other people. As children, we all played penny poker and things of that kind. The problem with racing is that, if you become too interested in it, you burn the midnight oil and become solitary—and when you become solitary as a gambler, your problem increases. There is no doubt about that. I am thinking about online betting, and fixed-odds betting terminals in betting shops, where people play poker and roulette. In a normal roulette situation on the table, your action takes place within about eight or 10 minutes, but it takes 20 seconds on a machine. For people who are in danger with gambling, that is a very strong factor that ought to be taken into consideration.
Racing really does need to have more than the Government reckon that it needs. They seem to have thought that about £75 million is about right, but it needs about double that to do what they do with the tote monopoly in France. I am glad that the noble Baroness, Lady Pitkeathley, told us about the state aid relief, which might well make a big impact; we could get more money—and it is not just prize money but the work conditions and raising the general standard and class of the less financially able racecourses to provide their entertainment.
Racing is historically very important in this country, which is important in the world—British racing is a global brand, if you like, and we have some extraordinary racecourses. People love it and will continue to love it and I think that it needs to be backed. I hope that the Government will seriously look at racing and the problems that it faces. I raised the issue once when I said, I think, in front of the noble Lord, Lord Mandelson, that racing was in a parlous state and he said that he did not know anything about that. I am quite sure that the noble Lord, Lord Gardiner, knows about it and he might be able to give us some encouragement.
Baroness Heyhoe Flint (Con)
My Lords, I declare an interest as a member of the England and Wales Cricket Board, but I do not know if today is the appropriate date to mention links with such a sport. I am undertaking counselling clinics for any of my noble friends in here tomorrow morning, along with the bank manager of the noble Viscount, Lord Falkland, if that is possible.
The official world of cricket and, to my knowledge, that of football and horseracing, is at the forefront of the debate about the impact of corrupt betting. Cricket has over many years faced high-profile issues, such as the South African Hanse Cronje and the more recent cases of international cricketers and English county cricketers exposed by national newspapers. Dealing with the impact of these cases has meant that the England and Wales Cricket Board, as with other national governing bodies, has had to invest considerable time and resources to this greatly concerning issue.
The Bill, as already stated, proposes that the UK moves to a licensing system based on the point of consumption rather than the point of supply, but sports bodies worry that this Bill fails to address the anomaly of spread betting—as mentioned by my noble friend Lord Clement-Jones—such as on the first no-ball, the first corner, or when England will ever get a first innings lead against Australia this winter. While traditional betting operators are, as already mentioned, regulated by the Gambling Commission, at present spread betting operators are regulated by the Financial Conduct Authority, the FCA, with which there is no equivalent of the relevant licence condition 15.1. This means, therefore, that spread betting companies are under no legal obligation to report suspicious activity. My honourable friend the Minister for Sport, Tourism and Equalities has now publicly confirmed that the FCA will publish new guidelines for spread betting companies, comparable with requirements set out for fixed odds operators under that licence condition 15.1, I hope.
There is urgency for the FCA to publish these guidelines. Will my noble friend the Minister give an assurance that this matter is under serious consideration? Official sports are incredibly keen that spread betting companies must be regulated in the same way as traditional operators. The International Cricket Council was the first international body to have a global anti-corruption unit and the England and Wales Cricket Board has developed an access unit with specific anti-corruption responsibilities.
Illegal betting and match fixing is an activity that consumes considerable resources for national governing bodies. Will my noble friend the Minister therefore urge the DCMS to consider whether this expensive resource could be funded by a levy from betting so that once all offshore-based operators are, as the Bill proposes, regulated within the United Kingdom they must make a contribution? Anti-doping agencies receive around £6 million in Exchequer funding but, at present, sports betting integrity receives nothing. The Government are due to receive additional tax revenue of £300 million from overseas betting operators in 2014; could they not divert as little as, say, 1% of this revenue to sport to aid its fight against corruption, thus enabling national governing bodies not to have to divert resources away from developing the grass roots of their own sports?
The Sport and Recreation Alliance, which represents over 300 governing bodies of sport within this country, wholeheartedly supports the Bill, but with the reservation that all betting operators have a legal duty to share information. It is right that we bring operators based overseas into that remit.
I understand that the ECB recently met the Financial Conduct Authority, which is being urged to introduce guidance on this matter. However, again, the FCA has said that it cannot replicate licence condition 15. Perhaps the Minister can tell us why that is so. It means that information on any betting irregularities need not be given directly to any national governing body. This is a major flaw because those governing bodies need to know of any betting issues immediately so that they can act to prevent a manipulation of any aspect of any match or competition under suspicion. I urge the Minister to consider amendments to the Bill so that spread betting is specifically covered.
I also mention the need for the Government to look more widely at the legislative framework for gambling. Many sports feel that there is a need for specific laws against match fixing. This would clarify the offences for prosecutors and mean that we could have appropriate penalties. Australia—if I dare mention that country again in the context of the current status of the Ashes series—has recently moved to do just that, so surely it is time for the UK Government to follow suit.
We should at the very least welcome this Bill. It is long overdue given that the initial consultation proposing action was launched by Labour in 2010 when the honourable Member Gerry Sutcliffe was Minister for Sport. Professional gamblers will exploit every loophole possible to further their illegal gains. They use sport as an insidious tool to further their dubious activities. I urge the Minister to give every assurance that measures will be taken to give sport the weapons and resources it needs to protect the integrity of genuine sporting conflicts, and to protect the consumer. After all, sports governing bodies should not have to rely on newspaper stings or whistleblowers to reveal betting scams. If the Bill includes legislation to cover the governance of spread betting, as well as traditional betting, the Government will be taking a vital step to protect the integrity of sport.
Lord Risby (Con)
My Lords, one of the great pleasures of being a Member of Parliament was that as part of my constituency I represented Newmarket, the historic—and still, I hope—world headquarters of racing.
The finances of racing are based on a system which nobody now likes at all and which has repeatedly attracted very reluctant government involvement. Additionally, the levy has shrunk from a high point of £115.3 million in 2007-08 to the current very anaemic £73.9 million. By contrast, the French state-owned Tote monopoly returned €876 million in 2011 to the industry body, and even in Australia a total of £280 million was returned to racing from betting. The comparison is obvious.
While high-quality bloodstock has recently reached staggering price levels and race meeting attendance has grown as the industry has become more consumer-friendly, prize money is now pathetically inadequate—a point made by the noble Viscount, Lord Falkland. Today there are concerns about consequent falling foal production, the best bloodstock leaving the country and the drop in the number of horses in training. I echo the point made by the noble Baroness, Lady Pitkeathley. The imbalances are now obvious.
I welcome the Bill unreservedly, at least inasmuch as it takes us in the direction of some resolution of racing’s dilemmas and introduces clearer consumer protection and the monitoring of possible illegal activity. When the Gambling Act was introduced in 2005, it was hoped that online gambling would remain in the UK with its economic benefits. It was an error by the then Chancellor of the Exchequer to try to secure revenue by seeking to impose a tax and regulatory regime that simply helped to drive almost every operator offshore. At the heart of the Bill lies the objective of trying to secure a level playing field between onshore and offshore gambling by making the point of consumption the focal point of the system. The Bill has been welcomed across the party political divide and endorsed by the Select Committee for Culture, Media and Sport.
Undoubtedly, we hope that this will have some effect on increasing the size of the levy and bring greater transparency to betting activity. If that proves to be the case, and the prize money situation improves, it will be hugely welcome. However, the truth is that the history of contact and agreement between the governing bodies of racing and the bookmakers has been at times fractious and unproductive. Of course, the hope is that with this legislation offshore betting activity will be persuaded at least in part to return home and that levy payments will be automatically paid under the regulatory umbrella provided by the Betting, Gaming and Lotteries Act 1963.
However, there is a view that this is not currently adequately defined and that even after being licensed by the Gambling Commission offshore operators may not contribute to the levy, all of which may be subject to judicial review. The Government have expressed the fear that the introduction of the point of consumption levy would breach EU state aid rules but the French, as we have heard, appear to have been given a green light by the EU Commission to operate their parafiscal levy.
I cannot but believe that the levy ultimately is unsustainable over the long run as the basis for financing a good portion of racing in this country. Therefore, however welcome this Bill is, surely we need to look further, but regard this Bill as an important and significant step towards an enduring, long-term and viable financial structure for the industry. Modern technology and changing consumer habits and practice offer this possibility. I therefore invite the Minister to reflect on the possibility of looking seriously at a sporting right which would give organisers of potentially many sports fixtures the property rights over the outcomes of the event, the product on which bets are placed. This product would be licensable so that any operator offering or accepting bets on the sport would need prior authorisation and pay a fair return accordingly. This would promote a commercial relationship between dependent industries, allowing the value of the products to be determined by a market rather than the Government, creating a level playing field and unlocking funding for horseracing and other sports, particularly at the grass-roots level. This approach essentially has been adopted in France and Australia.
Replacing the levy with a true sporting right would represent a major step forward for racing and gambling regulation more widely. Sport governing bodies could determine the market value of their product in line with the move to bring taxation and regulation of remote gambling onshore, as per this Bill. It would also recognise the interdependent relationship between the sports and gambling industries and force them to negotiate in good faith on commercial lines rather than, as in the case of horseracing, bringing about unwelcome government intervention.
In conclusion, I repeat my welcome for this Bill and earnestly hope that it fulfils its sound objectives but I believe that there still needs to be another step forward ultimately to move away from the levy system. Moreover, I ask the Minister, as this legislative process is undertaken, echoing the point made by my noble friend, that this is brought to a conclusion as quickly as possible. There has been the thought of potential delay of up to four years. Big problems are being highlighted in this legislation. I hope and believe that this can move through the legislative process and be applied as quickly as possible.
Baroness Howe of Idlicote (CB)
My Lords, first, I thank the Minister for his helpful and concise introduction of the Bill. Before I make any detailed comments, I should like to set out some of the general principles informing my approach to gambling legislation. While I have no wish to prevent from gambling online anyone who wishes to do so legitimately, I believe in the importance of putting in place proper protections for problem gamblers and the vulnerable. In this regard, I strongly support the commitment to protect,
“children and other vulnerable persons from being harmed or exploited by gambling”,
as set out in Section 1 of the Gambling Act 2005.
The 2010 British Gambling Prevalence Survey shows that the UK problem gambling figure is 0.9%. That may not sound like very much, but it amounts to about 451,000 people in the UK. Problem gambling is a hugely destructive process that destroys lives. In assessing its public policy significance, it is important to remember that since no man or woman is an island, the destructive chaos that impacts those 451,000 people actually impacts a far larger group when we factor in the families and work colleagues of those 451,000 people.
Moreover, in considering the challenge of problem gambling from the perspective of this Bill, we must consider that the figure for people gambling online is much greater. Far from being 0.9% of the whole population, the problem figures for online slot machines are actually more than 9% and, measured on a monthly basis, are 17% of those who gamble. It is vital that we approach the Gambling (Licensing and Advertising) Bill mindful of this challenge and mindful of the need to ensure that any changes it makes result in greater protection for problem gamblers. I now turn to my detailed consideration of the Bill.
The first major problem with the Bill, as a consumer protection Bill, is that half of it is missing. The whole point of having a regulatory regime is to protect customers, including the vulnerable, and this depends on being able to enforce that regime. In principle, the idea that all online gambling providers that want to access the UK market should require a licence is excellent. If we are to follow through on this protective measure, however, it is imperative that those online gambling providers that do not have a licence are prevented from accessing the UK market.
If noble Lords scrutinise this Bill, however, they will see that this vital enforcement provision is missing. There is an incentive—a carrot—for gambling providers to get a licence, which is the opportunity to advertise, but there is no stick—no means of preventing unlicensed providers from accessing the UK market. Without a credible enforcement mechanism, the chief effect of the Bill is actually further to widen the scope for online gambling operators to advertise. Bereft of this key component, a Bill that is supposed to be about consumer protection looks increasingly like the online gambling liberalisation Bill.
In the other place, the Minister was pressed as to why the Bill is all carrot and no stick. Specifically, she was asked why there are no provisions in the Bill for either IP blocking or financial transaction blocking. The Minister’s response seemed to be based on a fundamental misunderstanding about these mechanisms. In the first instance, she seemed to seek to refute both financial transaction blocking and IP blocking, through arguments that only really pertained to the latter and which did not provide a reason not to proceed with financial transaction blocking. In the second instance, she seemed to operate on the basis that because neither mechanism is 100% effective they are failures. If we are concerned to protect British consumers from unregulated providers, we should want to avail ourselves of the technology that is available. Even if it was only 50% better, that would be 50% better than doing nothing.
The implication seemed to be that unless blocking technology is 100% successful it is a failure, which is rather like saying that because people wearing seat belts still sadly die in some road traffic accidents, seat belts are ineffective. The truth is that financial transaction blocking has been deemed sufficiently useful to be employed as a tool to protect consumers from unregulated online gambling providers in Belgium, Estonia, France, Hungary, Israel, Malaysia, the Netherlands, Norway and the USA. If the Government are serious in suggesting that the Bill before us today is about consumer protection, they must introduce a clear enforcement mechanism, such as financial transaction blocking, and demonstrate a real political will to protect British consumers from unlicensed online gambling providers.
The second failure of the Bill pertains to the way in which it effectively liberalises gambling advertising without taking any steps to help the problem gamblers, who will be made even more aware of online gambling. To understand that failure, we must understand a failure of current efforts to help online gamblers today, even before the Bill takes effect. One of the accepted standards for helping problem gamblers is self-exclusion. Indeed, a form of self-exclusion is already part of the UK regulatory regime. Problem gamblers have the option of self-excluding from gambling providers for a fixed period of, say, eight months or longer. The provider is then obliged not to serve them for the duration of the agreed self-exclusion period and to take them off any marketing list they may be on. This tool works in that, as well as having weak days, problem gamblers also have strong days. On a strong day, they will be able to get round the four betting shops in their town and thus deny themselves the option of gambling for, say, eight months, during which time they can get help and seek to put their lives back together.
Currently, however, online problem gamblers are effectively discriminated against because, although they can self-exclude from gambling websites, they still have a difficulty. They could self-exclude from four gambling websites that they can access from home, but they will still be able to access hundreds, if not thousands, of online gambling websites. It is simply physically impossible to self-exclude from all those websites. Unlike the problem gambler who, in a strong period, self-excludes from the four bookies on his high street, the online gambler cannot do that for all websites.
The current failure, however, is massively compounded by the Bill, because it proposes increasing the scope for even more online gambling providers to advertise in the UK without doing anything to address existing discrimination against online problem gamblers. Happily, there is something that can be done to address that problem: the provision of a one-stop shop self-exclusion mechanism. The principle is very simple. Any problem gambler should be able to self-exclude just once by contacting the Gambling Commission, and that should cover all gambling providers with a Gambling Commission licence.
Dr Sally Gainsbury, author of Internet Gambling: Current Research Findings and Implications, published by Springer in the SpringerBriefs behavioural medicine series 2012, states that a significant limitation of self-exclusion is,
“the lack of collaboration between different online gambling sites and venues, so that excluded individuals may find it easy to gamble at another site or venue”.
She argues that the technology is available and points to its feasibility, particularly in the UK due to the current existing licensing conditions and code of practice upheld by the UK Gambling Commission. She states that,
“it is a UK licensing condition to maintain a register of self-excluders, including appropriate record of identification details and payment cards. Although care must be taken to protect customers identity, data encryption programs can be used to protect sensitive details and it may be possible to encourage operators to share details to enable wider self-exclusion programs”.
Gainsbury goes on to mention a program called VeriPlay.com, developed by Bet Buddy, which allows the secure exchange of anonymous data. It allows operators to check whether a player is on a centralised list of players who have self-excluded.
Research presented to the Canadian-based Responsible Gambling Council in 2011 by the British-based GamCare and the University of Salford, along with Bet Buddy, backs the proposa1. A one-stop shop amendment was put down in the other place in Committee and at Third Reading. Although both were defeated, the majority was not great and the Government did not seem to have any compelling arguments with which to oppose. The Third Reading vote was relatively close, at 223 to 283.
The idea can be implemented; it takes only political will. The basic question is: do we care about problem gamblers? Do we care about protecting the vulnerable? The Government could have squarely addressed concerns that this Bill is really all about tax, but they have not done so.
In the absence of a proper enforcement mechanism and a one-stop shop self-exclusion mechanism, this looks like the “online gambling advertising liberalisation Bill”, with no regard for online problem gamblers. Is it not a shame that that is how one can look at it? I strongly urge the Government to amend the Bill and to make provision both for financial transaction blocking and a one-stop shop for self-exclusion.
Lord Cavendish of Furness (Con)
My Lords, I apologise to the House and to my noble friend the Minister for not being in my place when he rose. I think I only missed about 30 seconds.
I will not pretend to be an expert on gambling but, having read the debate in another place and heard my noble friend, I do not think I have any difficulty in supporting this Bill and I thank him for introducing it so clearly.
I rise this evening only to draw the attention of your Lordships to one aspect of the Bill that affects horseracing. So much of what I want to say has already been rehearsed, and very ably, by the noble Baroness, Lady Pitkeathley, and my noble friend Lord Risby, that I will try to keep my remarks briefer than I had intended.
I must declare an interest. I am chairman of a small national hunt racecourse in south Cumbria called Cartmel; it is owned by my family. Therefore I know a little about jumps racing and almost nothing about the flat. Perhaps I should add that, in common with so many people involved with national hunt racing, in all the years I have been involved with Cartmel I have drawn nothing in the way of fees, dividends or expenses, but I have helped myself to quite substantial lunches on race days. Of course, if any of your Lordships were to come to Cumbria, I would have enormous pleasure in asking them to join me there.
The horseracing levy is sometimes misunderstood and believed to be some kind of subsidy to racing; it is of course nothing of the kind. Put simply, it was established in 1961 with the power and the duty to collect a statutory levy from the horseracing business of bookmakers and the Tote. In effect, the mechanism was a recognition that betting operators owed something to the racing industry for providing the races on which people liked to bet.
The majority of the levy income is distributed, as noble Lords have heard, by the Horserace Betting Levy Board in direct support of horseracing. That will include improving the breeds of horses, the advancement and encouragement of veterinary science and veterinary education, integrity services and improving horseracing. Overwhelmingly, however, the levy enhances prize money, which in turn generates more levy—and so the cycle goes on.
Parliament’s original intention when establishing the levy was to provide a means of compensating racing for the loss of attendance that was anticipated when off-course betting shops were legalised in 1961. As your Lordships have heard, the levy has decreased sharply in recent years. There are a number of reasons for this but by far the biggest factor in the leakage of levy can be accounted for by the bookmaking industry moving to offshore locations to escape the levy. The consequences of this have been so well described by the noble Baroness, Lady Pitkeathley, that I will not repeat them. Suffice it to say that racing is suffering; racing and all the economic benefits that flow from it are threatened.
The development of offshore remote betting that escapes the levy is of course disadvantageous to racing. It is also unfair to the taxpayer and very unfair on those betting operators who have chosen to remain in the United Kingdom, as well as those companies which have entered into voluntary agreements that mitigate forgone levy payment. The Bill before us will indeed license all remote gambling in Britain at the point of consumption. What it does not do, as has been said, is to make any provision in relation to racing or the horserace betting levy. It is the strong contention of British racing, and my strong contention, that the Bill provides a perfect opportunity to put this right. Here I pay tribute to Mr Clive Efford, who put in heroic work in another place on this subject. The honourable gentleman indeed tabled amendments which, as your Lordships have heard, would have meant that the levy was once more payable by remote betting operators. The Government, again as your Lordships have heard, rejected these amendments on the grounds, I think, that there were concerns in respect of the EU’s stance on state aid. I will return to that in a moment.
The figures on racing and the huge crowds that it attracts speak for themselves but there is more to British racing than the raw statistics suggest. Racing in this country has a long and fascinating history, whose origins stretch back to the very dawn of time when man first saddled a horse—a point which I think was made by the noble Viscount, Lord Falkland. It is not given to many and it is not, I say with some sadness, given to me to really understand the extraordinary, some would say almost mystical, relationship that has developed over time between the two species of man and horse. I see it and observe it. I talk to people who have the gift and rather wistfully admire it, while feeling a little excluded.
If I may divert for a moment, the closest I ever came to sensing that myself was when, many years ago, I was part-owner of a wonderful mare. One dark afternoon, I watched her run in absolutely vile conditions on a northern track—not my own. It was a good race and attracted good horses, and my mare drifted out in the betting. Sure enough, she struggled to keep up with the field and a mile out, I could see that she looked tired and outclassed. Quite suddenly, coming round the final bend, she gathered herself and headed with visible courage and determination through the driving sleet to win by a short head. She was what is known in racing terminology as a genuine horse. It was impossible not to be moved by the shared triumph of jockey and horse.
I relate that incident because it is one of many thousands that happen every year which make British racing the great romance that it is: the romance that brings men and women of all backgrounds to the racetrack; the romance of town meeting country in the fellowship born of shared interests and pleasures; the romance that causes—in jumps racing, at any rate—thousands of people to support racing through attendance, sponsorship and, especially, ownership with no expectation whatever of seeing a return on their money. I think even those who have no interest in racing would accept that the sport is a valuable and much loved part of this country’s heritage.
On my own little track in Cumbria at the attractive village of Cartmel, we race over seven days. Even there, we welcome 70,000 visitors, many from overseas. We cater especially for families and there is a funfair in the middle of the course. On one of our festival meetings there is a racecourse church service in Cartmel’s lovely priory church where local bookies fervently pray, so they tell me, that favourites will not triumph on the following day. I suspect that we are the only racecourse in England to have a chaplain. We are very much part of the local community and inside the track is home to the cricket club—I think my noble friend Lady Heyhoe Flint would approve of that—the football clubs, the scouts and the agricultural show.
The impact of levy leakage on my track is in line with the problems faced by better known tracks. To spell it out would sound like special pleading. In truth, we are better placed than many because we are so popular and because we have favourable fixtures. I speak in support of racing in general. Former sports Minister Mr Gerry Sutcliffe also contributed with distinction to the debate in another place. The honourable gentleman predicted that the issue would be heavily debated in your Lordship’s House, given,
“the horse racing fanatics that are in the House of Lords”.—[Official Report, Commons, 19/11/13; col. 141.]
I cannot imagine who the honourable gentleman had in mind. The noble Viscount, Lord Falkland, hardly fits that description, nor do my noble friends Lord Astor and Lord Risby. I do not think the noble Baroness could be described as a fanatic. Sadly I fear that many of our best fanatics have moved on to pastures new, or fresh gallops. I am just a supporter of racing but I hope the Minister can help this evening.
In the course of this Parliament, British racing has received numerous commitments from the Government that they will fully reform or replace the levy which, in the view of the then Minister in the other place in January 2011, was
“if not broken, in the process of breaking”.—[Official Report, Commons, 20/1/11; col. 1067.]
However, nearly three years later, there has been no material change in this situation, as has been underlined so much this evening. The levy remains ineffective in meeting British racing’s needs and it has required the efforts of both the racing industry and forward-thinking elements of the British betting industry to agree voluntary deals to mask the levy’s inadequacies. This is not sustainable—it is merely a sticking plaster. It is within the scope and remit of this Bill for the levy to be included. Amendments to this effect should be put forward and accepted.
I gave notice, which I hope my noble friend received, of some questions. I urge him to provide a concrete commitment to a consultation early in the new year, as has already been requested, on reform or replacement of the levy to provide a sustainable, enforceable and legally sound solution. Given that my noble friend’s department has also been brooding for some time on the legal position in respect of the recent EU Commission ruling that approved the French parafiscal levy on online horseracing betting, has it reached a conclusion? Might the Government now consider the Efford amendments or something similar as this Bill progresses? Will my noble friend take account of British racing’s own unambiguous legal advice that the collection of levy from remote operators under a point-of-consumption licensing regime does not constitute state aid?
Under this Bill, the Treasury stands to gain substantially. I hope that my noble friend might see that to bring succour to an undeservedly troubled sector, with so slight a change and at no cost to the public purse, can only do good. To do otherwise would be a great disappointment to all of us who have the interest of racing at heart.
Lord Morrow (DUP)
My Lords, the stated intention of this Bill, namely that all online gambling providers wanting to access the UK market, no matter where they are located in the world, should be required to get a UK Gambling Commission licence, is to be welcomed. However, detailed examination of the actual provisions in this Bill has led me to feel that, on balance, the Bill makes matters worse not better. Indeed, in wrestling with this question one is left with a more fundamental question: what is the real purpose of this Bill?
In the other place the Government claimed, as they have today, that this Bill is all about consumer protection. It was suggested from other quarters, however, that the real guiding principle at work was a desire for greater taxation revenue for the Exchequer. The notion that all online gambling operators seeking to access the UK market should get a UK Gambling Commission licence certainly seems like an attempt to protect UK consumers from providers that do not make the grade. In the first instance, we should surely stop depending on the regulatory frameworks of the European Economic Area and the so-called white list jurisdictions, and regulate providers seeking access to the UK ourselves. In the second instance, we should certainly do more to protect UK consumers from providers whose regulatory regimes do not make the grade, rather than simply putting them on a theoretical black list.
However, trading lazily on the regulatory frameworks of other jurisdictions has had an unintended consequence. It has meant that online gambling providers based in the UK could move to the EEA and white-listed jurisdictions, yet still be deemed to be sufficiently regulated to advertise in the UK. In this context, all but one online gambling provider relocated to white-listed jurisdictions where they could pay less tax.
Noble Lords will be aware that alongside the Bill there is a separate proposal that henceforth all gambling providers with a UK licence must pay UK tax. The idea is that we move from regulation and taxation at the point of supply to regulation and taxation at the point of consumption. Of course there is no reason why the interests of robust regulation and robust tax legislation should not go together. I have nothing against making sure that online gambling providers accessing the UK market are properly taxed. My concern, as I shall explain, is that the weakness of the regulatory framework proposed by the Bill is such that it causes me to wonder whether its primary purpose is not actually being a means to the end of providing a framework on to which the new taxation regime can be hung.
Before I look at what I regard as the three main regulatory failings of the Bill, I shall pause to reflect on the sad reality of problem gambling in the UK today, the reason why robust regulation of online gambling is so important. Some people almost dismiss problem gambling as unimportant—this point has already been made by others today—on account of the fact that in 2010 the problem prevalence figure was 0.9%. The truth, however, is that that accounts for approximately 451,000 people in the United Kingdom. Moreover, if we are to compute the real significance of the problem, it is crucial to understand how one person’s problem gambling affects others. Last year the Gordon Moody Association, which treats the most serious addicts, estimated that each addict,
“will have severely affected the lives of at least 15 others in order to support their gambling”.
We have to understand that gambling online has a significantly higher problem prevalence figure than gambling generally, another point that has been made today; the problem prevalence figure for online slots is actually over 9%.
These statistics, though, are all a bit abstract. When I think of problem gambling, I think of people such as Lisa Carville, an accountant from Northern Ireland who stole some £50,000 to feed her online gambling habits between March 2010 and September 2011. I also think of Michael Garner, a financial adviser who stole almost £1 million from friends, a charity and investors to feed his online gambling habit between December 2011 and May 2012. Anna Mackenzie, defending Mr Garner, told the court that he was remorseful and understood that his actions had devastated the lives of himself, his family, his friends and his victims. She added that his marriage appeared to be over and that his matrimonial home, his only asset, had been sold to help to pay off the civil claim made by the investors against him. These are just two examples of the terrible social devastation that can be left in the wake of online gambling habits. Let me be very clear: I am not trying to argue for a split-second that this always happens or that it usually happens. My point is simply that it does happen and that there is a very serious obligation on us as legislators to make sure that the online gambling industry that this Bill addresses is robustly regulated.
With this in mind, I suggest that the Bill has three major weaknesses. The first problem is that this legislation provides no credible enforcement mechanism. You cannot say on the one hand that we want to protect British consumers and so require all online providers that want to access the UK market to get a UK licence, and at the same time do nothing to prevent those who do not have a licence accessing the UK market. Such a strategy is nothing more than an exercise in wishful thinking.
When presented with a proposal for financial transaction blocking or IP blocking in another place, the Minister rejected both, at least for now. I found her approach profoundly unconvincing. In the first instance, the Government seem to conflate IP blocking and financial transaction blocking as if they are the same and have the same results. Let me be very clear: they are not and they do not. Evidence suggests that financial blocking is significantly more robust. Indeed, it works well, as has already been stated, in places such as Belgium, Estonia, France, Hungary, Israel, Malaysia, the Netherlands, Norway and the US, which deem it worth while.
In the second instance, I find the notion of mixed success in the context rather troubling. I assume by this the Government mean that it does not always work, which is certainly true, but if in this imperfect world we rejected all public policy solutions that were not always successful we would greatly restrict what we could do. The world would be much poorer on account of the misguided commitment to make the excellent the enemy of the good. If we had a mechanism available that could protect UK consumers from 50% of transactions with unregulated websites, it would be a significant step forward—one we should take.
Moreover, it is important to remember that financial transaction blocking is likely to be more successful in the UK than anywhere else, because in other jurisdictions where there is a closed market with a limited number of licensees or a semi-open market that allows any number of licensees but only for some forms of gambling there is a great deal more that needs to be blocked than in the UK. In these environments, gamblers have incentives to try to bypass blocking to access forms of gambling that are not permitted. However, that would not be the case here in the UK where we do not prohibit any form of gambling and allow anybody who meets our regulatory standards to access our market.
If we do not back up the licence requirement with financial transaction blocking, the simple truth is that the primary implication of the Bill will be simply to allow more gambling providers to advertise in the UK. All those located in EEA and white-listed jurisdictions can currently advertise, but after this Bill all providers that get a licence will also be able to advertise regardless of whether they are based in what is currently an EEA white-listed or black-listed jurisdiction.
It is concern about the implication of the Bill for advertising in the absence of a credible enforcement regime which takes me to the second major worry about this Bill. While it proposes making problem gamblers in the UK more aware of online gambling opportunities that can get them into difficulty, it introduces no compensatory measures to provide problem gamblers with additional help in the context of the new environment. To really understand this deficiency in the Bill, however, one must understand the problem with the current system.
One of the key accepted mechanisms of helping problem gamblers is through the provision of self-exclusion. Put simply, self-exclusion allows someone with a gambling problem to take control by self-excluding from gambling providers for a certain period; say, five or six months, or whatever it might be. This mechanism is credible in an offline environment. It recognises that people suffering from a gambling addiction will have days when they are stronger and able to take steps to try to break free. On such a day it would be possible for a gambler to visit all five betting shops in his town and self-exclude for five months, providing him with an opportunity to get help and to try to put his life back together.
This, however, simply does not work in an online environment because, after you have self-excluded from five online gambling websites, hundreds if not thousands of sites are equally available. Denying online gamblers a credible self-exclusion mechanism is, I believe, a matter of discrimination, one that exists without the Bill before us today. Mindful of this current injustice, I find it quite inconceivable that the Government should consider introducing the Bill, which proposes widening the scope for problem gamblers to be made aware of online gambling opportunities, without at the same time providing any compensatory help for online problem gamblers. We should, at the very least, provide online gamblers with a credible self-exclusion opportunity.
When the Minister in another place was confronted with this idea, she had nothing of any great substance to say. She suggested that the industry was doing a good job and that she wanted to give it more time, although she failed to outline what it needed time to do. She did not say that she had asked the industry to introduce a one-stop shop for self-exclusion. The Minister also made the assertion that introducing a one-stop shop would be complicated. I have no doubt that introducing a one-stop shop would present some challenges, but I do not believe that there is any evidence that they cannot be dealt with. The question that we have to ask is: can we be bothered to do the additional work to protect online gamblers? One would hope that the answer to that question, in considering a Bill that the Government say is all about consumer protection, would be a positive yes, but apparently not, at least in the other place.
As others have noted, Dr Sally Gainsbury, author of Internet Gambling: Current Research Findings and Implications, published by Springer in the SpringerBriefs in Behavioural Medicine Series 2012, states: “Significant limitation”—of self-exclusion, that is—
“is the lack of collaboration between different online gambling sites and venues so that excluded individuals may find it easy to gamble at other sites or venues”.
Gainsbury follows through on this by making two important subsidiary points. First, she argues that the UK system particularly lends itself to the provision of a one-stop shop because of our licensing framework:
“It is a UK licensing condition to maintain a register of self-excluders, including an appropriate record of identification details and payment cards. Although care must be taken to protect customers’ identity, data encryption programs can be used to protect sensitive details, and it may be possible to encourage operators to share details to enable wider self-exclusion programs”.
Secondly, Gainsbury is very clear that the technology is present to deliver a one-stop shop. She cites a program called VeriPlay.com, already referred to in this debate, developed by Bet Buddy, which allows the secure exchange of anonymous data. It allows operators to check whether a player is on a central list of players who have self-excluded.
Gainsbury also argues that collaborative efforts would help strengthen self-exclusion and that,
“regulatory efforts may be required to prompt operators to enact such measures”.
A one-stop shop amendment was tabled in the Commons in Committee and on Report in the other place. Although both were defeated, the majority was not great, and the Government did not seem to have compelling arguments with which to oppose them.
I very much hope that the Government will reconsider and recognise that if their claim to have regard for problem gambling and the suggestion that this Bill is about consumer protection is to have any credibility, they must, at an absolute minimum, ensure that the core advertising proposal in this Bill is complemented by a strategy to help online problem gamblers in the form of credible self-exclusion.
My final problem with this Bill relates to the detail of the general UK regulatory framework. If this legislation becomes law, those websites currently supplying UK customers that are subject to the regulatory regimes of the EEA or white-listed jurisdictions will instead be subject to UK regulation. At the moment, if they decide to relocate back to the UK, player protection will in some cases be eroded. It is therefore important that our licensing is amended to provide the same level of regard for the problem gambler as the licensing regimes of the best EEA or white-listed jurisdictions.
Alderney, a jurisdiction to which some UK online gambling providers relocated, offers player protection that is superior to the UK licensing regime. The Alderney Gambling Control Commission gives any player the right to tell a company the limits on their gambling that they want to set themselves. This means they can inform a company that they wish to set such limits to the amount that they can deposit during a specific period, or to how much they may lose by reference to a number of gambling transactions or a period during which the amount can be lost. Setting such personal limits is one way in which gamblers can ensure that they gamble within their means, without chasing their losses and without spending too much time gambling. Those are all signs that a problem is developing.
Just last week, I visited Sweden on a different matter altogether, but I want to draw the House’s attention to what happens there. Players in Sweden are given the option to make use of a technology called play scan. This helps and guides players in their gambling activity, warning them about increased addiction or significant changes in their behavioural activity. The prompts are in the form of green, yellow and red-light indicators. When a player’s behaviour changes, a message informs them immediately.
A further example is in the area of online poker, a style of gambling which the Swedes have designated as being particularly related to problem gambling. In Sweden, a player needs to apply for a card, which has a specific number associated with it. Gamblers authorise the transfer of funds from a linked account to the card, and any winnings are paid automatically into the gambler’s account. To play, customers are required to set time and money limits. The setting of limits is the main function of the card, but it also offers play management features—including a summary of player history for the previous 12 months—allows for a “time out” and offers risk assessment.
In October, the Prime Minister said that he wanted,
“a fair and decent approach that prevents problem gambling”.—[Official Report, Commons, 23/10/13; col. 299.]
But the approach given in this Bill is neither properly fair nor decent. I very much hope that it will be amended to deliver financial transaction blocking, a one-stop shop for self- exclusion and a regulatory framework that is at least as good as the best EEA or white-listed jurisdiction with respect to care for online problem gamblers.
Viscount Astor (Con)
My Lords, I welcome this Bill. It will mandate all remote operators in the British market to provide governing bodies such as the British Horseracing Authority with information on suspicious betting patterns. However, it is a pity that the Bill does not go further with regard to racing, and I hope that the Minister will be able to give us some comfort particularly on the levy.
At this stage, I should declare my interests: I do not think that I have problem gambling; I have owned a few problem horses, particularly the last one, which last year managed to canter down to the start rather faster than she came back—that is certainly not what they are supposed to do. However, I always remain an optimist and I have a leg in another horse, which will be running next season, and I can assure your Lordships that it is bound to do better—it cannot do worse anyway. I should also say that I once rode a winner over the jumps, but that was quite a long time ago.
Offshore betting operators do not contribute to the levy. The Government have in the past used concerns that the European Commission would use the concept of state aid as a reason not to act, but following the ruling from Brussels on the French levy those concerns have disappeared. The European Commission approved the French parafiscal levy on online horseracing betting, so we now know that that reason is not an obstacle to action. Reform of the levy would not constitute state aid, and neither would a point of consumption licensing regime. The omission is costing the racing industry about £20 million a year in lost revenue.
This has been a complicated issue, whose solution has defied Governments over the years. For as long as I can remember being in this House we have discussed replacing the levy—and I have been here quite a long time. This Bill would be the perfect vehicle not to reform the levy but to close the offshore gambling loophole.
The racecourses, and racing itself, could act. If the racecourses did not accept prize money or sponsorship from gaming companies that do not pay the levy, that would force the issue, as bookmakers need to be close to their customers. Two amendments were tabled in another place, but were rejected by the Government. There is an opportunity for us to rethink here; after all, we are a revising Chamber.
I am sure that the Minister will say that the levy is 50 years old and needs fundamental reform. We know that; as I said, we have been discussing it for quite some time. Now there is an opportunity to make some progress in the meantime. The Government have said that they will consult, and come to Parliament with a proposal. However, when the Minister in another place summed up, she said that she was not,
“prepared to risk jeopardising the financial stability that has been achieved by the four-year voluntary agreements by extending the levy to offshore bookmakers”.—[Official Report, Commons, Gambling (Licensing and Advertising) Bill Committee, 19/11/13; col. 141.]
But there is no financial stability, because offshore bookmakers are not paying any levy. We have an opportunity to put an amendment before your Lordships in Committee that will allow the Government, if they wish, to extend the levy to offshore bookmakers. That would give them the opportunity to consult in Europe and to do, in effect, what the French have been doing. Racing is missing out. That is a point that has been made by almost everyone who has spoken this evening.
The second issue I want to raise concerns casinos. It is similar to the issue raised by my noble friend Lord Clement-Jones. The Bill will mean that online gaming companies selling into the UK market are licensed and regulated at the point of consumption, rather than where they are based. This is a major improvement, which I welcome. However, there is an anomaly here. Punters can play on remote internet sites on their mobiles or computers while at home or on the move, in any public place, or even inside a casino. But casino operators, who often also hold a remote licence, are not allowed to show or advertise their products in their casinos, or to show that there is an opportunity to use a computer. This makes promoted online gambling in a casino illegal—yet not illegal if unpromoted, if it is on one’s own mobile or computer. That seems a strange state of affairs. As casinos are the most highly regulated and inspected of any gaming premises, it looks bizarre. Many of them already provide their customers with laptops, iPads and other computers.
I understand that the Minister in another place said that the anomaly could be corrected by secondary legislation. It would be helpful if the Minister, when he sums up, could say whether there has been any progress on this, because if secondary legislation is not going to work, this Bill provides an opportunity for us to change that anomaly. I very much hope that the Minister will be able to look carefully at these issues.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank all speakers in the debate, which has been a bit of a ride round the various possibilities that gambling opens up to us. It has been a bit like “Gambling Anonymous” from time to time. I was interested to hear some of the comments that have been made, and I am grateful to the noble Lord, Lord Cavendish, for his invitation to lunch, which I am sure many of us will want to take up at some time. I am not sure whether I was pleased with the tips given to us by the noble Viscount, Lord Astor; I could not quite tell whether he was telling us to avoid his horses or to follow them—but I shall certainly reflect on what he said. An even more startling observation has unfortunately not yet reached your Lordships’ ears, but I am sure that it will come out in Committee. Just as I was standing up, my colleague on the Front Bench, my noble friend Lady Jones, confessed that her main ambition when she left school was to become a jockey. I had not expected that; however, we are of course very grateful that she has managed to avoid that career choice and join us here.
The Bill has been a long time coming. Online gambling was first regulated in the United Kingdom in 2007. Since that time all but one of our major online betting companies have moved offshore, primarily to avoid taxation. They have justified that decision by claiming that it was necessary to remain competitive. Underlying a lot of the comments that we have heard this evening has been a concern that tax and other issues ought to be paid by those who make a living out of offering gambling services in this country. However, we should recall that that was the justification behind the decision when they left in the first place in 2007. As has been said, the consequence is that those operators are outside UK regulation, which is an unacceptable situation and needs to be tackled. However, as my noble friend Lady Pitkeathley reminded us, there is a downside for the white list jurisdictions, many of which have operated to very high standards for so many years. We will have to pay some regard to those as we make further consideration of the Bill.
The need for changes in the licensing of remote gambling operators was identified by the previous Government, and much good work on that issue was done before the last election. Therefore, given what I have said, it will be clear that we support this modest Bill in principle, although there are many areas which we think need to be strengthened and as has been pointed out during this debate, a number of rather alarming gaps.
In 2009, the then Minister for Sport, Mr Gerry Sutcliffe MP, ordered a review of overseas gambling operators which advertised in the UK. In 2010, the previous Government began the consultation on extending Gambling Commission licensing to include online gambling operators which offer services in the UK. Consultation responses were published after the general election in July 2010, but it took a full year before the Government issued a Written Statement on the plans to legislate. The draft Bill was published in December 2012, and the Select Committee published its report on the draft Bill in May 2013. Therefore it took four and a half years and four Ministers, but we have finally got the Bill, even if it is rather slim pickings.
What was all the waiting about? As the noble Lord, Lord Clement-Jones, identified, clearly the loss of taxation revenue is the real driver of this regulation move. When he comes to respond, perhaps the Minister could say where things have got to. In August 2013 there were reports that a deal had been done, and the figure of 15% was mentioned. Of course it would be quite inappropriate for a mere Minister in a department to mention taxation, which is a matter reserved for the Chancellor of the Exchequer. However, perhaps a hint about where we are on this might not go amiss. The noble Viscount, Lord Falkland, made the point that this shift to a point-of-consumption basis for operating the regulatory function parallels the change to a point-of-consumption taxation. At least in his words, that is what is driving the Bill. In order to get the tax take of about £300 million, which has already been scored in the Budget accounting, a deal has to be done to introduce light-touch regulation, otherwise we will frighten the horses—I am sorry about that metaphor. I hope that we will learn about that in the Minister’s response.
We have before us—and we can only discuss—this rather slim five-clause Bill that deals with the licensing of remote gambling at the point of consumption. That is not contentious: virtually everyone, including large parts of the gambling industry, although perhaps not those in the white list countries, is in favour of that. The delay in bringing the Bill forward could be understood if it addressed many of the issues that have come to light since 2007, but it does not do so.
The Gambling Act 2005 was a major piece of legislation that has largely stood the test of time. When the legislation was put in place, the then Government said that the issues in the Bill would have to be kept under review. A number of areas have subsequently come to light, such as online gambling, which has grown exponentially over the past few years, and we accept that revised regulation is necessary. However, the Bill deals solely with matters that have been under consideration for four years or more, and over which there is pretty much unanimous agreement. It is a matter of some regret that the Government have not taken the opportunity to deal with the many other issues mentioned tonight that have boiled up in the intervening period and which need to be addressed.
Gambling is enjoyed by more than 56% of the population, and the figure rises to more than 70% if the purchase of lottery tickets is included. One should include that; I think that as the noble Lord, Lord Clement-Jones, mentioned, there are still some concerns about other lottery operators, which could be considered within the Bill. As we said, we welcome the move to create a level playing field between the operators which have remained onshore, and those which have moved offshore, and we would like to make sure that the approach which removes the divide between them is pursued. But as the noble Baroness, Lady Howe, and the noble Lord, Lord Morrow, have mentioned, we are worried about the paucity of sanctions included within the Bill, which are neither financial nor operational. It was the noble Baroness, Lady Howe, who said it was all carrot and no stick. We will be pushing for amendments in Committee which will perhaps bring in some of the blocking technology to which she referred.
On match fixing, the European Parliament has just called on all EU Governments to make match fixing a criminal offence. This has been supported by the Sports Rights Owners Coalition and David Collier, the chief executive of the England and Wales Cricket Board, who, through his sport, is at the forefront of trying to ensure that every country across the world has as effective a regime as possible. The noble Baroness, Lady Heyhoe Flint, made good points on this matter that we think we would support; we hope she will consider putting down amendments in Committee. We wonder why the Government have not used or looked again at the Gambling Act 2005, as the power in that Act to tackle match fixing is too loosely defined, and indeed was not used in the recent case of the Pakistani bowlers, who were prosecuted under fraud laws.
In this context it is surprising, as many noble Lords have mentioned, that the Bill contains no measures to ensure that spread betting is licensed in the same way as other forms of betting. It is my understanding that this is because spread betting is seen as primarily a financial transaction rather than betting in the way it is interpreted in the Act. Therefore the consequence would be that the regulation should lie with the FCA. But the logic of this escapes me. Surely it is better for one body to have overall control in this activity, particularly as we realise that spread betting is now being provided by companies that also provide betting services. As was argued in another place, the Bill should deal with the issue both in terms of principle and practicality. If there is not to be single responsibility, there should be a common approach, such as licence conditions mentioned by the noble Baroness, which we support. Otherwise the information about the cancer of match fixing will never be obtained.
A number of Lords, including the noble Viscount, Lord Falkland, and the noble Lord, Lord Clement-Jones, mentioned pre-watershed advertising. The noble Viscount, Lord Falkland, says it does not matter about advertising. I fundamentally disagree on this point. Anybody who has watched television recently would be aware that the amount of advertising, and the sharpness of it, has now much increased. Although we had a recent report from Ofcom which described the volume of advertising and the limits on it due to the restrictions on the watershed, it is clear that there is a big loophole which needs to be looked at. This is the situation affecting games that are sports fixtures that start before 9 pm, for which advertising is allowed, and therefore which reaches not only problem gamblers but also children. We think there is a need for an amendment in this area, and would be interested to see whether there would be support for that around the House.
A number of noble Lords have picked up on problem gambling. The figures are difficult to find. This is primarily because the gambling prevalence survey, which last took place in 2010, has been abolished, so we have very little empirical evidence. But I think we are agreed. My figures said 450,000, but the common consent for those other people who have mentioned it is 451,000 people who seem to be affected by problem gambling. I am sure the 1,000 will make a big difference to our thinking on this matter. On the one hand we have an NHS which provides support for those who have addiction problems with drink and in other areas, but does not deal specifically with gambling. In this situation we have to be careful, as we tread a difficult path between a wish to promote an industry from which people gain a great deal of pleasure, and the responsibility to protect the vulnerable.
As has been mentioned, online gambling is of particular concern. It is possible for vulnerable adults to indulge their addiction without leaving their homes, and hence to suffer alone while running up debts that they cannot hope to pay. The figure that the noble Lord, Lord Morrow, gave about those who had suffered under this was shocking. It is surely our duty as legislators to make sure that we create a safe and well regulated environment in which people can enjoy the pleasure that they experience from gambling, but not suffer the consequences if they have an addiction.
The noble Baroness, Lady Howe, mentioned the worry about advertising, and the way in which that reaches those who already have vulnerability. A number of noble Lords also picked up the need for a proper self-exclusion system. This is something we are sure we will return to in Committee.
The horseracing betting levy has been a problem for successive Governments over a number of years. I listened with interest to those with more expertise in this area than I will ever have about some of the ways in which we might address this. The problem that was picked up in another place was that the Government do not seem ready to come forward with proposals; they are not relying on the existing model but are not yet sure about which one they would like to pick. Of course, Governments do not pick winners; it might be worrying if they did start to do that, particularly in this area. But, levity aside, this is obviously something that needs to be resolved, and it would be interesting if the Minister could do so when he responds.
On the one side, there are the points that my noble friend Lady Pitkeathley mentioned about the vibrancy of the existing situation, which has been supported by this recirculation of cash. But of course many industries could argue that the betting or gambling industry takes from them the benefits and intellectual property, as it were, of the activity that they are involved in but does not in any sense put back sufficiently into grass roots or other activities. So there is a broader discussion here as well as the narrow one about what to do about the levy. Clearly, something must happen in this area, whether within the Bill or some time in the very near future. At least the Minister could give us some advice about where he is on this; that would be helpful.
On the list of issues that we might want to come back to in Committee there is a question that has not yet been mentioned, which the Government have said that they would act on—the question of unclaimed winnings and dormant accounts. We are talking about bets that are void because the horse did not run, about unclaimed winnings and about the accounts of people who have left money sitting in them for more than a year. That seems to be part of a category of unused funds which in many areas there are plans to begin to use, and it is equally true in the area of gambling. The money could be put to use for treatment for problem gambling, or support for education about gambling, perhaps even into grass roots. If the Government are not ready to legislate for this issue, although they have said that they would like to, I suggest to the Minister that we require some information here at least, perhaps from the betting operators as part of the licence, to record exactly how much and what they hold in dormant betting accounts and unclaimed winnings, so that, when or if the Government decide to legislate, they will be able to do on the basis of sure and certain knowledge.
In conclusion, we welcome the Bill as far as it goes, but as I hope I have made clear tonight, it needs to go much further. I hope that the Minister will recognise that this is not at heart a partisan issue, but something on which we think we could work together, because there is a need for a rethink on a number of issues. We need to consider seriously some amendment to come from all parts of the House, which would make for a good Committee stage—and from that would come an improved and refined Bill. There is good work in the 2005 Act, which is the basis on which we operate, but we want to improve it where we can, and this Bill will help us to do that. We look forward to working with the Government and others in this House to create a licensing system that is the gold standard for the world.
Lord Gardiner of Kimble
My Lords, I start by thanking all your Lordships for the wide-ranging and informative debate that we have had tonight. A number of questions have been raised, and I hope that your Lordships will forgive me if I try to gallop through as briskly as I can. I will write, as so many points have been raised during the debate.
First, on the betting levy, a number of your Lordships have raised this. It was extremely useful to have the arguments aired. It is undoubtedly the case that racing, which is the second most attended sport after football in Britain, is immensely important to many people. I should declare an interest in that there is a point-to-point course on the family farm in Kimble and I am very much aware of amateur racing—so I was particularly interested in the racecourse of my noble friend Lord Cavendish, where I remember a horse of my grandfather winning. I also remember the fairground, which was going merrily while the racing proceeded. It is clear that training yards and racecourses up and down the country are playing their role in what is a huge part of the rural economy. The noble Baroness, Lady Pitkeathley, mentioned members of her family. I have sat on horses and ridden, probably behind a pack of hounds, with her son-in-law. The horse is hugely important in the way of life for many hundreds of thousands of people in Britain, whether they spectate, ride horses, or admire everyone that prepares horses.
The levy is a complex issue and the Bill is not the right vehicle in our view to achieve what I would like and what many noble Lords seek. The levy itself is now over 50 years old and it is widely agreed that it is in need of reform. We must look beyond simply extending a system that it is agreed is out of date and we need to reflect a vastly different set of circumstances from those that existed 50 years ago.
My noble friend Lord Cavendish, the noble Baroness, Lady Pitkeathley, my noble friend Lord Clement-Jones and the noble Lord, Lord Risby, raised the recent European Commission ruling in relation to the French parafiscal levy. This is a potentially interesting development and its impact is being assessed currently by the department. It does not mean, I am advised, that the UK would not similarly be required to seek similar EC approval. My advice is that an amendment of the levy reform raises state aid issues and will need the approval of the European Commission. I reassure your Lordships that the Government are committed to taking the opportunity to consider genuine levy reform and to consult widely on any sustainable, enforceable and legally sound options that emerge. My noble friend Lord Risby mentioned the consideration of a sports betting right. The Government will consult on any legal, sustainable and enforceable option for levy reform. At this stage it is unclear whether a racing right might meet these tests but I would not rule out the matter.
My noble friends Lord Astor and Lord Clement-Jones raised casinos and spoke about restrictions on remote gambling in casinos. I welcome the opportunity to confirm the current position. Customers are able to use their iPhones and iPads in casinos to use remote sites as they can everywhere else. This is about casinos being able to promote and encourage play, and that is why it is properly managed within gaming machine regulations. The Government have agreed to review the issue of remote gambling provision in casinos, but this must be progressed in a considered and balanced way, and subject to proper consideration, impact assessment and consultation. It may be that there is a case for some relaxation subject to certain safeguards, but we must ensure that existing controls on stake and prize limits are not undermined. Discussions with the industry have commenced and will conclude by the end of March of next year. My noble friend Lord Clement-Jones mentioned the portability of casino licences. The Government are in discussion with the casino industry over a range of proposals to provide greater regulatory flexibility. Portability of casino licences forms part of these discussions.
The noble Lord, Lord Stevenson of Balmacara, and my noble friend Lady Heyhoe Flint raised the issue of sports integrity. It is absolutely clear that match fixing undermines the very essence and integrity of sport and there is no place for it in any sport. This Bill will ensure that overseas operators selling into the British market are required to obtain a Gambling Commission licence. This will mean that the protections of the Gambling Act—in particular those afforded by licence condition 15.1 on reporting suspicious betting activity—are applied on a consistent basis to all operators active in the British market, regardless of where they are located. More generally, the Secretary of State had a really positive meeting last week with the big sports governing bodies and the Gambling Commission to discuss what more can be done to tackle this. A number of actions have been agreed and further discussions will take place in the new year.
My noble friend Lady Heyhoe Flint and the noble Lord, Lord Stevenson, also raised the issue of sports spread betting and the requirements on spread betting operators. The Financial Conduct Authority is in the process of preparing guidance to the principal two sports spread betting firms operating in the United Kingdom to reinforce the current requirements. It is the FCA’s intention that where parity with the Gambling Commission licence condition 15.1 can be achieved, the individual guidance to sports spread betting operators will reflect this. I confirm that this guidance will be published in the new year.
A number of your Lordships mentioned problem gambling, and the noble Viscount, Lord Falkland, asked for some costs relating to that. My understanding is that GamCare has calculated that every problem gambler costs the state £8,000 each year. The noble Baroness, Lady Howe of Idlicote, and the noble Lord, Lord Morrow, particularly highlighted the distress and upset that it causes to wider family members, and we must not forget that.
A number of issues were raised concerning self-exclusion lists. My understanding is that the Gambling Commission has already asked the Responsible Gambling Strategy Board to look at the effectiveness of self-exclusion as a tool, and the Responsible Gambling Trust work programme is also taking forward work in this area. In addition, the Remote Gambling Association convened an industry cross-sector meeting earlier this month to improve co-ordination and collaboration on developing options in relation to self-exclusion. The European Commission’s expert group is also looking into this matter.
The noble Baroness, Lady Howe of Idlicote, mentioned a one-stop shop. We are not ruling that out in the future, but the truth—and it may be an inconvenient truth—is that it would involve certain complexities and practicabilities. Although at this stage we would not wish to legislate, we want to look into the matter, and perhaps, in the series of meetings that I referred to, there is a discussion to be had on that with the noble Baroness. This matter was raised, in particular, by the noble Lord, Lord Morrow. I reassure your Lordships that the Government take the problem of gambling extremely seriously. The figure that I stated suggests that any Government should and must take it seriously. Indeed, operators are required by licence conditions to commit to contributing, and say how they will contribute, to the identification and treatment of problem gamblers.
The gambling industry has committed to bring in a number of enhanced player protection measures, including for users of fixed-odds betting terminals, such as voluntary time and monetary limits—for example, after 30 minutes of play a machine will pause. These measures will be in place by 1 March next year. We expect the industry to implement these new measures swiftly and to monitor their effectiveness closely.
One of the three licensing objectives set out in the Gambling Act 2005 is to protect children and other vulnerable adults. It is a condition of an operating licence issued by the Gambling Commission that an operator must have, and put into effect, policies and procedures to prevent underage gambling. This Bill will mean that all remote operators wishing to sell to or advertise in the British market will have to comply with that condition.
I was intrigued by the views of the noble Viscount, Lord Falkland, on advertising. The Government acknowledge the growth in gambling advertising that has occurred since the Act commenced in 2007 following the introduction of greater freedoms. The Government are examining what impact this might be having on the licensing objectives of the Gambling Act and whether the current arrangements remain adequate.
The Committee of Advertising Practice and the Broadcast Committee of Advertising Practice are about to publish significantly expanded guidance on gambling. The help note will include new, specific guidance on free bets and bonus offers to make explicitly clear the requirements on those marketing such offers. It will underline the need for them to give appropriate prominence to any significant conditions associated with their offers. Therefore, I assure your Lordships that the Government take this matter extremely seriously. Work is under way and we need to keep that under review.
My noble friend Lord Clement-Jones mentioned a kitemark. The Government are committed to ensuring progress on the work that the Gambling Commission has already commenced to make sure that consumers can quickly and clearly establish that they are transacting with a British licensed site.
A number of your Lordships, including the noble Baroness, Lady Howe, and my noble friend Lord Clement-Jones, mentioned blocking. The Government want to continue to develop understanding of this important emerging area. We do not rule out blocking in the future should it become appropriate, necessary and demonstrably effective. I would very much welcome discussions with those of your Lordships who would be interested in exploring this further. Where illegal operators attempt to target British consumers, the Government and the Gambling Commission are confident that action can be taken through existing enforcement mechanisms to disrupt and stop unlawful gambling. These include action on illegal advertising, player education and, ultimately, prosecution.
Turning to the point made by the noble Baroness, Lady Pitkeathley, about the Channel Islands and her championing of the islands, I understand that the Gambling Commission is working very closely with the Alderney Gambling Control Commission to ensure that there is minimal disruption and minimal burden on operators. Following on from that, my noble friend Lord Clement-Jones asked about transitional arrangements for white list licence holders and EEA holders. The repeal of the white list will not create disruption for operators who have an existing entitlement to operate in Britain under an EEA or white list jurisdiction licence. They will be granted a continuation licence for their existing activities if they apply for an advanced application before the cut-off date.
The Government have been working closely with the Gibraltar Betting and Gaming Association to seek a remedy in the best interests of British consumers. Officials have met with the Chief Minister of Gibraltar and the GBGA, and there will be further meetings to discuss these matters. The Government have also hosted delegations from the Gibraltar Government and the GBGA in London. The Government very much look forward to continuing a positive and productive relationship with Gibraltar.
My noble friend Lord Clement-Jones asked me quite a lot of questions. If he will forgive me, I shall address his points in a letter, which would be the best way to ensure that your Lordships do not have such a late night. We are confident that the Bill is compatible with EU law as a proportionate measure for achieving the legitimate purpose of consumer protection. The Government have been clear that this Bill is independent of any tax changes. My noble friend also asked about the Full Tilt case. Consultation by the Gambling Commission on the protection of customer funds closed on 4 December. The commission is analysing the responses and will publish its response to the consultation in the new year. It is vital that the society lottery consultation considers carefully the impact on all society lottery operators and not only the Health Lottery. In that regard the Government are still considering the nature of proposals and will set out their approach soon.
I am sure that a number of your Lordships would like to draw me on taxation but tax matters are for the Treasury and are continually kept under review. From a regulatory point of view, whatever the tax rate adopted by the Treasury, the key issue is whether the Gambling Commission has all the necessary enforcement tools at its disposal to minimise any illegal activity. The Government are confident that the Gambling Commission has the right tools to take effective action against illegal operators and deter unlicensed companies from entering the market.
The noble Lord, Lord Stevenson of Balmacara, mentioned dormant accounts, which is an important issue. This Bill will make significant changes to the manner in which a large number of betting accounts, including those that are currently dormant, are regulated. That is why the Government have been clear that it would be appropriate to consider the recommendations from the report only once our proposals for remote gambling have been implemented.
I say to the noble Lord, Lord Morrow, that this is a small and significant Bill. Its intention is about protection for remote gambling consumers based in Great Britain. It will also ensure that all remote gambling, wherever the operator is based, is licensed by the Gambling Commission and subject to its robust and consistent standards and controls.
This has undoubtedly been a debate in which a wide range of points were made. I fully confess that I have not been able to respond in the detail that many of your Lordships might have preferred. These are important issues that we need to consider further. I hope that many of your Lordships will come to further meetings before Committee, during which time the Bill team and I would be happy to give further explanation and listen to the points raised to see what progress we can make. But for the purposes of tonight, I commend the Bill to the House and ask for it to be given a Second Reading.