Grand Committee
(10 years, 11 months ago)
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Arrangement of Business
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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
(10 years, 11 months 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
(10 years, 11 months 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)
(10 years, 11 months 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
(10 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
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
(10 years, 11 months ago)
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Social Mobility: Public Schools
(10 years, 11 months 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
(10 years, 11 months 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
(10 years, 11 months ago)
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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
(10 years, 11 months 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
(10 years, 11 months 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]
(10 years, 11 months ago)
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Children and Families Bill
(10 years, 11 months ago)
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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.
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(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.
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(ii) children and young people in its area who have a disability.”
Gambling (Licensing and Advertising) Bill
(10 years, 11 months ago)
Lords ChamberRead Full debate Read Hansard Text
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.